Managerial Accounting Flashcards
Question and answers verified to pass
2025/2026
Accounting - correct answer ✔the process of keeping the financial score for the entity
relevant cost: - correct answer ✔the cost that differs between two alternatives
sunk cost: - correct answer ✔cash already spent; irrelevant to decision making because cash does not
exist, does not effect anything we do
break even is when revenue equals - correct answer ✔cost
differential analysis: - correct answer ✔analyzing the difference between two alternatives.
Traceable Fixed Cost - correct answer ✔A fixed cost that is able to be traced back to some sort of cost
object or business segment
Common Fixed Cost - correct answer ✔A cost that cannot be traced back to a cost object or business
segment.
relevant range: - correct answer ✔range in which costs are linear
market price: - correct answer ✔price paid by willing buyer/seller
Pricing - correct answer ✔company needs to produce and get an adequate return
,cost plus pricing - correct answer ✔price is a markup on the cost (cost base + markup %)
Variable cost pricing does not cover FC, - correct answer ✔makes contribution to FC
importance of transfer pricing: - correct answer ✔allows manipulation and moving of profits to low tax
environments.
Financial Accounting vs Managerial Accounting - correct answer ✔Financial: external users of financial
statements; follow GAAP
Managerial: internal users; no GAAP
The Rule Makers - correct answer ✔SEC: Securities and Exchange Commission
IRS: Internal Revenue Service
FASB: Financial Accounting Standards Board
GAAS: Generally Accepted Auditing Standards
GAAP: Generally Accepted Accounting Principles
CPA: Certified Public Accountant
AICPA: American Institute of Certified Public Accountants
Controller: - correct answer ✔typically the top accounting person in a company
The Security and Exchange Act of 1934 - correct answer ✔created the Securities and Exchange
Commission (SEC)
authorized the SEC to set accounting rules
SEC delegated the rule to a private non-profit industry group
(now) FASB - Financial Accounting Standards Board
, Entity - correct answer ✔organizational element about which accounting information is collected
all costs are - correct answer ✔historical
Objectivity - correct answer ✔arm's length negotiation: arm's length transaction is to ensure that both
parties in the deal are acting in their own self interest and are not subject to any pressure or duress from
the other party. both parties are on equal footing.
Going Concern - correct answer ✔company will be around long enough to use up assets and pay all
liabilities
Revenue Recognition - correct answer ✔Earned: rendered goods and services
Recognized: expectation of payment
Matching: - correct answer ✔match expenses with revenue in the period they occur
Consistency: - correct answer ✔follow the same procedures each accounting period so can compare
financial statements
Conservatism: - correct answer ✔if multiple options exist, pick the least favorable
Materiality - correct answer ✔if you knew the fact, it could change your mind; 5% of something
Full Disclosure: - correct answer ✔"Full Monty" must disclose all relevant information
Assets: - correct answer ✔something of future economic value
Question and answers verified to pass
2025/2026
Accounting - correct answer ✔the process of keeping the financial score for the entity
relevant cost: - correct answer ✔the cost that differs between two alternatives
sunk cost: - correct answer ✔cash already spent; irrelevant to decision making because cash does not
exist, does not effect anything we do
break even is when revenue equals - correct answer ✔cost
differential analysis: - correct answer ✔analyzing the difference between two alternatives.
Traceable Fixed Cost - correct answer ✔A fixed cost that is able to be traced back to some sort of cost
object or business segment
Common Fixed Cost - correct answer ✔A cost that cannot be traced back to a cost object or business
segment.
relevant range: - correct answer ✔range in which costs are linear
market price: - correct answer ✔price paid by willing buyer/seller
Pricing - correct answer ✔company needs to produce and get an adequate return
,cost plus pricing - correct answer ✔price is a markup on the cost (cost base + markup %)
Variable cost pricing does not cover FC, - correct answer ✔makes contribution to FC
importance of transfer pricing: - correct answer ✔allows manipulation and moving of profits to low tax
environments.
Financial Accounting vs Managerial Accounting - correct answer ✔Financial: external users of financial
statements; follow GAAP
Managerial: internal users; no GAAP
The Rule Makers - correct answer ✔SEC: Securities and Exchange Commission
IRS: Internal Revenue Service
FASB: Financial Accounting Standards Board
GAAS: Generally Accepted Auditing Standards
GAAP: Generally Accepted Accounting Principles
CPA: Certified Public Accountant
AICPA: American Institute of Certified Public Accountants
Controller: - correct answer ✔typically the top accounting person in a company
The Security and Exchange Act of 1934 - correct answer ✔created the Securities and Exchange
Commission (SEC)
authorized the SEC to set accounting rules
SEC delegated the rule to a private non-profit industry group
(now) FASB - Financial Accounting Standards Board
, Entity - correct answer ✔organizational element about which accounting information is collected
all costs are - correct answer ✔historical
Objectivity - correct answer ✔arm's length negotiation: arm's length transaction is to ensure that both
parties in the deal are acting in their own self interest and are not subject to any pressure or duress from
the other party. both parties are on equal footing.
Going Concern - correct answer ✔company will be around long enough to use up assets and pay all
liabilities
Revenue Recognition - correct answer ✔Earned: rendered goods and services
Recognized: expectation of payment
Matching: - correct answer ✔match expenses with revenue in the period they occur
Consistency: - correct answer ✔follow the same procedures each accounting period so can compare
financial statements
Conservatism: - correct answer ✔if multiple options exist, pick the least favorable
Materiality - correct answer ✔if you knew the fact, it could change your mind; 5% of something
Full Disclosure: - correct answer ✔"Full Monty" must disclose all relevant information
Assets: - correct answer ✔something of future economic value
