ACC561_r5_financial_statement_review
Select an American corporation.
Visit its
website and download the Income Statement, Statement of Stockholders Equity,
Balance Sheet, and Statement of Cash Flows.
Complete
the University of Phoenix Material: Financial Statement Review Worksheet that
is attached.
Submit
the completed worksheet, copies of the downloaded financial statements, and a
link to the website.
Financial
Statement Review
What is
the net income for the current fiscal year? Is it up or down from the prior
year? Why would this information be important to investors?
What is
the ending balance in stockholders’ equity? Why would a labor union potentially
be interested in this information?
What is
the total value of assets? Why would this information be important to a
potential creditor?
What is
the total cash flow from operation?
What
financial statement user would find this information most important.
ACC561
Week 2 – Accounting Methods
This week's activity
illustrates the role a company's accounting method plays in financial statement
reporting. In this assignment, students evaluate the events occuring in a
business setting and determine how to properly analyze those events to identify
the impact on both cash and accrual accounting methods.
Assignment Steps
Resources: Generally Accepted
Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC)
Tutorial help on Excel® and
Word functions can be found on the Microsoft® Office website.
There are also additional tutorials via the web offering support for Office
products.
Scenario: BizCon, a consulting firm,
has just completed its first year of operations. The company's sales growth was
explosive. To encourage clients to hire its services, BizCon offered 180-day
financing – meaning its largest customers do not pay for nearly 6 months.
Because BizCon is a new company, its equipment suppliers insist on being paid cash
on delivery. Also, it had to pay up front for 2 years of insurance. At the end
of the year, BizCon owed employees for one full month of salaries, but due to a
cash shortfall, it promised to pay them the first week of next year.
As the senior accountant,
the Chief Financial Officer has asked you to prepare a memo to be sent to
management notifying them of the delayed wage payments.
Prepare the memo in a
maximum 700 words including the following information to better outline the
situation:
- Explain how cash and accrual accounting
differs for each of the events listed in the above scenario and describe
the proper accrual accounting.
- Assess how at the end of the year, BizCon
reported a favorable net income, yet the company's management is concerned
because the company is very short of cash. Explain to management how
BizCon could have positive net income and yet run out of cash.
Format your assignment consistent
with APA guidelines.
Purpose of
Assignment
This week's focus is
on the preparation of financial reports for internal users, such as managers.
This case study applies the concepts of managerial accounting, through
comparative and ratio analysis, and requires students to identify financial
data needed by managers for decision making.
About Your Signature
Assignment
This signature
assignment is designed to align with specific program student learning
outcome(s) in your program. Program Student Learning Outcomes are broad
statements that describe what students should know and be able to do upon
completion of their degree. The signature assignments may be graded with an
automated rubric that allows the University to collect data that can be
aggregated across a location or college/school and used for program
improvements.
Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and
Exchange Committee (SEC)
Tutorial help on Excel®
and Word functions can be found on the Microsoft® Office website.
There are also additional tutorials via the web offering support for Office
products.
Scenario: You are a loan officer for White Sands Bank of Taos. Paul Jason,
president of P. Jason Corporation, has just left your office. He is interested
in an 8-year loan to expand the company's operations. The borrowed funds would
be used to purchase new equipment. As evidence of the company's
debt-worthiness, Jason provided you with the following facts:
|
|
2017 |
2016 |
|
Current Ratio |
3.1 |
2.1 |
|
Asset Turnover |
2.8 |
2.2 |
|
Net Income |
Up 32% |
Down 8% |
|
Earnings per Share |
$3.30 |
$2.50 |
Jason is a very
insistent (some would say pushy) man. When you told him you would need
additional information before making your decision, he acted offended and said,
“What more could you possibly want to know?” You responded you would , at
minimum, need complete, audited financial statements.
Develop a minimum 700-word examination of the financial statements and include
the following:
- Explain why you
would want the financial statements to be audited.
- Discuss the
implications of the ratios provided for the lending decision you are to make.
That is, does the information paint a favorable picture? Are these ratios
relevant to the decision? State why or why not.
- Evaluate trends
in the performance of P. Jason Corporation. Identify each performance
measure as favorable or unfavorable and explain the significance of each.
