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
