ACG 2071 FSU SUDANO EXAM #1| Ques ons and
answers | Updated RATED A+
Characteris cs of financial accoun ng
1. The primary products are financial statements for external use
2. The users of informa on are external users (gov. regulators, lenders, stockholders)
3. The purpose of informa on is to help external users make inves ng and lending decisions
4. The repor ng format is GAAP
5. The focus of the informa on is historical
6. The characteris cs of the informa on are reliability, objec vity, and verifica on
7. The repor ng unit is the company as a whole
8. The informa on is a mandatory requirement of the SEC
Characteris cs of managerial accoun ng
1. The primary products are a variety of useful internal reports
2. The users of the informa on are internal users (managers)
3. The purpose of the informa on is to help managers with planning, controlling, and decision
making
4. The repor ng format does not need to follow GAAP
5. The focus of the informa on is futuris c
6. The characteris cs of the informa on are relevance and meliness
7. The repor ng units are segments/divisions of the company
8. The informa on is helpful but not required by any agency
Corporate Social Responsibility
A business's concern for society's welfare. A company's performance should be viewed in terms
of:
1. Profits (economic)
2. People (social)
3. Planet (environmental)
Service companies
Companies that sell and provide intangible services (healthcare, banking, insurance)
Merchandising companies
Companies that resell tangible products purchased from suppliers (Walmart, Publix, CVS)
, Manufacturing companies
Companies that convert raw materials into new finished products by using labor, plant, and
equipment (Toyota, Ben & Jerry's)
Direct costs
Costs that can easily be traced to the cost object. The direct cost is incurred solely because of
the cost object. (A football coach's salary can be easily traced to the cost of having a football
team)
Indirect costs
Costs that cannot be easily and accurately traced to the cost object. They are related to the cost
but not as clearly as a direct cost, so they must be allocated. (The cost of an athle c director or
shared training gym cannot be directly traced to the cost of having a football team)
Product costs
All costs that are involved in acquiring or producing a product. In the case of manufacturing
companies, these costs consist of direct materials, direct labor, and manufacturing overhead.
Period costs
All of the costs that are associated with the selling of products and administra on of the
business. They are taken directly to the income statement as expenses in the period in which
they are incurred or accrued. O=en referred to as opera ng or selling and administra ve
expenses.
Prime costs
Direct Materials + Direct Labor. The costs incurred to start the manufacturing process.
Conversion costs
direct labor + manufacturing overhead (costs to take direct materials and covert them to a
finished product).
Cost behavior
The way a cost "behaves" or reacts to changes in ac vity levels.
Fixed costs
Costs that remain constant in total regardless of changes in ac vity (rent, monthly franchise
fee). CommiBed if they cannot be changed in the short run, discre onary if they can be changed
in the short run.
answers | Updated RATED A+
Characteris cs of financial accoun ng
1. The primary products are financial statements for external use
2. The users of informa on are external users (gov. regulators, lenders, stockholders)
3. The purpose of informa on is to help external users make inves ng and lending decisions
4. The repor ng format is GAAP
5. The focus of the informa on is historical
6. The characteris cs of the informa on are reliability, objec vity, and verifica on
7. The repor ng unit is the company as a whole
8. The informa on is a mandatory requirement of the SEC
Characteris cs of managerial accoun ng
1. The primary products are a variety of useful internal reports
2. The users of the informa on are internal users (managers)
3. The purpose of the informa on is to help managers with planning, controlling, and decision
making
4. The repor ng format does not need to follow GAAP
5. The focus of the informa on is futuris c
6. The characteris cs of the informa on are relevance and meliness
7. The repor ng units are segments/divisions of the company
8. The informa on is helpful but not required by any agency
Corporate Social Responsibility
A business's concern for society's welfare. A company's performance should be viewed in terms
of:
1. Profits (economic)
2. People (social)
3. Planet (environmental)
Service companies
Companies that sell and provide intangible services (healthcare, banking, insurance)
Merchandising companies
Companies that resell tangible products purchased from suppliers (Walmart, Publix, CVS)
, Manufacturing companies
Companies that convert raw materials into new finished products by using labor, plant, and
equipment (Toyota, Ben & Jerry's)
Direct costs
Costs that can easily be traced to the cost object. The direct cost is incurred solely because of
the cost object. (A football coach's salary can be easily traced to the cost of having a football
team)
Indirect costs
Costs that cannot be easily and accurately traced to the cost object. They are related to the cost
but not as clearly as a direct cost, so they must be allocated. (The cost of an athle c director or
shared training gym cannot be directly traced to the cost of having a football team)
Product costs
All costs that are involved in acquiring or producing a product. In the case of manufacturing
companies, these costs consist of direct materials, direct labor, and manufacturing overhead.
Period costs
All of the costs that are associated with the selling of products and administra on of the
business. They are taken directly to the income statement as expenses in the period in which
they are incurred or accrued. O=en referred to as opera ng or selling and administra ve
expenses.
Prime costs
Direct Materials + Direct Labor. The costs incurred to start the manufacturing process.
Conversion costs
direct labor + manufacturing overhead (costs to take direct materials and covert them to a
finished product).
Cost behavior
The way a cost "behaves" or reacts to changes in ac vity levels.
Fixed costs
Costs that remain constant in total regardless of changes in ac vity (rent, monthly franchise
fee). CommiBed if they cannot be changed in the short run, discre onary if they can be changed
in the short run.
