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Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):

3. Is not required to follow GAAP.

Short Answer

Expert verified

GAAP refers to the accounting principles and guidelines and the correct answer is managerial accounting.

Step by step solution

01

Definition of GAAP

GAAP stands for Generally Accepted Accounting Principles and refers to some of the common sets of accounting standards that companies should follow.

02

Identification of Accounting type

The correct option is managerial accounting

Financial accounting requires GAAP as they are prepared not for internal use but they are also prepared for external users but the managerial accounting is just for internal members of the organization and does not require GAAP guidelines.

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Most popular questions from this chapter

Classifying period costs and product costs

Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers:

โ€ข Handle and shaft of edger

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1. Describe the difference between period costs and product costs.

2. Classify Langleyโ€™s costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.

Question:Preparing a schedule of cost of goods manufactured and an income statement for a manufacturing company

Gourmet Bones manufactures its own brand of pet chew bones. At the end of December 2018, the accounting records showed the following:

Balances: Beginning Ending

Direct Materials \( 13,500 \) 7,500

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Finished Goods Inventory 0 5,200

Other information:

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Sales salaries 6,000

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Net sales revenue 107,000

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Rent on plant 17,000

Customer service hotline costs 1,200

Direct labor23,000

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1. Prepare a schedule of cost of goods manufactured for Gourmet Bones for the year ended December 31, 2018.

2. Prepare an income statement for Gourmet Bones for the year ended December 31, 2018.

3. How does the format of the income statement for Gourmet Bones differ from the income statement of a merchandiser?

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