Accounting 320 Exam 1 Chap. 1,2,4,10,18, 5

Front 1

Financial Accounting

Back 1

focuses on reporting financial info to external parties such as investors, government agencies, etc. based on GAAP

Front 2

Management accounting

Back 2

the process of measuring analyzing and reporting financial and non financial info that helps managers make decisions to fulfill goals of an organization.

Front 3

Cost Accounting

Back 3

measuring, analyzing, and reporting financial and non financial info related to the costs of acquiring or using resources in an organization

Front 4

Strategy

Back 4

specifies how an organization matches its capabilities with the opportunities in the market place

Front 5

Value Chain

Back 5

sequence of business functions by which a product is made progressively more useful to customers

Front 6

What are the 6 primary business functions that add value to the value chain?

Back 6

1) R&D

2) Design of products and processes

3) Production

4) Marketing

5) Distribution

6) Customer Service

Front 7

Customer Relationship Management (CRM)

Back 7

a strategy that integrates people and technology in all business functions to deepen relationships with customers, partners, and distributors

Front 8

What are the 5 key success factors for a supply chain?

Back 8

1) cost and efficiency

2) Quality

3) time

4) Innovation

5) Sustainability

Front 9

What is the 5 step decision making Process

Back 9

1) Identify the problem

2) Obtain Info

3) Make predictions about the future

4) Make decisions by choosing among alternatives

5) Implement the decision, evaluate performance, and learn

Front 10

What is the most important planning tool when implementing strategy?

Back 10

budget

Front 11

Planning

Back 11

setting goals, predicting results under alternatives, deciding course of action, and communicating goals and courses of action to the organization.

Front 12

Control

Back 12

implementing planning decisions, performance evaluation and feedback/learning

Front 13

Learning

Back 13

examining past performance and exploring alternatives for future improvement

Front 14

what links planning and control?

Back 14

learning

Front 15

What are the key management accounting guidelines?

Back 15

1) cost-benefit approach

2) Behavioral and technical considerations

3) Different cost for different purposes

Front 16

Cost benefit approach

Back 16

benefits should exceed costs

Front 17

Behavioral and technical considerations

Back 17

help managers make wise economic decisions by providing desired info. Motivate managers and employees to attain goals and do jobs better

Front 18

Chief Financial Officer

Back 18

executive responsible for overseeing the financial operations of an organization. Responsibilities: Controllership, treasury, risk management, taxation, investor relations, and strategic planning.

Front 19

Controller

Back 19

the financial executive primarily responsible for management accounting and financial accounting

Front 20

What other things must management accountants do?

Back 20

work in cross-functional teams, fact-based analysis and critical judgements, lead and motivate people to change and be innovative, communicate clearly/openly/candidly, and have a strong sense of integrity

Front 21

What does IMA stand for?

Back 21

Institute of Management Accountants

Front 22

What are IMA's overarching ethical principals?

Back 22

1) Honesty

2) Fairness

3) Objectivity

4) responsibility

Front 23

What are the IMA's four standards for management and financial accounting?

Back 23

1) Competence

2) Confidentiality

3) Integrity

4) Credibility

Front 24

Competence

Back 24

continualy educate themselves and learn, follow laws, provide timely and accurate info, recognize constraints

Front 25

Confidentialty

Back 25

keep info confidential except when legally required, inform all relevant parties, don't use info unethically

Front 26

Integrity

Back 26

regularly communicate to eliminate conflict, don't carry out unethical duties, don't do activities that would discredit profession

Front 27

Credibility

Back 27

communicate info fairly, disclose all info that could influence a user's understanding, disclose delays or deficiencies in info

Front 28

What steps should an accountant take if established written policies provide insufficient guidance on how to handle an ethical conflict?

Back 28

1) discuss with supervisor

2) talk with an IMA counsler

3) consult an attourney

Front 29

Cost

Back 29

resource sacrificed or forgone to achieve specific objective

Front 30

cost object

Back 30

anything for which separate cost measurement is desired

Front 31

cost accumulation

Back 31

collection of cost data in some organized way by using accounting system. accumulated costs are then assigned to cost objects

Front 32

What does cost tracing deal with?

Back 32

direct costs

Front 33

What doe cost allocation deal with?

Back 33

indirect costs

Front 34

What are managers more confident in accuracy of direct or indirect costs?

Back 34

direct

Front 35

What factors affect direct and indirect classification?

Back 35

materiality, available info-gathering technology, design of operations

Front 36

When dealing with total costs and until costs what do you use more cautiously?

Back 36

unit costs

Front 37

What does classification of direct and indirect costs depend on?