- List three other
ratios you would want to calculate for P. Jason Corporation, and in your
own words explain in detail why you would use each.
- As the loan
officer, what else would you do to gain a better understanding of Paul
Jason's, and the Corporation's financial picture and why?
- Based on your
analysis of P. Jason Corporation, will you recommend approval for the
requested loan? Provide specific details to support your decision.
Format the assignment consistent with APA guidelines.
ACC561
Week 3 Financial Statement Analysis and Decision Making Activity
Purpose of Assignment
The activity requires
students to perform research and analysis on competing companies and the
potential implications of international standards. This real-world analysis is
key to understanding how a company's profitability, liquidity, and solvency can
be useful for all users. Students also learn to analyze financial statements
and use managerial tools to make decisions from an investor's and creditor's
standpoint.
Assignment Steps
Resources: U.S. Securities and Exchange Commission (SEC), websites such as Annual
Reports (AnnualReports.com)
Tutorial help on Excel®
and Word functions can be found on the Microsoft® Office website.
There are also additional tutorials via the web offering support for Office
products.
Select two competing companies, one of which must be an international company,
and locate annual reports for these two companies on the Internet.
Research the two companies on the Internet and download the Income Statement,
Statement of Shareholders' Equity, Balance Sheet, and Statement of Cash
Flows.
Develop a minimum 525-word examination of the financial statements and include
the following:
- Make a 5-year
trend analysis for each company, using 2011 as the base year, of:
- Net sales.
- Net income.
Discuss the significance of the trend results.
- Compute for 2015
and 2014 the:
- Debt to assets
ratio.
- Times interest
earned. How would you evaluate each company's solvency?
- Compute for 2015
and 2014 the:
- Profit margin.
- Asset turnover.
- Return on
assets.
- Return on common
stockholders' equity. How would you evaluate each company's
profitability?
- Evaluate the
financial opportunity presented by the companies. If you were a creditor,
which company would you be more likely to lend money to? Defend your
decision.
- Which company
would you recommend as an investment? Discuss the items that were
considered in your decision.
- Research global
implications for the international company selected. How might changing
environmental factors affect organizational choices?
- Consider the
ethical climate (internal or external) of your chosen companies. Describe
the ethical issues and impact on the stakeholders. What has been/is being
done to resolve these issues? Do you agree with these methods for
resolution? If not, what might you do differently?
Show your work in Microsoft® Word or Excel®.
Complete calculations/computations using Microsoft® Word or Excel®.
Include the four financial statements along with your assignment.
Format your assignment consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
ACC561
Week 4 Production Costs
Purpose of
Assignment
The materials covered
this week distinguish between the different costing methods and provides needed
tools for decision making. This case study focuses on determining equivalent
units in a production business setting.
Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and
Exchange Committee (SEC)
Tutorial help on Excel®
and Word functions can be found on the Microsoft® Office website.
There are also additional tutorials via the web offering support for Office
products.
Scenario: Davis Skaros has recently been promoted to production manager. He has
just started to receive various managerial reports, including the production
cost report you prepared. It showed his department had 2,000 equivalent units
in ending inventory. His department has had a history of not keeping enough
inventory on hand to meet demand. He has come to you, very angry, and wants to
know why you credited him with only 2,000 units when he knows he had at least
twice that many on hand.
Prepare a maximum 700-word informal memo and explain to Mr. Skaros why his
production cost report showed only 2,000 equivalent units in ending inventory.
Using a professional tone, explain to him clearly why your report is accurate.
Format the assignment consistent with APA guidelines.
ACC561_r5_financial_statement_review
Select an American corporation.
Visit its
website and download the Income Statement, Statement of Stockholders Equity,
Balance Sheet, and Statement of Cash Flows.
Complete
the University of Phoenix Material: Financial Statement Review Worksheet that
is attached.
Submit
the completed worksheet, copies of the downloaded financial statements, and a link
to the website.
Financial
Statement Review
What is
the net income for the current fiscal year? Is it up or down from the prior
year? Why would this information be important to investors?
What is
the ending balance in stockholders’ equity? Why would a labor union potentially
be interested in this information?
What is
the total value of assets? Why would this information be important to a
potential creditor?
What is
the total cash flow from operation?
What
financial statement user would find this information most important.
