Deck 14: Managerial Accounting Concepts and Principles

Question 1

Control is the process of monitoring planning decisions and evaluating an organization's activities and employees.

Answer 1

True

Question 2

Marketing managers can use managerial accounting information to decide whether to advertise on social media.

Answer 2

True

Question 3

The management concept of customer orientation motivates a company to spend large amounts on advertising to convince customers to buy the company's standard products.

Answer 3

False

Question 4

When the attitude of continuous improvement exists throughout an organization,every manager and employee is challenged to continuously experiment with new and improved business practices.

Question 5

One of the usual differences between financial and managerial accounting is the timeliness of the information reported.

Question 6

The concept of total quality management focuses on quality improvement.

Question 7

Both financial and managerial accounting affect user's decisions and actions.

Question 8

Managerial accounting provides financial and nonfinancial information to an organization's managers and other internal decision makers.

Question 9

Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it,and estimates and projections are acceptable.

Question 10

Managerial accounting reports and information are used by external users and financial accounting by internal users.

Question 11

The focus of managerial accounting information is on the organization as a whole.

Question 12

Control is the process of setting goals and determining ways to achieve them.

Question 13

Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.

Question 14

Planning is the process of setting goals and making plans to achieve them.

Question 15

Both financial and managerial accounting rely on accepted principles that are enforced through an extensive set of rules and guidelines.

Question 16

An important managerial accounting report is the budget,which predicts revenues and expenses.

Question 17

Feedback provided by the control function allows managers to revise their plans.

Question 18

The main goal of the lean business model is the elimination of waste while satisfying the customer and providing a positive return to the company.

Question 19

Managerial accounting is an activity that helps managers determine costs of products and services,plan future activities,and compare actual to planned results.

Question 20

Just-in-time manufacturing is a system that acquires inventory and produces product only when needed for an order.

Question 21

Total variable costs change in proportion to changes in the volume of activity.

Question 22

Period costs are incurred by manufacturing finished goods.

Question 23

Costs may be classified by many different cost classifications.

Question 24

The sales commission incurred based on units of product sold during the month is an example of a product cost.

Question 25

Straight-line depreciation,rent,and manager salaries are examples of variable costs.

Question 26

Cost concepts such as variable,fixed,mixed,direct,and indirect apply only to manufacturers and not to service companies.

Question 27

An employee overstates his reimbursable expenses in one period in order to receive needed additional cash.Since he intends to reduce his expenses the next period by the current overstatement,this act is not considered fraudulent.

Question 28

The Institute of Management Accountants (IMA)Statement of Ethical Professional Practice requires that management accountants be competent and act with integrity.

Question 29

Period costs can refer to expenditures necessary to manufacture products during the time period.

Question 30

Product costs are capitalized as inventory on the balance sheet and period costs are expensed on the income statement.

Question 31

Total fixed costs change in proportion to changes in the volume of activity.

Question 32

Indirect costs cannot be easily and cost-beneficially traced to a single cost object.

Question 33

The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers.

Question 34

Direct materials are not easily traced to a product.

Question 35

The balanced scorecard aids in continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance.

Question 36

Direct costs can be traced to more than one cost object.

Question 37

Under a just-in-time manufacturing system,large quantities of inventory are accumulated throughout the factory to be certain that components are available each time that they are needed.

Question 38

Product costs can refer to expenditures necessary to manufacture products and to administrative support during the time period.

Question 39

Total quality management and just-in-time manufacturing focus on quality improvement as well as on time customer deliveries.

Question 40

Adopting a lean business model should have no effect on cost in a modern manufacturing environment.

Question 41

Manufacturers usually have three inventories: raw materials,work in process,and finished goods.

Question 42

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

Question 43

Raw materials inventory should not include indirect materials.

Question 44

Raw materials that become part of a product and are identified with specific units or batches of a product are called direct materials.

Question 45

Newly completed units are combined with beginning finished goods inventory to make up total ending work in process inventory.

Question 46

Four factors come together in production activity: beginning work in process inventory,direct materials,direct labor,and factory overhead.

