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ACCT 2023 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

investment centers

A

Center of which a manager is responsible for revenues, costs, and asset investments

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2
Q

ROI

A

Ratio reflecting operating efficiency;

= net income/average total assets

also called return on assets or return on total assets

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3
Q

profit margin

A

income/sales

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4
Q

investment turnover

A

sales/average assets

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5
Q

balanced scorecard

A

A system of performance measurement that collects information on several key performance indicators within each of four perspectives: customer, internal processes, innovation and learning, and financial.

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6
Q

nonfinancial measures of evaluation

A

customer, internal processes, innovation and learning

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7
Q

days sales in receivables

A

365 * net accounts receivable/net sales

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8
Q

cash conversion cycle

A

The average time it takes to convert cash outflows into cash inflows from customers.

days sales in accounts receivable + days sales in inventory - days payable outstanding

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9
Q

transfer pricing

A

The price used to record transfers of goods or services across divisions within the same company.

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10
Q

investment center

A

Center of which a manager is responsible for revenues, costs, and asset investments.

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11
Q

cost centers

A

Department that incurs costs but generates no revenues; common example is the accounting or legal department.

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12
Q

profit center

A

Business unit that incurs costs and generates revenues.

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13
Q

controllable costs

A

Costs that a manager has the power to control or at least strongly influence.

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14
Q

responsibility accounting

A

System that provides information that management can use to evaluate the performance of a department’s manager.

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15
Q

performance evaluations

A

best done with controllable costs

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16
Q

segment costs

A
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17
Q

direct costs

A

Expenses traced to a specific department (object) that are incurred for the sole benefit of that department.

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18
Q

indirect costs

A

Expenses traced to a specific department (object) that are incurred for the sole benefit of that department.

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19
Q

cost allocation to segments

A

= total cost to allocate * % allocation base used

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20
Q

segment income statements

A

Income statements prepared for each operating department within a decentralized organization.

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21
Q

contribution to overhead

A

Amount by which a department’s revenues exceed its direct expenses.

= sales - cogs- direct expenses

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22
Q

time and materials charges for service businesses

A

time charge per hr direct labor * DL hrs + direct materials + DM * materials markup %

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23
Q

relevant costs

A

future oriented and focus on incremental effects from alternative managerial decisions

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24
Q

out-of-pocket costs

A

requires a future outlay of cash, is relevant

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25
Q

incremental costs

A

Additional cost incurred only if a company pursues a specific course of action.

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26
Q

opportunity costs

A

potential benefit lost by not choosing an alternative action

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27
Q

sunk costs

A

from past decisions and cannot be avoided or changed; irrelevant

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28
Q

make or buy decision

A

choose the cheaper option

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29
Q

sell or process further decision

A

choose whichever gives higher income

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30
Q

sales mix decision

A

produce the model with highest contribution margin per machine hour until market demand is satisfied

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31
Q

eliminating a segment decision

A

contribution margin < avoidable fixed costs

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32
Q

keep or replace decision

A

replace if income increases, keep if income decreases

33
Q

determine selling price

A

add markup to cost per unit

34
Q

special order decision

A

accept special offer if income increases, reject if income decreases

35
Q

Payback

A

Time-based measurement used to evaluate the acceptability of an investment

= time until net cash flow = initial cost

36
Q

ARR

A

Rate used to evaluate the acceptability of an investment

= after tax periodic income from project / average investment in asset

37
Q

NPV

A

Dollar estimate of an asset’s value that is used to evaluate the acceptability of an investment

38
Q

managerial accounting

A

Area of accounting aimed mainly at serving the decision-making needs of internal users; also called management accounting.

39
Q

classifying costs

A

direct, indirect, overhead

40
Q

manufacturing Income Statement

A

cogs = cogm + beginning finished goods inventory - ending finished goods inventory

41
Q

manufacturing Balance Sheet

A

contains raw materials inventory, wip inventory, finished process inventory

42
Q

Schedule of Cost of Goods Manufactured

A

Report that summarizes the types and amounts of costs incurred in a company’s production process for a period

43
Q

job order costing

A

Cost accounting system to determine the cost of producing each job or job lot.