Back 37

the cost object

Front 38

Variable costs

Back 38

changes in total proportion to change in activity; costs per unit stays the same

Front 39

fixed costs

Back 39

remains unchanged in total over changes in activity; Cost per unit changes inversely

Front 40

cost driver

Back 40

factor that has a cause and effect relationship with total cost

Front 41

relevant range

Back 41

range of activity over which relationship remains valid

Front 42

Inventoriable Costs

Back 42

all costs of a product that are considered assets in a company's balance sheet when the costs are incurred and that are expensed as cost of goods sold only when the product is sold

Front 43

Period Costs

Back 43

all costs in the income statement other than Cost of Goods Sold, expensed in the period incurred

Front 44

Gross Margin

Back 44

revenue- CGS

Front 45

Operating Income

Back 45

gross margin- period costs

Front 46

Costs of Goods Manufactured

Back 46

(DM used+ DL+MOH)+ Beginning WIP- Ending WIP

Front 47

DM used

Back 47

Beginning DM+ Purchases- Ending DM

Front 48

Costs of Goods Sold

Back 48

Beginning Finished Goods+ Costs of Goods Manufactured - Ending Finished Goods

Front 49

Prime Costs

Back 49

all direct manufacturing costs;

= DM + DL

Front 50

Conversion Costs

Back 50

all manufacturing costs there than DM costs;

= DL+ MOH

Front 51

mixed costs

Back 51

both variable and fixed costs; total cost increases while unit costs decreases

Front 52

All costs that have to deal with the ____ function are considered inventorial. Ex._____

Back 52

Manufactoring; DM, DL MOH

Front 53

For overtime when do you put it in direct costs and when in indirect costs?

Back 53

direct cost if CAUSED by that particular job; indirect costs if due to heavy work load (included in MOH)

Front 54

Where do you put idle time?

Back 54

indirect cost in MOH

Front 55

Pay Rate: $15

Hours Worked: 46

Idle Time: 2

Assume a 40 hour work week, what is an indirect cost and direct costs?

Back 55

Direct: 44X$15= 660

Indirect: 2X $15

6X$7.5 = 75

Front 56

What assumptions are made when using thew costs function?

Back 56

variations in total coast of the cost object explained by variations in level of single activity; cost behavior approx. by linear (straight line) cost function within relevant range.

Front 57

What does everything mean in y=a+bX?

Back 57

y= dependent variable (total cost)

a= intercept or constant (fixed cost

b= slope coefficient (variable cost per unit of activity)

X= independent variable (level of activity)

bX= total variable cost

Front 58

What are the 4 cost estimation methods?

Back 58

1) Industrial engineering Method

2) Conference Method

3) Account Analysis Method

4) Qualitative Analysis Method

Front 59

Industrial Engineering Method

Back 59

AKA work-measurement; analyzes relationships between inputs and outputs in physical terms; very thorough and detailed, time consuming

Front 60

Conference Method

Back 60

estimates cost function based off of analysis and opinions about costs and their drivers gathered from various departments; interdepartmental cooperations

Front 61

Account Analysis Method

Back 61

classifies various cost accounts as a variable, fixed, or mixed in regard to the level of activity; cost effective and accurate

Front 62

Qualitative Analysis Method

Back 62

formal math method to fit cost function to past data observations

Front 63

High-low Method

Back 63

= Change in Y (independent variable)/ change in X (dependent variable)

Front 64

What is the criteria for comparing cost drivers

Back 64

1) Economic plausibility

2) Goodness of Fit

3) Significance of Independent Variable

Front 65

Economic Plausibility

Back 65

does it make sense that there should be a relationship?

Front 66

Goodness of Fit

Back 66

Coefficient Determination r^2 and rand of r^2 from 0 to 1

Front 67

What does r^2 measure?

Back 67

the percentage of variation in Y explained by X

Front 68

Significance of independent variables

Back 68

t-value of the b coefficient greater than 2

Front 69

Cumulative average-time Learning Model

Back 69

cumulative average time per unit declines by a constant percentage each time the cumulative quantity of units produced doubles;

y=aX^b

Front 70

What does everything mean in y=aX^b

Back 70

y= cumulative average time per unit

a= time for first unit

X= total units produced

b= factor for learning (percentage)

Front 71

When using the cumulative average time model, how do you find the individual unit time for the Xth unit?

Back 71

take the cumulative total time from the previous on and subtract the current one.

Front 72

Learning Curve

Back 72

a function that measures how labor hours per unit decline as units of production increase because workers are learning and becoming better at their jobs

Front 73

Experience Curve

Back 73

measures the decline in the cost per unit of these various business functions (marketing, distributions, etc.) as the amount of these activities increases

Front 74

What does a higher learning curve percentage mean? what about a lower one?

