CHAPTER 1
MANAGERIAL ACCOUNTING
Summary of Questions by Learning Objectives and Bloom’s Taxonomy
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
True-False Statements
sg
1. 1 C 9. 1 K 17. 2 C 25. 3 C 33. 2 C
sg
2. 1 K 10. 2 K 18. 2 K 26. 3 C 34. 2 K
sg
3. 1 K 11. 2 K 19. 2 K 27. 3 K 35. 2 K
sg
4. 1 K 12. 2 K 20. 2 K 28. 4 K 36. 3 K
sg
5. 1 K 13. 2 K 21. 3 K 29. 4 K 37. 3 K
6. 1 K 14. 2 C 22. 3 K 30. 4 K
sg
7. 1 C 15. 2 C 23. 3 K 31. 1 K
sg
8. 1 K 16. 2 K 24. 3 K 32. 1 K
Multiple Choice Questions
38. 1 K 61. 1 C 84. 2 AP 107. 3 AP 130. 3 AP
39. 1 C 62. 1 K 85. 2 C 108. 3 AP 131. 3 AP
40. 1 K 63. 1 C 86. 2 C 109. 3 AP 132. 3 AP
41. 1 C 64. 2 C 87. 2 C 110. 3 AP 133. 3 AP
42. 1 K 65. 2 K 88. 2 C 111. 3 AP 134. 3 C
43. 1 C 66. 2 C 89. 2 K 112. 3 AP 135. 3 C
44. 1 K 67. 2 K 90. 2 C 113. 3 AP 136. 4 C
45. 1 C 68. 2 K 91. 2 K 114. 3 AP 137. 4 K
46. 1 C 69. 2 K 92. 3 K 115. 3 AP 138. 4 K
47. 1 K 70. 2 C 93. 3 C 116. 3 AP 139. 4 C
48. 1 K 71. 2 C 94. 3 C 117. 3 AP 140. 4 K
49. 1 K 72. 2 K 95. 3 C 118. 3 AP 141. 4 K
sg
50. 1 K 73. 2 K 96. 3 C 119. 3 AP 142. 1 C
sg
51. 1 C 74. 2 C 97. 3 AP 120. 3 AP 143. 1 K
sg
52. 1 C 75. 2 K 98. 3 K 121. 3 AP 144. 2 K
sg
53. 1 K 76. 2 C 99. 3 C 122. 3 AP 145. 2 K
st
54. 1 K 77. 2 K 100. 3 C 123. 3 AP 146. 3 K
sg
55. 1 K 78. 2 K 101. 3 K 124. 3 AP 147. 3 C
st
56. 1 K 79. 2 C 102. 3 AP 125. 3 AP 148. 3 K
sg
57. 1 C 80. 2 K 103. 3 AP 126. 3 AP 149. 3 K
st
58. 1 K 81. 2 K 104. 3 AP 127. 3 AP 150. 3 K
sg
59. 1 C 82. 2 C 105. 3 K 128. 3 AP 151. 3 K
60. 1 K 83. 2 C 106. 3 AP 129. 3 AP
Brief Exercises
152. 2 K 154. 2 K 156. 2 C 158. 3 AP 160. 3 AP
153. 2 K 155. 2 K 157. 3 AP 159. 3 AP 161. 3 AP
,Exercises
162. 1 C 167. 2 AP 172. 3 AP 177. 3 AP 182. 3 AP
163. 2 C 168. 2 C 173. 3 AP 178. 3 AP 183. 3 AP
164. 2 C 169. 2 C 174. 3 AP 179. 3 AP 184. 3 C
165. 2 C 170. 3 AP 175. 2,3 AP 180. 3 AN 185. 3 AP
166. 2 AP 171. 3 C 176. 3 AN 181. 3 AN
Completion Statements
186. 1 K 189. 1 K 192. 2 K 195. 2 K 198. 3 K
187. 1 K 190. 1 K 193. 2 K 196. 3 K 199. 3 K
188. 1 K 191. 1 K 194. 2 K 197. 3 K 200. 3 K
Matching Statements
201. 1 K
Short-Answer Essay
202. 1 K 204. 2 K 206. 2 K 208. 2 K
203. 1 K 205. 2 K 207. 4 K
sg
This question also appears in the Study Guide.
st
This question also appears in a self-test at the student companion website.
