INTRODUCTION TO COST ACCOUNTING TERMS (PART I)
TRUE OR FALSE
1. Cost accounting systems are used to supply cost data information on the costs incurred
by a manufacturing process or department. TRUE
2. Period cost include direct materials and direct labor. FALSE
3. A process cost accounting system is best used by manufacturers of like units or product
that are not distinguishable from each other during a continuous production process.
TRUE
4. Large inventories of raw materials must be maintained in just in time system. FALSE
5. The primary objective of activity-based costing is more accurate and meaningful product
costs. TRUE
6. Financial accounting is considered as a subset of management accounting and cost
accounting. FALSE
7. Cost accounting involves the process of analyzing, recording, classifying, summarizing
and interpreting the details of costs of materials, labor and factory overhead necessary
to produce and sell the product. TRUE
8. Cost accounting helps managers understand the costs of running the business. TRUE
9. Financial accounting is concerned with providing information to managers for use in
planning and controlling operations for decision making. FALSE
10. Management accounting involves financial analysis, budgeting, and forecasting, cost
analysis, evaluation of business decisions. TRUE
11. A cost means a measurement in monetary terms, of the amount of resources used for
the purpose of production of goods or rendering services. TRUE
12. The cost accounting system provides management needed information to estimate the
cost of their products for profitability analysis, inventory valuation and cost control.
TRUE
13. The product costs in the standard costing system are determined as they occur
simultaneously with the manufacturing operation, but the total of product costs is only
known as the operation has been completed. FALSE
14. Under the standard costing system, direct material, direct labor and factory overhead
are applied using predetermined rate. TRUE
15. Under the normal costing system, direct materials and direct labor are accumulated
using standard costing and factory overhead are accumulated using actual costing.
FALSE
16. In throughput costing, only direct materials are recorded as part of the inventory. TRUE
17. Direct labor and factory overhead costs are charged as an expense in direct costing.
FALSE
18. The total sales less the costs of direct materials are known as throughput. TRUE
19. Throughput costing provides proper matching of cost and revenue. FALSE
20. In throughput costing, variable costs are part of the inventory. FALSE
21. Direct costing provides proper matching of cost and revenue. FALSE
22. Absorption costing provides proper matching of cost and revenue. TRUE
23. Hybrid costing is a combination of job order and process costing method. TRUE
24. Under hybrid costing, direct materials are accumulated using process costing and
conversion costs using job order costing. FALSE
25. Using the FIFO method, the goods last purchased are first sold. FASLE
26. Using the FIFO method, the goods last purchased at the end of the accounting period
remain in the ending inventory. TRUE
27. Using the LIFO method, the inventory is recorded in terms of older prices and the cost
of goods sold is recorded at recent prices. TRUE
28. The purpose of cost accounting is the control of cost. TRUE
29. The purpose of financial accounting is the financial reporting. TRUE
30. The periodic system requires maintenance of records called stock cards. FALSE