Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

According to the concept of management by exception, which of the following variances should a manager investigate?

Only variances that are significant or exceed a predetermined threshold

Only variances that occur in direct materials costs

Only favorable variances

All variances, regardless of their size or significance

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Verified step by step guidance

Understand the concept of 'management by exception,' which is a principle in managerial accounting that focuses on investigating only significant deviations from expected performance.

Recognize that the goal of management by exception is to prioritize efficiency by addressing variances that have a meaningful impact on the organization's financial performance.

Identify the types of variances mentioned in the problem: significant variances, variances in direct materials costs, favorable variances, and all variances regardless of size or significance.

Evaluate each option against the principle of management by exception. For example, significant variances align with the concept because they exceed a predetermined threshold and warrant investigation.

Conclude that the correct approach under management by exception is to investigate only variances that are significant or exceed a predetermined threshold, as this ensures focus on impactful deviations.