SUMMARY OF Learning OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 8. TF 41. MC 48. MC 55. MC 62. MC 188. C
2. TF 9. TF 42. MC 49. MC 56. MC 63. MC 189. C
3. TF 31. TF 43. MC 50. MC 57. MC 142. MC 190. C
4. TF 32. TF 44. MC 51. MC 58. MC 143. MC 191. C
5. TF 38. MC 45. MC 52. MC 59. MC 162. Ex 201. MA
6. TF 39. MC 46. MC 53. MC 60. MC 186. C 202. SA
7. TF 40. MC 47. MC 54. MC 61. MC 187. C 203. SA
Learning Objective 2
10. TF 20. TF 71. MC 81. MC 91. MC 165. Ex 204. SA
11. TF 33. TF 72. MC 82. MC 144. MC 166. Ex 205. SA
12. TF 34. TF 73. MC 83. MC 145. MC 167. Ex 206. SA
13. TF 64. MC 74. MC 84. MC 152. BE 168. Ex 208. SA
, 14. TF 65. MC 75. MC 85. MC 153. BE 169. Ex
15. TF 66. MC 76. MC 86. MC 154. BE 175. Ex
16. TF 67. MC 77. MC 87. MC 155. BE 192. C
17. TF 68. MC 78. MC 88. MC 156. BE 193. C
18. TF 69. MC 79. MC 89. MC 163. Ex 194. C
19. TF 70. MC 80. MC 90. MC 164. Ex 195. C
Learning Objective 3
21. TF 95. MC 108. MC 121. MC 134. MC 170. Ex 183. Ex
22. TF 96. MC 109. MC 122. MC 135. MC 171. Ex 184. Ex
23. TF 97. MC 110. MC 123. MC 146. MC 172. Ex 185. Ex
24. TF 98. MC 111. MC 124. MC 147. MC 173. Ex 196. C
25. TF 99. MC 112. MC 125. MC 148. MC 174. Ex 197. C
26. TF 100. MC 113. MC 126. MC 149. MC 175. Ex 198. C
27. TF 101. MC 114. MC 127. MC 150. MC 176. Ex 199. C
35. TF 102. MC 115. MC 128. MC 151. MC 177. Ex 200. C
36. TF 103. MC 116. MC 129. MC 157. BE 178. Ex
37. TF 104. MC 117. MC 130. MC 158. BE 179. Ex
92. MC 105. MC 118. MC 131. MC 159. BE 180. Ex
93. MC 106. MC 119. MC 132. MC 160. BE 181. Ex
94. MC 107. MC 120. MC 133. MC 161. BE 182. Ex
Learning Objective 4
28. TF 30. TF 137. MC 139. MC 141. MC
29. TF 136. MC 138. MC 140. MC 207. SA
Note: TF = True-False BE = Brief Exercise C =
Completion
MC = Multiple Choice Ex = Exercise
, CHAPTER LEARNING OBJECTIVES
1. Identify the features of managerial accounting and the three functions of
management. The primary users of managerial accounting reports issued as
frequently as needed, are internal users, who are officers, department heads,
managers, and supervisors in the company. Managerial accounting issues internal
reports as frequently as the need arises. The purpose of these reports is to provide
special-purpose information for a particular user for a specific decision. The content
of managerial accounting reports pertains to subunits of the business. It may be very
detailed, and may extend beyond the double-entry accounting system. The reporting
standard is relevance to the decision being made. No independent audits are
required in managerial accounting. The three functions are planning, directing, and
controlling. Planning requires management to look ahead and to establish objectives.
Directing involves coordinating the diverse activities and human resources of a
company to produce a smooth-running operation. Controlling is the process of
keeping the activities on track.
2. Describe the three classes of manufacturing costs and differences between
product and period costs. Manufacturing costs are typically classified as either (1)
direct materials, (2) direct labor, or (3) manufacturing overhead. Raw materials that
can be physically and directly associated with the finished product during the
manufacturing process are called direct materials. The work of factory employees
that can be physically and directly associated with converting raw materials into
finished goods is considered direct labor. Manufacturing overhead consists of costs
that are indirectly associated with the manufacture of the finished product. Product
costs are costs that are a necessary and integral part of producing the finished
product. Product costs are also called inventoriable costs. Under the expense
recognition principle, these costs do not become expenses until the company sells
the finished goods inventory. Period costs are costs that are identified with a specific
time period rather than with a salable product. These costs relate to
nonmanufacturing costs and therefore are not inventoriable costs.
