Questions -
1. What is the accounting equation? Suppose your company sold $12,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation?
2. What are the four basic financial statements? Describe the statement of cash flows, and explain why it is important.
3. What is the Sarbanes-Oxley Act? Why is it important to accounting investors?
4. What is horizontal analysis of financial statements? Which analysis do you think is better-horizontal or vertical?
5. Why is capital budgeting important? What is the cash payback period? How is it calculated?
6. What are five different types of decisions that could use incremental analysis? What are the factors to be considered in retaining or replacing equipment?
7. How is a transfer price determined? Describe the cost-based method. Do you think it is better than the market-based method?
8. What are direct materials? Give an example of a direct material. How do direct materials differ from indirect materials? Give an example of an indirect material.
9. What is CVP analysis? Why is this an important analysis for a company to perform?
10. What is a budget? How does this differ from a long-term plan? Which do you think is more important to do if you can only prepare one of them?
11. What is a profit center? What is the controllable margin used for? How does a profit center differ from a cost center?