Exam 8: Accounting: Decision Making by the Numbers

Which of the following statements is true of activity­based costing?

Since it deals strictly with numbers, the practice of accounting is free from ethical obligations.

Joe's accountant has asked him to determine the company's direct and indirect costs. Joe would classify depreciation on the company's copy machine and computers as indirect costs.

The managers of a company are the only stakeholders of that company to have a legitimate interest in its accounting information.

Which of the following does not classify as an asset of a company?

As key users of accounting information, employees typically evaluate their company's financial statements to:

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Which of the following is a difference between managerial accounting and financial accounting?

Which of the following is a disadvantage of participatory budgeting?

Financial budgets identify projected sales and production goals and the various costs a firm will incur to meet these goals.

Which of the following refers to the claims that stockholders have against their firm's assets?

Balance sheets reflect three key terms in the accounting equation: assets, liabilities, and cost of goods sold.

Briefly discuss managerial accounting.

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The _____ is the last financial budget; it shows how the firm's operations, investing, and financing activities are expected to affect all of the asset, liability, and owners' equity accounts.

Explicit costs are not easy to measure since they do not involve monetary payments.

Assets are the tangible and intangible resources owned by a firm.

What is a static budget? What are its weaknesses?

Creditors primarily use accounting information to meet the reporting needs of federal and state agencies.

_____ accounting is the branch of accounting that addresses the needs of external stakeholders, including stockholders, creditors, and government regulators.