Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
CHAPTER 16(1): MANAGERIAL ACCOUNTING CONCEPTS AND
PRINCIPLES
1.
Managerial accounting reports must be prepared according to generally accepted accounting principles.
a.
True
b.
False
2.
Managerial accounting uses only past data in reports to aid management in the decision making process.
a.
True
b.
False
3.
Managerial accounting information includes both historical and estimated data.
a.
True
b.
False
4.
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.
a.
True
b.
False
5.
A diagram of the operating structure of an organization is called an organization chart.
a.
True
b.
False
6.
In most business organizations, the chief accountant is called the treasurer.
a.
True
b.
False
7.
In most business organizations, the chief management accountant is called the controller.
a.
True
b.
False
8.
A staff department or unit is one that provides services, assistance, and advice to the departments with line or other
staff responsibilities.
a.
True
b.
False
9.
The vice presidents of production and sales and the controller hold line positions in most large organizations.
a.
True
b.
False
10.
A staff department has no direct authority over a line department.
a.
True
b.
False
11.
The controller's staff consists of management accountants responsible for systems and procedures,
general
accounting, budgets, taxes, and cost accounting.
a.
True
b.
False
12.
Managerial accounting reports must be useful to the user of the information.
a.
True
b.
False
13.
Planning is the process of monitoring operating results and comparing actual results with the expected results.
a.
True
b.
False
14.
Planning is the process of developing the company’s objectives or goals and translating these objectives into courses
of action.
a.
True
b.
False
15.
Controlling deals with choosing goals and deciding how to achieve them.
a.
True
b.
False
16.
Controlling is the process of monitoring operating results and comparing actual results with the expected results.
a.
True
b.
False
17.
Managerial accounting provides useful information to managers on product costs.
a.
True
b.
False
18.
The payment of dividends is an example of a cost.
a.
True
b.
False
19.
A cost can be a payment of cash for the purpose of generating revenues.
a.
True
b.
False
20.
Goods that are part way through the manufacturing process, but not yet complete, are referred to as
materials
inventory.
a.
True
b.
False
21.
The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and
factory
overhead cost.
a.
True
b.
False
22.
The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.
a.
True
b.
False
23.
The cost of wages paid to employees directly involved in converting materials to finished product is classified
as
direct labor cost.
a.
True
b.
False
24.
If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as
direct
materials cost.
a.
True
b.
False
25.
For a construction contractor, the wages of carpenters would be classified as factory overhead cost.
a.
True
b.
False
26.
For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.
a.
True
b.
False
27.
Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified
as
factory overhead cost.
a.
True
b.
False
28.
Depreciation on factory plant and equipment is an example of factory overhead cost.
a.
True
b.
False
29.
Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
a.
True
b.
False
30.
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.
a.
True
b.
False
31.
Factory overhead cost is sometimes referred to as factory burden.
a.
True
b.
False
32.
Conversion cost is the combination of direct labor cost and factory overhead cost.
a.
True
b.
False
33.
Conversion cost is the combination of direct materials cost and factory overhead cost.
a.
True
b.
False
34.
Factory overhead is an example of a product cost.
a.
True
b.
False
35.
Direct labor costs are included in the conversion costs of a product.
a.
True
b.
False
36.
The costs of materials and labor that do not enter directly into the finished product are classified as
factory
overhead.
a.
True
b.
False
37.
The costs of materials and labor that do not enter directly into the finished product are classified as cost of
goods
sold.
a.
True
b.
False
38.
Indirect labor would be included in factory overhead.
a.
True
b.
False
39.
A cost object indicates how costs are related or identified.
a.
True
b.
False
40.
Direct costs can be specifically traced to a cost object.
a.
True
b.
False
41.
Indirect costs can be specifically traced to a cost object.
a.
True
b.
False
42.
Period (nonmanufacturing) costs are classified into two categories: selling and administrative.
a.
True
b.
False
43.
Prime costs are the combination of direct labor costs and factory overhead costs.
a.
True
b.
False
44.
Prime costs are the combination of direct materials and direct labor costs.
a.
True
b.
False
45.
Conversion costs are the combination of direct labor, direct material, and factory overhead costs.
a.
True
b.
False
46.
Manufacturers use machinery and labor to convert direct materials into finished products.
a.
True
b.
False
47.
Period costs include direct materials and direct labor.
a.
True
b.
False
48.
Period costs can be found on both the balance sheet and the income statement.
a.
True
b.
False
49.
Product costs are not expensed until the product is sold.
a.
True
b.
False
50.
The plant manager’s salary in a manufacturing business would be considered an indirect cost.
a.
True
b.
False
51.
Operating expenses are product costs and are expensed when the product is sold.
a.
True
b.
False
52.
Period costs are operating costs that are expensed in the period in which the goods are sold.
a.
True
b.
False
53.
Factory overhead includes all manufacturing costs except direct materials and direct labor.
a.
True
b.
False
54.
Labor costs that are directly traceable to the product are part of factory overhead.
a.
True
b.
False
55.
Product costs include direct labor and advertising expense.
a.
True
b.
False
56.
Indirect labor and indirect materials would be part of factory overhead.
a.
True
b.
False
57.
Prime costs consist of factory overhead and direct labor.
a.
True
b.
False
58.
Conversion costs consist of product costs and period costs.
a.
True
b.
False
59.
Prime costs consists of direct materials, indirect materials, and direct labor.
a.
True
b.
False
60.
Only the value of the inventory that is sold will appear on the income statement.
a.
True
b.
False
61.
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.
a.
True
b.
False
62.
The statement of cost of goods manufactured is an extension of the income statement for a manufacturing
company.
a.
True
b.
False
63.
Managers use managerial information to evaluate performance of a company’s operation.
a.
True
b.
False
64.
Managerial information is for external as well as internal stakeholders.
a.
True
b.
False
65.
A report analyzing how many products need to be sold to cover operating costs is not typically a
managerial
accounting report.
a.
True
b.
False
66.
A report analyzing the dollar savings of purchasing new equipment to speed up the production process is
a
managerial accounting report.
a.
True
b.
False
67.
A performance report that identifies the amount of employee downtime is a financial accounting report.
a.
True
b.
False
68.
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
