Chapters 1 + (15 financial accounting) Exam verified solutions and explanations.

Chapters 1 + (15 financial accounting) Exam verified solutions and explanations Managerial Accounting - Correct Answers: The field of accounting that focuses on providing information for internal decision makers How much money should the business budget for the production? Should the business expand to a new location? How do actual cost compared to budgeted cost? - Correct Answers: The decision making questions that managerial accountants ask Generally excepted accounting principles (GAAP) Accounting guidelines, currently formulated by the financial accounting standards board (FASB); the main US accounting rulebook - Correct Answers: What is GAAAP? An organization that stands apart as a separate economic unit - Correct Answers: What is economic entity assumption? Sole proprietorship, partnership, corporation, or limited—liability company (LLC) - Correct Answers: A business can be organized as a... D. its employees to plan, direct and control operations - Correct Answers: Managerial accounting information for a company is primarily used by A. its investors to make their investment decisions B. its customers to understand the pricing of the product C. its creditors to understand the credibility of the business D. its employees to plan, direct and control operations C. Organizational chart - Correct Answers: _______ shows the relationship between departments and divisions and managers responsible for each section A. Treasurer's chart B. Controllers chart C. Organizational chart D. Board of Directors chart C. integrity - Correct Answers: Refraining from engaging in any conduct that would prejudice carrying out of duties ethically is acting in accordance with which ethical professional practice? A. confidentiality B. objectivity C. integrity D. competence B. a car dealership - Correct Answers: Which of the following is most likely a merchandising company? A. an accounting firm B. a car dealership C. a law firm D. a doctor's office C. Raw Materials Inventory - Correct Answers: A manufacturing company uses labor, equipment, supplies, and facilities to convert ___________ into finished products. A. Manufacturing Overhead B. Work−in−Process Inventory C. Raw Materials Inventory D. Finished Goods Inventory B. wages of the assembly line staff - Correct Answers: Which of the following would be considered a direct labor cost for a manufacturing company? A. wages of the factory manager B. wages of the assembly line staff C. salaries of the internal auditors D. wages of the factory janitors D. $309,000 - Correct Answers: Mars Supplies Company provided the following information for the year: Beginning Balance—Work−in−Process Inventory $ 28,000 Ending Balance—Work−in−Process Inventory 57,000 Beginning Balance— Direct Materials Inventory 82,000 Ending Balance— Direct Materials Inventory 61,000 Purchases — Direct Materials 356,000 Direct Labor 472,000 Indirect Labor 19,000 Depreciation on Factory Plant and Equipment 22,000 Plant Utilities and Insurance 268,000 What was the amount of the manufacturing overhead costs? A. $290,000 B. $41,000 C. $491,000 D. $309,000 D. prime costs - Correct Answers: Which of the following represents the combined sum of direct materials costs and direct labor costs? A. conversion costs B. fixed costs C. period costs D. prime costs D. $485,070 - Correct Answers: The following information was obtained from Durand, Inc.: Advertising Costs $11,200 Indirect Labor 7,000 CEO's Salary 450,000 Direct Labor 52,000 Indirect Materials Used 7,500 Direct Materials Used 400,000 Factory Utilities 880 Factory Janitorial Costs 2,000 Manufacturing Equipment Depreciation 1,100 Delivery Vehicle Depreciation 1,470 Administrative Wages and Salaries 22,400 How much were Durand's period costs? A. $470,480 B. $12,670 C. $483,600 D. $485,070 D. $89,280 - Correct Answers: The following information was obtained from Johnson Manufacturing, Inc.: Advertising Costs $12,500 Indirect Labor 76,000 CEO's Salary 730,000 Direct Labor 56,000 Indirect Materials Used 7,300 Direct Materials Used 61,000 Factory Utilities 180 Factory Janitorial Costs 2,700 Manufacturing Equipment Depreciation 3,100 Delivery Vehicle Depreciation 1,900 Administrative Wages and Salaries 23,000 Calculate Smith Manufacturing's manufacturing overhead costs. A. $208,180 B. $98,680 C. $767,400 D. $89,280 C. with a competing company - Correct Answers: To accurately determine the financial performance of a company, it is necessary to compare the company's performance ________. A. with companies in different industries B. only with profitable companies C. with a competing company D. to the budget C. financial statement analysis - Correct Answers: There are three main ways to analyze financial statements. Which of the following does NOT represent one of these ways of analyzing financial statements? A. vertical analysis B. horizontal analysis C. financial statement analysis D. ratio analysis C. discuss the company's competitors and the risks related to the company's business - Correct Answers: Annual reports ________. A. are required to be prepared by every corporation B. are also called a Form 10−Q C. discuss the company's competitors and the risks related to the company's business D. only include the company's financial statements C. a decrease of 12.31% - Correct Answers: Net Sales Revenue for 2024 was $130,000 and for 2025 was $114,000. What is the percentage of increase or decrease in Net Sales Revenue for the two periods? A. a decrease of 14.04% B. an