Chapter 16 Accounting True and False

Manufacturing companies have three inventory catorgies: ___, ___, ____.

Material Inventory WIP Inventory Finished goods Inventory

the completed units that have emerged from the manufacturing process and are on hand and available for sale

NONE

DL

wages of drill-press operations

DM

wood used by furn manu glass used by windows manu

There are currently no professional certifications available for those who wish to pursue careers in management accounting

FALSE

Accounting systems often provide parallel monitoring capabilities to serve the information needs of internal parties and external parties

TRUE

If the levels of finished goods and work in process inventories are increasing, the amount of product cost deducted from revenue during the period will be less than the amount of product costs incurred

TRUE

Materials inventory refers to the direct materials on hand and available for use in the manufacturing process

TRUE

Product costs associated with work in process and unsold inventories of finished goods appear in the balance sheet as current assets until the goods are sold

TRUE

Some costs, such as property taxes, should be allocated between manufacturing overhead and operating expenses

TRUE

The Work in Process Inventory account reports only the cost of partially completed products at year-end

TRUE

XX (not manu costs)

property taxes wages of sales manger

The direct labor account is debited

At the end of each payroll period to record direct labor costs incurred during the period

the cost of finished goods manufactured is computed as follows

Beg WIP + DM used, DL, and manufacturing overhead - ending WIP

More and more organizations are sharing info by participating in and undertaking ___

Bench Marking studies

The two exam sponsored by the Institute of Certified Management Accounts are the:

CMA and CFM

A manufacturing company usually has three separate inventories: materials, manufacturing supplies, and finished goods

FALSE

All costs and expenses incurred by a manufacturing company are considered product costs rather than period costs

FALSE

An inventory of finished goods is an asset, but inventories of raw materials and work in process are not considered assets until production is completed

FALSE

Costs incurred to store and to ship finished products are considered product costs

FALSE

Management accounting reports should presented in accordance with generally accepted accounting principles

FALSE

Managers are rarely assigned decision-making authority over a firm's assets

FALSE

Product costs are all deducted from revenue in the period in which they are incurred

FALSE

The linked set of activities and resources necessary to create and deliver products or services to customers is referred to as benchmarking activities

FALSE

The schedule of the cost of finished goods manufactured is a required financial statement for manufacturing companies.

FALSE

A ___ is the linked set of activities and resources necessary to create and deliver products or services to customers

value chain

Users of Management accounting reports would include:

A sales manager

units in production the are not yet completed nor available for sale

WIP inventory

Raw materials that become an integral part of manufactured goods and can be traced directly to finished goods

DM

As specific units are completed, the costs of manufacturing them is transferred by ___ the Finished Goods Inventory account and __ the Work in Process Inventory account.

Debiting Crediting

A machine operator's salary would be accounting for the __ account, while the salary of a production supervisor would be accounted for in the ___.

Direct Labor Manufacturing Overhead

The term ___ refers to integral materials and component parts that can be directly traced to finished products. Materials on hand and available for use at the end of the period are represented by the balance in the ___ account.

Direct Materials. Materials Inventory

Materials Inventory account is credited when

Direct materials are placed into production

The major classifications of manufacturing costs are ___, ____, _____.

Direct materials, Direct labor, Manufacturing Overhead.

Direct materials are those raw materials that become an integral part of finished products such as nails, glue, and lubricating oil

FALSE

Manufacturing companies do not use perpetual inventory systems because such systems do not parallel the physical flow of goods through the production process

FALSE

Manufacturing costs are regarded as period costs and are reported in the income statement for the current period

FALSE

Selling, general, and administrative expenses are all examples of product costs

FALSE

The wages paid to supervisors are an example of direct labor

FALSE

Manufacturing costs would not include:

Income tax expense

Which of the following is not likely to be treated as a product cost?

Interest paid on bonds payable

Management accounting info is used primalry by ___ to asset them in making business decisions.

Managers

a category including all manufacturing costs other than the costs of DM and DL

Manu OH

Each of the following statements is true with respect to product costs except:

Product costs are deducted from revenue when the manufacturing process is completed

Manufacturing costs are the costs of creating inventory and are termed ____. Costs that are charged directly to expense accounts are termed _____. Products costs are transferred from the balance sheet to the ____ when the goods are sold.

Product costs. Period costs. Income Statement.

In a merchandising company, the cost of goods sold is based upon the cost of __ merchandise for resale. In a manufacturing company, it is based on the costs of ___ these products

Purchasing Manufacturing

Manufacturing overhead includes all manufacturing costs except direct labor and direct materials

TRUE

Product costs are the costs of purchasing or manufacturing inventory and represent assets until the goods are sold

TRUE

Turner Corporation produces kitchen cabinets

decorative knobs for the drawers

Which is of the following is not one of the three principles that govern the design of a management accounting system?

determining a market value

the costs of purchasing or manufacturing inventory that represent an asset until the related inventory is sold

product costs

MANU OH (MO)

wage of plant supervisor electricity used in factory operations property taxes on factory buildings depreciation on factory machinery glue used by a furniture manu