Finance and Cost Accounting Overview
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Questions and Answers

Which of the following is NOT considered a type of inventory?

  • Customer orders (correct)
  • Finished goods
  • Raw materials
  • Work in process

    • Freight-in is added to purchases when calculating net purchases.

    True

    What is calculated by subtracting purchase returns, allowances, and discounts from gross purchases?

    Net Purchases

    The value of materials used in production is referred to as _______.

    <p>Direct materials</p> Signup and view all the answers

    Match the type of manufacturing cost with its description:

    <p>Direct materials = Cost of raw materials used in production Direct labor = Wages paid to workers directly involved in manufacturing Factory overhead = Indirect costs associated with manufacturing Cost of goods sold = Total cost of producing goods that are sold</p> Signup and view all the answers

    Which of the following items affects the work in process inventory?

    <p>Direct labor</p> Signup and view all the answers

    Which of the following is an example of a fixed cost?

    <p>Rent paid for a factory</p> Signup and view all the answers

    A relevant cost is a cost that will not affect decision-making.

    <p>False</p> Signup and view all the answers

    The total materials available for use is calculated by adding net purchases to the ending raw materials inventory.

    <p>False</p> Signup and view all the answers

    What is a controllable cost?

    <p>A cost that a manager can influence or control.</p> Signup and view all the answers

    What is the formula to calculate direct materials used in production?

    <p>Net Purchases + Beginning Raw Materials Inventory - Ending Raw Materials Inventory</p> Signup and view all the answers

    ________ costs are incurred when multiple outputs are derived from one source.

    <p>Joint</p> Signup and view all the answers

    Match the cost classification to its definition:

    <p>Variable Cost = Vary in total but fixed on a per unit basis Indirect Costs = Not directly attributable to a specific cost object Committed Cost = Costs that cannot be easily changed Standard Cost = Costs expressed at a predetermined rate per unit</p> Signup and view all the answers

    Which of the following is classified as a non-GAAP cost?

    <p>Opportunistic costs</p> Signup and view all the answers

    Semi-variable costs consist of both fixed and variable components.

    <p>True</p> Signup and view all the answers

    Define 'irrelevant costs'.

    <p>Costs that do not affect decision-making.</p> Signup and view all the answers

    What is the primary concern of finance within a personal context?

    <p>Spending and saving earnings</p> Signup and view all the answers

    Managerial financial tasks include developing a financial plan and extending credit to customers.

    <p>True</p> Signup and view all the answers

    Name one area of career opportunity in financial services.

    <p>Banking</p> Signup and view all the answers

    In finance, the primary objective of businesses is to earn a ______.

    <p>profit</p> Signup and view all the answers

    Match the following roles in finance with their descriptions:

    <p>Financial Manager = Administers the financial affairs of businesses Investment Advisor = Provides advice on investments Cost Accountant = Analyzes cost of production Real Estate Agent = Assists in buying and selling properties</p> Signup and view all the answers

    Which of the following is NOT a task performed by financial managers?

    <p>Designing clothing lines</p> Signup and view all the answers

    Management advisory services aim primarily to sell financial products to clients.

    <p>False</p> Signup and view all the answers

    What is one responsibility of a financial manager?

    <p>Raising money to fund operations</p> Signup and view all the answers

    What is the primary purpose of cost accounting?

    <p>To measure, record, and report product costs</p> Signup and view all the answers

    A job order cost system assigns costs to batches of goods.

    <p>True</p> Signup and view all the answers

    What are the two major steps in the flow of costs in a job order cost system?

    <p>Accumulating manufacturing costs and assigning accumulated costs.</p> Signup and view all the answers

    When raw materials are received, they are debited to _______ Inventory.

    <p>Raw Materials</p> Signup and view all the answers

    Match the following cost components with their respective accounts:

    <p>Raw Materials = Raw Materials Inventory Labor = Work in Process Inventory Manufacturing Overhead = Cost of Goods Sold Finished Goods = Finished Goods Inventory</p> Signup and view all the answers

    The perpetual inventory system provides outdated information on product costs.

    <p>False</p> Signup and view all the answers

    What happens to the cost of a job when it is completed?

    <p>The cost is transferred to Finished Goods Inventory.</p> Signup and view all the answers

    What is the total cost of purchasing the handles and modules?

    <p>Php42,000</p> Signup and view all the answers

    Factory labor costs include only the gross earnings of factory workers.

    <p>False</p> Signup and view all the answers

    What entry is made to record factory labor costs of Php32,000?

    <p>Factory Labor 32,000; Factory Wages Payable 27,000; Employer Payroll Taxes Payable 5,000</p> Signup and view all the answers

    The total factory labor cost incurred by KAIA-MOTO Manufacturing is Php______.

    <p>32,000</p> Signup and view all the answers

    Match the following manufacturing costs with their descriptions:

    <p>Factory Labor = Wages and payroll-related costs Manufacturing Overhead = Indirect costs associated with production Raw Materials Inventory = Cost of materials for production Factory Wages Payable = Amounts owed to factory workers</p> Signup and view all the answers

    Which account is debited when recording manufacturing overhead?

    <p>Manufacturing Overhead</p> Signup and view all the answers

    What is the total amount related to payroll taxes in the factory labor cost entry?

    <p>5,000</p> Signup and view all the answers

    Manufacturing overhead can only be recognized through daily entries.