3. Demonstrate how to compute cost of goods manufactured and prepare
financial statements for a manufacturer. Companies add the cost of the beginning
work in process to the total manufacturing costs for the current year to arrive at the
total cost of work in process for the year. They then subtract the ending work in
process from the total cost of work in process to arrive at the cost of goods
manufactured. The difference between a merchandising and a manufacturing income
statement is in the cost of goods sold section. A manufacturing cost of goods sold
section shows beginning and ending finished goods inventories and the cost of
goods manufactured. The difference between a merchandising and a manufacturing
balance sheet is in the current assets section. The current assets section of a
MANAGERIAL ACCOUNTING
Summary of Questions by Learning Objectives and Bloom’s Taxonomy
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
True-False Statements
sg
1. 1 C 9. 1 K 17. 2 C 25. 3 C 33. 2 C
sg
2. 1 K 10. 2 K 18. 2 K 26. 3 C 34. 2 K
sg
3. 1 K 11. 2 K 19. 2 K 27. 3 K 35. 2 K
sg
4. 1 K 12. 2 K 20. 2 K 28. 4 K 36. 3 K
sg
5. 1 K 13. 2 K 21. 3 K 29. 4 K 37. 3 K
6. 1 K 14. 2 C 22. 3 K 30. 4 K
sg
7. 1 C 15. 2 C 23. 3 K 31. 1 K
sg
8. 1 K 16. 2 K 24. 3 K 32. 1 K
Multiple Choice Questions
38. 1 K 61. 1 C 84. 2 AP 107. 3 AP 130. 3 AP
39. 1 C 62. 1 K 85. 2 C 108. 3 AP 131. 3 AP
40. 1 K 63. 1 C 86. 2 C 109. 3 AP 132. 3 AP
41. 1 C 64. 2 C 87. 2 C 110. 3 AP 133. 3 AP
42. 1 K 65. 2 K 88. 2 C 111. 3 AP 134. 3 C
43. 1 C 66. 2 C 89. 2 K 112. 3 AP 135. 3 C
44. 1 K 67. 2 K 90. 2 C 113. 3 AP 136. 4 C
45. 1 C 68. 2 K 91. 2 K 114. 3 AP 137. 4 K
46. 1 C 69. 2 K 92. 3 K 115. 3 AP 138. 4 K
47. 1 K 70. 2 C 93. 3 C 116. 3 AP 139. 4 C
48. 1 K 71. 2 C 94. 3 C 117. 3 AP 140. 4 K
49. 1 K 72. 2 K 95. 3 C 118. 3 AP 141. 4 K
sg
50. 1 K 73. 2 K 96. 3 C 119. 3 AP 142. 1 C
sg
51. 1 C 74. 2 C 97. 3 AP 120. 3 AP 143. 1 K
sg
52. 1 C 75. 2 K 98. 3 K 121. 3 AP 144. 2 K
sg
53. 1 K 76. 2 C 99. 3 C 122. 3 AP 145. 2 K
st
54. 1 K 77. 2 K 100. 3 C 123. 3 AP 146. 3 K
sg
55. 1 K 78. 2 K 101. 3 K 124. 3 AP 147. 3 C
st
56. 1 K 79. 2 C 102. 3 AP 125. 3 AP 148. 3 K
sg
57. 1 C 80. 2 K 103. 3 AP 126. 3 AP 149. 3 K
st
58. 1 K 81. 2 K 104. 3 AP 127. 3 AP 150. 3 K
sg
59. 1 C 82. 2 C 105. 3 K 128. 3 AP 151. 3 K
60. 1 K 83. 2 C 106. 3 AP 129. 3 AP
Brief Exercises
152. 2 K 154. 2 K 156. 2 C 158. 3 AP 160. 3 AP
153. 2 K 155. 2 K 157. 3 AP 159. 3 AP 161. 3 AP
,Exercises
162. 1 C 167. 2 AP 172. 3 AP 177. 3 AP 182. 3 AP
163. 2 C 168. 2 C 173. 3 AP 178. 3 AP 183. 3 AP
164. 2 C 169. 2 C 174. 3 AP 179. 3 AP 184. 3 C
165. 2 C 170. 3 AP 175. 2,3 AP 180. 3 AN 185. 3 AP
166. 2 AP 171. 3 C 176. 3 AN 181. 3 AN
Completion Statements
186. 1 K 189. 1 K 192. 2 K 195. 2 K 198. 3 K
187. 1 K 190. 1 K 193. 2 K 196. 3 K 199. 3 K
188. 1 K 191. 1 K 194. 2 K 197. 3 K 200. 3 K
Matching Statements
201. 1 K
Short-Answer Essay
202. 1 K 204. 2 K 206. 2 K 208. 2 K
203. 1 K 205. 2 K 207. 4 K
sg
This question also appears in the Study Guide.
st
This question also appears in a self-test at the student companion website.
