Deck 15: Introduction to Managerial Accounting

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

Verticals prepare their own income statements.

Answer 3

True

Question 4

In smaller companies, the term controller may be used to refer to the chief financial officer.

Question 5

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

Question 6

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

Question 7

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

Question 8

Managerial information is for external as well as internal stakeholders.

Question 9

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

Question 10

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

Question 11

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

Question 12

Although finance and accounting professionals often work within verticals and other horizontals, they do not normally report directly to the heads of those units or departments.

Question 13

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

Question 14

Horizontals are departments within a company that are responsible for developing products.

Question 15

While no two company structures are identical, most large companies are organized in terms of verticals and diagonals.

Question 16

Managerial accounting reports are designed to meet the specific needs of a company's management.

Question 17

Managerial accounting information includes both historical and estimated data.

Question 18

The functions reporting to the CFO sometimes are grouped together and referred to as corporate finance.

Question 19

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

Question 20

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

Question 21

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 22

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

Question 23

The payment of dividends is an example of a cost.

Question 24

Factory overhead is an example of a product cost.

Question 25

A cost is a sacrifice made to obtain some benefit.

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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 32

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

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

Factory overhead cost is sometimes referred to as factory burden.

Question 39

Managerial accounting provides useful information to managers on product costs.

Question 40

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

Question 41

Direct costs can be specifically traced to a cost object.

Question 42

Product costs are not expensed until the product is sold.

Question 43

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

Question 44

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

Question 45

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

Question 46

Product costs include direct labor and advertising expense.

Question 47

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

Question 48

Indirect labor would be included in factory overhead.

Question 49

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

Question 50

Indirect costs can be specifically traced to a cost object.

Question 51

A cost object indicates how costs are related or identified.

Question 52

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

Question 53

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

Question 54

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

Question 55

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

Question 56

Conversion costs are the combination of direct labor, direct material, and factory overhead costs.

Question 57

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

Question 58

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

Question 59

Period costs include direct materials and direct labor.

Question 60

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

Question 61

Which of the following terms 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 62

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 63

Lower utilization rates are considered favorable, while higher utilization rates are considered unfavorable.

Question 64

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 65

The primary goal of managerial accounting is to provide information to

A)investors
B)creditors
C)management
D)external auditors

Question 66

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

Question 67

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

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

Question 68

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

Question 69

Which of the following 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 70

Prime costs consist of factory overhead and direct labor.

Question 71

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 72

Which of the following terms is used to describe the process of developing the organization's objectives and translating those into courses of action?

A)supervising
B)planning
C)improving
D)decision making

Question 73

Conversion costs consist of product costs and period costs.

Question 74

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

Question 75

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

Question 76

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 77

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 78

Which of the following is most associated with financial accounting reports?

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 79

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

Question 80

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