True or False Flashcards

(77 cards)

1
Q

Managerial Accounting involves gathering accounting data primarily for external users.

A

False

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2
Q

Managerial Accounting emphasizes relevance, timeliness, precision, and verifiability

A

False

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3
Q

Managerial Accounting adds substantial value only to accounting majors because it provides them with effective insights in planning, controlling, and making good business decisions regarding business operations.

A

False

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4
Q

Business Ethics is an important concept that must be understood and used in both the US and worldwide economy at all times (i.e. competence, integrity, credibility).

A

True

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5
Q

Leadership primarily focuses on overseeing day-to-day business operations while management is primarily about positively influencing the behavior (i.e. business performance) of others.

A

False

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6
Q

The salary of a security guard working in the manufacturing plant is considered a manufacturing overhead cost.

A

True

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7
Q

A manufacturing company president’s salary is an example of indirect labor cost in manufacturing overhead.

A

False

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8
Q

Prime Costs are Product Costs.

A

True

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9
Q

Manufacturing overhead costs are period costs.

A

False

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10
Q

Conversion costs are Period costs.

A

False

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11
Q

Non-manufacturing costs are period costs.

A

True

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12
Q

Variable costs per unit increases or decreases as activity increases or decreases.

A

False

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13
Q

Fixed costs per unit decreases as volume increases.

A

True

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14
Q

In the mixed cost formula Y=a+bx, b= the total fixed manufacturing costs.

A

False

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15
Q

The traditional format income statement is primarily used for internal management decision making.

A

False

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16
Q

Opportunity costs address the benefit given up as a result of incurring a given cost.

A

True

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17
Q

Costs that are different between two or more alternatives are referred to as sunk costs.

A

False

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18
Q

Job order costing is used in companies that manufacture products to customer specifications.

A

True

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19
Q

Under Job Order Costing, the job cost sheet is used to capture DM, DL, MO, and Total cost per unit for each job.

A

True

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20
Q

Under Job Order Costing, Manufacturing Overhead costs are recorded on the job cost sheet based on actual costs.

A

False

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21
Q

Under Job Order Costing, the predetermined Overhead rate is based on total estimated manufacturing overhead costs and total actual allocation base.

A

False

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22
Q

Under Job Order Costing, Under-applied MO occurs when actual MO is greater than applied MO.

A

True

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23
Q

Under Job Order Costing, Over-applied MO results in an overstatement of COGS and an overstatement of Net profit.

A

False

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24
Q

Under Job Order Costing, the adjustment correction to an overapplied MO results in a decrease in COGS and an increase in Net Profit.

A

True

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25
In Job Order Costing, the journal entry for applying manufacturing overhead to a particular job is to credit the MO account and debit the WIP account.
True
26
The traditional format income statement is commonly used in the Cost-volume-profit Analysis.
False
27
Fixed Expenses are essential in determining a company’s contribution margin.
False
28
Contribution Margin is equal to sales minus variable expenses.
True
29
Contribution Margin is used first to cover fixed expenses. Any remaining Contribution Margin contributes to net operating income at the rate of sales per unit.
False
30
A company’s breakeven point is reached when its contribution margin is zero.
False
31
The sale of additional units beyond the break even point produces profit at the rate of the contribution margin per unit.
True
32
Once the breakeven point is achieved, fixed expenses can increase without any impact on net operating income.
False
33
Given the same level of sales, an increase in variable costs results in a decrease in contribution margin.
True
34
The margin of safety in dollars is the excess of the break-even volume of sales over budgeted (or actual) sales.
False
35
Variable costing and absorption costing define product costs the same way.
False
36
Variable costing treats all variable costs as product costs.
False
37
Traditional format income statement supports the variable costing Method and CVP analysis.
False
38
Absorption Costing treats all production costs as product costs, regardless of whether they are fixed or variable.
True
39
Absorption costing produces greater value for ending work in process and finished goods than variable costing.
True
40
When production is less than sales, the variable costing approach will produce a higher level of net operating income than the absorption costing approach.
True
41
Under the variable costing approach, variable selling and administrative expenses are treated as product costs.
False
42
The use of the absorption costing approach can be misleading and inappropriate when making pricing decisions or product discontinuance decisions.
True
43
Absorption costing gives the impression that fixed manufacturing overhead costs are variable.
True
44
While absorption Costing is required for external reporting, variable Costing is most advantageous for managerial accounting purposes.
True
45
In a segment income statement, the contribution format is typically used.
True
46
In segment income reporting, common fixed costs should be allocated to the segment being reported.
False
47
Subtracting traceable costs and common fixed costs from contribution margin to determine segment (division) margin is the “best gauge” for determining long run profitability of a segment.
False
48
In a segment Income Statement, Segment (Division) Margin is determined before contribution Margin.
False
49
Common fixed Costs can be eliminated by dropping a company’s division or segment.
False
50
Segment (division) margin equals segment (division) sales minus segment (division) variable costs.
False
51
A budget is a plan expressed in quantitative terms showing how a company's financial and other pertinent resources are to be used to achieve a certain financial outcome for a specified period.
True
52
Budgets help to ensure alignment of financial and other resources to achieve a targeted outcome.
True
53
Top down prepared budgets are more effective than bottom-up prepared budgets.
False
54
Planning and Controlling functions are the same thing.
False
55
Budgetary slack aids profit maximization.
False
56
Self-Imposed budgets create opportunities for employees to assert that company objectives are unrealistic.
False
57
Top Management's attitude towards budgets can substantially affect employee performance.
True
58
Budgets can be used to promote employee effectiveness AND can be used to demoralize employees.
True
59
The master budget is a comprehensive layout of a company's acquisition and use of financial and related resources.
True
60
All sub-budgets within a master budget are interrelated.
True
61
The Sales Budget and Schedule of Cash Collections are the same.
False
62
The timing of cash collections is not important if all the cash at the end of a given period (i.e. quarter, half-year, year) is correct.
False
63
A company's production needs for a given period is determined by adding the budgeted sales in units to the beginning period's units and then subtracting the ending period's units.
False
64
The final cash disbursement total for the Selling and Administrative Expense Budget includes all variable and all fixed selling and administrative expenses.
False
65
In the Cash Budget, all cash proceeds (inflows) are included in the first section of the budget - including beginning cash.
False
66
All cash outflows must be included in the cash disbursement section of the Cash Budget - including loan repayments.
False
67
The primary purpose of the cash budget is to determine the cash balance at the end of each period.
False
68
Depreciation Expenses must be included in the Cash Budget.
False
69
Relevant costs are unavoidable costs.
False
70
Sunk Costs are never relevant costs.
True
71
Irrelevant costs impact successful decision making.
False
72
Once a relevant cost - always a relevant cost.
False
73
In a decision to drop a segment or product line, contribution margin should be greater than all related avoidable costs.
False
74
Avoidable costs can be fixed or variable costs.
True
75
Common Costs are irrelevant costs.
True
76
Common Costs are included in the decision to make v. buy a product.
False
77
When considering profit maximization for a company producing multiple products, constraints should be considered and evaluated when determining the priority of the products to make.
True