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Accounting Exam Review 1 T/F

Managerial accounting reports must be useful to the user of the information.
True
Planning is the process of developing the company’s objectives or goals and translating these objectives into courses of action.
True
A diagram of the operating structure of an organization is called an organization chart.
True
A staff department has no direct authority over a line department.
True
Managerial accounting reports must be prepared according to generally accepted accounting principles.
False
Planning is the process of monitoring operating results and comparing actual results with the expected results.
False
The vice presidents of production and sales and the controller hold line positions in most large organizations.
False
Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change.
True
In most business organizations, the chief accountant is called the treasurer.
False
Controlling deals with choosing goals and deciding how to achieve them.
True
The controller’s staff consists of management accountants responsible for systems and procedures, general accounting, budgets, taxes, and cost accounting.
True
In most business organizations, the chief management accountant is called the controller.
True
A staff department or unit is one that provides services, assistance, and advice to the departments with line or other staff responsibilities.
True
Managerial accounting information includes both historical and estimated data.
True
Managerial accounting uses only past data in reports to aid management in the decision making process.
False
Direct costs can be specifically traced to a cost object.
True
Conversion cost is the combination of direct labor cost and factory overhead cost.
True
Factory overhead includes all manufacturing costs except direct materials and direct labor.
True
Prime costs consist of direct materials, indirect materials, and direct labor.
False
Conversion costs consist of product costs and period costs.
False
The costs of materials and labor that do not enter directly into the finished product are classified as cost of goods sold.
False
Period (nonmanufacturing) costs are classified into two categories: selling and administrative.
True
Factory overhead is an example of a product cost.
True
Managerial accounting provides useful information to managers on product costs.
True
Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as factory overhead cost.
True
Conversion cost is the combination of direct materials cost and factory overhead cost.
False
Prime costs are the combination of direct labor costs and factory overhead costs.
False
Prime costs are the combination of direct materials and direct labor costs.
True
Indirect labor and indirect materials would be part of factory overhead.
True
The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.
True

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