    <p>False</p> Signup and view all the answers

    What is the primary purpose of a predetermined overhead rate?

    <p>To apply manufacturing overhead to specific jobs</p> Signup and view all the answers

    Large companies often use a single, company-wide predetermined overhead rate.

    <p>False</p> Signup and view all the answers

    What was the activity base used by KAIA-MOTO Manufacturing for its predetermined overhead rate?

    <p>Direct labor cost</p> Signup and view all the answers

    The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual __________ activity.

    <p>operating</p> Signup and view all the answers

    What is the predetermined overhead rate if a company expects annual overhead costs of Php280,000 and direct labor costs of Php350,000?

    <p>80%</p> Signup and view all the answers

    Match the activity bases with their usage:

    <p>Direct labor costs = Historically used for overhead application Machine hours = Increasingly used for overhead allocation Activity-based costing = Allocates costs based on activities Direct labor hours = Another traditional measure for overhead</p> Signup and view all the answers

    Today's manufacturing operations are primarily based on manual labor.

    <p>False</p> Signup and view all the answers

    What does a company achieve by applying a predetermined overhead rate during the year?

    <p>It allows for immediate determination of job costs.</p> Signup and view all the answers

    Study Notes

    Finance

    • Finance is the science and art of managing money.
    • Personal context involves decisions on how much to spend, save, and invest.
    • Business context includes how firms raise capital, invest in profitability, and distribute profits to investors.
    • Financial services involve advising and delivering financial products to individuals, businesses, and governments.
    • Career opportunities in finance include banking, personal financial planning, investments, real estate, and insurance.
    • Managerial finance involves the duties of financial managers in various businesses (private/public, large/small, profit-seeking/non-profit).
    • Financial managers administer financial affairs, create financial plans/budgets, extend credit, evaluate expenditures, and raise funds.

    Cost Accounting

    • Cost accounting focuses on measuring, recording, and analyzing costs for financial reporting and decision-making.
    • Cost is anything sacrificed to obtain a benefit.
    • Cost classifications can vary based on the purpose of classification and are not mutually exclusive.
    • GAAP costs are relevant for financial reporting and are found in financial statements. These include manufacturing and non-manufacturing costs.

    Management Advisory Services (MAS)

    • Management advisory services provide consulting to improve client capabilities and resource utilization to achieve objectives.
    • MAS professionals possess relevant education and experience.
    • The 4Ms (machinery, manpower, methods, materials) are important resources.

    Managerial vs Financial Accounting

    • Managerial accounting caters to internal users (owners).
    • Financial accounting caters to external users (BIR, SEC).
    • Managerial reports are special and vary, while financial reports are general.

    Work of Management and the Planning and Control Cycle

    • The planning includes
    • Directing and motivating
    • Controlling
    • Deciding

    Need for Information

    • Relevant information is crucial for decision-making.
    • Data needs to be processed into information.

    Characteristics of Managerial Accounting Reports

    • Managerial accounting reports should be relevant, timely, accurate, clear, and concise.

    Areas of MAS

    • MAS focuses on analysis, planning, organizing, and control.
    • Introducing new ideas, concepts, and methods improves management.
    • Improving policies, and procedures, systems, and relationships.

    Organizational Structure

    • Organizational structure defines responsibility and authority distribution within an organization.
    • Centralization vs. decentralization describes organizational structure.
    • Line and staff relationships describe how roles interact.

    The Chief Financial Officer (CFO)

    • The CFO oversees the accounting department.
    • The CFO is a part of top management and plays an active role in planning, control, and decision-making.

    Treasurership vs Controllership

    • Treasurership involves providing capital, investor relations, short-term financing, banking, collections, investment, and insurance.
    • Controllership includes planning and control, reporting, evaluating, consulting, tax administration, government reporting, protection of assets, and economic appraisal.

    Cost Accounting Basics

    • Describes cost accounting as a branch in accounting
    • Describes main objective of cost accounting
    • Classifies Costs

    Manufacturing Costs

    • Categorizes manufacturing costs into direct materials, direct labor, and manufacturing overhead.
    • Explains prime and conversion costs.
    • Describes non-manufacturing costs or selling and administrative costs

    Costs as to Accounting Periods

    • Categorizes costs as capital or revenue expenditures
    • Categorizes costs as product or period costs.

    Non-GAAP Costs

    • Describes costs not included in GAAP - such as variable, opportunity, etc

    Other Costs

    • Describes avoidable vs unavoidable costs
    • Describes out of pocket and imputed costs
    • Describes opportunity and sunk costs
    • Describes quality costs

    Methods of Costing

    • Covers job costing, contract costing, cost plus costing, batch costing, and process costing
    • Explores the differences between job order and process costing

    Introduction to Cost Flow Systems

    • Describes how non-cost systems simplify financial statements.
    • Defines inventory types (raw materials, work in process,finished goods)
    • Identifies manufacturing costs.
    • Explains the flow of costs and inventory implications.

    Costing Systems

    • Discusses how cost accounting affects financial reporting and decision-making.
    • Describes job order and process costing methods
    • Describes the importance of costing systems for companies.

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    Description

    Explore the fundamentals of finance and cost accounting through this quiz. Learn about managing money in both personal and business contexts, and understand the roles of financial managers. Dive into cost classifications and their significance in decision-making and financial reporting.

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