FIFM

If assets = $10,000,000 and liabilities = $5,000,000, how much owners' equity exists? $1,000,000 $3,000,000 $5,000,000 $10,000,000

$5,000,000

Using MS Excel Worksheet Target Costing: How much less money does a business profit at 12% profit versus 8% profit at 25,000 units? $6,000 $3,600 $4,800 $7,200

$6,000

Using MS Excel Worksheet Target Costing: With revenue of $100 on the latest new fad, what is the target cost if a business desired to make 15% profit? $85 $87 $89 $83

$85

Using MS Excel Worksheet Break-Even Analysis: With fixed costs of $5,000; variable costs of $3.00; and $ sales price of $6.00, how many units must I sell before breaking even? 1,667 10,000 16,667 1,000

1,667

Using MS Excel Worksheet Break-Even Analysis: With fixed costs of $5,000; variable costs of $4.00; and $ sales price of $6.00, how many units must I sell before breaking even? 2,500 5,000 2,000 3,000

2,500

Using MS Excel Worksheet Break-Even Analysis: With fixed costs of $10,000; variable costs of $3.00; and $ sales price of $6.00, how much money must I make before breaking even? $20,000 $25,000 15,000 $18,000

20,000

Using MS Excel Worksheet Target Costing: A car company with a market sales price of $35,000 must sell its vehicles at $________ to earn 12% profit. $30,800 $26,250 $32,200 $29,750

30,800

Using MS Excel Worksheet Target Costing: If you change 15% to 25% in desired profit, how many $6.00 footlongs must you sell to exceed $50,400? 33,601 33,600 25,000 50,400

33,601

Using MS Excel Worksheet Break-Even Analysis: A local landscaping company with overhead of $1,500 must cut how many lawns at $100 sales price with $78 in cost per lawn before it becomes profitable? 69 68 78 100

69

Using MS Excel Worksheet Target Costing: How many $6.00 footlongs must be sold at 12% profit to earn $50,400? 70,000 75,000 65,000 80,000

70,000

Which statements are true of financial management? Select all that apply. Focuses on borrowing funds and investing cash resources of the firm Maximization of the for-profit firm's bottom line Provides financial analyses to improve decision-making Maximization of the firm's viability

All choices

Economic order quantity includes analysis of what related to inventory management? Select all that apply. Purchase price Insurance costs Administrative costs Shipping costs Physical space to store goods

All of the above

Which are true of budgets? Select all that apply. Forces managers to think ahead Provide a tool to allow for effective evaluation of both departments and managers. Specifies what must happen to stay on track with longe range vision of strategic plan Provide information needed for those decisions to be properly implemented.

All of the above

Which is true of capital budgeting? Select all that apply. Correct! Help managers determine best use of available cash Correct! Cash outlays to start such projects often precedes the receipt of cash inflows by a significant period of time Correct! Help managers predict the profitability of a project Correct! Frequently require large initial investments

All of the above

Which of the below are equal to the accountant's equation? Select all that apply. Assets - Owners' Equity = Liabilities Assets - Liabilities = Owners' Equity Assets = Liabilities + Owners' Equity Assets + Liabilities = Owners' Equity

Assets - Owners' Equity = Liabilities Assets - Liabilities = Owners' Equity Assets = Liabilities + Owners' Equity

The accounting equation is directly linked to which key financial statement? General ledger Balance sheet Income statement The statement of cash flows

Balance sheet

All production costs are _________ costs. Direct Indirect cash basis cash accrual

Direct

Which is true of zero-based budgeting? Select all that apply. Each department or program starts with a zero based of justified costs No expenditure is automatically excepted without some explanation of why the organization is better off with that expenditure Focuses on just the increase in budget ZBB hopes to keep budgets from developing fat

Each department or program starts with a zero based of justified costs ZBB hopes to keep budgets from developing fat

All indirect and direct costs are also considered overhead costs.

False

Cost and expense mean the same thing.

False

FIFO is superior to other cost-flow assumptions.

False

Given NPV always indicates the rate of return a project is earning, the Internal Rate of Return (IRR) can be dismissed as it does not provide information on cash inflows, which are necessary for business viability.

False

If an asset is sold for more than its book value, it is considered illegal and should be reported to governing agencies.

False

In really bad years for a firm, it is possible to have fewer assets than the combination of liabilities and owners' equity.

False

Like the balance sheet, the income statement is a photograph of the firm's financial position at a point in time.

False

The concept of matching is necessary for accrual accounting and cash basis accounting.

False

When depreciating an asset, most firms expect to use 100% of an equipment's value over its life and disregard salvage value.