ACC561
Week 5 Cost Behavior Analysis
Purpose
of Assignment
The case
study focuses on break-even, margin of safety, and incremental analysis and
allows students to experience working through a business scenario to apply
these tools in managerial decision making. Students are required to make
decisions and provide solutions based on their evaluation of financial
data.
Assignment
Steps
Resources:
Generally
Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee
(SEC)
Tutorial
help on Excel® and Word functions can be found on the Microsoft®
Office website. There are also additional tutorials via the web offering
support for Office products.
Scenario:
Shelley
Jones has just been elected as president of the Circular Club of Auburn,
Kansas, and she has been asked to suggest a new fundraising activity for the
club. After a considerable amount of research, Shelley proposed the Circular
Club sponsor a professional rodeo. In her presentation to the club, Shelley
recommends the fundraiser become an annual activity with the following goals:
- Continue to grow each year
- Give back to the community
- Provide the club a presence
in the community
Shelley's
goal in the first year is to have an activity that would become an “annual
community event” and would break even the first year and raise $5,000 the
following year. In addition, based on the experience of other communities,
Shelley believed a rodeo could grow in popularity so the club would eventually
earn an average of $20,000 annually.
A rodeo
committee was formed. Shelley contacted the world's oldest and largest
rodeo-sanctioning agency to apply to sponsor a professional rodeo. The
sanctioning agency requires a rodeo to consist of the following five events:
Bareback Riding, Bronco Riding, Steer Wrestling, Bull Riding, and Calf Roping,
Team Roping and Women's Barrels. Prize money in the amount of $3,000 would be
paid to winners in each of the seven events. Members of the rodeo committee
contracted with RJ Cattle Company, a livestock contractor on the rodeo circuit,
to provide bucking stock, fencing, and chutes. Realizing costs associated with
the rodeo were tremendous and ticket sales would probably not be sufficient to
cover the costs, the rodeo committee sent letters to local businesses soliciting
contributions in exchange for various sponsorships. Exhibiting Sponsorships are
$1,000 to exhibit products or services, while Major Sponsorships are $600, and
Chute Sponsorships are $500 to have the name of the sponsor's business on one
of the six bucking chutes. For a contribution of $100, individual sponsors will
be included in a Friends of Rodeo list found in the rodeo programs.
A local
youth group will be contacted to provide concessions to the public and divide
the profits with the Circular Club. The Auburn Circular Club Pro Rodeo Roundup
will be held on June 1, 2, and 3. The cost of an adult ticket is set at $8 in
advance or $10 at the gate; the cost of a ticket for a child 12 or younger is
set at $6 in advance or $8 at the gate. Tickets are not date-specific. Rather,
one ticket will admit an individual to one performance of his or her choice–
Friday, Saturday, or Sunday. The rodeo committee is able to secure a location
through the county supervisors' board at a nominal cost to the Circular Club.
The arrangement allows for the use of the county fair grounds and arena for a
one-week period. Several months prior to the rodeo, members of the rodeo
committee were notified the bleachers at the arena would hold 2,500 patrons. On
Saturday night, paid attendance was 1,663, but all seats were filled due to
poor gate controls. Attendance was 898 Friday and 769 on Sunday.
The
following revenue and expense figures relate to the first year of the rodeo.
Receipts
Contributions
from sponsors $22,000
Receipts
from ticket sales $28,971
Share of
concession profits $1,513
Sale of
programs
$600
Total
receipts
$53,084
Expenses
Livestock
contractor
$26,000
Prize money
$21,000
Contestant
hospitality
$3,341*
Sponsor
signs for arena $1,900
Insurance
$1,800
Ticket
printing
$1,050
Sanctioning
fees
$925
Entertainment
$859
Judging
fees
$750
Port-a-potties
$716
Rent
$600
Hay for
horses
$538
Programs
$500
Western
hats to first 500 children $450
Hotel
rooms for stock contractor $325
Utilities
$300
Sand for
arena
$251
Miscellaneous
fixed costs
$105
Total
expenses
$61,410
Net loss
$ (8,326)
*The club
contracted with a local caterer to provide a tent and food for the contestants.
The cost of the food was contingent on the number of contestants each evening.
