acct final
if fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000
10,769 units
Company wants to develop a cost estimating equation for its monthly cost of electricity. It has the following data: Month Cost of Electricity Direct Labor-Hours Jan $7000 750 April $7500 850 July $8500 1000 October $7250 800 What is the best estimate of its variable cost per labor hour? a. $6 b. $8 c. $4 d. $0
a
If net income is rising, but sales and the gross profit percentage remain the same, then: A. operating expenses are falling. B. operating expenses are rising. C. cost of goods sold is falling. D. cost of goods sold is rising.
a
Which if the these costs (in total or in part in part) is most likely to be characterized as variable overhead? a. Electricity used to heat, light, and cool a hospital b. salaries of quality inspectors in a production facility c. depreciation of a copy machine in the HR department d. parts used in manufacturing digital cameras
a
on which financial statement and at what amount are accounts receivable reported?
balance sheet at the net realizable value
what does the statement of cash flows link?
beginning and ending cash in the balance sheet
what does the statement of stockholders equity show?
beginning and ending equity in the balance sheet
what does the income statement link?
beginning and ending retained earnings in the statement of stockholders' equity
how are leases that are installment purchases of assets accounted for on the lessee's balance sheet?
both assets and liabilities
formula for breakeven point (units)
breakeven point (units) = fixed cost/contribution margin per unit
if a company is having problems collecting accounts receivable, how does this affect days' sales outstanding?
increase
an accrual of wages expense would produce what effect on the balance sheet?
increase liabilities and decrease equity
if a company borrows money to finance a building acquisition how is debt-to-equity affected?
increased
when a company writes off bad debt how is current ratio affected?
it is not affected
what are probable future sacrifices call and how are they reported?
liabilities on the balance sheet
net profit margin formula
net income / revenue
How should intangible assets be disclosed on the balance sheet?
net of any costs already amortized
inventory turnover formula
net sales / avg inv
Formula for Earnings Per Share
(Net Income - preferred dividends) / Common Stock Outstanding
formula for annual depreciation expense (straight line method)
(cost of asset - salvage value)/useful life
a firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales were $1,000,000. Operating profit (loss) was?
$(30,000)
if fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?
$1,875,000
formula for high low method
(highest cost - lowest cost)/(highest units - lowest units)
times interest earned formula
(operating income + depreciation)/interest expense
Days' Sales in Inventory formula
(Average or Ending Inventory / Cost of Goods Sold) * 365
quick ratio formula
(Current Assets - Inventory) / Current Liabilities
Cedair Corp paid 430,000 in prepaid rent on May 1, how much do they report at year end?
288,000
Formula for ROE
Net Income / Avg stockholders' equity
as volume increases, average cost per unit decreases because total __________ costs ___________________
fixed, stay the same
Developed by Congress due to concerns over the quality of corporate financial reporting. Goal was to increase the level of confidence that external users have in financial statements.
Sarbanes-Oxley Act of 2002
formula which represents a mixed cost
Y = a + bX
formula associated with mixed costs
Y = a +bX
As volume increases, average cost per unit decreases because. A. Total fixed costs stay the same B. Total variable costs stay the same C. Total variable costs increase D. Total fixed costs increase
a
Which of the following statements is true? a. a company that uses an accelerated method of depreciation for tax reporting and straight line depreciation for financial reporting purposes will create a deferred tax liability in the year the asset is required. b. erroneously reporting leases has no effect on return on assets c. net deferred tax liabilities result when taxable income exceeds financial reporting income. d. all financial commitments disclosed in the notes to the financial statements must be included as liabilities on the balance sheet
a
Which statement is FALSE? a. Advertising is part of fixed overhead b. Over the past century cost structures in the typical company have shifted significantly as a consequence of breakthroughs in technology, resulting in a major downward shift in direct labor as a percentage of total manufacturing costs. c. Changes in technology during the period of cost observations are a concern in estimating cost. d. Either the high low method or least squares regression can be useful in separating mixed costs into variable and fixed portions.
a
an expense that is incurred but not yet paid or recorded
accrued expense
collection of an accounts receivable increases a ________________ and decreases a _______________
asset, asset
Company has collected the following info about operating expenditures for its delivery truck fleet for the past five years: Year Miles Operating Costs 2016 55000 195000 2017 70000 210000 2018 50000 180000 2019 65000 205000 2020 85000 225150 What is the best estimate of total operating expenses for 2021 using the high-low method based on total expected miles of 60,000? a. 201000 b. 192900 c. 196000 d. 195000
b
Fixed costs are LEAST likely to respond to a. Capital expenditures made by the company b. Short-term changes in the amount of activity c. Changes in committed expenditures d. Discretionary investments in the company
b
method used to determine variable cost per unit when costs and units are given over an incremental period
high low method
If services are rendered on account, then liabilities will _____________
increase
corporation consistently selects accounting methods that reduce the amount of income taxes it pays. which of the following statements is true? a. as long as HHBL complies with tax laws, its financial statements are properly stated b. HHBL is not in compliance with Sarbanes-Oxley c. Sometimes it is appropriate to use a different accounting method for financial reporting than has been used to compute income taxes. d. if different methods of revenue recognition and matching result in more appropriate financial reporting, it is required that HHBL use these methods for computing income taxes.
c
leases that are in essence installment purchases of assets should be accounted for a. as liabilities but not assets b. as neither assets nor liabilities c. as both assets and liabilities d. as assets but not liabilities
c
a high debt to equity ratio indicates what?
company is highly leveraged
cost to cost method formula
costs to date / total estimated costs
formula for current ratio
current assets/current liabilities
errors in inventory reporting at year end affect which of the following? a. inventory for the next year b. gross profit c. COGS d. net income
d
if bad debt expense is determined by estimating uncollectable accounts receivable, the write-off of a particular account would affect allowance for doubtful accounts how?
decrease
as production increases, what happens to fixed cost per unit?
decreases
earnings from operating a business have what relationship with equity?
earnings increase equity
how is income recognized on an income statement when sold?
expense
the payment of a cash dividend would be classified as a ____________ activity
financing
depreciation of a copy machine in the HR dept would be best categorized as what kind of cost?
fixed
how are salaries reported on a balance sheet?
not at all
A company spends $20 million dollars for an office building. Over what period should the cost be expensed?
over the useful life of the building
expenses that are paid and recorded in an asset account before they are used or consumed
prepaid expenses
This ratio indicates a company's capacity to pay its current liabilities without needing to sell its inventory or get additional financing.
quick ratio
amount of net income left over for the business after it has paid out dividends to its shareholders
retained earnings
Accounting document which reports on changes in equity over a period of time
statement of stockholders' equity
an increase in volume within the relevant range will have what effect on total fixed costs?
stay the same
As production increases, what happens to variable cost per unit?
stays the same
Costs which are constant within certain ranges of activity but differ outside those ranges of activity.
step costs
costs which are constant within certain ranges of activity but differ outside those ranges
step costs
is cost of demolition added to the building or the land?
the land
measure of a company's ability to meet its debt obligations based on its current income. can be calculated as EBIT/total interest expense
times interest earned
an increase in volume within the relevant range will cause ___________ costs to stay the same
total fixed
debt to equity ratio
total liabilities/total stockholders' equity
true or false: to recognize revenue some performance obligation must be met
true
advertising is part of ______________ costs
variable
in a service-type business, revenue is recognized when?
when the service is performed
