BUS-A200 Chapter 10 An Introduction To Management
Accounting (Exam 2) Verified Answers (2025)!!
Ch. 10 Q1
What does the statement *"costs can be assets or expenses"* mean? - >>> CORRECT
ANSWER Q
A cost that has the *future economic potential to increase assets* is recorded as an
*asset*
(e.g. product cost of products purchased)
A cost that is *used in the process of earning revenue* is recorded as an *expense*
(e.g. administrative salaries, and product cost associated with products sold)
Ch. 10 Q2
What are some differences between financial and managerial accounting? - >>>
CORRECT ANSWER Q
*Financial accounting*...
deals with regulated, historical, financial information that pertains to the whole company
and is designed primarily to meet the information needs of outsiders.
*Managerial accounting*...
is concerned with unregulated financial, economic as well as physical data, which
pertains more to the sub-units of the organization, that is current and future oriented,
and that is designed primarily to meet the information needs of insiders
,Ch. 10 Q5
Why are the *salaries of production workers* accumulated in an inventory account
instead of being directly expenses on the income statement? - >>> CORRECT ANSWER
Q
The cash paid to production workers is not used to produce revenue but to produce
inventory.
The revenue is earned when the inventory is sold at which time the cost of salaries
associated with those products sold should be expensed.
Ch. 10 Q6
How do *product costs* affect the financial statements?
How does *classification of product costs* (as an asset vs. an expense affect net income?
- >>> CORRECT ANSWER Q
Product costs associated with goods that have not been sold are recorded in the
account called inventory.
Inventory cost is shown on the balance sheet as an asset.
, The amount of total assets and net income will be higher if a product cost is classified as
an asset.
Product cost associated with goods that have been sold should be recorded in the
account called cost of goods sold.
COGS is an expense shown on the income statement.
The amount of total assets and net income will be lower if a product cost is classified as
an expense as
opposed to being classified as an asset.
Ch. 10 Q7
What is an *indirect cost*?
Provide examples of product costs that would be classified as indirect. - >>> CORRECT
ANSWER Q
An indirect product cost is a cost that cannot be easily or economically traced to a
specific product.
Product costs that would be considered indirect include costs such as:
production supplies,
salaries of production supervisors, and
Accounting (Exam 2) Verified Answers (2025)!!
Ch. 10 Q1
What does the statement *"costs can be assets or expenses"* mean? - >>> CORRECT
ANSWER Q
A cost that has the *future economic potential to increase assets* is recorded as an
*asset*
(e.g. product cost of products purchased)
A cost that is *used in the process of earning revenue* is recorded as an *expense*
(e.g. administrative salaries, and product cost associated with products sold)
Ch. 10 Q2
What are some differences between financial and managerial accounting? - >>>
CORRECT ANSWER Q
*Financial accounting*...
deals with regulated, historical, financial information that pertains to the whole company
and is designed primarily to meet the information needs of outsiders.
*Managerial accounting*...
is concerned with unregulated financial, economic as well as physical data, which
pertains more to the sub-units of the organization, that is current and future oriented,
and that is designed primarily to meet the information needs of insiders
,Ch. 10 Q5
Why are the *salaries of production workers* accumulated in an inventory account
instead of being directly expenses on the income statement? - >>> CORRECT ANSWER
Q
The cash paid to production workers is not used to produce revenue but to produce
inventory.
The revenue is earned when the inventory is sold at which time the cost of salaries
associated with those products sold should be expensed.
Ch. 10 Q6
How do *product costs* affect the financial statements?
How does *classification of product costs* (as an asset vs. an expense affect net income?
- >>> CORRECT ANSWER Q
Product costs associated with goods that have not been sold are recorded in the
account called inventory.
Inventory cost is shown on the balance sheet as an asset.
, The amount of total assets and net income will be higher if a product cost is classified as
an asset.
Product cost associated with goods that have been sold should be recorded in the
account called cost of goods sold.
COGS is an expense shown on the income statement.
The amount of total assets and net income will be lower if a product cost is classified as
an expense as
opposed to being classified as an asset.
Ch. 10 Q7
What is an *indirect cost*?
Provide examples of product costs that would be classified as indirect. - >>> CORRECT
ANSWER Q
An indirect product cost is a cost that cannot be easily or economically traced to a
specific product.
Product costs that would be considered indirect include costs such as:
production supplies,
salaries of production supervisors, and