Information concerning the number of contestants and the costs incurred are as
follows:
Contestants
Total Cost
Friday
68
$998
Saturday
96
$1,243
Sunday
83
$1,100
$3,341
On
Wednesday after the rodeo, members of the rodeo committee met to discuss and
critique the rodeo. Jonathan Edmunds, CPA and President of the Circular Club,
commented that the club did not lose money. Rather, Jonathan said, “The club
made an investment in the rodeo.” The rodeo committee has requested an
analysis of the rodeos performance and evaluation of the CPA's review.
Create a minimum 10-slide
presentation, including detailed speaker notes, as the committee's consultation
team and respond to the following:
- What did Jonathan Edmunds
mean when he said the club had made an investment in the rodeo? Is his
comment consistent with Shelley's idea that the club should have a
fundraiser that would:
- Continue to get better each
year.
- Give back to the community.
- Provide the club a presence
in the community? Why or why not?
- Shelley, Jonathan, and
Adrian Stein, the Fundraising Chairperson, are beginning to make plans for
next year's rodeo. Shelley believes by negotiating with local feed stores,
inn- keepers, and other business owners, costs can be cut dramatically.
Jonathan agrees. After carefully analyzing costs, Jonathan has estimated
the fixed expenses can be pared to approximately $51,000. In addition,
Jonathan estimates variable costs are 4% of total gross receipts. After
talking with business owners who attended the rodeo, Adrian is confident
the funds solicited from sponsors will increase. Adrian is comfortable in
budgeting revenue from sponsors at $25,600. The local youth group is
unwilling to provide concessions to the audience unless they receive all
of the profits. Not having the personnel to staff the concession booth,
members of the Circular Club reluctantly agree to let the youth group have
100% of the profits from the concessions. In addition, members of the
rodeo committee, recognizing the net income from programs was only $100,
decide not to sell rodeo programs next year.
- Compute the break-even
point in dollars of ticket sales assuming Adrian and Jonathan are correct
in their assumptions.
- Shelley has just learned you
are calculating the break-even point in dollars of ticket sales. She is
still convinced the Club can make a profit using the assumptions above
(second bullet point above).
- Calculate the dollars of
ticket sales needed to earn a target profit of $6,000.
- Calculate the dollars of
ticket sales needed to earn a target profit of $12,000.
- Are the facilities at the
fairgrounds adequate to handle crowds needed to generate ticket revenues
calculated above (third bullet point above) to earn a $6,000 profit? Show
calculations to support your answers.
- A few members in the
Circular Club do not want to continue with the annual rodeo. However,
Shelley is insistent the Club must continue to conduct the rodeo as an
annual fundraiser. Shelley argues she has spent hundreds of dollars on
western boots, hats, and other items of clothing to wear to the rodeo. Are
the expenses related to Shelley's purchases of rodeo clothing relevant
costs? Why or why not?
- Rather than hire the local
catering company to cater the Contestant Hospitality Tent, members of the
Circular Club are considering asking Shady's Bar-B-Q to cater the event in
exchange for a $600 Major Sponsor spot. In addition, The Fun Shop, a local
party supply business, will be asked to donate a tent to use for the
event. The Fun Shop will also be given a $600 Major Sponsor spot. Several
members of the Club are opposed to this consideration, arguing that the
two Major Sponsor spots will take away from the money to be earned through
other sponsors. Adrian Stein has explained to the members the Major
Sponsor signs for the arena cost only $48 each. In addition, there is more
than enough room to display two additional sponsor signs. What would you
encourage the Club to do concerning the Contestant Hospitality Tent? Would
your answer be different if the arena were limited in the number of
additional signs that could be displayed? What kind of cost would you
consider in this situation that would not be found on a financial
statement?
- Assume you are elected chair
of the rodeo committee for next year. What steps would you suggest the committee
take to make the rodeo profitable?
Show your work in Microsoft®
Word or Excel®.
Complete calculations/computations using
Microsoft® Word or Excel®.
Format the assignment consistent
with APA guidelines.
Click the Assignment Files tab to submit
your assignment.
ACC561
Week 5 Cost-Volume-Profit Analysis
Purpose of
Assignment
The Case Study focuses
on CVP (Cost-Volume-Profit), break-even, and margin of safety analyses which
allows students to experience working through a business scenario and applying
these tools in managerial decision making.
Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and
Exchange Commission (SEC)
Tutorial help on Excel®
and Word functions can be found on the Microsoft® Office website.
There are also additional tutorials via the web offering support for Office
products.
Scenario: Mary Willis is the advertising manager for Bargain Shoe Store. She is
currently working on a major promotional campaign. Her ideas include the
installation of a new lighting system and increased display space that will add
$24,000 in fixed costs to the $270,000 in fixed costs currently spent. In
addition, Mary is proposing a 5% price decrease ($40 to $38) will produce a 20%
increase in sales volume (20,000 to 24,000). Variable costs will remain at $24
per pair of shoes. Management is impressed with Mary's ideas but concerned
about the effects these changes will have on the break-even point and the
margin of safety.
Complete the following:
- Compute the
current break-even point in units, and compare it to the break-even point
in units if Mary's ideas are used.
- Compute the
margin of safety ratio for current operations and after Mary's changes are
introduced (Round to nearest full percent).
- Prepare a CVP
(Cost-Volume-Profit) income statement for current operations and after
Mary's changes are introduced.
Prepare a maximum 700-word informal memo to management addressing Mary's
suggested changes.
- Explain whether
Mary's changes should be adopted. Why or why not? Analyze the above information
(three bullet points above) and use this information to support your
suggestion.
Show your work in Microsoft® Word or Excel®.
Complete calculations/computations using Microsoft® Word or Excel®.
ACC561
Week 6 Managerial Analysis
Purpose
of Assignment
This
comprehensive case requires students to evaluate a static budget and prepare
flexible budgets to meet managerial needs. Students are required to calculate
and analyze variances and discuss how variances are critical to managerial
decision making.
Assignment
Steps
Resources: Generally Accepted Accounting
Principles (GAAP), U.S. Securities and Exchange Committee (SEC), Green Pastures
Static Budget Income Statement
Tutorial
help on Excel® and Word functions can be found on the Microsoft®
Office website. There are also additional tutorials via the web offering
support for Office products.
Scenario:
Green
Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass,
specializing in the boarding of broodmares and their foals. A recent economic
downturn in the thoroughbred industry has led to a decline in breeding
activities, and it has made the boarding business extremely competitive. To
meet the competition, Green Pastures planned in 2017 to entertain clients,
advertise more extensively, and absorb expenses formerly paid by clients such
as veterinary and blacksmith fees.
The
budget report for 2017 is presented as an attachment. As shown, the static
income statement budget for the year is based on an expected 21,900 boarding
days at $25 per mare. The variable expenses per mare per day were budgeted:
feed $5, veterinary fees $3, blacksmith fees $0.25, and supplies $0.55.
All other budgeted expenses were either semifixed or fixed.
During
the year, management decided not to replace a worker who quit in March, but it
did issue a new advertising brochure and did more entertaining of
clients.
Develop a minimum 700-word examination
of the financial statements and include the following:
- Based on the static budget
report:
- What was the primary
cause(s) of the loss in net income?
- Did management do a good,
average, or poor job of controlling expenses?
- Were management's decisions
to stay competitive sound?
- Prepare a flexible budget
report for the year.
- Based on the flexible budget
report:
- What was the primary
cause(s) of the loss in net income?
- Did management do a good,
average, or poor job of controlling expenses?
- Were management's decisions
to stay competitive sound?
- What course of action do you
recommend for the management of Green Pastures?
Show your work in Microsoft®
Word or Excel®
ACC561
Week 6 Final Exam SCORE 100 PERCENT
Question 1
Ben
Gordon, Inc. manufactures 2 products, wheels and seats. The company has
estimated its overhead in the assembling department to be $660,000. The company
produces 300,000 wheels and 600,000 seats each year. Each wheel uses 2 parts,
and each seat uses 3 parts. How much of the assembly overhead should be
allocated to wheels?
$264,000
$282,856
$165,000
$220,000
Question 2
Which of
the following will not result in an unfavorable controllable margin
difference?
Sales under budget; costs over budget
Sales under budget; costs under budget
Sales exceeding budget; costs over budget
Sales exceeding budget; costs under budget
Question 3
Scorpion
Production Company planned to use 1 yard of plastic per unit budgeted at $81 a
yard. However, the plastic actually cost $80 per yard. The company actually
made 3,900 units, although it had planned to make only 3,300 units. Total yards
used for production were 3,960. How much is the total materials variance?
