A200 Final Exam Polling Questions
Indiana Inc projects $100,000 in sales for January. ½ will be cash and ½ on account. If the sales on account are received one month later, what is the total budgeted revenue and budgeted cash receipts for January? $100,000 revenue, $100,000 receipts $50,000 revenue, $100,000 receipts $100,000 revenue, $50,000 receipts $50,000 revenue, $50,000 receipts
$100,000 revenue, $50,000 receipts
Hoosier Inc projects $100,000 in sales for January and $120,000 in sales for February. ½ will be cash and ½ on account. If the sales on account are received one month later, what is the total budgeted revenue and budgeted cash receipts for February? $120,000 revenue, $100,000 receipts $110,000 revenue, $110,000 receipts $120,000 revenue, $120,000 receipts $120,000 revenue, $110,000 receipts
$120,000 revenue, $110,000 receipts
Griffin Inc. borrowed $120,000 at 10% interest on August 1, 2022. Principal and interest are due at maturity. If the company's year-end is 12/31, what amount of interest expense should be reported in the 2022 income statement? $5,000 ($120,000 * 10%*5/12) $6,000 ($120,000 * 10%*5/10) $1,000 ($120,000 * 10%/12) $0, the loan is due in 2023 $12,000 ($120,000 * 10%)
$5,000 ($120,000 * 10%*5/12)
Jones Inc. borrowed $50,000 on April 1, 2022. The loan matures in 10 months. What is the maturity date? 1/1/2023 2/28/2023 1/31/2023 12/31/2022
1/31/2023
A bakery has the capacity to produce up to 1000 cupcakes each day. Which of the following production levels is OUTSIDE of the relevant range? 0 cupcakes 900 cupcakes 1100 cupcakes 50 cupcakes More than 1 answer is correct
1100 cupcakes
Continuous budgeting is when A company plans for multiple years in advance A company doesn't really plan but operates day to day A company budgets for the next month (or quarter) after completing the current month (or quarter)
A company budgets for the next month (or quarter) after completing the current month (or quarter)
When Land is sold how is the income statement affected? Sales increase, Expenses increase Assets and Liabilities are both changed A gain or loss is recorded
A gain or loss is recorded
Goal congruence seeks to Align the operating and master budgets Align organizational and individual goals Determine plans and goals for the company Set compensation for upper executives
Align organizational and individual goals
Which of the following is included in the cost of equipment? Invoice price Cost of delivery to bring the equipment to the company Cost of customization Cost of testing All of the above are included in the cost
All of the above are included in the cost
Financial accounting Is what we just learned about the last few weeks Results in a set of 4 financial statementsIs used by decision makers outside of the company Follows generally accepted accounting principles (GAAP) All of the answers are correct
All of the answers are correct
Which of the following is NOT a financial statement ELEMENT? Assets Liabilities Expenses Revenues All of the other answers are elements
All of the other answers are elements
The interest rate used to calculate interest expense will always be given as what type of rate? The rate for the length of the loan (i.e. 9 month rate for a 9 month loan) An annual rate The monthly rate
An annual rate
What is the formula used to calculate inventory on the balance sheet? Ending Inventory + COGS Beg Inventory + Purchases - COGS Beg Inventory - COGS
Beg Inventory + Purchases - COGS
How do you calculate ending retained earnings? Beg RE + Net income - dividends Net income - expenses Beg RE - Net income + dividends
Beg RE + Net income - dividends
What does pro forma mean (in reference to pro forma financial statements) Historical financial statements Fiscal year financial statements Budgeted or projected financial statements Master financial statements
Budgeted or projected financial statements
In what order are liabilities reported on the balance sheet? By maturity date Smallest to largest Largest to smallest Alphabetically
By maturity date
Goodwill is: Never recorded on the balance sheet Calculated as the purchase price of another company less the value of the assets and liabilities of the company Expensed immediately The same as a trademark or patent
Calculated as the purchase price of another company less the value of the assets and liabilities of the company
Product costs are Capitalized as inventory costs until the product is sold Expensed as inventory costs until the product is sold Capitalized and depreciated over the life of the asset Expensed during the period the product is produced
Capitalized as inventory costs until the product is sold
How are product costs recorded in the accounting records Expensed- the cost is reported on the income statement Expensed- the cost is reported on the balance sheet Capitalized- the cost is initially recorded in inventory (asset account) and then expensed when sold Capitalized- the cost is initially recorded in inventory which is an expense account
