D196 Principles of Financial and Managerial Accounting - Set 1 - Part 2

Correct Answer: Credit analysis, regulatory uses, and company valuation estimates

Financial accounting provides information such as credit analysis and company valuation, primarily used by external stakeholders for regulatory and investment purposes.

Correct Answer: To report how much profit or loss was made over a specific period

The income statement reports a companys revenue, expenses, and net income over a specific period, revealing its profitability.

Correct Answer: Balance sheet

The balance sheet reports a companys assets, liabilities, and equity, giving insight into its financial position.

Correct Answer: Financial Accounting Standards Board (FASB)

The FASB is responsible for establishing generally accepted accounting principles (GAAP) used in financial accounting in the United States.

Correct Answer: They are considered a product cost and traced directly to specific products

Direct labor costs are treated as a product cost because they can be directly traced to the production of specific products.

Correct Answer: Direct materials budget

The direct materials budget estimates the amount and cost of raw materials needed to meet production goals.

Correct Answer: Variable cost

Variable costs change in total as production increases or decreases but remain constant per unit.

Correct Answer: Accounts payable

Accounts payable is a liability account representing amounts owed to suppliers for goods or services purchased on credit.

Correct Answer: Retained earnings

Retained earnings are part of owners' equity and represent accumulated profits not distributed as dividends.

Correct Answer: Fixed costs remain constant in total, regardless of production levels

Fixed costs remain the same in total regardless of production levels, though the per-unit fixed cost decreases as more units are produced.

Correct Answer: Factory maintenance and utilities costs

A manufacturing overhead budget includes indirect costs such as factory maintenance, utilities, and other expenses not directly tied to production labor or materials.

Correct Answer: Asset

Accounts receivable is an asset account representing amounts owed to the company by customers for sales made on credit.

Correct Answer: Balance sheet

The balance sheet provides a snapshot of a companys financial position, listing its assets, liabilities, and owners equity as of a specific date.

Correct Answer: Raw materials

Product costs include all costs that are necessary to create a product, such as raw materials, direct labor, and manufacturing overhead.

Correct Answer: A furniture manufacturer that makes custom pieces

Job costing systems are used by companies that manufacture unique, custom products, such as furniture made to order.

Correct Answer: Sales Variable Costs

Contribution margin is calculated as sales revenue minus variable costs, showing the amount available to cover fixed costs and contribute to profit.

Correct Answer: Wages for the production supervisor

The wages of a production supervisor are classified as indirect labor, part of manufacturing overhead, as they cannot be directly traced to individual products.

Correct Answer: Statement of cash flows

The statement of cash flows reports cash inflows and outflows from operating, investing, and financing activities over a specific period.

Correct Answer: Cost of raw materials used in production

Direct costs are those that can be directly traced to a specific product, such as raw materials or direct labor.

Correct Answer: Depreciation on factory equipment

Depreciation on factory equipment is a fixed cost that cannot be controlled or influenced by a production manager, as it results from previous capital investment decisions.