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

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

The materials price variance is calculated using the:

difference between the actual price and the standard price, multiplied by the standard quantity allowed

difference between the actual price and the standard price, multiplied by the actual quantity purchased

difference between the actual quantity used and the standard quantity allowed, multiplied by the standard price

difference between the actual quantity purchased and the standard quantity allowed, multiplied by the actual price

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Verified step by step guidance

Understand the concept of materials price variance: It measures the difference between the cost of materials at the actual price and the cost of materials at the standard price, based on the quantity purchased.

Identify the formula for materials price variance: The formula is (Actual Price - Standard Price) × Actual Quantity Purchased.

Break down the components: 'Actual Price' refers to the price paid per unit of material, 'Standard Price' is the predetermined cost per unit, and 'Actual Quantity Purchased' is the total quantity of materials bought during the period.

Clarify why the formula uses 'Actual Quantity Purchased': This ensures the variance reflects the actual cost impact based on the quantity bought, not the quantity used or allowed.

Apply the formula step-by-step: Subtract the Standard Price from the Actual Price to find the price difference, then multiply this difference by the Actual Quantity Purchased to calculate the materials price variance.