Capitalized- the cost is initially recorded in inventory (asset account) and then expensed when sold
What method of accounting is not allowed under GAAP? Cash Accrual
Cash
A cost is considered VARIABLE if it changes due to: Inflation Supplier price increases Changes in production levels Changes in the design of the product
Changes in production levels
Which of the following shareholders have voting rights? Common shareholders Preferred shareholders Treasury shareholders All of the above shareholders have voting rights
Common shareholders
Treasury stock is Common stock that has been repurchased by the company A special class of stock that gives the shareholders special rights and responsibilities An example of Preferred stock Stock that earns a steady dividend amount each period
Common stock that has been repurchased by the company
Breakeven means Contribution margin - Fixed costs = zero Fixed costs - Variable costs = zero Contribution margin - profit = zero
Contribution margin - Fixed costs = zero
A company that issues stock is a ____ Proprietorship Corporation Partnership
Corporation
What is "book value" for equipment? Cost minus total accumulated depreciation Carrying value plus accumulated depreciation Cost plus depreciation expense Depreciable cost
Cost minus total accumulated depreciation
What is COGS? Cost of sold inventory Sum of company's operating expenses Unsold inventory
Cost of sold inventory
Which of the following is an example of a variable cost for a bakery? Cost of the company accountant Cost of the depreciation on the baking machines Cost of the frosting ingredients Cost of advertising
Cost of the frosting ingredients
Which of the following describes a VARIABLE cost? Cost that stays the same, per unit and in total, when the activity level changes Cost that changes, per unit and in total, when the activity level changes Cost that stays the same per unit, but changes in total, when the activity level changes Cost that stays the same in total, but changes per unit, when the activity level changes
Cost that stays the same per unit, but changes in total, when the activity level changes
Why is it important to know a company's relevant range? Costs that are fixed may change when the company is operating above the relevant range Costs that are variable may change when the company operates at less than the relevant range
Costs that are fixed may change when the company is operating above the relevant range
A highly leveraged company relies heavily on ___? Equity Debt Assets
Debt
Which of the following is a manufacturing overhead cost for the cupcake factory? Cost of flour and sugar Wages paid to the bakers Cost to ship the cupcakes to the customers Depreciation cost of the ovens and cooling racks Cost of the human resources supervisor salary
Depreciation cost of the ovens and cooling racks
Regular repairs and maintenance costs are: Expensed immediately and will reduce net income Included in the cost of tangible assets Included in the cost of intangible assets Expensed immediately but will not affect net income
Expensed immediately and will reduce net income
The formula to calculate breakeven point in units is: VC divided by CM per unit FC divided by CM per unit FC + VC divided by CM per unit
FC divided by CM per unit
Cost of goods sold includes both product and period costs. True False
False
Costs are classified by fixed, variable, and mixed so the company can prepare the company's financial statements. True False
False
Direct labor is an example of a period cost. True False
False
Gain contingencies increase net income True False
False
If no-par stock is issued by a company, the total amount of capital raised is recorded in the Paid-in-Capital in Excess account True False
False
Par value is the same as market value True False
False
Period costs are included in cost of goods sold on the income statement. True False
False
Sales tax collected from a customer and owed to the state government reduces the company's net income True False
False
Rent on the factory building is an example of what type of cost? Fixed cost Variable cost Mixed cost
Fixed cost
Which of the following is TRUE? Variable cost per unit decreases when more items are produced Fixed cost per unit decreases when more items are produced Mixed costs are mostly fixed costs and just a little variable costs Product costs are always variable costsPeriod costs are always fixed costs
Fixed cost per unit decreases when more items are produced
Costs that do not change in total, even when the activity level changes, are Fixed costs Mixed costs Variable costs Product costs
Fixed costs
Which of the following costs do not change IN TOTAL when the activity or output level changes? Variable costs Product costs Fixed costs Mixed costs
