acc202_tanining
TRANSCRIPT
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Question 1
Compare and contrast Financial Accounting and Managerial Accounting (5 marks)
Answer:
Financial AccountingManagerial Accounting
Prepared for externals users such as
stockholders, creditors, and
regulators.
Primary Users ofReports
Prepared for internal users such as
company officers and manager.
Financial statements
Prepared quarterly and annuallyTypes and Frequency
of Reports
Internal reports
Prepared as frequently as needed
For general purpose Purpose of Reports For special-purpose for specific
decisions
Related to the business as a whole
Highly condensed
Limited to double-entry
accounting and cost data
Generally accepted accounting
principles
Content of Reports Related to subunits of the business Highly detailed
Includes any relevant data besides
double-entry accounting
Standard is relevance to decisions
Audited by CPA Verification Process Does not require audits or noindependent audits
Question 2
Briefly explain three broad functions of Management. (3 marks)
Answer:
The three broad functions of management are Planning, Directing and Controlling.
Planning involves managers in long term planning and establishing objectives for the
company. Directing requires managers to coordinate a companys many activities and
human resources to ensure a smooth operation. Controlling is making sure companys
activities are on track with its planned goals.
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Question 3
The following are the cost and expense data extracted from Hitech Manufacturing
Cooperation for the year ended December 31, 2010
$ $
Raw Materials 1/1/2010 30,000 Factory Insurance 14,000
Raw Materials 12/31//2010 20,000 Property Taxes, Factory Building 6,000
Raw Material purchases 205,000 Sales (Net) 1,500,000
Indirect Materials 15,000 Delivery Expenses 100,000
Work-in-Process 1/1/2010 80,000 Sales Commissions 150,000
Work-in-Process 12/31/10 50,000 Indirect Labor 90,000
Finished Goods, 1/1/10 110,000 Factory Machinery Rent 40,000
Finished Goods, 12/31/10 120,000 Factory Utilities 65,000
Direct Labor 350,000 Depreciation, Factory Building 24,000
Factory Manager's salary 35,000 Administration Expenses 300,000
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(a) Prepare a cost of goods manufactured schedule for Hitech Manufacturing
Cooperation for the year ended 31/12/2010
Answer:
Hitech Manufacturing CooperationCosts of Goods Manufactured ScheduleFor the Year Ended December 31, 2010
Work in process, 1/1 $ 80,000
Direct materials
Raw materials, 1/1 $ 30,000
Raw materials purchases 205,000
Total raw materials available for use 235,000
Less: Raw materials, 12/31 20,000
Direct materials used $ 215,000
Direct labor 305,000
Manufacturing overhead
Indirect labor $ 90,000
Factory utilities 65,000
Factory machinery rent 40,000
Factory managers salary 35,000
Depreciation on building 24,000
Indirect materials 15,000Factory insurance 14,000
Property taxes 6,000
Total manufacturing overhead 289,000
Total manufacturing costs 854,000
Total cost of work in process 934,000
Less: Work in process, 12/31 50,000
Cost of goods manufactured. $ 884,000
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(b) Prepare an income statement for Hitech Manufacturing Cooperation for the
year ended 31/12/2010
Answer:
Hitech Manufacturing CooperationIncome Statement
For the Year Ended December 31, 2010
Sales (Net) $ 1,500,000Costs of goods soldFinished goods inventory, January 1 $ 110,000Costs of goods manufactured 884,000Costs of goods available for sale 994,000Less: Finished goods inventory, December 31 120,000
Costs of goods sold 874,000Gross profit 626,000Operating Expenses
Administrative expenses 300,000
Sales commissions 150,000
Delivery expenses 100,000
Total operating expenses 550,000
Net income
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(c) Assume that Hitech Manufacturing Cooperations ledgers show the following
balances as at 31/12/2010
$
(i) Cash 17,000
(ii) Accounts Receivable (Net) 120,000
(iii) Prepaid Expenses 13,000
(iv) Short-Term Investments 26,000
Prepare Hitechs balance sheet (extract) as at 31/12/2010, showing the Current
Assets section
Answer:
Hitech Manufacturing CooperationBalance Sheet (partial)
For the Year Ended December 31, 2010
Current Assets $ 17,000
Cash 26,000
Short-term investments 120,000
Accounts receivable (net)Inventories
Finished goods $ 120,000
Work in process 50,000
Raw materials 20,000 190,000
Prepaid expenses 13,000
Total current assets $ 366,000