Concept introduction:
There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced. The mixed cost is the mix of variable and fixed cost, some of its part is fixed and some variable.
To indicate:
The effect of wrong classification of costs on the financial statement
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Managerial Accounting
- Is there a way to prevent managers from focusing on accounting measures as performance measures?arrow_forwardDetermine the effect of the following errors on a companys total revenue, total expenses, and net income. Indicate the effect by writing O for Overstated (too much), U for Understated (too little), or NA for Not Affected.arrow_forwardExplain the impact on a company's financial statements if it shifts from using the historical cost principle to using the revaluation model. What adjustments should be made to the financial statements to reflect this change?arrow_forward
- How does reporting information for a merchandising company differ from financial reporting for a service organization?arrow_forwardWhich of the following statements is false? a.Financial accounting must conform to GAAP. b.Managerial accounting sometimes relies on past information. c.Managerial accounting does not need to conform to GAAP. d.There is no overlap between financial and managerial accounting.arrow_forwardDo not Copy What is the difference between managerial and financial accounting?arrow_forward
- Which of the following statements is false? Select one: O A. Management accounting statements need not comply with Accounting regulations O B. Financial accounting statements normally reflect more detail than would be found in management accounting reports O C. Management accounting reports emphasise future activities and future costs O D. Financial accounting data are directed primarily at external users rather than internal users.arrow_forwardWhen a merchandising business is compared to a service business, the financialstatement thatis notaffected by that change is the Statement of Owner'sEquity. True or False?arrow_forwardWhich of the following is not one of the criteria for revenue recognition? (Assume the company reports using ASPE.) a.Economic benefits will probably flow to the seller. b.Significant risks and rewards of ownership have been transferred. c.Continuing managerial involvement does not exist. d.Customers have an excellent credit rating.arrow_forward
- Should companies use non-GAAP measures to report performance?arrow_forwardWhich of the following statements is false? Managerial accounting does not need to conform to GAAP Financial accounting must conform to GAAP. Managerial accounting sometimes relies on past information. There is no overlap between financial and managerial accounting.arrow_forwardWhich of the following statements is/ are not true? Financial accounting information can be used for internal reporting purposes. Routine information can be used to make decisions regarding both long term and the short term. Management accounting provides information relevant to decision making, planning, control and evaluation of performances. Cost accounting can only be used to provide inventory valuations for internal reporting.arrow_forward
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