Acnt 2402 - Study guides, Class notes & Summaries

Chapter 10, Differential Analysis: The Key to Decision Making True/False 1. Only future costs that differ between alternatives are relevant in decision making. Answer: T 2. Future costs that do not differ between the alternatives in a decision are avoidable costs. Answer: F 3. The book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine. (Ignore taxes.) Answer: T 4. A cost that is relevant in one ...

1. Collecting the principal on a loan to another company would be reported on the investing activities section of the statement of cash flows. TRUE 2. Money received from issuing bonds payable would be included as part of a company's financing activities on the statement of cash flows. TRUE 3. The collection of a loan made to a supplier would be treated as an investing activity on a statement of cash flows. TRUE 4. Paying taxes to governmental bodies is considered a cash outflow in the...

True/False 1. Only future costs that differ between alternatives are relevant in decision making. Answer: T 2. Future costs that do not differ between the alternatives in a decision are avoidable costs. Answer: F 3. The book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine. (Ignore taxes.) Answer: T 4. A cost that is relevant in one decision may not be relevant in another decision. Answer: T 5...

1. Comparing a static planning budget to actual costs is a good way to assess whether variable costs are under control. FALSE 2. Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled. FALSE 3. Fixed costs should be ignored when evaluating how well a manager has controlled costs. FALSE 4. Fixed costs should be included in a flexible b...

1. Selling costs can be either direct or indirect costs. TRUE 2. A direct cost is a cost that cannot be easily traced to the particular cost object under consideration. FALSE 3. Property taxes and insurance premiums paid on a factory building are examples of period costs. FALSE 4. Conversion cost equals product cost less direct labor cost. FALSE 5. Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead. TRUE ...