accounting 231 exam 1

manufacturing

Activities and processes that involves conversion of raw materials into finished goods

which of the following is the correct formula for cost of goods sold

Beg FG + cost of goods manufactured- End FG

Which of the following is the correct formula for cost of goods manufactured

Beg WIP + total manufacturing costs- End WIP

income statement

a) Use - measures performance b) Contents - revenue and expenses c) Time period - rage of dates; period of time (For year ended December 31, 2021)

accounts receivable

amount due from customers

What financial statement is for a specific point in time

balance sheet

shareholders equity

commond stock, utilities expense, revenue, dividendsa

owners enjoy limited liability in a

corporation

what costs are included in manufacturing costs

direct materials, direct labor, manufacturing overhead

period cost examples

factory building depreciation, advertising expenditures, machine lubricants, salary of factory manager, salary of accountant, salaries of factory maintenance employees, sales commission

managerial accounting provides reports to help investors and creditors evaluate a company

false

how should you date the top of a cost of goods manufactured schedule

for year ended december 31, 2021

what is the purpose of financial accounting

general purpose

accounting process sequence

identify, record, communicate

what kind of user is a human resource manager

internal

what are the primary users of managerial accounting

internal users

creditor

party to whom money is owed

direct materials

raw materials,

What is the planning function for

to add value to the business

What is an asset

• Assets are resources a business owns to carry out activities such as production and sales • Provides future benefits • Examples: - Cash - Accounts Receivable - Inventory - Equipment

managerial accounting is applicable to

-service entities -manufacturing entities -not-for-profit entities

Accounting is a 3-step process:

1. Identify the economic event relevant to its business 2. Record the event (double entry accounting) 3. Communicate the information

4 financial statements

1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash Flows

proprietorship

A business owned by one person

accounting equation

Assets = Liabilities + Shareholders'(Owners') Equity

transactions

Business's economic events recorded by accountants

product costs

Product costs are also referred to as manufacturing costs. They are necessary and integral parts of producing the finished product. These include: - Direct Materials - Direct Labor - Manufacturing Overhead

External Transactions

Purchasing equipment from another business

internal transactions

The use of cooking supplies within a company

3 manufacturing costs

direct materials, direct labor, manufacturing overhead

dividends

earnings distributed to stockholders

which of the following dates would be seen on an income statement

for quarter ended june 30, 2021

balance

income-expenses

What are the two accounts in affect when you company purchases equipment on account

increase accounts payable and increase equipment

if you received cash for services provided, what would the effect be on the accounting equation

increase assets and increase stockholders' equity

manufacturing overhead

indirect costs associated with making the finished product. These costs cannot be directly traced to a particular product • Examples: the maintenance person who comes to work on the cake company factory • Other examples: factory equipment depreciation, factory maintenance cost, factory maintenance officers' salary, indirect cost, indirect labor, indirect material

manufacturing overhead

indirect labor, factory repairs, factory utilities, factory depreciation, factory insurance

a manufacturing process requires small amounts of glue. the glue used in the production process is

indirect material

the two most common types of external users

investors and creditors

Raw material examples

lumber used to build tables bolts used in manufacturing the compressor of an engine rivets for the wings a new commercial jet aircraft

product costs are also called

manufacturing costs

What is the use/purpose of the income statement

measures performance

What is included on the retained earnings statement

net income and dividends

Three key functions of managerial accounting

planning, directing, controlling

what are the 3 key function of managerial functions

planning, directing, controlling

cost of goods sold

product cost of the finished goods that are sold. This cost affects a company's income statement Beginning finished goods + Cost of goods manufactured - Ending finished goods = Cost of goods sold.

direct materials

raw materials that can be physically and directly associated with the making of the finished good. • Examples: flour, sugar, and eggs in the making of cakes • In most cases, all direct materials are raw materials but not all raw materials are direct materials. Some raw materials could be indirect materials.

what are the 3 categories of inventory on a manufacturers' balance sheet

raw materials, work in process, and finished goods

external users of financial accounting and decisions they make

regulatory agency- is the company operating within prescribed guidelines- is the company complying with tax laws internal revenue service creditor- is the company able to pay its debts investor- is the company a good investment

expenses

rent, utilities, groceries, personal items, credit card payment, tuition and fees, cost of goods sold expense, salary expense, advertising, supplies

cost of goods manufactured

represents total cost of finished goods produced. This cost affects a company's balance sheet Beginning WIP + Total Manufacturing Costs (Direct Materials + Direct Labor + Manufacturing Overhead) - Ending WIP = cost of goods manufactured

which of the following costs would be a period cost

sales commissions

period costs

selling and administrative costs that are incurred to generate revenue; therefore, are matched with revenue earned. These include: - Advertising/marketing - Sales commissions - Shipping costs - Accounting and management and other admin

Which of the following CANNOT be quantified into dollars and cents and recorded as an accounting transaction

the appointment of a new CPA firm to perform an audit CAN be quantified -the sale of store equipment -the purchase of a new computer -payment of income taxes

direct labor

the people that are physically and directly associated with converting raw materials into finished goods • Examples: The bakers at the cake company

product cost examples

tires on wheels, wages of employees who put tires on wheels, spokes of bicycle, handlebars, salary of product quality inspector

the accounting process includes bookkeeping

true

directing

• Coordinate diverse activities and human resources • Implement planned objectives • Provide incentives to motivate employees • Hire and train employees • Produce a smooth-running operation

What is a liability?

