Acct1003 : Quiz On Cost And Management Accounting! Trivia Quiz

1. In the Cost of Goods Sold section, 'Purchases' are used on the merchandiser's income statement while 'Cost of Goods Manufactured' is used on the manufacturer's income statement.

True

False

The explanation for the given correct answer is that the term "Purchases" is used on the income statement of a merchandiser to represent the cost of acquiring the goods that are sold to customers. On the other hand, the term "Cost of Goods Manufactured" is used on the income statement of a manufacturer to represent the cost of producing the goods that are sold. Therefore, the statement is true as the two terms are used differently depending on the type of business.

Explanation

The explanation for the given correct answer is that the term "Purchases" is used on the income statement of a merchandiser to represent the cost of acquiring the goods that are sold to customers. On the other hand, the term "Cost of Goods Manufactured" is used on the income statement of a manufacturer to represent the cost of producing the goods that are sold. Therefore, the statement is true as the two terms are used differently depending on the type of business.

2. Financial accounting differs from management accounting in that management accounting provides information on demand since management requires information to be furnished quickly.

True

False

Financial accounting and management accounting are two distinct branches of accounting. Financial accounting focuses on preparing financial statements and reports for external stakeholders, such as investors, creditors, and regulatory authorities. On the other hand, management accounting is concerned with providing information to internal stakeholders, particularly management, to aid in decision-making and control. One key difference between the two is the timing of information provision. Financial accounting follows a set reporting period and provides historical data, while management accounting provides real-time or on-demand information to meet the immediate needs of management. Therefore, the statement that management accounting provides information on demand is true.

Explanation

Financial accounting and management accounting are two distinct branches of accounting. Financial accounting focuses on preparing financial statements and reports for external stakeholders, such as investors, creditors, and regulatory authorities. On the other hand, management accounting is concerned with providing information to internal stakeholders, particularly management, to aid in decision-making and control. One key difference between the two is the timing of information provision. Financial accounting follows a set reporting period and provides historical data, while management accounting provides real-time or on-demand information to meet the immediate needs of management. Therefore, the statement that management accounting provides information on demand is true.

3. Operating expenses and product costs are expensed when the product is sold.

True

False

Operating expenses and product costs are not expensed when the product is sold. Instead, operating expenses are expensed as they are incurred, regardless of when the product is sold. On the other hand, product costs are expensed when the product is manufactured or produced, not when it is sold. Therefore, the correct answer is False.

Explanation

Operating expenses and product costs are not expensed when the product is sold. Instead, operating expenses are expensed as they are incurred, regardless of when the product is sold. On the other hand, product costs are expensed when the product is manufactured or produced, not when it is sold. Therefore, the correct answer is False.

4. When a continuous record is kept of the quantities and cost of merchandise on hand, the inventory system is referred to as periodic.

True

False

The explanation for the given answer is that when a continuous record is kept of the quantities and cost of merchandise on hand, the inventory system is referred to as perpetual, not periodic. In a perpetual inventory system, the inventory is continuously updated and tracked in real-time, whereas in a periodic inventory system, the inventory is only counted periodically, usually at the end of a specific period. Therefore, the statement that the inventory system is referred to as periodic when a continuous record is kept is incorrect.

Explanation

The explanation for the given answer is that when a continuous record is kept of the quantities and cost of merchandise on hand, the inventory system is referred to as perpetual, not periodic. In a perpetual inventory system, the inventory is continuously updated and tracked in real-time, whereas in a periodic inventory system, the inventory is only counted periodically, usually at the end of a specific period. Therefore, the statement that the inventory system is referred to as periodic when a continuous record is kept is incorrect.

5. Labour costs that are directly traceable to the product are part of manufacturing overhead.

True

False

Labour costs that are directly traceable to the product are not part of manufacturing overhead. These costs, known as direct labor costs, are directly associated with the production of goods and are therefore classified as part of the cost of goods sold (COGS) rather than manufacturing overhead. Manufacturing overhead includes indirect costs such as factory rent, utilities, and depreciation of equipment.

Explanation

Labour costs that are directly traceable to the product are not part of manufacturing overhead. These costs, known as direct labor costs, are directly associated with the production of goods and are therefore classified as part of the cost of goods sold (COGS) rather than manufacturing overhead. Manufacturing overhead includes indirect costs such as factory rent, utilities, and depreciation of equipment.