Chapter 8 Review

intangible asset

A famous composer sells the copyrights of one his songs to a record company for $1.2 dollars. The sale of the copyright of the song exemplifies the sale of what kind of asset?

sarbanes-oxley

A public accounting firm takes up a contract to perform an external audit for an oil manufacturing company. The firm, however, is already in a consulting contract with the oil company. Because of its prior association with the oil company and the hefty fee the oil company pays the firm, which law is being violated in the scenario?

indirect cost

A severe flood caused substantial damager to a dishwasher manufacturing company's production equipment. As a result, the company sends a sum of $42,000 to repair the equipment. Given this info, The sum of $42,000 is what type of cost?

the company's balance sheet

Andrew is a venture capitalist who invests in start-ups and small businesses. He is interested in investing in a fashion start-up company that has been in business for a year. Before making a decision, Andrew does some research on the value of the company's assets and liabilities. Based off the info provided, what is Andrew most likely analyzing?

no

Are balance sheets universal in specifics for all types of companies?

*current liabilities *long-term liabilities

Balance sheets usually organize liabilities into 2 different categories. They are called...

unqualified

If an auditor does NOT find any problems with the way a firm's financial statements were prepared and presented, what type of opinion will the report offer?

management accountant

Igor is an accountant at Salt Lake Inc., a multinational company. He is responsible for providing analysis, preparing financial statements, and reporting the financial transactions of the company to the deputy chairman of the company. In the given scenario, Igor is most likely what type of accountant?

more complex

Is activity-based costing (ABC) EASIER or MORE COMPLEX than the direct labor method?

accounts receivable

Jimmy is the owner of a restaurant that has several franchises. One of the franchisees owes Jimmy a sum of $15,000 for the goods that the franchisee previously bought from Jimmy on credit. The money owed to Jimmy is known as...

public accountant

Kat works in an accounting firm that offers services such as tax preparation and external auditing to companies. Kat is currently providing consultation to a client that deals in cell phone parts. In this given scenario, Kat is most likely what type of accountant?

*balance sheet *income statement *statement of cash flows

List the 3 kinds of basic financial statements that are prepared in financial accounting

sell its goods or services

Mario Makeup, a makeup manufacturing company, needs to increase its declining cash inflow through its operating activities. In this context, Mario Makeup is most likely to...

overstated the needs of his department in the budget

Maverick, the manager of the men's department in a clothing manufacturing company, is accused of budgetary slack by a senior manager. What is one reason that Maverick would be accused of budgetary slack?

bottom-up approach

Patagenie, a newly established business, is set to prepare its first budget. The executive team of the company decides to use a budgeting approach that will seek active participation from the middle and supervisory managers of the company. Based off the given scenario, Patagenie will most likely use the ____________ to budgeting.

true

T or F: Annabelle decides to check with her accountant as to how much money her company owes to a raw materials supplier. To determine this, Annabelle should ask the accountant to provide her with the company's balance sheet

true

T or F: Jerry and Beau evaluate 3 telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help in the determination of the increase in their profits

true

T or F: The CFO of DJ Mix-a-Lot requests his accountant to prepare a customized report of the cost overruns at the company's production facility in LA. In this scenario, the accountant is a managerial accountant

true

T or F: a static budget is based on a single assumed level of sales and is an excellent tool for planning

true

T or F: common stock is a key owners' equity account for corporations

false

T or F: contingent expenses are costs that a firm incurs in the regular functioning if its business

true

T or F: intangible assets are assets that have no physical existence--you can't see or touch them--but they still have value

true

T or F: inventory is an example of a current asset

true

T or F: public accountants provide services such as tax preparation, external auditing, or management consulting to clients on a fee basis

false

T or F: the Securities and Exchange Commission (SEC) bans publicly traded corporations from making comparative financial statements

true

T or F: the deduction of a firm's expenses from its revenue is shown in the income statement of the firm

false

T or F: the difference between a firm's revenue and its cost of goods sold is an accounts receivable

false

T or F: the income statement is also known as the statement of financial position

false

T or F: the members of the Financial Accounting Standards Board (FASB) are appointed by the Securities and Exchange (SEC)

true

T or F: the net income of a company is calculated by subtracting expenses from revenue

$180 million

The assets of Stain Glass USA amount to $300 million, and its liabilities add up to $120 million. Based off the accounting equation, what should owner's equity equal?

budgeted income statement

The management of SouthSun Inc., a multinational company, is in the process of preparing the operating budget for the company. It has already created the sales budget and the production budget. It is now creating a financial statement that would present a forecast of the expected revenue of the company from the projected sales. What type of INCOME STATEMENT is the management creating based off the given scenario?

static budget

The management of an electronics company creates 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, because the values in the estimated budget vary significantly from the actual sales. Based off the info provided, what type of budget did the management most likely create?

top-down budget

Veronica is part of the senior management of Thirty Two and You. She and with other members of the senior management plans the annual budget of the company. Veronica, however, is not required to seek input from or involve the middle and supervisory managers of the company in this planning process. Based off the info provided, what type of budget is Thirty Two and You most likely creating?

*expected to be used up within a year *easily converted into cash

What are some characteristics of current assets?

*150 semester hours with heavy emphasis in accounting and other business-related courses *pass 4-part 2 day exam

What are some characteristics that need to be met in order for an individual to be recognized as a certified public accountant (CPA)?

intangible asset

What type of asset is being provided in the following: the goodwill showed by a food manufacturing company by helping its competitor at a time of crisis

current asset

What type of asset would an accounts receivable account be?

statement of retained earnings

Which statement is a simple statement that shows how the accumulated revenues that have been reinvested in the company have changed from one accounting period to the next?

government accountants

Which type of accountants perform a variety of accounting functions for local, state, or federal agencies, like the IRS and FDIC (federal deposit insurance corporation)?

intangible asset

With balance sheets, patents, trademarks, and copyrights are examples of what type of assets?

owner's equity

With balance sheets, retained earnings would be found in which section?

financial budget & operating budget

With budget preparation, the master budget of a firm organizes what two budget types into a unified whole?

are seldom interested in analyzing detailed accounting information about the individual departments within the firm

With financial accounting, external stakeholders of a firm...

dividends paid to shareholders from net income

With the statement of retained earnings, any change in retained earnings is found by subtracting...