TRUE/FALSE

1. Accounting is an information system that provides essential data about the economic activities of an entity to various users to aid them in making informed judgments and decisions.

2. Managerial accounting reports are prepared according to generally accepted accounting principles.

3. Managerial accounting information includes both historical and estimated data.

4. Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change.

5. A diagram of the operating structure of an organization is called an organization chart.

6. In most business organizations, the chief accountant is called the treasurer.

7. In most business organizations, the chief accountant is called the controller.

8. A staff department or unit is one that provides services, assistance, and advice to the departments with line or other staff responsibilities.

9. The vice presidents of production and sales and the controller hold line positions in most large organizations.

10. A staff department has no direct authority over a line department.

11. The controller's staff consists of management accountants responsible for systems and procedures, general accounting, budgets, taxes, and cost accounting.

12. Managerial accounting reports must be useful to the user of the information.

13. Planning is the process of monitoring operating results and comparing actual results with the expected results.

14. Planning is the process of developing the companys objectives or goals and translating these objectives into courses of action.

15. Control is the process of monitoring operating results and comparing actual results with the expected results.

16. Managerial accounting provides useful information to managers on product costs.

17. The payment of dividends is an example of a cost.

18. A cost can be a payment of cash for the purpose of generating revenues.

19. The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead cost.

20. The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.

21. The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.

22. If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct materials cost.

23. For a construction contractor, the wages of carpenters would be classified as factory overhead cost.

24. For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.

25. Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as factory overhead cost.

26. Depreciation on factory plant and equipment is an example of factory overhead cost.

27. Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.

28. If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead cost.

29. Factory overhead cost is sometimes referred to as factory burden.

30. Conversion cost is the combination of direct labor cost and factory overhead cost.

31. Conversion cost is the combination of direct materials cost and factory overhead cost.

32. Factory overhead is an example of a product cost.

33. Direct labor costs are included in the conversion costs of a product.

34. The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.

35. The costs of materials and labor that do not enter directly into the finished product are classified as cost of goods sold. tty

36. Indirect labor would be included in factory overhead.

37. A cost object indicates how costs are related or identified.

38. Direct costs can be specifically traced to a cost object.

39. Indirect costs can be specifically identified to a cost object.

40. Non-manufacturing costs are classified into two categories: selling and administrative.

41. Prime costs are the combination of direct labor costs and factory overhead costs.

42. Prime costs are the combination of direct materials and direct labor costs.

43. Conversion costs are the combination of direct labor, direct material and factory overhead costs.

44. Product costs are also referred to as inventoriable costs.

45. Period costs include direct materials and direct labor.

46. Period costs can be found in the balance sheet or in the income statement.

47. On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead are categorized as either materials inventory, work in process inventory, or finished goods inventory.

48. Only the value of the inventory that is sold will appear in the income statement.

49. The statement of cost of goods manufactured is an extension of the income statement for a manufacturing company.

50. Managers use managerial information to evaluate performance of a companys operation.

51. Managerial information is for external as well as internal stakeholders.

52. A report analyzing how many products need to be sold to cover operating costs is not typically a managerial accounting report.

53. A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial accounting report.

54. A performance report that identifies the amount of employee downtime is a financial accounting report.

55. Controlling deals with choosing goals and deciding how to achieve them.

56. Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials inventory.

57. Manufacturers use labor, plant, and equipment to convert direct materials into finished products.

58. Product costs are not expensed until the product is sold.

59. The plant managers salary in a manufacturing business would be considered an indirect cost.

60. Operating expenses are product costs and are expensed when the product is sold.

61. Period costs are operating costs that are expensed in the period in which the goods are sold.

62. Factory overhead includes all manufacturing costs except direct materials and direct labor.

63. Labor costs that are directly traceable to the product are part of factory overhead.

64. Product costs include direct labor and advertising expense.

65. Indirect labor and indirect materials would be part of factory overhead.

66. Prime costs consist of factory overhead and direct labor.

67. Conversion costs consist of product costs and period costs.

68. Prime costs consists of direct materials, indirect materials, and direct labor.

69. Managerial accounting uses only past data in reports to aid management in the decision making process.