chapter 8

Rolette Clemens is a financial institution that provides loans to businesses. It rejects a textile company's request for a loan after it reviews the value of the company's assets, liabilities, and owners' equity and finds them to be unsatisfactory. In this scenario, Rolette Clemens most likely analyzed the company's _____ to assess its financial condition.

balance sheet

investing activities

A steel manufacturing company is going through a financial crisis because of which it is unable to pay its employees and suppliers their dues. The management of the company sells some of the fixed assets of the company to cover these expenses. In the context of the statement of cash flows, the company gets the required capital by engaging in _____.

bottom-up

Acloe Inc., a nutrition bar manufacturing company, plans to commence its budget preparation. The management of the organization comes to a consensus that it will use a budgeting approach that will encourage the active participation of the middle and supervisory managers and consider their suggestions while creating the budget. Acloe Inc. is most likely to adopt the _____ budgeting approach.

Accrual-basis accounting

Fred, a financial accountant at a multinational company, is asked by his supervisor to find out the exact income the company earns from the sale of its products over the next five weeks. To do this, for the next five weeks, Fred matches the revenue earned from the sale of the company's products and matches the expenses incurred by the company to the revenue they help produce. In this scenario, which of the following has Fred used to get the required information?

identifies a firm's planned investments in major fixed assets and long-term projects.

In the context of financial budgets, the capital expenditure budget:

direct costs

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

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

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

sell its goods or services.

Poline Foods, a food processing company, needs to increase its declining cash inflow through its operating activities. In this context, Poline Foods is most likely to:

bottom-up approach

Prenora Inc., a newly established company, is set to prepare its first budget. The top management of the company decides to use a budgeting approach that will seek active participation from the middle and supervisory managers of the company. In the given scenario, Prenora Inc. will most likely use the _____ to budgeting.

take short-term and long-term loans.

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:

false

The members of the Financial Accounting Standards Board (FASB) are appointed by the Securities and Exchange Commission.

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

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

In the context of owners' equity, which of the following is true of retained earnings?

They are accumulated earnings reinvested in a company rather than being paid to the owners.

false

In the accounting equation, assets are equal to liabilities minus the owners' equity.

managerial accounting

Janice is an accountant in a public relations firm. She prepares financial reports upon request by the management of the firm and does not stick to a predetermined schedule. The reports that she prepares mainly help the internal stakeholders of the firm. Given this information, it can be said that Janice performs _____.

balance sheet.

Jonathan, a grocery store owner, is due to pay suppliers for delivering goods for a specific month. To ascertain how much money he owes the suppliers, Jonathan should check the:

balance sheet.

Marcus is a venture capitalist who invests in start-ups and small businesses. He is interested in investing in an online start-up company that has been in business for a year. Before making a decision, Marcus does some research on the value of the company's assets and liabilities. In this scenario, Marcus is most likely analyzing the company's:

budgetary slack

Sigborne Corp., a food and beverage company, commences its budgeting process by requesting the middle managers of the company to collect data from their respective departments and submit a consolidated report stating the needs of their departments. Harold, the manager of the packaging department, overstates the needs of his department. In this scenario, Harold is guilty of _____.

false

The Securities and Exchange Commission (SEC) bans publicly traded corporations from making comparative financial statements.

budgetary slack

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

The Securities and Exchange Commission hires Tim to procure and analyze data on the state's tax revenues and expenditures to ensure that they are recorded and reported in accordance with regulations and requirements. In this case, Tim is most likely a(n) _____.

government accountant