Answer 16

1) On accrual basis concept cost is generally recognized when (1) occur, and (2) expensed.

The adoption of the sale basis is the accountant’s practical solution to the extremely difficult problem of measuring revenue under conditions of uncertainty as to the future.

2 ) Why does the concept of matching underlie the cost flows in a job order costing system?

The matching principle indicates that expenses should be allocated to the appropriate periods involved. In this case of job Order costing ,costs are accumulated by jobs, orders, contracts, or lots. So we can say that as per matching principal we record the cost to the paticular job during the period in w=hich the job is continued or finished. So we can say that, concept of matching underlie the cost flows in a job order costing system

Chapter 17

1) Why does the concept of cost management underlie the five steps in preparing a process cost report?

cost management underlie the five steps in preparing a process cost report

·         To decide how much does it cost to produce each unit of product for each department

·         Which production cost is the highest—direct materials, direct labor, or overhead

·         Where are we having difficulties in the production process? In any particular departments

·         Are we seeing any significant changes in unit costs for direct materials, direct labor, or overhead

·         How many units flow through each processing department each month?

2) Why does process costing in the management process reinforce the concepts of cost recognition and cost measurement to produce business results?

Answer : Proccess costing is accounting method that find the accumulated direct cost and allocate indirect cost of manufacturing. As per process costing generaaly cost is recognised during the paricuar batch which may be include entire month production. Process costing is a type of operation costing which is used to ascertain the cost of a product at each process or stage of manufacture. so we can say that process costing in the management process reinforce the concepts of cost recognition and cost measurement to produce business results

Chapter 18

2) Why do the concepts of relevance and reliability underlie the five steps in implementing activity-based costing (ABC)?

activity-based costing (ABC) is a method for assigning costs to products, services project t, task and acquisitions based on the activities that go in to them and resources consumed by theses activities. Relevance requires that the financial accounting information should be such that the users need it and it is expected to affect their decisions and the concept ofReliability requires that the information should be accurate and true and fair.

(1) they both are critical for the quality of the financial information,

(2) They both are related such that an emphasis on one will hurt the other and vice versa.

(3) we have to trade-off between them.

(4) Accounting information is relevant when it is provided in time

Management is moved to adopt ABC by the desire to improve costing accuracy of the projects or other initiatives.So we can say that ,the concepts of relevance and reliability underlie the five steps in implementing activity-based costing (ABC)