Question 1

Reporting format of managerial accounting is flexible and driven by user's needs.

Accepted Answer

A) True 
 B)False

Question 2

The three elements of product costs are

Accepted Answer

A) direct materials,work in process,and overhead. 
B) direct materials,work in process,and finished goods. 
C) direct materials,direct labor,and overhead. 
D) direct materials,direct labor,and period costs. 
A) direct materials,work in process,and overhead. 
B) direct materials,work in process,and finished goods. 
C) direct materials,direct labor,and overhead. 
D) direct materials,direct labor,and period costs.

Question 3

Which of the following terms apply to materials and supplies that can be traced conveniently to specific products?

Accepted Answer

A) Indirect materials 
B) Indirect manufacturing costs 
C) Direct costs 
D) Manufacturing overhead 
A) Indirect materials 
B) Indirect manufacturing costs 
C) Direct costs 
D) Manufacturing overhead

Question 4

Management accounting reports

Accepted Answer

A) are primarily used by parties inside the organization. 
B) must be prepared on a periodic basis. 
C) are generally publicly available. 
D) are based on generally accepted accounting principles. 
A) are primarily used by parties inside the organization. 
B) must be prepared on a periodic basis. 
C) are generally publicly available. 
D) are based on generally accepted accounting principles.

Question 5

A manager should focus on the purpose of a report while preparing it.

Accepted Answer

A) True 
 B)False

Question 6

Both direct labor and indirect labor are recorded in the Work in Process Inventory account as the product is being manufactured.

Accepted Answer

A) True 
 B)False

Question 7

Suppose a management accountant becomes aware that a poor judgment he or she made has resulted in the loss of one of the company's clients.Is the accountant bound to share this information with the company? (The accountant doubts that the company will ever find out about it directly. )

Accepted Answer

A) The management accountant is bound to respond honestly to inquiries regarding the adequacy of professional judgments but is not bound to communicate them if not directly asked. 
B) The management accountant is bound to communicate this error in judgment only if another client cannot be found. 
C) The management accountant is not bound to communicate this error. 
D) The management accountant is bound to communicate unfavorable and favorable judgments made,even if not directly asked. 
A) The management accountant is bound to respond honestly to inquiries regarding the adequacy of professional judgments but is not bound to communicate them if not directly asked. 
B) The management accountant is bound to communicate this error in judgment only if another client cannot be found. 
C) The management accountant is not bound to communicate this error. 
D) The management accountant is bound to communicate unfavorable and favorable judgments made,even if not directly asked.

Question 8

Direct costs can be conveniently traced to a cost object.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following labor costs would be included in direct labor?

Accepted Answer

A) Maintenance workers 
B) Machine operators 
C) Managers and supervisors 
D) Materials storeroom custodian 
A) Maintenance workers 
B) Machine operators 
C) Managers and supervisors 
D) Materials storeroom custodian

Question 11

Similar to financial accounting reports,management accounting reports are standardized in format.

Accepted Answer

A) True 
 B)False

Question 12

Practitioners of management accounting and financial management have a responsibility to communicate information fairly and objectively.

Accepted Answer

A) True 
 B)False

Question 13

Lubrication used for machines is an example of a direct material.

Accepted Answer

A) True 
 B)False

Question 14

Managers use managerial accounting principles to guide their actions and decisions in the management process.

Accepted Answer

A) True 
 B)False

Question 15

Total manufacturing costs include all direct materials used as well as all direct labor costs and overhead costs incurred during a period.

Accepted Answer

A) True 
 B)False

Question 16

Inventoriable cost is a synonym of product cost.

Accepted Answer

A) True 
 B)False

Question 17

The presentation of merchandise inventory on the balance sheet of a merchandising company most nearly resembles the presentation of __________ inventory on the balance sheet of a manufacturing company.

Accepted Answer

A) materials 
B) finished goods 
C) manufacturing supplies 
D) work in process 
A) materials 
B) finished goods 
C) manufacturing supplies 
D) work in process

Question 18

Overhead costs are

Accepted Answer

A) not allocated to the Work in Process Inventory account. 
B) not charged directly to the Finished Goods Inventory account. 
C) expensed in the period in which they are incurred. 
D) not considered product costs. 
A) not allocated to the Work in Process Inventory account. 
B) not charged directly to the Finished Goods Inventory account. 
C) expensed in the period in which they are incurred. 
D) not considered product costs.

Question 19

Overhead costs are not recorded in the Work in Process Inventory account.

Accepted Answer

A) True 
 B)False

Question 20

Management accounting information is objective and verifiable for decision making.

Accepted Answer

A) True 
 B)False

Exam 15: Managerial Accounting and Cost Concepts

Reporting format of managerial accounting is flexible and driven by user's needs.

The three elements of product costs are

Which of the following terms apply to materials and supplies that can be traced conveniently to specific products?

Management accounting reports

A manager should focus on the purpose of a report while preparing it.

Both direct labor and indirect labor are recorded in the Work in Process Inventory account as the product is being manufactured.

Suppose a management accountant becomes aware that a poor judgment he or she made has resulted in the loss of one of the company's clients.Is the accountant bound to share this information with the company? (The accountant doubts that the company will ever find out about it directly. )

Direct costs can be conveniently traced to a cost object.

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

Which of the following labor costs would be included in direct labor?

Similar to financial accounting reports,management accounting reports are standardized in format.

Practitioners of management accounting and financial management have a responsibility to communicate information fairly and objectively.

Lubrication used for machines is an example of a direct material.

Managers use managerial accounting principles to guide their actions and decisions in the management process.

Total manufacturing costs include all direct materials used as well as all direct labor costs and overhead costs incurred during a period.

Inventoriable cost is a synonym of product cost.

The presentation of merchandise inventory on the balance sheet of a merchandising company most nearly resembles the presentation of __________ inventory on the balance sheet of a manufacturing company.

Overhead costs are

Overhead costs are not recorded in the Work in Process Inventory account.

Management accounting information is objective and verifiable for decision making.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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