Module 1 Flashcards
Who are the users of managerial accounting?
Insiders - including executives, managers, and operators.
Who focuses on financial accounting?
Outsiders - investors, creditors, government agencies, analysts & reporters.
When comparing managerial and financial accounting, what kinds of information do they use?
Managerial will use economic, physical, and financial data.
Financial accounting only focuses on the financial data.
Managerial accounting focuses more on the ______ information on the ________ of the organization
local
subunits
Financial accounting focuses on the _______ information of the company, looking at the company as a _______.
global
whole
Financial accounting is regulated by the ____ and _____ as well as GAAP.
SEC
FASB
T or F: Managerial accounting is focused more on the value added principle as it relates to regulation.
True.
Managerial accounting focuses on information that promotes ________ and enables ________.
relevance
timeliness
Financial accounting is focused on ________ information only (objective, reliable and consistent).
factual
Time horizon for managerial accounting is focused on the _______, ________, and _______ whereas financial is focused only on the ______.
past, present, and future
past
How often is managerial and financial accounting reported?
managerial: continuously as needed
financial: delayed with emphasis on annual reporting
What are the three types of costs that are incurred in the process of making products?
- direct materials
- direct labor
- manufacturing overhead
_____________ can be easily traced to the product while ________ cannot.
Direct costs
indirect cost
What is a good example of an indirect cost and why?
Overhead is a good example because it includes indirect materials, indirect labor, depreciation, rent and utilities for manufacturing facilities.
What is the process of allocating indirect costs of a product?
allocation
Manufacturing costs are recorded as _______ when incurred and expensed as COGS when the product is _______.
inventory
sold
What kind of material can be easily traced to a product?
direct materials
How are the wages paid to production workers different from those paid to selling and admin employees?
Production worker wages are added to inventory and expensed as COGS when the product is sold. Selling & admin employee wages are expensed immediately.
__________ costs are incurred before beginning the manufacturing process.
Upstream
What kind of costs are incurred in the process of manufacturing?
midstream costs
T or F: Downstream costs are the costs incurred prior to the manufacturing process.
False, they are costs incurred after the manufacturing process.
What kind of costs is GAAP mostly concerned with?
Midstream costs (which are COGS)
How do you calculate operating leverage?
Contribution margin / net income
A contribution margin is calculated by subtracting _________ costs from ___________.
variable
revenue or sales revenue
