1.) Explain one difference between manufacturing and merchandising business. 2.) Why is it that product costs are distinguished from period costs? 3.) Explain why financial statement analysis is important

1.) Explain one difference between manufacturing and merchandising business. 2.) Why is it that product costs are distinguished from period costs? 3.) Explain why financial statement analysis is important

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5Q: What is meant by a products contribution margin ratio and how is this ratio useful in planning...

See similar textbooks

Related questions

Q: Using the Acme hardware case, What are the alternatives for accounting for advertising and how could…

A: Manipulation of income is defined as purposely manipulating financial data in the income statement…

Q: Traditional accounting systems record only actual transac-tions. As a result, how can opportunity…

A: Financial Accounting: It refers to the process of recording the financial transactions of the…

Q: How does a product cost differ from a general, selling, and administrative cost? Give examples of…

A: Product Cost: Product costs are the expenses directly associated with making a particular product.…

Q: 2. How would components of Revenues and Expenses differ between a merchandise company versus a…

A: a. Merchandise Company - This company does buy and sells of inventory from suppliers to customers.…

Q: Which of the following is NOT one of the definitions of "Cost" concept? Select one: a. Cost means…

A: Cost is very broad term used in accounting. It denotes amount and level of expenses that can be…

Q: What is a product cost? What is a period cost? What is the difference and why is it important to…

A: Product cost refers to all costs directly pertaining to the production of a product. While, Period…

Q: An analyst must be familiar with the concepts involved in determining income. The amount of in- come…

A: Period costing is one of the methods of costing deals with costs that are not directly related to…

Q: How is the accounting cycle different for a merchandising operation, as compared to a service…

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: The income statement of a merchandising company includesa major type of cost that does not appear in…

Q: Define how costs of goods and other costs such as taxes contribute to the performance besides sales?

A: Performance of the business is usually measured by the ability of the company to generate the net…

Q: There is a relationship between cost accounting, financial accounting, and management accounting.…

A: Financial and management accounting are two of the most important branches of accounting. They are…

Q: Explain the concept of a contribution margin and describe how it differs from gross margin. Also,…

A: Contribution Margin represents the incremental money generated for each product/unit sold after…

Q: What is the purpose of Classifying Costs for Financial Statement?

A: Cost Classifications helps the management in analysing the overall effect on the assets and…

Q: How do an income statement and a balance sheet for a manufacturing company and a merchandising…

A: Manufacturing company: Manufacturing companies produce their own goods and sell it to the…

Q: 3. Determining the unit cost of manufacturing a product is an output of financial accounting.

A: Financial management consists of directing ,planning, organizing and controlling of financial…

Q: Under the historical cost accounting model the financial statement that is regarded as the most…

A: A financial statement is prepared by the management for users' decision making, it includes the…

Q: A multi- step income statement ___________. A. Seperates cost of goods sold from operating…

A: Mutli step income statement means an income statement where first gross profit is calculated by…

Q: and period costs. 6. What is the difference between gross margin and manufacturing margin?

A: The costs directly associated with the creation of product or service for sale are known as a…

Q: The branch of accounting that deals in particular with the different cost concepts in order to…

A: Accounting is a process of identifying, recording, classifying, summarising and analysing business…

Q: What is cost management, and how does it differ from management accounting and cost accounting?

A: Cost accounting and management accounting are two different forms of accounting, that is being…

Q: Please explain “capitalizing” and “expensing” as these terms apply to the cost of goods manufactured…

A: The word capitalizing and expensing are of different meanings in terms of cost of goods manufactured…

Question

1.) Explain one difference between manufacturing and merchandising business.

2.) Why is it that product costs are distinguished from period costs?

3.) Explain why financial statement analysis is important.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

1. State whether the following questions is True (T) or False (F): a. Cost accounting looks at the company as a whole and not at the various units, jobs or processes. b. Financial accounting is concerned with how and why profits arise. c. Cost accounting depends entirely on historical information.
Accounting is primarily used to?
Which of the following is NOT a period cost? Select one: O a. manufacturing costs. Ob general and administrative costs. Oc marketing costs. Od. research and development costs. Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy? Select one: a. What substitute products exist in the marketplace? Ob. Who are our most important customers? Does the strategy comply with GAAP (Generally Accepted Accounting Principles)? Od. Will adequate cash be available to implement the strategy?
Under the historical cost accounting model the financial statement that is regarded as the most important is: Select one: a. Balance sheet b. Cash flow statement c. Income statement d. They are all equally important
3. Determining the unit cost of manufacturing a product is an output of financial accounting.
How you relate the differential cost with management of revenue in management accounting.
What is meant by a products contribution margin ratio and how is this ratio useful in planning business operations?
What are the key differences between financial accounting and managerial accounting?
Which of the following represents the components of the income statement for a manufacturing business? A. Sales Revenue - Cost of Goods Sold = gross profit B. Service Revenue - Operating Expenses = gross profit C. Service Revenue - Cost of Goods Manufactured = gross profit D. Sales Revenue - Cost of Goods Manufactured = gross profit
Explain how the income statement of a manufacturing company differs from the income statement of a merchandising company.
(Management Accounting) A cost management system provides ________. A) measures of inventory value and cost of goods sold for financial reporting B) cost information for strategic management decisions C) cost information for operational control D) all of the above
Solution to financial accounting problem