$4,860 U
$48,600 U
$900 U
$3,960 F
Question 4
Top
management notices a variation from budget and an investigation of the
difference reveals that the department manager could not be expected to have
controlled the variation. Which of the following statements is applicable?
Department managers' performances should not be evaluated based on actual
results to budgeted results.
Department managers should only be held accountable for controllable variances
for their departments.
Department managers should be held accountable for all variances from budgets
for their departments.
Department managers should be credited for favorable variances even if they
are beyond their control.
Question 5
Financial
and managerial accounting are similar in that both:
have the same primary users.
have reports that are prepared quarterly and annually.
deal with the economic events of an enterprise.
produce general-purpose reports.
Question 6
What is
the primary difference between a static budget and a flexible budget?
The static budget is prepared only for units produced, while a flexible budget
reflects the number of units sold.
The static budget is prepared for a single level of activity, while a flexible
budget is adjusted for different activity levels.
The static budget is constructed using input from only upper level management,
while a flexible budget obtains input from all levels of management.
The static budget contains only fixed costs, while the flexible budget
contains only variable costs.
Question 7
It costs
Garner Company $12 of variable and $5 of fixed costs to produce one bathroom
scale which normally sells for $35. A foreign wholesaler offers to purchase
3,000 scales at $15 each. Garner would incur special shipping costs of $1 per
scale if the order were accepted. Garner has sufficient unused capacity to
produce the 3,000 scales. If the special order is accepted, what will be the
effect on net income?
$45,000 increase
$6,000 increase
$6,000 decrease
$9,000 decrease
Question 8
Which of
the following statements concerning users of accounting information is
incorrect?
Management is considered an internal user.
Taxing authorities are considered external users.
Regulatory authorities are considered internal users.
Present creditors are considered external users.
Question 9
The entry
to record the acquisition of raw materials on account is:
Raw Materials Inventory Accounts Payable
Manufacturing Overhead Raw Materials Inventory Accounts Payable
Accounts Payable Raw Materials Inventory
Work in Process Inventory Accounts Payable
Question
10
Which of
the following is not an underlying assumption of CVP analysis?
Sales mix is constant.
Beginning inventory is larger than ending inventory.
Cost classifications are reasonably accurate.
Changes in activity are the only factors that affect costs.
Question
11
Henson
Company began the year with retained earnings of $380,000. During the year, the
company recorded revenues of $500,000, expenses of $380,000, and paid dividends
of $40,000. What was Henson’s retained earnings at the end of the year?
$460,000
$500,000
$840,000
$540,000
Question
12
Differences
between a job order cost system and a process cost system include all of the
following except the:
unit cost computations.
documents used to track costs.
point at which costs are totaled.
flow of costs.
Question
13
Danner
Corporation reported net sales of $650,000, $720,000, and $780,000 in the years
2016, 2017, and 2018, respectively. If 2016 is the base year, what percentage
do 2018 sales represent of the base?
20%
120%
108%
83%
Question
14
An
activity-based overhead rate is computed as follows:
actual overhead divided by estimated use of cost drivers.
actual overhead divided by actual use of cost drivers.
estimated overhead divided by estimated use of cost drivers.
estimated overhead divided by actual use of cost drivers.
Question
15
If a plant
is operating at full capacity and receives a one-time opportunity to accept an
order at a special price below its usual price, then:
the order will likely be rejected.
the order will likely be accepted.
fixed costs are not relevant.
only variable costs are relevant.
Question
16
Which
statement is correct?
The use of the cash basis of accounting violates both the revenue recognition
and expense recognition principles.
As long as management is ethical, there are no problems with using the cash
basis of accounting.
As long as a company consistently uses the cash basis of accounting, generally
accepted accounting principles allow its use.
The cash basis of accounting is objective because no one can be certain of the
amount of revenue until the cash is received.
Question
17
At
September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During
the month, Baxter generated revenues of $60,000, incurred expenses of $36,000,
purchased equipment for $15,000 and paid dividends of $6,000. What is the
balance in Retained Earnings at September 30, 2017?
