BUS-A200 Chapter 10: An Introduction to
Management Accounting Exam 2| Verified
Answers| Updated 2026
Ch. 10 Q1
What are some differences between financial and managerial accounting? ANSWER:
Q
Financial accounting...
deals with regulated, historical, financial information that pertains to the whole company and is
designed primarily to meet the information needs of outsiders.
Managerial accounting...
is concerned with unregulated financial, economic as well as physical data, which pertains more
to the sub-units of the organization, that is current and future oriented, and that is designed
primarily to meet the information needs of insiders
Ch. 10 Q4
What does the statement "costs can be assets or expenses" mean? ANSWER:
,Q
A cost that has the future economic potential to increase assets is recorded as an asset
(e.g. product cost of products purchased)
A cost that is used in the process of earning revenue is recorded as an expense
(e.g. administrative salaries, and product cost associated with products sold)
Ch. 10 Q5
Why are the salaries of production workers accumulated in an inventory account instead of
being directly expenses on the income statement? ANSWER:
Q
The cash paid to production workers is not used to produce revenue but to produce inventory.
The revenue is earned when the inventory is sold at which time the cost of salaries associated
with those products sold should be expensed.
Ch. 10 Q6
How do product costs affect the financial statements?
, How does classification of product costs (as an asset vs. an expense affect net income?
ANSWER:
Q
Product costs associated with goods that have not been sold are recorded in the account called
inventory.
Inventory cost is shown on the balance sheet as an asset.
The amount of total assets and net income will be higher if a product cost is classified as an
asset.
Product cost associated with goods that have been sold should be recorded in the account
called cost of goods sold.
COGS is an expense shown on the income statement.
The amount of total assets and net income will be lower if a product cost is classified as an
expense as
opposed to being classified as an asset.
Ch. 10 Q7
Management Accounting Exam 2| Verified
Answers| Updated 2026
Ch. 10 Q1
What are some differences between financial and managerial accounting? ANSWER:
Q
Financial accounting...
deals with regulated, historical, financial information that pertains to the whole company and is
designed primarily to meet the information needs of outsiders.
Managerial accounting...
is concerned with unregulated financial, economic as well as physical data, which pertains more
to the sub-units of the organization, that is current and future oriented, and that is designed
primarily to meet the information needs of insiders
Ch. 10 Q4
What does the statement "costs can be assets or expenses" mean? ANSWER:
,Q
A cost that has the future economic potential to increase assets is recorded as an asset
(e.g. product cost of products purchased)
A cost that is used in the process of earning revenue is recorded as an expense
(e.g. administrative salaries, and product cost associated with products sold)
Ch. 10 Q5
Why are the salaries of production workers accumulated in an inventory account instead of
being directly expenses on the income statement? ANSWER:
Q
The cash paid to production workers is not used to produce revenue but to produce inventory.
The revenue is earned when the inventory is sold at which time the cost of salaries associated
with those products sold should be expensed.
Ch. 10 Q6
How do product costs affect the financial statements?
, How does classification of product costs (as an asset vs. an expense affect net income?
ANSWER:
Q
Product costs associated with goods that have not been sold are recorded in the account called
inventory.
Inventory cost is shown on the balance sheet as an asset.
The amount of total assets and net income will be higher if a product cost is classified as an
asset.
Product cost associated with goods that have been sold should be recorded in the account
called cost of goods sold.
COGS is an expense shown on the income statement.
The amount of total assets and net income will be lower if a product cost is classified as an
expense as
opposed to being classified as an asset.
Ch. 10 Q7