Back 74

high percentage means slow learning, whereas low percentage means quick learning

Front 75

What are the advantages of the high-low method?

Back 75

It is easy to use and understand

Front 76

What are the disadvantages of the high-low method?

Back 76

may not be representative of the relationship between the cost and cost driver.

Front 77

What are the advantages of the regression method?

Back 77

it considers all observations

Front 78

What are the disadvantages of the regression method?

Back 78

it is complicated to use and understand.

Front 79

Spoilage

Back 79

units of production fully or partially completed, that don't meet the specifications required by customers for good units and are discarded or sold at reduced prices

Front 80

Rework

Back 80

units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units

Front 81

Scrap

Back 81

residual material that results from manufacturing a product

Front 82

Normal Spoilage

Back 82

spoilage inherent in a particular production process

Front 83

Normal Spoilage Rate

Back 83

Units of normal spoilage/ good units complete

Front 84

Abnormal spoilage

Back 84

spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions; recorded as "Loss From Abnormal Spoilage"

Front 85

How do you journal normal spoilage attributional to a specific job?

Back 85

Dr. Materials Inventory

Cr. WIP (specific job)

Front 86

How do you journal normal spoilage common to all jobs?

Back 86

Dr. Materials Control (disposal value)

MOH Control

Cr. WIP (Total Cost)

Front 87

How do you journal abnormal spoilage?

Back 87

Dr. Materials Inventory (disposal Value)

Loss from Abnormal Spoilage

Cr. WIP(Total Cost)

Front 88

How do you journal normal rework attributable to a specific job?

Back 88

Dr. WIP(specific job)

Cr. Material Inventory

Wages Payable

MOH Allocated

Front 89

How do you journal normal Rework common to all jobs?

Back 89

Dr. MOH Control

Cr. Materials Inventory

Wages Payable

MOH Allocated

Front 90

How do you journal abnormal rework?

Back 90

Dr. Loss from Abnormal Rework

Cr. Materials Inventory

Wages Payable

MOH Allocated

Front 91

How do you journal an immaterial sale of scrap?

Back 91

Dr. Cash

Cr. Scrap Revenue

Front 92

How do you journal scrap attributable to a specific job at sale?

Back 92

Dr. Cash

Cr. WIP

Front 93

How do you journal scrap common to all jobs at sale?

Back 93

Dr. Cash

Cr. MOH Control

Front 94

When you do not sell scrap right away, what do you journal when the scrap is attributable to a specific job?

Back 94

Dr. Materials Inventory

Cr. WIP

Front 95

When you do not sell scrap right away, what journal do you do when the scrap is common to all jobs?

Back 95

Dr. Materials Inventory

Cr. MOH Control

Front 96

Once you sell scrap that was not immediately sold what do journal?

Back 96

Dr. cash

Cr. Materials Inventory

Front 97

What do you journal when the scrap is reused?

Back 97

Dr. Materials Inventory

Cr. MOH Control

Dr. WIP

Cr. Materials Inventory

Front 98

Product Undercosting

Back 98

a product consumes a high level of resources per unit but is reported to have a low cost per unit

Front 99

Product Overcosting

Back 99

a product consumes a low level of resources per unit but is reported to have a high cost per unit

Front 100

Product-cost Cross-subsidization

Back 100

if a company undercoats one of its products, it will overcast at least one of its other products and vise versa.

Front 101

Refined Costing System

Back 101

costing system that reduces the use of broad averages for assuming the cost of resources to cost objects and provides better measurements of the costs of indirect resources used by different cost objects no matter how differently various cost objects use indirect resources.

Front 102

Activity-Based Costing (ABC)

Back 102

refines a costing system by identifying individual activities as the fundamental cost objects

Front 103

Cost Hierarchy

Back 103

categorizes various activity cost pools on the basis of the different types of cost drivers, cost allocation bases, or different degrees of difficulty in determining cause and effect relationship.

Front 104

What are the 4 cost hierarchy categories?

Back 104

1) Output Unit Level

2) Batch Level

3) Product-Sustaining

4) Facility-Sustaining

Front 105

Output Unit-level Costs

Back 105

the costs of activities performed on each individual unit of a product or service

Front 106

Batch-Level Costs

Back 106

Costs of activities related to a group of units of a product or service rather than each individual unit of product or service

Front 107

Product Sustaining Costs

Back 107

costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced.

Front 108

Facility Sustaining Costs

Back 108

Costs of activities that managers can't take to individual products or services but that support the organization as a whole

Front 109

Activity-Based Management

Back 109

a method of management decision making that uses activity-based costing information to improve customer satisfaction and profitability