Introduction to Cost Accounting Reviewer

Manufacturing organizations and merchandising businesses both deal with purchasing, storing, and selling goods. (True/False)

External users of accounting information include the government, fund providers, and those interested in the entity's operations. (True/False)

Merchandisers buy items in marketable form to be resold to their customers. (True/False)

Manufacturers must make the goods they sell. (True/False)

The purchase of materials by a manufacturer is only the last step in the production process. (True/False)

Accounting's primary objective is to provide financial information to internal users such as managers. (True/False)

The manufacturing process involves the conversion of raw materials into finished goods.

The manufacturer must make a major investment in physical facilities, such as factory buildings and warehouses.

Cost accounting was originally developed only for profit-seeking entities.

Financial accounting is primarily concerned with financial statements for external use by investors and creditors.

The information provided by financial accounting is usually presented in the form of financial statements, tax returns, and other formal reports.

Creditors who provide debts are interested in the financial statements of the entity.

The methods of accounting for sales, cost of goods sold, selling, and administrative expenses are different for manufacturing and merchandising organizations.

Labor is involved in the conversion of raw materials into finished goods.

Financial accounting is the use of accounting information for reporting to external parties, including investors and creditors.

Cost accounting was developed to satisfy management’s need for product cost information only in manufacturing business.