Question 1

Indirect materials and indirect labor are both inventoriable costs.

Accepted Answer

Both indirect materials and indirect labor are considered as manufacturing overhead costs and are included in the cost of producing a product. Therefore, they are inventorable costs.

Question 2

Total period costs are deducted from total cost of work in process to calculate cost of goods manufactured.

Accepted Answer

Total period costs are not included in the cost of goods manufactured calculation. Only the direct materials, direct labor, and manufacturing overhead costs that are used to produce the goods are included in the cost of goods manufactured calculation.

Question 3

Controlling is the process of determining whether planned goals are being met.

Accepted Answer

This statement is true. Controlling involves evaluating progress towards goals and making adjustments as necessary to ensure they are being met.

Question 4

Direct materials and direct labor are the only product costs.

Accepted Answer

Product costs include direct materials, direct labor, and manufacturing overhead.

Question 5

Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports.

Accepted Answer

Reports prepared in financial accounting are intended to provide information to external stakeholders, such as investors and creditors, and are therefore general-purpose in nature. In contrast, reports prepared in managerial accounting are intended to provide information to internal management for decision-making and are therefore more specialized in nature.

Question 6

Managerial accounting applies to all forms of business organizations.

Accepted Answer

Managerial accounting is a type of accounting that is focused on providing information and analysis to internal users, such as managers and executives within a business organization. It is applicable to all forms of business organizations, including corporations, partnerships, and sole proprietorships.

Question 7

Period costs include selling and administrative expenses.

Accepted Answer

Period costs are not related to the production of goods or services and include selling and administrative expenses such as advertising, salaries of administrative staff, and office rent.

Question 8

Period costs are not inventoriable costs.

Accepted Answer

Period costs are not directly related to the production or acquisition of goods, and therefore are expensed in the period they are incurred rather than being added to the cost of inventory. Examples of period costs include administrative expenses, selling expenses, and research and development costs.

Question 9

Determining the unit cost of manufacturing a product is an output of financial accounting.

Accepted Answer

Determining the unit cost of manufacturing a product is an output of managerial accounting, which focuses on providing information for internal decision-making. Financial accounting, on the other hand, is concerned with providing financial information to external stakeholders such as investors, creditors, and regulatory agencies.

Question 10

Managerial accounting information generally pertains to an entity as a whole and is highly aggregated.

Accepted Answer

Managerial accounting information is often detailed, pertains to specific segments of a business, and is used internally for decision-making, planning, and control purposes.

Question 11

Both direct labor cost and indirect labor cost are product costs.

Accepted Answer

Both direct labor cost and indirect labor cost are considered part of the manufacturing overhead and are included in the production costs of a product.

Question 12

Raw materials are equal to direct materials minus indirect materials.

Accepted Answer

Raw materials include both direct and indirect materials, so they are not equal to direct materials minus indirect materials.

Question 13

The controller of a company is responsible for all of the accounting and finance issues a company faces..

Accepted Answer

The answer of The controller of a company is responsible...

Question 14

Decision-making is an integral part of the planning, directing, and controlling functions.

Accepted Answer

Decision-making is a process that involves making choices about how to allocate resources to achieve organizational goals, which is an integral part of the planning, directing and controlling functions of management.

Question 15

The management function of organizing and directing is mainly concerned with setting goals and objectives for the entity.

Accepted Answer

The management function of organizing is concerned with organizing resources and tasks to achieve goals and objectives, while the function of directing involves providing guidance, delegation, communication, and motivation to employees to achieve those goals and objectives.

Question 16

Managerial accounting internal reports are prepared more frequently than are classified financial statements.

Accepted Answer

Managerial accounting internal reports are prepared more frequently than are classified financial statements because they are used for decision-making by management and require more frequent updates. Classified financial statements are typically prepared once a year and are used for external reporting purposes.

Question 17

Raw materials that can be conveniently and directly associated with a finished product are called materials overhead.

Accepted Answer

Raw materials that can be conveniently and directly associated with a finished product are known as direct materials or direct costs. Materials overhead refers to indirect materials such as lubricants, cleaning supplies, or small tools used in production, that cannot be traced to specific products.

Question 18

The total cost of a finished product does not generally contain equal amounts of materials, labor, and overhead costs.

Accepted Answer

The cost of a finished product can vary depending on the materials used, the amount of labor required, and the level of overhead costs associated with the production process. These costs may not be equally distributed and can vary greatly depending on the specific product and production process.

Question 19

Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead.

Accepted Answer

This statement is true. Manufacturing overhead includes all indirect costs of production, such as rent, utilities, depreciation, and indirect labor.

Question 20

Direct materials costs and indirect materials costs are manufacturing overhead.

Accepted Answer

Direct materials costs are not considered manufacturing overhead; they are directly attributable to the production of goods. Manufacturing overhead includes indirect costs such as indirect materials, indirect labor, and other overhead costs associated with the production process.

Quiz 1: Introduction to Financial Statements