False

While operating budgets may be good for planning purposes, cash budgets are not as critical to business viability given they are focused on previous sales and expenses.

False

Three key financial statements include (select all that apply): Income statement The statement of cash flows General ledger Balance sheet

Income statement The statement of cash flows Balance sheet

Which two factors make up the viability of an organization? Liquidity and risk Solvency and return Liquidity and solvency Risk and return

Liquidity and solvency

Select all indirect costs. Maintenance staff Production staff Administrative offices Legal department

Maintenance staff Administrative offices Legal department

Match the variable to concept as it relates to EOQ.

N- Total number of units of inventory ordered per year C- Annual cost to carry one unit of inventory O- Costs related to placing one order 2- A constant used in the numerator of EOQ calculation

When the terms current, near-term, or short-term are used, this means events are expected within: One month or less Correct! One year or less One quarter or less One week or less

One year or less

Which two factors make up the profitability trade-off? Liquidity and solvency Risk and liquidity Liquidity and return Risk and return

Risk and return

Which of the below are period costs? Select all that apply. Selling, general, and administrative (SG&A) expenses Depreciation for office equipment Commissions Direct labor

Selling, general, and administrative (SG&A) expenses Depreciation for office equipment Commissions

While liquidity is simply a measure of the amount of resources a firm has available within one year or less, __________ is the same concept from a long-time perspective. Working capital management Variance analysis Budgeting Solvency

Solvency

Match cost-flow assumptions with its method.

Specific identification- Physically tagging each unit in some way FIFO- Reduces inventories of oldest goods first LIFO- Reduces inventories of newest goods first Weighted Average- Inventory is commingled

A critical step in the budget process is the preparation of forecasts of what would happen under a variety of alternatives. Despite this, most forecasting is based, to a major extent, on historical patterns.

True

An entity can apply to people, departments, projects, divisions, or the firm.

True

As depreciation accumulates, we see expenses on the Income Statement and changes to net value of equipment on the Balance Sheet.

True

By using cash basis accounting, conclusions can be misleading about the profitability of a firm.

True

Depreciation differs from amortization in that depreciation refers to a tangible asset.

True

Differentiating between average and marginal costs is important to improve decision-making effectiveness.

True

Examples of tangible assets include plant, property, and equipment and examples of intangible assets include goodwill, brand recognition, patents, copyrights, and trade names.

True

Fixed costs do not change with changes in the volume or production while variable costs change in direct proportion to production.

True

If an asset is sold for less than its book value for any reason, the firm would record a loss on the Income Statement.

True

Net income is simply the difference between revenues and expenses.

True

On a more personal level, managers are concerned with the maximization of salary and perks, which are often tied in with the maximization of ROI, ROE, or ROA.

True

Process costing may be ideal if the firm has enough resources and systems to track both the cost of various components of the production process and the number of units made with few interchangeable components.

True

Profitable firms cannot go bankrupt.

True

The inventory equation states that BI + P - S = EI.

True

While cost per unit declines as volume increases, the inherent risk is not being able to sell excess inventory that could lead to bankruptcy.

True

While quick, the payback method of capital budgeting analysis is fraught with weaknesses, namely that it ignores cash inflows depending on how far out the analysis goes.

True

When products are manufactured in one period but remain unsold, associated labor and factory rent expenses are placed in which account? WIP inventory account General ledger account Assets account Liabilities account

WIP inventory account

Using MS Excel Worksheet Break-Even Analysis: Which scenario requires the fewest number of units to sell before breaking even? With fixed costs of $4,000; variable costs of $3.50; and $ sales price of $6.00. With fixed costs of $5,000; variable costs of $4.00; and $ sales price of $6.00. With fixed costs of $5,000; variable costs of $3.00; and $ sales price of $6.00. With fixed costs of $5,000; variable costs of $4.00; and $ sales price of $7.00.

With fixed costs of $4,000; variable costs of $3.50; and $ sales price of $6.00.

Which type of budget is an approach that requires evaluation of all proposed spending? Zero-based budgeting Capital budgeting Operating budget Departmental budgeting

Zero-based budgeting

Which statements are true regarding financial accounting? Select all that apply. focused on history of the firm data and information are usually communicated through annual and quarterly financial reports focused on future of the firm is synonymous with managerial accounting

focused on history of the firm data and information are usually communicated through annual and quarterly financial reports

Which statements about the statement of cash flows are true? Select all that apply. gives information about how and why cash position has changed provides more complete information than the balance provides more valuable information about liquidity is the only financial statement you really need to make an investing decision

gives information about how and why cash position has changed provides more complete information than the balance provides more valuable information about liquidity