44
Q

job order costing for services

A
45
Q

flow of materials in job order costing; journal entries

A
46
Q

flow of overhead costs in job order costing; journal entries

A

predetermined oh rate –> apply estimated oh –> record actual oh –> close oh

47
Q

adjusting for overapplied or underapplied overhead

A

underapplied: debit cogs credit oh
overapplied: debit oh credit cogs

48
Q

Process costing

A

determine physical flow of units

compute equivalent units of production

compute cost per equivalent unit of production

assign and reconcile costs

49
Q

calculation of work in process

A

= # units * DM %

50
Q

calculation of finished goods costs

A

= # units * conversion %

51
Q

Process costing production cost report (what does it show)

A

Summarizes the four steps of process costing: physical flow of units, equivalent units of production, costs per equivalent unit, and assignment of costs transferred out and to ending work in process inventory.

52
Q

Process costing; flow of costs; journal entries

A

raw materials –> wip 1,2, etc –> finished goods –> cogs

53
Q

Process costing; flow of products across departments and to finished goods and cost of goods sold; journal entries

A

debit new dept credit old dept

54
Q

process costing vs. job order costing

A

both: materials, labor, & oh; compute cost per unit

job order: cost object is a job, measures cost per unit after completion, job cost sheets, one wip account

process: cost object is process/dept, measures unit costs at period end, production cost report, one wip account per process

55
Q

using a plantwide overhead rate to allocate overhead costs

A

1 oh rate to allocate oh costs

cost object unit of product

56
Q

using department overhead rates to allocate overhead costs

A

dif oh rate per dept

57
Q

using activity based costing to allocate overhead costs

A

Cost allocation method that focuses on activities performed; traces costs to activities and then assigns them to cost objects

58
Q

compute contribution margin

A

sales - var costs

59
Q

compute contribution margin ratio

A

contribution margin / sales

60
Q

compute income

A

revenue - expenses

61
Q

classifying costs according to cost behavior

A

fixed mixed step-wise and variable costs

62
Q

use CVP to determine sales (in units or dollars) to reach target income

A

(fixed costs + target income) / contribution margin ratio or contribution margin per unit

63
Q

calculate net income using contribution margin income statement approach

A

sales + var costs - fixed costs = target income

64
Q

compute breakeven point in sales units or dollars

A

units = fixed costs / contribution margin per unit

dollars = fixed costs / contribution margin ratio

sales = # units for contribution margin to equal fixed costs * sales price

65
Q

sales mix

A

Ratio of sales volumes for the various products sold by a company

66
Q

compute unit cost under absorption and variable costing

A

absorption includes fixed oh in unit cost

variable costing excludes fixed oh

67
Q

operating budgets (sales, production, direct labor, general and administrative expenses)

A

components of master budget

68
Q

cash budget (calculate cash balance before and after borrowing, cash receipts,cash payments)

A

Plan that shows expected cash inflows and outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans.

69
Q

capital expenditures budget

A

Plan that lists dollar amounts to be both received from disposal of plant assets and spent to purchase plant assets.

70
Q

budgeted financial statements (what’s on each)

A

income, balance,

71
Q

sales price variance

A

budgeted dl cost = budgeted dl hrs * dl cost per hr

72
Q

benefits of budgeting

A

plans, control, coordination, communication, motivation

73
Q

standard costs

A

Costs that should be incurred under normal conditions to produce a product or component or to perform a service.

74
Q

flexible budget vs. static (fixed) budget calculations

A

flexible budget calculates income for multiple sales volumes

static calculates one sales volume

75
Q

budget performance report; favorable vs unfavorable variances

A

favorable: Difference in actual revenues or expenses from the budgeted amount that contributes to a higher income.

unfavorable: Difference in revenues or costs, when the actual amount is compared to the budgeted amount, that contributes to a lower income.

76
Q

direct materials and direct labor variances

A

pv = (ap - sp) * aq
qv = (aq - sq) * sp

77
Q

calculate gross profit

A

= sales - cogs

78
Q

budgeted income statement

A

Accounting report that presents predicted amounts of the company’s revenues and expenses for the budget period

79
Q

budgeted balance sheet

A

Accounting report that presents predicted amounts of the company’s assets, liabilities, and equity balances as of the end of the budget period.

ACCT 2023 (2 decks)

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