Question 47

The Work in Process Inventory account is found only in the ledgers of manufacturing companies.

Question 48

A lean business model aims to eliminate waste while satisfying the customer and providing a positive return to the company.

Question 49

The triple bottom line focuses on three measures: financial,social,and environmental.

Question 50

The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased.

Question 51

The cost of partially completed products is included in the balance of the Work in Process Inventory account.

Question 52

Product costs can be classified as one of three types: direct materials,direct labor,or factory overhead.

Question 53

Beginning finished goods inventory plus cost of goods manufactured equals cost of goods sold.

Question 54

Product costs are expenditures necessary to manufacture finished products.

Question 55

The Work in Process Inventory account is found only in the ledgers of merchandising companies.

Question 56

Beginning finished goods inventory plus cost of goods manufactured minus ending finished goods inventory equals cost of goods sold.

Question 57

Selling and administrative expenses are normally period costs.

Question 58

The series of activities that add value to a company's products or services is called a value chain.

Question 59

The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the manufacturer includes cost of goods manufactured rather than cost of goods purchased.

Question 60

Beginning finished goods inventory plus cost of goods manufactured equals cost of goods available for sale.

Question 61

Just-in-time manufacturing (JIT)focuses on quality improvement and applies this standard to all aspects of business activities.

Question 62

The schedule of cost of goods manufactured must be prepared monthly as it is a required general-purpose financial statement.

Question 63

Which of the following items is not a management concept that was created to improve company performance?

A)Just-in-time manufacturing.
B)GAAP constraints and guidelines.
C)Total quality management.
D)Continuous improvement.
E)Customer orientation.

Question 64

Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

Question 65

Which of the following items does not represent a difference between financial and managerial accounting?

A)Users of the information.
B)Flexibility of reporting.
C)Timeliness of information.
D)Focus of the information.
E)Managerial accounting does not use the financial information from the financial accounting system.

Question 66

The raw materials inventory turnover ratio is raw materials purchased divided by the average raw materials inventory.

Question 67

Total quality management (TQM)is a system that acquires inventory and produces only when needed.

Question 68

Managerial accounting information:

A)Is used mainly by external users.
B)Involves gathering information about costs for planning and control decisions.
C)Is generally the only accounting information available to managers.
D)Can be used for control purposes but not for planning purposes.
E)Has little to do with controlling costs.

Question 69

Just-in-time manufacturing (JIT)is a system that acquires inventory and produces only when needed.

Question 70

A manufacturer's cost of goods manufactured is the sum of direct materials,direct labor,and factory overhead costs incurred in producing products.

Question 71

Prime costs consist of direct labor and factory overhead.

Question 72

Direct labor refers to employees who physically convert materials to finished product.

Question 73

Total quality management (TQM)focuses on quality improvement to business activities.

Question 74

Indirect materials are accounted for as factory overhead because they are not clearly identified with specific product units.

Question 75

Factory overhead is charged to expense as it is incurred because it is a period cost.

Question 76

Indirect labor refers to the cost of workers who assist or supervise manufacturing,but they are not clearly identified with specific product units.

Question 77

Flexibility of practice when applied to managerial accounting means that:

A)The information must be presented in electronic format so that it is easily changed.
B)Managers must be willing to accept the information as the accountants present it to them,rather than in the format they ask for.
C)Managerial accountants must be on call twenty-four hours a day.
D)Managerial accounting systems differ across companies depending on the nature of the business and the arrangement of its internal operations.
E)Managers must be flexible with information provided in varying forms and using inconsistent measures.

Question 78

The schedule of cost of goods manufactured is also known as a manufacturing statement.

Question 79

Managerial accounting is different from financial accounting in that:

A)Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.
B)Managerial accounting never includes nonmonetary information.
C)Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
D)Managerial accounting is used extensively by investors,whereas financial accounting is used only by creditors.
E)Managerial accounting is mainly used to set stock prices.

Question 80

Prime costs consist of direct materials and direct labor.