increase of 12.31% C. a decrease of 12.31% D. an increase of 14.04% B. a decrease of 21.74% - Correct Answers: Cash for 2024 was $230,000 and for 2025 was $180,000. What is the percentage of increase or decrease in Cash for the two periods? A. a decrease of 27.78% B. a decrease of 21.74% C. an increase of 21.74% D. an increase of 27.78% A. 20.4% higher - Correct Answers: The trend analysis report of Minshell, Inc. is given below (in millions): 2025 Total Liabilities $177 2024 Total Liabilities $301 2023 Total Liabilities $556 2022 Total Liabilities $507 2021 Total Liabilities $250 Using 2021 as the base year, total liabilities in 2024 is __________. A. 20.4% higher B. 17% higher C. 17% lower D. 20.4% lower D. 63.46% - Correct Answers: Danby, Inc. provides the following data from its income statement for 2024: Net Sales $520,000 Cost of Goods Sold (190,000) Gross Profit $330,000 Calculate the gross profit percentage. (Round your answer to two decimal places.) A. 36.54% B. 100% C. 17.37% D. 63.46% beginning balance + additions (add one) - ending balance = amount used, manufactured, or sold - Correct Answers: formula to find amount used, manufactured, or sold planning, directing, & controlling planning - choosing goals & developing plans to achieve them directing - running day by day operations controlling - monitoring activities, measuring performance, & making corrections when needed - Correct Answers: three primary managerial functions the inventory (manufacturing firms) - Correct Answers: what's the primary difference between a manufacturing firm (coca-cola) & a service based firm (law firm) Cost - the expense incurred for making a product or service that is sold by a company Price - the amount a customer is willing to pay for a product or service - Correct Answers: Cost vs prime Raw material, work in progress, & finished goods - Correct Answers: Three types of inventory Current assets - current liabilities - Correct Answers: Working capital formula Current assets / current liabilities - Correct Answers: Current ratio formula Current assets - inventory & prepaids / current liabilities - Correct Answers: Acid-test (quick) ratio formula cash + cash equivalents / current liabilities - Correct Answers: Cash ratio formula Net credit sales / average net accounts receivable - Correct Answers: Accounts receivable turnover formula 365 / accounts receivable turnover - Correct Answers: Days sales in receivables formula Cost of goods sold / average inventory - Correct Answers: Inventory turnover formula 365 / inventory turnover - Correct Answers: Days sales in inventory formula Includes materials used to make a product - Correct Answers: What's raw material (RM) Includes goods that are in the manufacturing process, but are not yet complete - Correct Answers: What's work in process (WIP) Includes completed goods that have not yet been sold - Correct Answers: What's finished goods (FG) A cost that can be easily and cost effectively traced to a cost object - Correct Answers: What's direct cost Anything for which managers want a separate measurement of cost and may be a product, department, sales territory, or activity - Correct Answers: What's a cost object Costs that cannot be easily or cost effectively traced directly to a cost object - Correct Answers: What's indirect cost The costs of raw materials that are converted into the finished product and are easily trade to the product - Correct Answers: What's direct material (DM) The cost of wages and salaries of employees, who convert the raw materials into the finished product - Correct Answers: What's direct labor (DL) Refers to indirect manufacturing costs that cannot be easily traced to specific products - Correct Answers: Whats manufacturing overhead (MOH) The cost of raw materials that are difficult or not cost-effective to trace directly to the product - Correct Answers: What's indirect materials Includes the cost of wages and salaries in the factory for persons not directly producing the product - Correct Answers: What's indirect labor Combine the direct costs: direct materials and direct labor - Correct Answers: What's prime cost Combine direct labor with manufacturing overhead - Correct Answers: What's conversion costs Include the costs of purchasing or making a product (examples: direct materials, direct labor, and manufacturing overhead) - Correct Answers: What's product cost Are non-manufacturing costs (selling and administrative expenses and other expenses such as taxes and interest) - Correct Answers: What's period cost Product: direct material Product: prime - Correct Answers: Metal used for rims Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Period: selling - Correct Answers: Sales salaries Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Product: moh Product: conversion - Correct Answers: Rent on factory Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Product: dl Product: prime and conversion - Correct Answers: Wages of assembly workers Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Product: moh Product: conversion - Correct Answers: Salary of production supervisor Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Period: administrative - Correct Answers: Depreciation on office equipment Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Period: administrative - Correct Answers: Salary of ceo Product: dm, dl, moh Product: prime or conversion Period: selling or admin. Period: selling - Correct Answers: Delivery expense Product: dm, dl, moh Product: prime or conversion Period: selling or admin.