• Debts and obligations - being responsible for something • Creditors is the person that money is owed to • Examples: - Accounts Payable - Notes Payable - Salaries/Wages Payable

external users

• Individuals and organizations outside a company who want financial information about the company • Examples: - Investors and Creditors • A question an external user might ask: How does the company compare in size and profitability to their competitors?

controlling

• Keep and maintain activities on track • Determine whether goals are met • Decide changes needed to get back on track • May use an informal or formal system of evaluations

internal user

• Managers who plan, organize, and run a business • Examples: - Marketing managers, production supervisors, finance directors, and company officers • A question an internal user might ask: What price should our company charge for a product to maximize our company's net income?

planning

• Maximize short-term profit and market share • Commit to environmental protection and social programs • Add value to the business

What is stockholder's equity?

• The owner/stockholders' ownership in the company's assets • Looking at the equation again, we can explain why the equation is setup the way that it is • Examples: - Common Stock - Retained Earnings-Revenues, Expenses, Dividends

What is business transaction

a business's economic events recorded by accountants

Managerial Accounting

a field of accounting that provides economic and financial information for managers and other internal users to make healthy decisions for the organization's growth

Activity-based costing (ABC)

a method of allocating overhead based on each product's use of activities in making the product -costs are associated with the activity involved with making the product

balance scorecard

a performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company's operations in an integrated fashion. -Essentially a way for the company to make sure they stay relevant amongst their competitors

state of cash flows

a) Use - show cash sources and uses ( a zoomed in look at cash from the balance sheet) b) Contents - cash from operating, investing, and financing c) Time period - range of dates; period of time

retained earnings

a) Use - shows changes in equity (RE) b) Contents - Net Income; Dividends (not expenses) c) Time period - range of dates; period of time

balance sheet

a) Use - statement of financial position b) Contents - assets, liabilities, and equity c) Time period - for a specific point in time (December 31, 2021)

transaction

accountants refer to an economic event as this

liabilitys

accounts payable, notes payable, salaries payable

when we will receive payments (cash) sometimes in the future for service or good we sold, what do we record

accounts receivable

value chain

all business processes associated with providing a product or performing a service -adds value to the company, with each process

notes payable

amount owed to bank

accounts payable

amount owed to suppliers for goods and services purchased

paid for office equipments previously purchased with credit

assets- decreased liabilities- decreased stockholders' equity- no effect

paid employees salaries

assets- decreased liabilities- no effect stockholders' equity- decreased

paid telephone bill for the month

assets- decreased liabilities- no effect stockholders' equity- decreased

paid dividends

assets- decreased liabilities-no effect stockholders' equity- decreased

obtained a loan from the bank

assets- increased liabilities- increased stockholders' equity- no effect

billed customers for services rendered

assets- increased liabilities- no effect stockholders' equity- increased

received cash for services provided

assets- increased liabilities- no effect stockholders' equity- increased

purchased office supplies on credit

assets- increased liabilities-increased stockholders' equity- no effect

purchased office equipment on credit

assets- increased liabilities- increased stockholders' equity- no effect

received cash from customer in payment on account

assets- increased and decreased liabilities- no effect stockholders' equity- no effect

assets

cash, accounts receivable, supplies, equipment

What are the two accounts in affect when you pay for advertisement with cash

decrease cash and increase expense

L started with $55,000 and OE started with $62,000. L increasd by $5,000 and OE decreased by $4,000, What is A?

$108,000

Assets started with $5,000 and liabilities started with $2,800, liabilities increased by $10,000 and total OE decreased by $2,000, What is assets

$13,000

total assets= $80,000, total shareholders' equity= $55,000. What is total liabilities

$25,000

How are managerial accounting and financial accounting similar?

- Both types of accounting deals with economic events of a business - Both require that economic events be recorded and communicated to interested parties

just-in-time

Inventory system in which goods are manufactured or purchased just in time for sale -this process minimizes costs and allows for the company to order parts when needed

which of the following costs would not be considered a direct cost at toyota

depreciation on the factory building

management accountants

determine cost behavior assist in budget planning be concerned with the impact of cost and volume on profits NOT prepare reports primarily for external users