Test 1

Question 1

Managerial Accounting

Answer 1

the provision of accounting information for a company’s internal users

Question 2

Planning

Answer 2

the detailed formulation of action to achieve a particular end; it requires setting objectives and identifying methods to achieve them

Question 3

Controlling

Answer 3

the managerial activity of monitoring a plan’s implementation and taking corrective action as needed; it is usually achieved by comparing actual performance with expected performance

Question 4

Decision Making

Answer 4

the process of choosing amongst competing alternatives

Question 5

Financial Accounting

Answer 5

a type of accounting focused primarily on the creation of financial information for external users

Question 6

Value Chain

Answer 6

set of activities required to design, develop, produce, market, and deliver products and services to customers

Question 7

Continuous Improvement

Answer 7

the continual search for ways to increase the overall efficiency and productivity of activities by reducing waste, increasing quality, and managing cost

Question 8

Total Quality Management

Answer 8

a management philosophy in which manufacturers strive to create an environment that will enable workers to manufacture perfect (zero-defect) products

Question 9

Lean Accounting

Answer 9

an accounting practice that organizes costs according to the value chain to help managers eliminate waste and, ultimately, reduce costs and improve financial performance

Question 10

Line Positions

Answer 10

positions that have direct responsibility for the basic objectives of an organization

Question 11

Staff Positions

Answer 11

positions that are supportive in nature and have only indirect responsibility for an organization’s basic objectives

Question 12

Controller

Answer 12

the chief accounting officer in an organization

Question 13

Treasurer

Answer 13

the individual responsible for the finance function; raises capital and manages cash and investments

Question 14

Ethical Behavior

Answer 14

choosing actions that are right, proper, and just

Question 15

Sarbanes-Oxley Act (SOX)

Answer 15

an attempt to limit securities frauds and accounting misconduct scandals

Question 16

Certified Management Accounting (CMA)

Answer 16

has passed a rigorous qualifying examination, met an experience requirement, and participates in continuing education

Question 17

Certified Public Accountant (CPA)

Answer 17

has passed a national examination and must be licensed by the state in which he or she wishes to practice accounting (e.g., in audit, tax, etc.)

Question 18

Certified Internal Auditor (CIA)

Answer 18

has passed a comprehensive examination designed to ensure technological competence and has 2 years of experience

Question 19

Accumulating Costs

Answer 19

the way that costs are measured and recorded

Question 20

Administrative Costs

Answer 20

all costs associated with research, development, and general administration of the organization that cannot reasonably be assigned to either selling or production

Question 21

Allocation

Answer 21

when an indirect cost is assigned to a cost object using a reasonable and convenient method

Question 22

Assigning Costs

Answer 22

the way that a cost is linked to some cost object

Question 23

Conversion Cost

Answer 23

the sum of direct labor cost and overhead cost

Question 24

Cost

Answer 24

the amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization

Question 25

Cost Object

Answer 25

any item such as products, customers, departments, projects, and so on, for which costs are measured and assigned

Question 26

Cost of Goods Manufactured

Answer 26

the total product cost of goods completed during the current period

Question 27

Cost of Goods Sold

Answer 27

the total product cost of goods sold during the period

Question 28

Direct Costs

Answer 28

a cost that goes into the product (ex: steel in a safety pin)

costs that can be easily and accurately traced to a cost object

Question 29

Direct Labor

Answer 29

the labor that can be directly traced to the goods or services being produced

Question 30

Direct Materials

Answer 30

materials that are a part of the final product and can be directly traced to the goods or services being produced

Question 31

Expenses

Answer 31

costs that are used up (expired) in the production of revenue

Question 32

Fixed Cost

Answer 32

cost that remains the same (ex: rent on a building) it does not vary with relationship

costs that, in total, are constant within the relevant range as the level of output increases or decreases

Question 33

Gross Margin

Answer 33

the difference between sales revenue and cost of goods sold

sales revenue - COGS

Question 34

Indirect Costs

Answer 34

occurring cost that does not go into product (ex: a factory’s rent or insurance)

costs that cannot be easily and accurately traced to a cost object

Question 35

Manufacturing Organizations

Answer 35

an organization that produces tangible products

Question 36

Manufacturing Overhead

Answer 36

all product costs other than direct materials and direct labor

Question 37

Opportunity Cost

Answer 37

lost revenue

the benefit given up or sacrificed when one alternative is chosen over another

Question 38

Period Costs

Answer 38

cost related to time (ex: paying insurance in advance)

Question 39

Price

Answer 39

the revenue per unit

Question 40

Prime Cost

Answer 40

a form of product cost; the sum of direct materials cost and direct labor cost

Question 41

Product (Manufacturing) Costs

Answer 41

cost of product; including direct and indirect

material used (given) + labor used (calculate) + overhead used (given)

costs of producing a product in a manufacturing firm or of acquiring a product in a merchandising firm and preparing it for sale. Product costs include direct materials, direct labor, and manufacturing overhead

Question 42

Products

Answer 42

goods produced by converting raw materials through the use of labor and indirect manufacturing resources, such as the manufacturing plant, land, and machinery

Question 43

Selling Costs

Answer 43

those costs necessary to market, distribute, and service a product or service

Question 44

Service Organizations

Answer 44

an organization that produces intangible products

Question 45

Services

Answer 45

tasks or activities performed for a customer or an activity performed by a customer using an organization’s products or facilities

Question 46

Variable Cost

Answer 46

costs that, in total, vary in direct proportion to changes in output within the relevant range; it has a direct relationship with activity; the more products produced, the more income

Question 47

Work in Process (WIP)

Answer 47

DEBIT BALANCE the cost of the partially completed goods that are still being worked on at the end of a time period