SUMMARY OF Learning OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 8. TF 41. MC 48. MC 55. MC 62. MC 188. C
2. TF 9. TF 42. MC 49. MC 56. MC 63. MC 189. C
3. TF 31. TF 43. MC 50. MC 57. MC 142. MC 190. C
4. TF 32. TF 44. MC 51. MC 58. MC 143. MC 191. C
5. TF 38. MC 45. MC 52. MC 59. MC 162. Ex 201. MA
6. TF 39. MC 46. MC 53. MC 60. MC 186. C 202. SA
7. TF 40. MC 47. MC 54. MC 61. MC 187. C 203. SA
Learning Objective 2
10. TF 20. TF 71. MC 81. MC 91. MC 165. Ex 204. SA
11. TF 33. TF 72. MC 82. MC 144. MC 166. Ex 205. SA
12. TF 34. TF 73. MC 83. MC 145. MC 167. Ex 206. SA
13. TF 64. MC 74. MC 84. MC 152. BE 168. Ex 208. SA
, 14. TF 65. MC 75. MC 85. MC 153. BE 169. Ex
15. TF 66. MC 76. MC 86. MC 154. BE 175. Ex
16. TF 67. MC 77. MC 87. MC 155. BE 192. C
17. TF 68. MC 78. MC 88. MC 156. BE 193. C
18. TF 69. MC 79. MC 89. MC 163. Ex 194. C
19. TF 70. MC 80. MC 90. MC 164. Ex 195. C
Learning Objective 3
21. TF 95. MC 108. MC 121. MC 134. MC 170. Ex 183. Ex
22. TF 96. MC 109. MC 122. MC 135. MC 171. Ex 184. Ex
23. TF 97. MC 110. MC 123. MC 146. MC 172. Ex 185. Ex
24. TF 98. MC 111. MC 124. MC 147. MC 173. Ex 196. C
25. TF 99. MC 112. MC 125. MC 148. MC 174. Ex 197. C
26. TF 100. MC 113. MC 126. MC 149. MC 175. Ex 198. C
27. TF 101. MC 114. MC 127. MC 150. MC 176. Ex 199. C
35. TF 102. MC 115. MC 128. MC 151. MC 177. Ex 200. C
36. TF 103. MC 116. MC 129. MC 157. BE 178. Ex
37. TF 104. MC 117. MC 130. MC 158. BE 179. Ex
92. MC 105. MC 118. MC 131. MC 159. BE 180. Ex
93. MC 106. MC 119. MC 132. MC 160. BE 181. Ex
94. MC 107. MC 120. MC 133. MC 161. BE 182. Ex
Learning Objective 4
28. TF 30. TF 137. MC 139. MC 141. MC
29. TF 136. MC 138. MC 140. MC 207. SA
Note: TF = True-False BE = Brief Exercise C =
Completion
MC = Multiple Choice Ex = Exercise
, CHAPTER LEARNING OBJECTIVES
1. Identify the features of managerial accounting and the three functions of
management. The primary users of managerial accounting reports issued as
frequently as needed, are internal users, who are officers, department heads,
managers, and supervisors in the company. Managerial accounting issues internal
reports as frequently as the need arises. The purpose of these reports is to provide
special-purpose information for a particular user for a specific decision. The content
of managerial accounting reports pertains to subunits of the business. It may be very
detailed, and may extend beyond the double-entry accounting system. The reporting
standard is relevance to the decision being made. No independent audits are
required in managerial accounting. The three functions are planning, directing, and
controlling. Planning requires management to look ahead and to establish objectives.
Directing involves coordinating the diverse activities and human resources of a
company to produce a smooth-running operation. Controlling is the process of
keeping the activities on track.
2. Describe the three classes of manufacturing costs and differences between
product and period costs. Manufacturing costs are typically classified as either (1)
direct materials, (2) direct labor, or (3) manufacturing overhead. Raw materials that
can be physically and directly associated with the finished product during the
manufacturing process are called direct materials. The work of factory employees
that can be physically and directly associated with converting raw materials into
finished goods is considered direct labor. Manufacturing overhead consists of costs
that are indirectly associated with the manufacture of the finished product. Product
costs are costs that are a necessary and integral part of producing the finished
product. Product costs are also called inventoriable costs. Under the expense
recognition principle, these costs do not become expenses until the company sells
the finished goods inventory. Period costs are costs that are identified with a specific
time period rather than with a salable product. These costs relate to
nonmanufacturing costs and therefore are not inventoriable costs.
3. Demonstrate how to compute cost of goods manufactured and prepare
financial statements for a manufacturer. Companies add the cost of the beginning
work in process to the total manufacturing costs for the current year to arrive at the
total cost of work in process for the year. They then subtract the ending work in
process from the total cost of work in process to arrive at the cost of goods
manufactured. The difference between a merchandising and a manufacturing income
statement is in the cost of goods sold section. A manufacturing cost of goods sold
section shows beginning and ending finished goods inventories and the cost of
goods manufactured. The difference between a merchandising and a manufacturing
balance sheet is in the current assets section. The current assets section of a
