ACC 221 chapter 1 notes
ACC 221 chapter 1 notes Acc 221
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This 0 page Class Notes was uploaded by Estella Notetaker on Monday February 1, 2016. The Class Notes belongs to Acc 221 at University of Rochester taught by Kim J in Fall 2016. Since its upload, it has received 69 views. For similar materials see Managerial Accounting in Accounting at University of Rochester.
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Date Created: 02/01/16
ACC 221 Ch1 Managerial accounting De nition A eld of accounting that provides economic and nancial information for managers and other internal users Financial accounting vs Managerial accounting Financial Accounting Vs Managerial Accounting External users Stockholders creditors and regulators Primary users of reports Internal users Of cers and managers Financial statements Types and frequency of reports lnternal reports Quarterly amp annually Purpose of reports As frequently as needed General purpose Pertains to business as a whole Highly aggregated condensed Limited to double entry accounting and cost data Generally accepted accounting principles Content of reports Specialpurpose for speci c decisions Pertains to subunits of the business Very detailed Extends beyond doubleentry accounting to any relevant data Standard is relevance to decision Audit by CPA Veri cation process No independent audits Management functions 0 Planning look ahead and establish objectives 0 Ex maximize shortterm pro tmarket share Directing implement planned objectives 0 Ex coordinate purchasing manufacturing warehousing o Controlling keep activities on track amp determine whether goals are being met 0 Ex budgets responsibility centers performance evaluation reports Manufacturing costs 0 Manufacturing consists of activities and processes to convert raw materials into nished goods 0 In contrast a merchandising rm sells goods in the form in which they were purchased 0 Manufacturing costs are typically classi ed as 0 Direct materials 0 Direct labor 0 Manufacturing overhead Direct materials raw materials that can be physically and directly associated with the nished product during the manufacturing process Direct labor work of factory employees that can be physically and directly associated with converting raw materials into nished goods Ex salary paid to assembly workers for an auto manufacturer Manufacturing overhead quotburdenquot costs that are indirectly associated with manufacturing the nished product lndirect materials raw materials that cant be easily associated with the nished product because 1 they don t become part of nished product or 2 cost is too trivial to trace lndirect labor work of factory employees that has no physical association with the nished product or for which it s impractical to trace cost to goods produced Product vs Period costs Product Costs Period Costs Costs that are necessary and Nonmanufacturing costs integral part of producing a product Direct material cost direct labor Matched with revenue of a speci c cost and manufacturing overhead time period and charged to expense 0 Labor cost overhead as incurred quotconversion costsquot Recorded as inventory Deducted from revenues in period incurred to determine net income Not an expense until the nished Includes all selling and goods inventory is sold then administrative expenses product costs become cost of goods sold
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