Fixed costs
When the activity level changes the costs that change are: Fixed costs in total and variable costs per unit Fixed costs per unit and Variable costs in total Fixed costs in total and variable costs in total Fixed costs per unit and variable costs per unit
Fixed costs per unit and Variable costs in total
Total Sales Dollars at the breakeven point equal: Fixed costs Variable costs Contribution margin Fixed costs plus variable costs
Fixed costs plus variable costs
What do we call the accounting rules in the US? GAAP FASB IFRS
GAAP
Which of the following has an indefinite life? Patents Goodwill Computers Buildings
Goodwill
What kind of account is unearned or deferred revenue? Stockholders equity (revenue) Liability Asset Stockholders equity (expense)
Liability
Intangible assets are: Current assets Long term assets
Long term assets
The contribution margin income statement is used for Financial and managerial accounting Financial statements only Managerial decision making only
Managerial decision making only
Which of the following is a true statement? Margin of safety is the same as breakeven. Margin of safety is the amount sales can fall before losing money. Margin of safety is the point where contribution margin equals sales. Margin of safety is the number of items that need to be sold at breakeven.
Margin of safety is the amount sales can fall before losing money.
Which of the following are product costs? Upstream costs Midstream costs Downstream costs All of these are product costs
Midstream costs
Are the notes to the financial statements optional? No Yes
No
What effect does purchasing land for cash have on total assets? Increase Decrease No effect
No effect
What is the name of a liability account that might be included in either current and long term liabilities? Bonds payable Notes payable Salaries payable Utilities payable
Notes payable
Which of the following is an indirect materials cost for a cupcake? Flour Sugar Frosting Oil sprayed on the pan
Oil sprayed on the pan
Most companies use what method to account for inventory? Perpetual method Periodic method Cost method
Perpetual method
Which of the following is NOT a part of the operating budget? S&A budget Purchases budget Pro forma balance sheet Cash budget
Pro forma balance sheet
For a loss contingency to affect the financial statements it must be both: Probable and estimable Significant and possible Negative and material Relevant and reliable
Probable and estimable
Indirect labor costs is a Period cost, manufacturing overhead Period cost, indirect labor cost Product cost, manufacturing overhead Product cost, direct labor cost
Product cost, manufacturing overhead
Why do companies identify product and period costs? Product costs are included in net income immediately Product costs are included in the cost of inventory, until the product is sold Period costs increase the cost of goods sold Product costs are expensed as incurred
Product costs are included in the cost of inventory, until the product is sold
A company with 1 owner is ____ Corporation Partnership Proprietorship
Proprietorship
Which of the following would NOT increase total profit (assuming no change in number of units sold)? Reduce variable costs Reduce fixed costs Reduce selling price Increase contribution margin
Reduce selling price
What is one of the FUNDAMENTAL qualities of Financial Reporting?Investment Relevance Measurement Equity
Relevance
Which of the following is a FIXED cost for a cupcake bakery? Cost of the frosting Cost of the baker's wages Rent on the baking kitchen building Utilities cost of running the baking machines
Rent on the baking kitchen building
What are the two primary stockholders' equity accounts? Common stock and cash Retained earnings and common stock Assets and liabilities
Retained earnings and common stock
How is the contribution margin calculated? Revenue - Product costs Revenue - Fixed costs Revenue - Variable costs Fixed costs - Variable costs
Revenue - Variable costs
Which of the following is a temporary account? Accounts receivable Sales Supplies Common Stock
Sales
How do you calculate gross profit? Revenues - Expenses Sales - COGS Sales - Operating Expenses
Sales - COGS
What is the first budget prepared in the sequence of the master budget? Sales budget Production budget Purchases budget Cash budget
Sales budget
When inventory is sold how is the income statement affected? Assets and Liabilities are both changed A gain or loss is recorded Sales increase, Expenses increase
Sales increase, Expenses increase
Which of the following is a period cost? Direct materials Manufacturing overhead Selling expenses Inventory costs
Selling expenses
Dividends are paid to ____? Creditors Shareholders' Both
Shareholders'