$24,000 credit
$441,000 credit
$423,000 debit
$426,000 credit
Question
18
In
performing a vertical analysis, the base for sales revenues on the income
statement is:
net sales.
net income.
cost of goods available for sale.
sales revenue.
Question
19
Which of
the following statements is not true?
Operating leverage refers to the extent to which a company’s net income reacts
to a given change in sales.
When a company’s sales revenue is decreasing, high operating leverage is good
because it means that profits will decrease at a slower pace than revenues
decrease.
Companies that have higher fixed costs relative to variable costs have higher
operating leverage.
When a company’s sales revenue is increasing, high operating leverage is good
because it means that profits will increase rapidly.
Question
20
Hollis
Industries produces flash drives for computers, which it sells for $20 each.
Each flash drive costs $13 of variable costs to make. During April, 1,000
drives were sold. Fixed costs for March were $2 per unit for a total of $1,000
for the month. How much is the contribution margin ratio?
25%
65%
35%
75%
Question
21
Miller
Manufacturing’s degree of operating leverage is 1.5. Warren Corporation’s
degree of operating leverage is 3. Warren’s earnings would go up (or down) by
________ as much as Miller’s with an equal increase (or decrease) in sales.
2 times
1/2 times
4.5 times
1.5 times
Question
22
The
investigation of materials price variance usually begins in the:
first production department.
controller's office.
accounts payable department.
purchasing department.
Question
23
The Mac
Company has four plants nationwide that cost $350 million. The current fair
value of the plants is $300 million. The plants will be reported as assets at:
$600 million.
$300 million.
$350 million.
$700 million.
Question
24
If there
are no units in process at the beginning of the period, then:
the units to be accounted for will equal the units transferred out and the
units in process at the end of the period.
the units started into production will equal the number of units transferred
out.
only one computation of equivalent units of production will be necessary.
the company must be using a job order cost system.
Question
25
Which one
of the following is an example of a period cost?
A box cost associated with computers.
Workers' compensation insurance on factory workers' wages allocated to the
factory.
A change in benefits for the union workers who work in the New York plant of a
Fortune 1000 manufacturer.
A manager's salary for work that is done in the corporate head office.
Question
26
Which is
the last step in developing the master budget?
Preparing the budgeted balance sheet
Preparing the cash budget
Preparing the cost of goods manufactured budget
Preparing the budgeted income statement
Question
27
Are
advanced receipts from customers treated as revenue at the time of receipt? Why
or why not?
Yes, they are treated as revenue at the time of receipt because the company
has access to the cash.
Yes, the intent of the company is to perform the work and the customer is
confident that the services will be completed.
No, the amount of revenue cannot be adequately determined until the company
completes the work.
No, revenue cannot be recognized until the work is performed.
Question
28
La More
Company had the following transactions during 2016:
Sales of $9,000 on account
Collected $4,000 for services to be performed in 2017
Paid $3,750 cash in salaries for 2016
Purchased airline tickets for $500 in December for a trip to take place in 2017
What is La
More’s 2016 net income using accrual accounting?
$9,750
$5,750
$5,250
$9,250
Question
29
Kimble
Company applies overhead on the basis of machine hours. Given the following
data, compute overhead applied and the under- or overapplication of overhead
for the period:
Estimated
annual overhead cost $1,600,000
Actual
annual overhead cost
$1,575,000
Estimated
machine
hours
400,000
Actual
machine
hours
390,000
$1,560,000 applied and $15,000 underapplied
$1,560,000 applied and $15,000 overapplied
$1,600,000 applied and $15,000 overapplied
$1,575,000 applied and neither under- nor overapplied
Question
30
Based on
the following data, what is the amount of working capital?
Accounts
payable………………………………………………………..$64,000
Accounts
receivable……………………………………………………..114,000
Cash……………………………………………………………………….
70,000
Intangible
assets…………………………………………………………100,000
Inventory………………………………………………………………….
138,000
Long-term investments…………………………………………………..160,000
Long-term
liabilities……………………………… ………………………200,000
Short-term
investments……………………………………………………80,000
Notes
payable (short-term)………………………………………………..56,000
Property,
plant, and equipment………………………………………..1,340,000
Prepaid
insurance…………………………………………………………….2,000
$284,000
$332,000
$326,000
$370,000
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