D196 Principles of Financial and Managerial Accounting - Set 1 - Part 3

Correct Answer: Customer satisfaction ratings

Nonfinancial metrics, such as customer satisfaction ratings, provide valuable information for managerial decision-making beyond traditional financial measures.

Correct Answer: As a product cost

Depreciation on factory equipment used in production is classified as a product cost and allocated to the cost of goods manufactured.

Correct Answer: Rent for a factory

Rent is considered a fixed cost because it remains constant regardless of the level of production or sales.

Correct Answer: To establish financial accounting standards in the U.S.

The FASB sets generally accepted accounting principles (GAAP), which provide the framework for financial reporting in the U.S.

Correct Answer: Income statement, balance sheet, statement of cash flows

The income statement is prepared first to determine net income, which is then used to complete the balance sheet and statement of cash flows.

Correct Answer: Direct labor costs

Variable costs, such as direct labor, fluctuate with production volume. As production increases, variable costs increase accordingly.

Correct Answer: Income statement

The income statement shows a companys revenues, expenses, and net income, indicating its profitability over a specific period.

Correct Answer: Cost of goods sold

Cost of goods sold is an expense item representing the direct costs of producing the goods that were sold during the period.

Correct Answer: Owners' equity

The balance sheet summarizes accounts such as assets, liabilities, and owners' equity, which represent the financial position of the company.

Correct Answer: Administrative expense

Wages for office staff in a merchandising company are classified as administrative expenses, as they are not tied directly to the production of goods.