Which of the following is TRUE regarding operating leverage? Small changes in revenues can produce large changes in profitability Small loans can result in large increases in cash for the company Variable costs increase the benefits of operating leverage Shifting from relying on fixed costs to variable costs increases operating leverage
Small changes in revenues can produce large changes in profitability
Why do companies need to know the cost of their products? So they can determine the correct balance for inventory on the balance sheet So they can record an expense called inventory expense when the product is sold So they can determine the best method of shipping their product to customers So they can negotiate the amount of depreciation expense with their accountant
So they can determine the correct balance for inventory on the balance sheet
Which of the following is associated with long term planning? Operations budget Capital budgeting Strategic planning
Strategic planning
Which of the following is primarily a merchandising company? Indiana University NPR Public Radio Target Julie Head CPA, PC
Target
What is salvage value? The estimated value of the asset at the end of the estimated life of the asset The delivery cost to bring the asset to the company The cost of the equipment allocated to expense throughout the asset's life
The estimated value of the asset at the end of the estimated life of the asset
Which of the following is TRUE regarding managerial accounting? The information is readily available to those outside the company The information is forward-focused It is governed by GAAP It is usually prepared quarterly or annually
The information is forward-focused
The purpose of depreciation is: To adjust the asset value to market value. To allocate the cost of the asset as an expense over the useful life of the asset. To reflect the loss of value of the asset to match market expectations.
To allocate the cost of the asset as an expense over the useful life of the asset.
The primary purpose of budgeting is To determine the primary goal of the company To guarantee profitability To quantify the steps of a proposed plan of action To review historical events
To quantify the steps of a proposed plan of action
Breakeven means Fixed costs = variable costs Fixed costs + Variable costs = Total Costs Total Sales = Fixed costs + Variable costs
Total Sales = Fixed costs + Variable costs
Which of the following is an intangible asset? Trademark Land Natural resources Equipment More than 1 answers is an intangible asset
Trademark
Common stock is usually issued at par value True False
True
Cost of goods sold includes both variable and fixed costs. True False
True
Not all companies are required to have a par value assigned to their stock True False
True
Product costs include both fixed and variable costs. True False
True
Variable costs can be either product or period costs. True False
True
Which liability account represents cash payments received from customers for services not yet earned? Unearned revenue Accounts payable Sales tax payable Accounts receivable
Unearned revenue
The cost for the employees' wages who work in the factory making the products is an example of what type of cost? Assume workers are paid hourly. Fixed cost Variable cost Mixed cost
Variable cost
Which of the following is NOT a product cost for a car manufacturer? Metal used in the body of the car Wages paid to the company accountant Electricity used in the factory Depreciation of the factory building
Wages paid to the company accountant
Which of the following is NOT a product cost for a cupcake? Cake batter Frosting cook/baker's wages Baking supervisor salary Electricity for the ovens Wages paid to the research team to make the cupcake recipe healthier All of these are product costs
Wages paid to the research team to make the cupcake recipe healthier
When is revenue for a restaurant recorded? When cash is received from customer When gift card is sold to customer When food is delivered to customer All of the above are correct
When food is delivered to customer
When are expenses recorded under GAAP? When they are incurred, even if they are not yet paid When they are incurred, but only if also paid When they are paid
When they are incurred, even if they are not yet paid
Can depreciation estimates change? Yes Only once No
Yes
Most preferred stock is: cumulative, meaning the company must pay dividends owed to the preferred shareholders before paying the common shareholders non-cumulative, meaning the company can choose to skip the preferred dividends
cumulative, meaning the company must pay dividends owed to the preferred shareholders before paying the common shareholders
Which of the following is a period expense? shipping cost to get products to company shipping cost to send product to customer Cost of products
shipping cost to send product to customer