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Map 3rd Chapter 1
Map 3rd Chapter 1
b. False
Correct answer is b. Managerial and financial accounting uses the same accounting
information systems.
Management accounting concepts, such as cost management, job order costing and process
costing, provide a foundation to then analyze the costs of making a product or service.
A cost is a broad term used in cost and managerial accounting to define the value paid for
either an asset or an expense. For a merchandising business, the cost of a product is simply the
price the business paid to the supplier
in order to purchase and receive the product.
Company E-Furniture, Inc. Pine Furniture Manufacturer, Inc. Morton & Gallow, CPAs, LLC
Unit one Classic Chair one Classic Chair one audit program completed
c. Manufacturing
Correct answer is c. The manufacturing phase includes all the activities required to produce the
goods.
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Copyright © 2018 AME Learning Inc. 39
What type of costs does manufacturing overhead include?
b. Materials that are not easily traced to a product
Correct answers is b. Manufacturing overhead includes all indirect manufacturing costs such
as indirect materials, salaries paid to indirect labor, rental fees for the plant and depreciation of
machinery.
Merchandising companies begin each period (day, week, month, year) with the inventory that
was there at the end of the last period.
An easy way to remember this formula is to remember the word “BASE”: Beginning
inventory, Add purchases, Subtract COGS, equals Ending inventory.
Manufacturing Company
A manufacturing company must prepare a schedule of cost of goods manufactured before it
can prepare its operating income statement. A schedule of cost of goods manufactured is used
to determine the total cost of goods that were completed during the period. Here is an example
of Manufacturing Company.
Service Company
Morton & Gallow, CPAs is neither a merchandiser nor a manufacturer—it is a service provider.
As a result, it does not purchase or produce physical inventory; however, the business records
its costs in an accounting system so that it can bill its clients for the services rendered.
Internal and external stakeholders place significant trust in the accuracy of financial records to
enable them to make informed decisions about a business. Management accountants are
primarily responsible for internal stakeholders and must prepare accounting information
legally and ethically. IMA is a worldwide association for accounting and financial
professionals. It awards the Certified Management Accountant (CMA) designation. Part of
IMA’s objective is to ensure that professionals are properly qualified and ethically sound to
work in businesses.
d. Recognition
Correct answer is d. The 4Rs are Reputations, Relationships, Reduced Costs and Risks
Managed.