Qusetion: 1. Which financial statement is prepared first?
Balance sheet
Income statement
Retained earnings statement
Statement of cash flows
2. Management's views on the company's short-term debt paying ability, expansion financing, and results of operations are found in which of the following?
auditor's report
management discussion and analysis section
notes to the financial statements
president's state of the company report
3. Using the following balance sheet and income statement data, what is the earnings per share?
Current assets $ 7,000 Net income $ 12,000
Current liabilities 4,000 Stockholders' equity 27,000
Average assets 40,000 Total liabilities 9,000
Total assets 30,000
Average common shares outstanding was 10,000
$3.60
$4.00
$1.20
$0.83
4. Which of the following is not considered a measure of liquidity?
Current ratio
Working capital
Debt to total assets ratio
Each of the above are liquidity measures
5. Which pair of accounts follows the rules of debit and credit, in relation to increases and decreases, in the same manner?
Accounts Payable and Rent Expense
Repair Expense and Notes Payable
Prepaid Insurance and Advertising Expense
Service Revenues and Equipment
6. Which of the following is not part of the recording process?
Analyzing transactions
Preparing a trial balance
Entering transactions in a journal
Posting journal entries
7. An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of______________ .
establishment of responsibility is violated
independent internal verification is violated
documentation procedures is violated
segregation of duties is violated
8. The following information was taken from Mitchell Company cash budget for the month of July:
Beginning cash balance $50,000
Cash receipts 48,000
Cash disbursements 68,000
If the company has a policy of maintaining end of the month cash balance of $50,000, the amount the company would have to borrow is which of the following?
$20,000
$10,000
$30,000
$12,000
9. The major reporting standard for presenting managerial accounting information is which of the following?
relevance
generally accepted accounting principles
the cost principle
the current tax law
10. A manufacturing process requires small amounts of glue. The glue used in the production process is classified as which of the following?
period cost
indirect material
direct material
miscellaneous expense
11. Sales commissions are classified as which of the following?
overhead costs
period costs
product costs
indirect labor
12. Manufacturing costs include which of the following?
direct materials and direct labor only
direct materials and manufacturing overhead only
direct labor and manufacturing overhead only
direct materials, direct labor, and manufacturing overhead
13. Hardigan Manufacturing Company reported the following year-end information:
beginning work in process inventory, $80,000
cost of goods manufactured, $980,000
beginning finished goods inventory, $50,000
ending work in process inventory, $70,000
and ending finished goods inventory, $40,000
How much is Hardigan's cost of goods sold for the year?
$980,000
$990,000
$970,000
$1,000,000
14. Which statement below describes a variable cost?
It varies in total with changes in the level of activity.
It remains constant in total over different levels of activity.
It varies inversely in total with changes in the level of activity.
It varies proportionately per unit with changes in the level of activity.
15. Which of the following is an underlying assumption of CVP analysis?
Factors other than changes in activity may affect costs.
Cost classifications are reasonably accurate.
Increases in inventories cause increase in total fixed costs.
Unit costs remain the same over the relevant range.
16. A company has total fixed costs of $210,000 and a contribution margin ratio of 30%. How much sales are necessary to break even?
$125,000
$630,000
$700,000
$54,000
17. How much sales are required to earn a target income of $80,000, if total fixed costs are $100,000 and the contribution margin ratio is 40%?
$300,000
$200,000
$450,000
$330,000
18. Which one of the following is correct concerning a budget?
It can act as a substitute for management.
It is a written statement of management's plans for a specified future time period.
It is required for all business operations.
It is used only by manufacturing companies.
19. Which one of the following is one of the factors that must be present, if budgets are to be effective?
All upper level managers should verify the validity of the amounts in the budget.
Research and analysis should occur in order to set realistic goals.
The company must have the stockholders' approval of the budget.
The budget committee must prepare the budget.
20. Long-range planning does which of the following?
generally presents more detailed information than an annual budget
generally encompasses a longer period of time than an annual budget
is usually more accurate than an annual budget
is prepared on a quarterly basis if the budget is prepared on a quarterly basis
21. Which one of the following is a source of information used to prepare the budgeted income statement?
Cash budget
Budgeted balance sheet
Selling and administrative expense budget
Capital expenditure budget
22. Which statement is true concerning a static budget report?
It considers performance at numerous activity levels.
It is appropriate in evaluating a manager's effectiveness in controlling fixed costs.
It should be used when the actual level of activity is materially different from the master budget activity level.
It is most effective when evaluating a manager's effectiveness in controlling variable costs.
23. Which type of center is the housekeeping department of a manufacturing company?
A segment
A profit center
A cost center
An investment center
24. The best measure of the performance of the manager of a profit center is which of the following?
rate of return on investment
success in meeting budgeted goals for controllable costs
amount of controllable margin generated by the profit center
amount of contribution margin generated by the profit center
25. Merck Pharmaceuticals is evaluating its Vioxx division, an investment center. The division has a $45,000 controllable margin and $300,000 of sales. How much will Merck's average operating assets be when its return on investment is 10%?
$450,000
$495,000
$300,000
$255,000
26. Financial and managerial accounting are both concerned with the economic events of an enterprise. Similarities between financial and managerial accounting do exist, but they have a different focus. Briefly distinguish between financial and managerial accounting as they relate to
(1) the primary users,
(2) the type and frequency of reports,
(3) the purpose of reports, and
(4) the content of reports.