Module 17 Flashcards
T/F: The process of assigning cost to inventories as they are converted from raw material to finished goods is called Product costing.
True
T/F: In a manufacturing organization, manufacturing supplies costs are recorded as expenses as they are used.
False
Which of the following inventories results in recording an expense when its asset account is reduced in the accounting system? A. Raw materials B. Work in process C. Finished goods inventory D. Both A and B
Finished goods inventory
Partially completed goods that are in the process of being converted into a finish product are defined as: A. Work-in-process inventories B. Conversion inventories C. Raw materials inventories D. Operational inventories
Work-in-process inventories
T/F: When goods are transferred from the factory to the finished goods warehouse, Work-In-Process is reduced and Cost of Goods Sold Expense is recorded.
False
T/F: In financial accounting, the term period costs refers to all expired costs not related to the manufacturing function, and product costs refers to all costs incurred during the period related to the manufacturing function
True
T/F: All depreciation on factory assets is recorded as an expense of the period
False
Which of the following views of product costs is consistent with financial reporting requirements?
A. Product costs are all costs incurred in the process of manufacturing products, even if they are only indirectly related to the production process.
B. Product costs are all labor and materials costs that are incurred in the process of manufacturing products.
C. Product costs are all costs directly incurred in the manufacturing and selling of the product.
D. Product costs include all costs incurred throughout the value chain.
Product costs are all costs incurred in the process of manufacturing products, even if they are only indirectly related to the production process.
Which of the following statements most accurately describes financial accounting’s view of period costs?
A. Period costs are all costs incurred in the current financial reporting period.
B. Period costs are all direct costs incurred in the current financial reporting period.
C. Period costs are all non-manufacturing expenses incurred in the current financial reporting period.
D. Period costs are a component of fully absorbed costs.
Period costs are all non-manufacturing expenses incurred in the current financial reporting period.
How is depreciation on the manufacturing building and equipment classified in financial reporting?
A. As an irrelevant cost because it has already been incurred
B. As a current expense
C. As part of the cost of the products produced
D. As a period cost
As part of the cost of the products produced
When is the cost of manufacturing equipment recognized as an expense?
A. When equipment depreciation is recorded
B. When inventory processing is completed and finished goods are recorded
C. When finished goods inventory is sold
D. None of the above
When finished goods inventory is sold
Which of the following costs are treated as part of the cost of product?
A. Wages of plant security guards
B. Insurance on the plant building and equipment
C. Depreciation on the kitchen sink in the plant cafeteria
D. All of the above are product costs
All of the above are product costs
Which of the following is not a period cost?
A. The president’s salary
B. Sales commissions
C. Depreciation on the mainframe computer in the Information Systems Department
D. Subsidy of the plant cafeteria
Subsidy of the plant cafeteria
The method of accounting for inventory that assigns all manufacturing costs to inventory is sometimes referred to as: A. Prime costing B. FIFO C. The weighted average cost method D. Absorption costing
Absorption costing
Which of the following is one of the three major components of product costs?
A. Research and development expenses
B. Manufacturing overhead
C. Marketing costs related to specific products
D. Selling, general and administrative expenses
Manufacturing overhead
