ACC116 Discussion Questions

A creditor is an example of management accounting user

• True

• False

Financial accounting provides information for owners and investors

• True

• False

Example of management accounting report is payroll summary.

• True

• False

Financial accounting provides information about what may happen in the future

• True

• False

Cost and management accounting must comply with Company Law

• True

• False

Information presented in financial accounting emphasise more on relevance instead of reliability.

• True

• False

Accounting information can be obtained by direct observation or by communication.

• True

• False

Management accounting is based on past and future events

• True

• False

Laguna Cafe sells beverages and cakes. All cakes are produced in the cafe's kitchen. You are required to assist the management of the cafe to identify the following costs into its function.

• Selling cost

• Advertising

• Finance

• Packaging

• Production cost

• Interest on loan

• Distribution cost

• Flour used for making cakes

• Administration cost

• Rent of the cafe's office

Classiffication of cost is the grouping of costs according to their common characteristics. The important ways of classification of costs are by element, nature, function and behaviour. State any FOUR (4) types of cost under 'behaviour'.