Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes Objective 2.1 1) Cost objects include: A) products B) customers C) departments D) All of these answers are correct. Answer: D Diff: 2 Terms: cost object Objective: 1 AACSB: Reflective thinking 2) Actual costs are: A) the costs incurred B) budgeted costs C) estimated costs D) forecasted costs Answer: A Diff: 1 Terms: actual costing Objective: 1 AACSB: Reflective thinking
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Statement Stockholders’ Equity Financial Ratios Accounting Principles Bookkeeping, Debits and Credits Accounting Equation Adjusting Entries Bank Reconciliation Petty Cash Accounts Receivable and Bad Debts Expense Inventory and Cost of Goods Sold Depreciation Accounts Payable Cost Behavior and Break-even Point Payroll Accounting Standard Costing Accounting Pronouncements Organizations Pages 1 1-2 2-3 3 4 4-5 5-6 7-8 8 9 9-10 10-11 11 12 12-13 13 14 14-15 15-16 16-17 17 For personal use by the original
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Oliver, 2008) In reviewing CB, Inc.’s (CB) income statements and balance sheets for years 6, 7 and 8 we find fluctuations in sales, cost of goods sold and several other line items. CBs’ net sales experienced an increase of 33.3% from year 6 to year 7 with an increase in net earnings of 313.4%. In comparing year 7 to year 8 we find that CB did not have quite as good of a year; during year 8 the company experienced a 15% reduction in Net Sales with an 81.6% reduction in Net Earnings. We need to
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Cost Accounting Systems 1. Cost accounting involves the measuring, recording, and reporting of product costs. From the data accumulated, both the total cost and unit cost of each product is determined. 2. A cost accounting system consists of accounts for the various manufacturing costs. These accounts are fully integrated into the general ledger of a company. An important feature of a cost accounting system is the use of a perpetual inventory system. Such a system provides information immediately
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Describe the function and primary focus of financial accounting. Level of Learning: Easy 29. Which of the following is not true about net operating cash flow? A. It is the difference between cash receipts and cash disbursements from providing goods and services. B. It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows. C. Over short periods of time, it may not be indicative of long-run cash-generating ability. D. It is easy to understand
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debt securities called bonds The person whom someoen owed money is creditor. Amounts owed to creditor is called liabilities. Note payable = a note promising to pay a certain amount of money at a certain time Bonds payable = Debt securities sold to investors that must be repaid at particular date some years in the future. Corporation obtains funds by selling shares of stock to investors. Common Stock is the term used to describe the total amount paid in by stockholders for the shares they
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inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.” In other words, revenue tracks the inflow of net assets that occurs when a business provides goods or services to its customers. The realization principle requires that two criteria be satisfied before revenue can be recognized: The earnings
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Absorption: the sharing out of the costs of a cost center amongst the products which use the cost center. Account: a record in a double entry system that is kept for each (or each class) of asset, liability, revenue and expense. Accounting equation: an expression of the equivalence, in total, of assets = liabilities + equity. Accounting period: that time period, typically one year, to which financial statements are related. Accounting policies: the specific accounting bases selected and followed
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for financial reporting and tax purposes. In one recent year, this resulted in a cost of goods sold figure that was $5.6 billion higher than under FIFO. By increasing cost of goods sold, Exxon Mobil reduces net income, which reduces taxes. Critics say that LIFO provides an unfair “tax dodge.” As Congress looks for more sources of tax revenue, some lawmakers favor the elimination of LIFO. Supporters of LIFO argue that the method is conceptually sound because it matches current costs with current revenues
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are used by organizations to calculate and maintain the cost of the inventory as well as purchase them based on reorder stock level. There are many forms of inventory systems, namely, Periodic, Perpetual, point order and many others. This document describes perpetual inventory system in detail. Perpetual Inventory system describes the process of monitoring and managing inventory where the sale of each product or goods is recorded as it is sold and inventory updated. The Accounting system records the
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