ACCT 2000 M3 QUESTIONS WELL ANSWERED LATEST UPDATE 2026

ACCT 2000 M3 QUESTIONS WELL ANSWERED LATEST UPDATE 2026 Partnership - Answers An association of two or more persons to carry on as co-owners of a business for profit What are the advantages of a partnership? - Answers - Permits pooling of resources w/o complexities - Easier and less costly than a corp - Not subject to as much gov. regulation - Income not subject to taxation at a partnership level General Partnership - Answers partnership in which partners share equally in both responsibility and liability Limited Partnership - Answers A partnership with one or more general partners and one or more limited partners. What are the accounting issues related to partnerships? - Answers 1) Allocation of net income/loss to partners 2) Changes in ownership Capital account - Answers An account used to summarize the owner's equity in a business. When a new partner is admitted to a partnership and assets invested are EQUAL to the capital interest of the new partner, then the bonus goes to... - Answers No bonus When a new partner is admitted to a partnership and assets invested are GREATER THAN the capital interest of the new partner, then the bonus goes to... - Answers Bonus to EXISTING partners When a new partner is admitted to a partnership and assets invested are LESS THAN the capital interest of the new partner, then the bonus goes to... - Answers Bonus to NEW partner General Partnership- Mutual Agency - Answers one partner can bind other partners to a contract if he or she is acting within the general scope of the business General Partnership- Unlimited Liability - Answers the responsibility of business owners for all of the debts of the business Managerial Accounting - Answers Provides info for managers INSIDE an org who direct and control operations Financial Accounting - Answers Provides info to stakeholders, creditors, and others who are OUTSIDE the org Managerial Accounting look at issues from the perspective of a _________. - Answers Manufacturer What do MANUFACTURING COSTS consist of? - Answers 1) Direct Materials 2) Direct Labor 3) Manufacturing Overhead Direct Materials - Answers Raw materials that can be physically and directly associated with manufacturing the finished product. Direct Labor - Answers The work of factory employees that can be physically and directly associated with converting raw materials into finished goods Manufacturing Overhead - Answers All manufacturing costs other than direct materials and direct labor What are the 3 different types of Cost Behaviors? - Answers 1) Variable Cost 2) Fixed Cost 3) Mixed Cost Variable Cost - Answers a cost that rises or falls depending on how much is produced (ex: direct materials, direct labor) Fixed Cost - Answers Does not change when the volume of activity changes (ex: depreciation, rent, advertising) Mixed Cost - Answers contains both variable and fixed cost elements (ex: utilities, overhead) High-Low Method (Cost Behaviors) - Answers 1) Choose two data points, the high and low ACTIVITY LEVEL 2) Calculate the variable cost per unit = ($2 - $1)/(AL2 - AL1) *$ = cost *AL = activity level Contribution Income Statement Format - Answers Sales Revenue -Variable Costs =Contribution Margin -Fixed costs =Net Income Contribution Margin - Answers Represents the amount of revenue available to: 1) Pay fixed costs 2) Contribute toward a profit What 3 ways can the Contribution Margin be expressed? - Answers 1) Total Contribution Margin = Sales Rev - Variable Costs 2) Contribution Margin per Unit = Selling price per unit - Variable cost per unit 3) Contribution Margin Ratio = Contribution margin / sales rev OR CM per unit / Selling price per unit Cost-Volume-Profit Analysis - Answers a way of determining how revenues, costs, and profits behave (change) as the volume of activity changes Job Order Costing - Answers a costing system used in situations where many different products, jobs, or services are produced each period Indirect Labor - Answers The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products. Indirect Materials - Answers Materials used to support the production process (ex: cleaning supplies) Examples of Non-Manufacturing Costs - Answers 1. CEO's salary 2. Advertising 3. Commissions paid to salespeople 4. Utilities on the administrative building 5. Rent on sales and administrative buildings and equipment Predetermined Overhead Rate - Answers A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. Makes it possible to estimate the total cost of the product sooner. Estimated manufacturing overhead cost / Estimated activity level Applied Overhead - Answers The amount of the overhead cost assigned to products. A Applied overhead = PDR x Actual Activity When the actual overhead is GREATER THAN the applied overhead... - Answers Under-applied overhead (use T-chart) When the actual overhead is LESS THAN the applied overhead... - Answers Over-applied overhead (use T-chart) Product Costs - Answers All costs that are involved in acquiring or making a product. (Manufacturing-costs - ex: direct materials, direct labor, manufacturing overhead) Period Costs - Answers Non-Manufacturing costs, have nothing to do with the production of the good (ex: Selling and Administrative costs) Equation to calculate: DIRECT MATERIALS USED - Answers Beginning direct materials inventory + Direct Materials Purchased - Ending Direct Materials Inventory = Direct Materials Used Equation to calculate: COST OF GOODS MANUFACTURED - Answers Beginning work in process inventory + Direct Materials Used + Direct Labor + Overhead - Ending work in process inventory = Cost of goods manufactured Equation to calculate: UNADJUSTED COST OF GOODS SOLD - Answers Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory = Unadjusted cost of goods sold Prime Costs - Answers Direct Materials + Direct Labor Conversion Costs - Answers Direct Labor + Applied Overhead Which of the following costs would be considered a period rather than a product costs in a manufacturing company? A. Manufacturing Equipment Depreciation B. Property taxes on corporate headquarters C. Direct Materials Costs D. Electrical Costs to Light the manufacturing facility E. Sales Commissions - Answers B and E