Question 1 Which statement is true ? Question 2 Which of the following are the i

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Question

1

Which statement is true?

Question

2

Which of the following are the internal decision makers of a company?

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3

The primary goal of financial accounting is to provide information for

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4

Which one of the following reports is most likely to require an audit by an outside entity?

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5

The focus of management accounting is on

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6

When manufacturing products, direct labor and direct materials are classified as

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7

Where would period costs be found on the financial statements?

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8

Inventoriable product costs are best described by which of the following statements?

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9

Which of the following would not be considered a product cost for a manufacturer?

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10

Which of the following is an example of a period cost when manufacturing products?

Management uses financial information to analyze costs. Management uses financial information to plan internal operations. Management uses reports created for internal parties. All of the above are true.

Explanation / Answer

All of the above are true Explanation: Management uses financial information to plan the operations, analyse costs, assess the results and profitability and generate reports internally.Hence all the above are true. Managers are internal decision makers of the company Explanation: The decisions regarding day to day operations and internal affairs are taken by the management of the company Primary goal of financial accounting is to provide information for : All of the above (Government regulators , creditors, Potential investors) Explanation: Financial accounting aims at providing information to all the stakeholders,thereby enabling them to take appropriate decisions. Stakeholders include all the above Most Likely to require audit by an outside entity: All of the above .Explanation: Every financial statement of the company is most likely to be required to be audited by an outside entity Focus of management accounting is on : Internal reporting. Explanation: Management accounting is used to plan the operations, analyse costs, assess the results and profitability and generate reports internally When manufacturing products, direct labor direct material are classified as : period costs and expensed when incurred Explanation: Direct labour and material are classified as period costs. Period cost relate to a specific period and need to be booked in that period irrespective of whether such costs are actually incurred in that period or not Period costs will be found :As operating expense on the income statement in the period incurred Explanation: Period costs need to be charged as operating expense in statement of profit and loss in the period in which they are incurred Inventorial product costs are best described : As both A and C. Expalanation:Inventoriable products doesnt include marketing and distribution costs. please refer to cost sheet for better understanding Not considered as product cost for a manufacturer: Freight out .Explanation: Freight outside cannot be added to product cost for a manufacturer since it is a cost incurred post manufacture,not pre manufacture. Only those costs incurred till the point of manufacture only to be considered Period cost when manufacturing products: Advertising expense . Explanation : Advertisement can be considered as a period cost

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