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Introduction to Managerial Accounting

by: Carolanne Sawayn

Introduction to Managerial Accounting ACC 200

Marketplace > North Carolina State University > Accounting > ACC 200 > Introduction to Managerial Accounting
Carolanne Sawayn
GPA 3.97


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This 6 page Class Notes was uploaded by Carolanne Sawayn on Thursday October 15, 2015. The Class Notes belongs to ACC 200 at North Carolina State University taught by McKittrick in Fall. Since its upload, it has received 14 views. For similar materials see /class/223984/acc-200-north-carolina-state-university in Accounting at North Carolina State University.


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Date Created: 10/15/15
ACCOUNTING 200 Final Exam Study Guide Chapter 1 Key Terms 1 The Sarbanes Oxley Act of 2002 Requires management in public corporations to assess whether their internal controls over their financial reporting are effective as well as increases the criminal penalties on management associated with financial statement fraud 2 Financial Accounting Area of Accounting primarily dealing with the preparation of financial statements by creditors investors and other users outside the company 3 Managerial Accounting Area of Accounting primarily dealing with generating financial and non financial information for use by managers in their decision making roles 4 External Users Stockholders Creditors Regulators Suppliers Customers and others outside the company 5 Operational Planning Development of shortterm objectives and goals 6 Strategic Planning Address longterm questions of how an organization positions and distinguishes itself form competitors 7 Operating Activities DaytoDay operations of a business 8 Controlling Activities Motivation and Monitoring of employees and the evaluation of people and other resources used in the operations of the organization 9 Decision Making Process of identifying alternative courses of action and selecting an appropriate alternative in a given decisionmaking situation 10 Relevant Costs Those costs that differ among alternatives 11 Sunk Costs Those costs that have already been incurred 12 Opportunity Costs The benefits forgone by choosing one alternative over another 13 Accounting Information System AIS Atransaction processing system that captures financial data resulting from accounting transactions within a company 14 Planning The development of both the shortterm operational and longterm strategic objectives and goals of an organization and the identification ofthe resources needed to achieve them Formulas NONE Notes Over the past decade the role of the managerial accountant has adapted changes in the environment of business Operational planning involves the development of shortterm ob39ectives and goals When comparing financial and managerial accounting Managerial Accounting is more fonvard lookinq often emphasizing the future rather than the past Sunk Costs have already been incurred cannot be avoided and are not relevant Future costs that do not differ between alternatives are not relevant One ofthe main components of stakeholder analysis includes the assessment of social legal ethical and economic responsibilities to various stakeholders Decision making should include both gualitative Risks and guantitative Costs information CCorporations provide limited liability for their owners CCorporations are the business organization most likely to be able to raise capita Selling stock to investors in a business would be best classified as a Financial Activity The main difference between a tax credit and a tax deduction is that Tax credits directly reduce tax liability Unearned Revenue is a liability account Wolfpack Corporation uses accrual basis accounting On June 1 2010 the company bought machinery to be used in operating their business on account How would this transaction affect the elements of the balance sheet equation gt Assets increase and Liabilities increase Assuming the accrual basis of accounting paying cash for inventory to be used next month would change which elements ofthe accounting equation in the current month Assets NO CHANGE Liabilities NO CHANGE Owner s Equity NO CHANGE On January 1 2011 Ashley Advertising paid 180000 for a general liability insurance policy that covers the company for a 3 year period Assuming the accrual basis of accounting Ashley Advertising would report Insurance expense of 5000 on January 31 2011 ACCOUNTING 200 Final Exam Study Guide Chapter2 Key Terms 1 Actual Costing A product costing system in which actual overhead costs are entered directly into work in process 2 Direct Labor Laborthat can easily and conveniently be traced to particular products 3 Direct Materials Materials that can easily and conveniently be traced to the final product 4 FinishedGoods Inventory Inventory of finished product waiting for sale and shipment to customers 5 JIT Manufacturing The philosophy of having raw materials arrive just in time to be used in production and for finished goods inventory to be completed just in time to be shipped to customers 6 Indirect Labor Labor used in the production of products but not directly traceable to the specific product 7 Indirect Materials Materials used in the production of products but not directly traceable to the specific product 8 Manufacturing Costs Costs incurred in the factory or plant to produce a product typically consists of three elements direct materials direct labor and manufacturing overhead 9 Manufacturing Overhead Indirect materials and labor and any other expenses related to the production of products but not directly traceable to the specific product 10 Normal Costing A product costing system in which estimated or predetermined overhead rates are used to apply overhead to work in process 11 Period Costs Costs that are expensed in the period incurred attached to the period as opposed to the product 12 Product Costs Costs that attach to the products as they go through the manufacturing process also called inventorial costs 13 WIP Inventory Inventory of unfinished product in other words what is left in the factory at the end ofthe period 14 Service Companies Companies that do not sell a tangible product as their primary business 15 Raw Materials Inventory Inventory of materials needed in the production process but not yet moved to the production area Formulas INCOME STATEMENT Sales Revenue COGS Gross Profit SampA Exp Net Income RAW MATERIAL Beg RM USED Purchased End RM RM Used COGM Beg WIP RM Used Direct Labor MOH Some End WIP COGM COGS39 Beg FG COGM End FG COGS The account called Work inProcessquot can be found on the Balance Sheet The account called Cost of Goods Sold would be found on the Income Statement In Job Costing A Direct Materials Product Cost Direct materials used in factory B Direct Labor Product Cost Machine operator salaries C MOH Product Cost Factory Utilities Indirect Materials used in factory Factory maintenance worker salaries and insurance on factory equipment D Period Cost Advertising Supplies used in Admin Building and Shipping charges It is imperative that companies using JIT systems have the ability to manufacture products guickly and efficiently Utilities incurred for the sales office of a manufacturing company would be classified as a Period Cost The use of predetermined overhead rates for product costing helps smooth out seasonal fluctuations in overhead costs and provides more timely cost information Opportunity Costs and Future costs that differ among alternatives are relevant costs in decision making A home builder is the business organization most likely not to adopt a process costing system The role of the managerial accountant in today s business organization is best described as Decision support specialists who help analyze information and interpret information for other managers inside the organization Managerial accounting is not based on generally accepted accounting principles GAAP External users and external stakeholders of accounting information are likely to include all of the following groups except employees of the company


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