Deck 16: Managerial Accounting Concepts and Principles

Question 1

Goods that are part way through the manufacturing process, but not yet complete, are referred to as materials inventory.

Answer 1

False

Question 2

In most business organizations, the chief accountant is called the treasurer.

Answer 2

False

Question 3

In most business organizations, the chief management accountant is called the controller.

Answer 3

True

Question 4

The vice presidents of production and sales and the controller hold line positions in most large organizations.

Question 5

Managerial accounting reports must be prepared according to generally accepted accounting principles.

Question 6

The controller's staff consists of management accountants responsible for systems and procedures, general accounting, budgets, taxes, and cost accounting.

Question 7

Controlling is the process of monitoring operating results and comparing actual results with the expected results.

Question 8

A staff department has no direct authority over a line department.

Question 9

Managerial accounting reports must be useful to the user of the information.

Question 10

Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change.

Question 11

Controlling deals with choosing goals and deciding how to achieve them.

Question 12

Managerial accounting provides useful information to managers on product costs.

Question 13

A diagram of the operating structure of an organization is called an organization chart.

Question 14

Managerial accounting uses only past data in reports to aid management in the decision making process.

Question 15

The payment of dividends is an example of a cost.

Question 16

Planning is the process of monitoring operating results and comparing actual results with the expected results.

Question 17

A staff department or unit is one that provides services, assistance, and advice to the departments with line or other staff responsibilities.

Question 18

A cost can be a payment of cash for the purpose of generating revenues.

Question 19

Managerial accounting information includes both historical and estimated data.

Question 20

Planning is the process of developing the company's objectives or goals and translating these objectives into courses of action.

Question 21

If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead cost.

Question 22

If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct materials cost.

Question 23

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as factory overhead cost.

Question 24

Factory overhead cost is sometimes referred to as factory burden.

Question 25

The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.

Question 26

For a construction contractor, the wages of carpenters would be classified as factory overhead cost.

Question 27

The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.

Question 28

The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.

Question 29

Conversion cost is the combination of direct labor cost and factory overhead cost.

Question 30

Factory overhead is an example of a product cost.

Question 31

Depreciation on factory plant and equipment is an example of factory overhead cost.

Question 32

The costs of materials and labor that do not enter directly into the finished product are classified as cost of goods sold.

Question 33

Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.

Question 34

Direct costs can be specifically traced to a cost object.

Question 35

Direct labor costs are included in the conversion costs of a product.

Question 36

Indirect labor would be included in factory overhead.

Question 37

Conversion cost is the combination of direct materials cost and factory overhead cost.

Question 38

A cost object indicates how costs are related or identified.

Question 39

The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead cost.

Question 40

For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.

Question 41

Period nonmanufacturing) costs are classified into two categories: selling and administrative.

Question 42

Period costs can be found on both the balance sheet and the income statement.

Question 43

Prime costs consist of factory overhead and direct labor.

Question 44

Operating expenses are product costs and are expensed when the product is sold.

Question 45

Conversion costs are the combination of direct labor, direct material, and factory overhead costs.
a.
True
b.
False

Question 46

Prime costs consists of direct materials, indirect materials, and direct labor.

Question 47

The plant manager's salary in a manufacturing business would be considered an indirect cost.

Question 48

Factory overhead includes all manufacturing costs except direct materials and direct labor.

Question 49

Period costs include direct materials and direct labor.

Question 50

Period costs are operating costs that are expensed in the period in which the goods are sold.

Question 51

Product costs are not expensed until the product is sold.

Question 52

Indirect costs can be specifically traced to a cost object.

Question 53

Prime costs are the combination of direct labor costs and factory overhead costs.

Question 54

Indirect labor and indirect materials would be part of factory overhead.

Question 55

Prime costs are the combination of direct materials and direct labor costs.

Question 56

Labor costs that are directly traceable to the product are part of factory overhead.

Question 57

Product costs include direct labor and advertising expense.

Question 58

Conversion costs consist of product costs and period costs.

Question 59

Only the value of the inventory that is sold will appear on the income statement.

Question 60

Manufacturers use machinery and labor to convert direct materials into finished products.

Question 61

Accounting designed to meet the needs of decision makers inside the business is

A) general accounting
B) financial accounting
C) managerial accounting
D) external accounting

Question 62

Which of the following statements is false?

A) There is no overlap between financial and managerial accounting.
B) Managerial accounting sometimes relies on past information.
C) Managerial accounting does not need to conform to GAAP.
D) Financial accounting must conform to GAAP.

Question 63

A report analyzing how many products need to be sold to cover operating costs is not typically a managerial accounting report.

Question 64

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?

A) improving
B) controlling
C) directing
D) planning

Question 65

The statement of cost of goods manufactured is an extension of the income statement for a manufacturing company.

Question 66

A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial accounting report.

Question 67

In order to be useful to managers, managerial accounting reports should possess all of the following characteristics except

A) provide objective measures of past operations and subjective estimates about future decisions
B) be prepared in accordance with generally accepted accounting principles
C) be provided at any time management needs information
D) be prepared to report information for any unit of the business to support decision making

Question 68

Managerial accounting reports are

A) prepared according to GAAP
B) prepared according to management needs
C) prepared periodically only
D) related to the entire business entity only

Question 69

Managers use managerial information to evaluate performance of a company's operation.

Question 70

Who are the individuals charged with the responsibility for directing the day-to-day operations of a business?

A) investors
B) managers
C) shareholders
D) customers

Question 71

Which of the following is most associated with financial accounting?

A) can have both objective and subjective information
B) can be prepared periodically, or as needed
C) prepared in accordance with GAAP
D) can be prepared for the entity or segment

Question 72

What is the primary criterion for the preparation of managerial accounting reports?

A) relevance of the reports
B) manager needs
C) timing of the reports
D) cost of the reports

Question 73

Managerial information is for external as well as internal stakeholders.

Question 74

In most business organizations, the chief management accountant is called the

A) chief accounting officer
B) controller
C) chairman of the board
D) chief executive officer

Question 75

All of the following employees hold line positions in Facebook except

A) vice president of production
B) vice president of finance
C) manager of the web design
D) vice president of sales

Question 76

On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead are categorized as either materials inventory, work in process inventory, or finished goods inventory.

Question 77

A performance report that identifies the amount of employee downtime is a financial accounting report.

Question 78

Which of the following are basic phases of the management process?

A) supervising and directing
B) decision making and supervising
C) organizing and directing
D) planning and controlling

Question 79

The controller's staff often consists of several management accountants. All of the following would most likely be on the controller's staff except

A) general accountants
B) budgets and budget analysts
C) investments and shareholder relations managers
D) cost accountants

Question 80

Which of the following is most associated with managerial accounting?

A) must follow GAAP
B) may rely on estimates and forecasts
C) is prepared for users outside the organization.
D) always reports on the entire entity