Acct 4B Study Guide
Present Value of Net Cash Inflows / Initial Investment, is the formula to compute the ________.
profitability index
Inventory kept on hand to account for increases in consumer demand or machine malfunction in case of emergency is
safety stock
________ explains why a manager may prefer to receive cash sooner or later and also depends on the key factors of the principal amount (p), the number of periods (n), and interest rate (i).
Time value of money
Which of the following is NOT an outcome of the combined cash budget?
Total liabilities and stockholders' equity
The payback period ________.
highlights risks of investments with longer cash recovery periods.
A ________ is a lending tool the company can use to draw money as needed at a specified rate of interest, for a specified amount of time, paying on the actual amount owed instead of a closed-end note.
line of credit
Benchmarking ________.
may help a manager motivate employees and provide a measure to evaluate performance
The combined cash budget ________.
merges budgeted cash collections and cash payments to project the firm's ending cash position
A manager using the net present value (NPV) for evaluation of a project may assume the cash inflows from the project are immediately reinvested at the ________.
required rate of return
When evaluating an investment with a residual value, how should the residual value be included in the IRR function in Excel?
Added to the final year's cash flow.
Which of the following budgets reveal a manager's intent to invest in new property, plant, or equipment?
Capital expenditure budget
Mary has the workbook pictured above, but only wants to look at unfavorable variances. Which Excel tool will she use to select just the unfavorable variances?
filtering
A manager can project the collection of cash and forecast an organization's budgeted balance sheet by using a(n) ________
financial budget
The ________ measures the difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.
fixed overhead budget variance
A line of credit ________.
is a lending tool the company can use to draw money as needed at a specified rate of interest, for a specified amount of time, paying on the actual amount owed instead of a closed-end note
The accounting rate of return (ARR) is the capital budgeting method that ________.
measures the average profitability of the asset over its life.
The ________ is the difference between the present value of the investment's net cash inflows and the cost of an investment.
net present value (NPV)
The ________ is a capital budgeting method that ignores the time value of money and focuses on the time it takes to recover the company's cash investment.
payback period
Which of the following is the formula to compute the direct labor rate variance?
Actual Hours × (Actual Rate - Standard Rate)
Which of the following is the formula to compute the variable manufacturing overhead rate variance?
Actual Hours × (Actual Rate - Standard Rate)
Which of the following is the calculation to compute the Direct Materials (DM) Price Variance?
Actual Quantity Purchased × (Actual Price - Standard Price)
Which Excel function will predict the point at which a regression line crosses the y-axis?
INTERCEPT
Which of the following budgets is the comprehensive planning document for the entire organization?
Master budget
Which of the following is NOT a component of the operating budget of a service company?
Merchandise inventory
Which of the following capital budgeting methods indicates whether the asset will earn the company's minimum required rate of return?
Net present value (NPV)
Which of the following is a TRUE statement about the accounting rate of return?
The accounting rate of return (ARR) focuses on the operating income instead of the net cash inflow of an asset.
Sustainable capital investments should result in ________.
a decrease of lawsuits, regulatory fines, and cleanup costs.
Which of the following journal entries represents the recording of the sale and release of inventory in a periodic system?
A debit to Accounts Receivable and a credit to Sales Revenue.
Which of the following is NOT a TRUE statement about the payback period?
A major criticism of the payback period is that it focuses only on profit instead of on time.
Which of the following is NOT true about credit card sales and budgets?
A sale is shown on the operating expense budget, two months after the sale.
Which of the following is TRUE about credit card sales and budgets?
A sale is shown on the sales budget, in the same month as the sale.
Jules wishes to highlight revenue sources where the variance is a high priority in the workbook above. After filtering for unfavorable variances, which Excel function will allow him to highlight high priority variances?
Conditional Formatting
Which of the following is NOT a component of the direct labor budget?
Cost of goods sold
The computation for sales revenue is ________.
Expected Number of Unit Sales × Expected Sales Price per Unit
You have prepared the scatterplot and trendline above from the data provided. Although you can use the graph to predict sales volume for 250 coupons, which Excel function will be most helpful in developing an exact value?
FORECAST.LINEAR
Which of the following capital budgeting methods highlights risks of investments with longer cash recovery periods?
Payback period
Which of the following is the calculation to compute the standard cost of direct labor?
Standard Quantity of Direct Labor × Standard Price of Direct Labor
Which of the following is the calculation to compute the standard cost of direct materials?
Standard Quantity of Direct Materials × Standard Price of Direct Materials
Which of the following represents the type of costs used to record the manufacturing costs entered into the inventory accounts?
Standard costs
________ entails the planning and establishment of long-term goals which range years into the future.
Strategic planning
Which of the following is NOT an example of a cash outflow?
The future residual value of an asset
Which of the following is important to a manager at a merchandising company when preparing the master budget?
The length of time between sales and deposits
Which of the following is NOT important to a manager at a merchandising company when preparing the master budget?
The production budget
Which of the following best describes a disadvantage of standard costing which might occur when the production manager purchases a large quantity of raw materials which results in the production manager overproducing to obtain a favorable fixed overhead variance?
Unintended behavioral consequence
Which of the following represents the formula to compute the total units to produce in the production budget?
Units Needed for Sales + Desired Ending Inventory - Units in Beginning Inventory
The formula to compute the direct labor budget is ________.
Units to be Produced × Direct Labor per Unit × Direct Labor Cost per Hour = Total Direct Labor Cost
Total estimated variable Manufacturing Overhead / Total estimated amount of the allocation base is the calculation to compute the ________.
Variable Manufacturing Overhead Rate
A merchandising company uses a master budget which includes a ________.
cost of goods sold
Standard Rate × (Actual Hours - Standard Hours Allowed) is the formula to compute the ________.
direct labor efficiency variance
The net present value (NPV) ________.
indicates whether the asset will earn the company's minimum required rate of return
The master budget ________.
is the comprehensive planning document for the entire organization
The variable overhead rate variance ________ .
is the difference between the actual variable manufacturing overhead costs incurred during the period and the amount of variable manufacturing overhead expected, considering the number of actual hours worked
The accounting rate of return (ARR) ________.
is the only capital budgeting method that uses accrual accounting figures
When using the INTERCEPT function in Excel, what data is required?
known or existing x-axis and y-axis values
Motivation is an advantage of standard costing which occurs when ________.
the manager provides an employee with a reasonable or attainable goal
The internal rate of return (IRR) is ________.
the rate of return, based on discounted cash flows, that a company can expect to earn by investing in a capital asset
Actual or prior year budgeted data is ________.
the starting point for creating the budget
