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Final Exam Study Guide - Accounting Principles II | AC 202, Study notes of Financial Accounting

John Carroll University (JCU)Financial Accounting
Prof. Patti R. Weiss

Final Exam Study Guide Material Type: Notes; Professor: Weiss; Class: ACCOUNTING PRINCIPLES 2; Subject: Accounting; University: John Carroll University; Term: Spring 2011;

Typology: Study notes

2010/2011

Uploaded on 05/21/2011

cmorgan12
cmorgan12 🇺🇸

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STUDY GUIDE –Final
AC202
Chapter 7 Incremental Analysis
1. Steps in decision making process
2. Incremental Analysis-terms
a. Relevant cost
b. Opportunity Cost
c. Sunk Cost
d. Qualitative Factors
3. Types
a. Accept/reject special order
b. Make vs. Buy
c. Sell or Process further
i. Single Product
ii. Multiple Product
d. Retain or Replace Equipment
e. Eliminate an Unprofitable Segment
Chapter 9 Budgetary Planning
1. Budgeting basics
a. Purpose/ benefits
b. Top down vs. bottom up (participative)
c. Length- long range (forecast) ; shorter term
budget
2. Master Budget- comprised of:
a. Operating Budgets
i. Sales budget
ii. Production Budget
iii. Direct Materials budget
iv. Direct Labor budget
v. Manufacturing Overhead Budget
vi. Selling and Administrative Budget (period
costs)
vii. Budgeted Income statement
b. Financial budgets
i. Cash budget-anticipated cash flows
1. Cash receipts
2. Cash disbursements
3. Financing
pf3

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Download Final Exam Study Guide - Accounting Principles II | AC 202 and more Study notes Financial Accounting in PDF only on Docsity!

STUDY GUIDE –Final AC Chapter 7 Incremental Analysis

  1. Steps in decision making process
  2. Incremental Analysis-terms a. Relevant cost b. Opportunity Cost c. Sunk Cost d. Qualitative Factors
  3. Types a. Accept/reject special order b. Make vs. Buy c. Sell or Process further i. Single Product ii. Multiple Product d. Retain or Replace Equipment e. Eliminate an Unprofitable Segment Chapter 9 Budgetary Planning
  4. Budgeting basics a. Purpose/ benefits b. Top down vs. bottom up (participative) c. Length- long range (forecast) ; shorter term budget
  5. Master Budget- comprised of: a. Operating Budgets i. Sales budget ii. Production Budget iii. Direct Materials budget iv. Direct Labor budget v. Manufacturing Overhead Budget vi. Selling and Administrative Budget (period costs) vii. Budgeted Income statement b. Financial budgets i. Cash budget-anticipated cash flows
  6. Cash receipts
  7. Cash disbursements
  8. Financing

ii. Budgeted balance sheet iii. Non-manufacturing companies Chapter 10-Budgetary Control/ Responsibility Accounting

  1. Static Budgets a. At one level of activity b. Variance-difference between budget and actual results c. Favorable/ Unfavorable- based on effect on net income
  2. Flexible Budgets a. Projects budget data at various levels of activity b. Development i. activity index and relevant range of activity ii. Variable costs-budgeted variable cost per unit per cost iii. Fixed costs- budgeted amount per cost iv. Prepare in selected increments within relevant range c. Management by exception-consider i. Materiality ii. Controllability of item d. Responsibility Accounting i. Accumulation/reporting costs and/or revenues on basis of manger with authority in area ii. Controllable vs. noncontrollable revenues and costs
  3. Based on level of responsibility
  4. Costs incurred directly and allocated to a responsibility level- noncontrollable costs at that level iii. Responsibility Reporting System-for each level of responsibility iv. Types of responsibility Centers
  5. Cost Centers-prod or service departments a. Reports actual controllable costs w/ flexible budget data
  6. Profit Center-generates revenues/ incurs costs a. Direct fixed costs-traceable costs-controllable b. Indirect fixed costs-common costs-not controllable c. Reports –show controllable margin
  7. Investment center-like a profit center with control over decisions regarding assets available for use. a. ROI= Controllable margin/ average operating assets i. Improving ROI
  8. Increasing controllable margins a. Increase sales b. Decrease variable and fixed costs