BUS Ch 8 Quiz Question Bank

The three kinds of basic financial statements that are prepared in financial accounting are:

balance sheet, income statement, and statement of cash flows.

Which of the following is a difference between managerial accounting and financial accounting?

Financial accounting is governed by a set of generally accepted accounting principles, whereas managerial accounting uses procedures developed internally that are not required to follow generally accepted accounting principles.

In the context of budget preparation, which of the following is a disadvantage of participatory budgeting?

It can lead to budgetary slack.

Which of the following statements is true of activity-based costing (ABC)?

It is more complex than the direct labor method.

In the context of accounting, which of the following best defines cost?

The value of what is given up in exchange for something else

The first stage in activity-based costing is to:

identify specific activities that create indirect costs and determine the factors that drive the costs of these activities.

The preparation of operating budgets begins with the development of a(n) _____.

sales budget

The owners' equity of Senesta Corp., an event management company, adds up to $23 million, and its liabilities add up to $17 million. Based on the accounting equation, the assets of Senesta Corp. are worth _____.

$40 million (Liabilities+Owners' Equity)

The overstating of needs or setting low budget goals by managers in a budgeting process can result in _____.

budgetary slack

Costs are deducted from revenue in several stages to show how net income is determined. The first step in this process is to deduct:

cost of goods sold

In the context of balance sheets, accounts receivable is an example of__________.

current assets

In the context of managerial accounting,__________are costs that are incurred as the result of some specific cost object.

direct costs

The management of a sugar manufacturing company sets aside a sum of $50,000 in its budget for the purchase of new machinery that would double the production. In the given scenario, the management is in the process of planning the _____ of the company.

operating budget

In the context of balance sheets, retained earnings are a major component of the _____ section.

owners' equity

The total assets of a dairy products manufacturing company are calculated. However, a sum of $5 million from the value of the company's property, plant, and equipment assets is not taken into account as the machinery is bound to become unusable after a certain period of time. In the context of balance sheets, the amount of $5 million that is subtracted from the original value of the total assets is called _____.

accumulated depreciation

_____ is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period.

budgeting

In the context of statement of cash flows, cash flows from operating activities show the amount of cash that flowed into the company from:

dividends

To give the company's stockholders, creditors, and other external stakeholders an accurate idea of the company's overall performance, Rowensport Corporation, a multinational company, releases statements that contain details of the company's profits and losses over the past five years. In this scenario, the company is most likely involved in _____.

financial accounting

In the recent years, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have come together to:

find ways to make U.S. accounting practices more consistent with those in other nations.

In the context of financial statements of a company, cash flow statements commonly begin with _____.

net income

__________is the profit or loss a firm earns in the time period covered by the income statement.

net income

To preserve independence and impartiality, the Financial Accounting Standards Board (FASB) members are required to:

sever all ties with any firms or institutions they served prior to joining the board.

The management of an electronics company created the annual budget on a single assumed level of sales. This level of sales is to remain constant for the whole year. Later, the management finds it difficult to accurately measure the financial progress of the firm as the values in the estimated budget vary significantly from the actual sales. In the given scenario, the management most likely created a _____.

static budget

The management of a fertilizer company decides to increase the company's cash flow by increasing its financing activities. In this context, the company is most likely to:

take short-term and long-term loans.

If an auditor doesn't find any problems with the way a firm's financial statements were prepared and presented, the report will offer a(n) _____ opinion.

unqualified