Managerial Accounting

The statement of cash flows is prepared according to the __________ basis of accounting.

Accrual

Relevant costs are those costs that are:

All of the options

Management can be held accountable for all the direct operating expenses of the business.

True

Net working capital is "Current Assets - Current Liabilities".

True

Scatter diagram approach gives an approximation of measuring the fixed costs

True

'For preparing the statement of cash flows which of the following statement (s) is/ are needed.

Balance Sheet, Income Statement, Statement of Retained Earnings

During the first quarter of the previous year, the current ratio at the blue hotel was 1.25 to 1. Three months into the new year, the current ratio is 2 to 1. For every dollar of current liabilities, the hotel now has two dollars of current assets. Which of the following groups is most likely to be pleased by this increase in the hotel's current ratio?

Creditors

All of the following are sections of the statement of cash flows except the:

Earning Activities Section (Investing, Operating, and Financing are all sections)

Depreciation of fixed assets is not shown on the income statement.

False

Management can be held accountable for all the fixed expenses of the business.

False

Scatter diagram approach gives a precise measurement of the fixed costs.

False

Variable cost per unit varies with the level of sales/ business volume.

False

Direct method' is the most used or common method for converting net income to net cash flows.

False (Indirect is the most used)

Statement of cash flows explains the change in cash by showing the effects on cash of a business's operating, investing, and financing activities for a period of time.

True

If you expect the revenue to be more than the revenue at indifference point, you should choose__________

Fixed cost option

Ratios are particularly useful to managers as indicators of:

How well operational goals are being achieved.

EBIT figure can be calculated from___________.

Income Statement

In equation 'Y = a+bX', X is

Independent variable

Which of the following types of ratios reveals the ability of a hospitality business to meet its short-term goals?

Liquidity ratios

Statement of cash flows is a statement that reflects the cash inflows and outflows of a business for a period of time.

True

__________ costs contain both the fix and variable cost elements.

Mixed

Which of the following are not among the typical standards used in ratio analysis?

Official standards set by government regulations

Which of the following ratios is the best overall measure of management's performance?

Operating efficiency ratio

Which of the following is not a fixed cost?

Operating supplies

Which of the following profitability ratios is calculated by dividing net income by total revenue?

Profit margin

Which of the following types of ratios shows management's overall effectiveness as measured by returns on sales and investments?

Profitability ratios

Creditors typically use ratio analysis to evaluate the __________ of a business.

Solvency

'Liquidity' measures the operation's ability to convert assets to cash

True

'Long-Term Liabilities' are obligations that are expected to be paid beyond the next 12 months, i.e. not due in the current year.

True

At 'Indifference Point' both the fixed cost and variable cost options are same for the given revenue

True

Balance Sheet reflects the financial position of the hospitality operation at a given date.

True

Balance sheet can be arranged in either 'account' format or 'report' format.

True

Creditors would be considered external users of a company's income statement.

True

Current assets normally refer to items that are to be converted to cash or used in operations within one year or a normal operating cycle.

True

Current liabilities are obligations that are expected to be satisfied within one year or a normal operating cycle.

True

Direct method' focuses on cash receipts from sales and cash disbursements from expenses.

True

For corporations, 'Net Income' is added on the 'Statement of Retained Earnings'.

True

Indirect method' starts with 'Net Income' and makes adjustments for non-cash items such as depreciation.

True

Investors would be considered external users of a company's income statement.

True

'Account format' of balance sheet shows assets first, followed by liabilities and owner's equity.

false