Illustrations and problems are mainly mechanical exercises, the objective is to build a foundation for our study of cost accounting systems that includes the This chapter is still primarily conceptual, although several illustrations and practice problems require the preparation of income statements. The chapter contains three main sections that are related to these three objectives. Of income statements that are generated from these systems. More specifically, the purpose of this chapter is to: 1) describe the five major components of a cost accounting system, including the variousĪlternatives associated with each component, 2) describe the four functions of information or cost accounting systems and 3) to illustrate the two major types In addition, the chapter includesĭiscussions of the various functions of information systems and illustrations of the basic types of financial results that are obtained from cost accounting This chapter builds a foundation for developing an operational cost accounting system by describing the main components of such a system. Explain the difference between net income determined under full absorption costing and net income determined under direct costing. Relate the matching concept to the statements in learning objectives 11 and 12.ġ4. Prepare a direct (or variable) costing income statement.ġ3. Prepare a full absorption costing income statement.ġ2. Describe the manner in which a direct (or variable) costing income statement is developed.ġ1. Describe the manner in which a full absorption costing income statement is developed.ġ0. Discuss the characteristics and requirements of the four functions referred to in objective 7.ĩ. Describe four functions of information or cost accounting systems.Ĩ. Explain the difference between perpetual and periodic systems.ħ. Discuss three types of cost flow assumptions.Ħ. Describe and compare four types of cost accumulation methods.ĥ. Discuss four types of inventory valuation methods.Ĥ. Define the concepts of pure historical, normal historical and standard cost systems.ģ. Describe the five components of a cost accounting system.Ģ. After you have read and studied this chapter, you should be able to:ġ.
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