Managerial Accounting
The statement of cash flows is prepared according to the __________ basis of accounting.
Accrual
Relevant costs are those costs that are:
All of the options
Management can be held accountable for all the direct operating expenses of the business.
True
Net working capital is "Current Assets - Current Liabilities".
True
Scatter diagram approach gives an approximation of measuring the fixed costs
True
'For preparing the statement of cash flows which of the following statement (s) is/ are needed.
Balance Sheet, Income Statement, Statement of Retained Earnings
During the first quarter of the previous year, the current ratio at the blue hotel was 1.25 to 1. Three months into the new year, the current ratio is 2 to 1. For every dollar of current liabilities, the hotel now has two dollars of current assets. Which of the following groups is most likely to be pleased by this increase in the hotel's current ratio?
Creditors
All of the following are sections of the statement of cash flows except the:
Earning Activities Section (Investing, Operating, and Financing are all sections)
Depreciation of fixed assets is not shown on the income statement.
False
Management can be held accountable for all the fixed expenses of the business.
False
Scatter diagram approach gives a precise measurement of the fixed costs.
False
Variable cost per unit varies with the level of sales/ business volume.
False
Direct method' is the most used or common method for converting net income to net cash flows.
False (Indirect is the most used)
Statement of cash flows explains the change in cash by showing the effects on cash of a business's operating, investing, and financing activities for a period of time.
True
If you expect the revenue to be more than the revenue at indifference point, you should choose__________
Fixed cost option
Ratios are particularly useful to managers as indicators of:
How well operational goals are being achieved.
EBIT figure can be calculated from___________.
Income Statement
In equation 'Y = a+bX', X is
Independent variable
Which of the following types of ratios reveals the ability of a hospitality business to meet its short-term goals?
Liquidity ratios
Statement of cash flows is a statement that reflects the cash inflows and outflows of a business for a period of time.
True
__________ costs contain both the fix and variable cost elements.
Mixed
Which of the following are not among the typical standards used in ratio analysis?
Official standards set by government regulations
Which of the following ratios is the best overall measure of management's performance?
Operating efficiency ratio
Which of the following is not a fixed cost?
Operating supplies
Which of the following profitability ratios is calculated by dividing net income by total revenue?
Profit margin
Which of the following types of ratios shows management's overall effectiveness as measured by returns on sales and investments?
Profitability ratios
Creditors typically use ratio analysis to evaluate the __________ of a business.
Solvency
'Liquidity' measures the operation's ability to convert assets to cash
True
'Long-Term Liabilities' are obligations that are expected to be paid beyond the next 12 months, i.e. not due in the current year.
True
At 'Indifference Point' both the fixed cost and variable cost options are same for the given revenue
True
Balance Sheet reflects the financial position of the hospitality operation at a given date.
True
Balance sheet can be arranged in either 'account' format or 'report' format.
True
Creditors would be considered external users of a company's income statement.
True
Current assets normally refer to items that are to be converted to cash or used in operations within one year or a normal operating cycle.
True
Current liabilities are obligations that are expected to be satisfied within one year or a normal operating cycle.
True
Direct method' focuses on cash receipts from sales and cash disbursements from expenses.
True
For corporations, 'Net Income' is added on the 'Statement of Retained Earnings'.
True
Indirect method' starts with 'Net Income' and makes adjustments for non-cash items such as depreciation.
True
Investors would be considered external users of a company's income statement.
True
'Account format' of balance sheet shows assets first, followed by liabilities and owner's equity.
false