WGU C 213 Accounting For Decision Makers

What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a 22% increase?

$153279

The company uses the following information to determine activity rates for each pool: Pool 1 Costs: $300,000 Total Activity: 20,000 hours Pool 2 Cost: $20,000 Total Activity: 500 pounds Pool 3 Cost: $10,000 Total Activity: 100 moves Total $330,000 Data concerning the three products appear below: Product A Cost Drivers Number of Hours: 10,000 Number of Pounds: 150 Number of Moves: 20 Product B Cost Drivers Number of Hours: 7,500 Number of Pounds: 250 Number of Moves: 30 Product C Cost Drivers Number of Hours: 2,500 Number of Pounds: 100 Number of Moves: 50 What is the total amount of overhead applied to product A? O $125,500 O $265,000 O $150,000 O $158,000

$158,000

Given the following information:Pairs of shoes expected to be produced: 1,950,000Pairs of shoes produced: 2,500,000Overhead rate: $0.75What is the amount of applied overhead?O $412,500O $1,875,000O $1,462,500O $550,000

$1875000

A company reported the following information for the production and sale of 500,000 gallons of oil: Sales: $1,500,000 Production costs Direct materials: $575,000 Direct labor: $300,000 Applied overhead (Using ABC) Overhead based on number of gallons: $375,000 Overhead based on number of batches: $100,000 Overhead based on number of ingredients: $180,000 Total production cost: $1,530,000 Gross profit: ($30,000) Overhead was applied based upon the following predetermined overhead rates: $0.75 per gallon $500 per batch $1,000 per ingredient What would be the gross profit if the company increased their selling price per gallon by $0.10? O $10,000 O $20,000 O $50,000 O $75,000

$20000

A company budgeted the following purchases for raw materials: January Budget: $10,000 February Budget: $20,000 March Budget: $25,000 April Budget: $22,000 May Budget: $27,000 June Budget: $30,000 July Budget: $24,000 The company has a policy of paying for 40% of the purchases in the month of purchase, 35% in the month following the purchase, and 25% in the second month following the purchase. Based on this information, what are the budgeted cash disbursements for May? O $27,300 O $18,500 O $25,050 O $24,750

$24750

A corporation has total liabilities of $300 million, total owners' equity of $100 million, and current assets of $50 million. What is the value of the firm's long term assets?

$350 million

A running shoe manufacturer produces three types of shoes: traditional, minimalist, and spikes. The company uses the following information to determine activity rates for each pool: Shoe Production Costs: $250,000 Total Activity: 20,000 pair of shoes Shoe Batches Costs: $10,000 Total Activity: 500 batches Shoe Design Costs: $5,000 Total Activity: 100 parts Total: $265,000 Traditional Pairs: 10,000 Batches: 150 Parts: 20 Minimalist Pairs: 7,500 Batches: 250 Parts: 30 Spike Pairs: 2,500 Batches: 100 Parts: 50 What is the total amount of overhead applied to spikes shoes? O $35,750 O $31,250 O $100,250 O $265,000

$35750

On May 1, 2011, a company using accrual accounting purchased equipment costing $500,000. It expects the equipment to have a useful life of five years. At the time of purchase, the company also purchased a one-year insurance policy on this equipment, which cost $6,000. How much insurance expense should the company have recognized for the year ending in 2011? O $3,000 O $4,000 O $6,000 O $8,000

$4000

During its first month of operations, a manufacturer incurs the following costs in dollars related to activities within its factory: Direct materials costs $5,000 Indirect materials $2,000 Direct labor $15,000 Indirect labor $3,000 Factory rent $10,000 Depreciation on factory equipment $8,000 What are the manufacturer's total product costs for the month? O $20,000 O $25,000 O $38,000 O $43,000

$43000

A company manufactures and sells widgets. The following information is available: • Each widget sells for $100. • The variable cost per widget is $50. • Total fixed costs per month are $300,000. How many widgets does the company need to sell each month to break even? O 6,000 O 4,500 O 3,000 O 2,000

$6000

During its first month of operations, a manufacturer incurs the following costs (in dollars) related to activities within its factory: Direct materials $15,000 Direct labor $30,000 Manufacturing overhead $40,000 What amount should be reported as cost of goods sold on the income statement if 5,000 units are produced and 4,000 are sold? O $56,000 O $68,000 O $70,000 O $85,000

$68000

A company plans to purchase inventory for the second half of 2014 as follows: July $100,000 August $75,000 September $225,000 October $125,000 November $250,000 December $30,000 They usually pay 50% of inventory purchases in the month of purchase, 35% in the following month, and 15% in the second month. Based on this information, what are the forecasted total 2014 cash payments for inventory purchased in the second half of 2014? O $705,000 O $752,500 O $790,000 O $805,000

$752,500

Patient financial information for a company as follows: current assets $36,543 total assets $58,719 current liabilities $24,824 total liabilities $48,561 stockholders' equity $10,158 sales: $46,997 net income $3,761 market value of shares $41,316 What is the price-earnings (PE) ratio for the company?

11.0

The steps in the decision cycle in order:

1: prepare financial statements 2: analyze financial statements 3: gather information 4: make decision 5: implement decision

The grouped together and reported changes which companies experience increases and decreases in equity each year because of the movement of market prices or exchange rates

Accumulated Other Comprehensive Income

A method of attributing overhead costs to products based on measurable factors that relate to activities that create overhead costs.

Activity-based Costing (ABC)

Invested by stockholders that exceeds the par value of the issued shares.

Additional Paid-in Capital

The professional organization of certified public accountants in the United States.

American Institute of Certified Public Accountants (AICPA)

Probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events.

Asset

The proportion of total assets in each asset category, is determined to a large degree by the industry in which the company operates.

Asset Mix

Sales divided by assets and is interpreted as the number of dollars in sales generated by each dollar of assets.

Asset Turnover

Accounting Equation

Assets = Liabilities + Owners' Equity

A company's statement of cash flows includes the following cash transactions: Sales 1,250,000 Inventory Purchase -750,000 Property and Equipment Purchase -270,000 Interest Payment on Long-Term Debt -25,000 Payment of Wages -315,000 Payment of Rent -40,000 Borrowing Long-Term Debt 200,000 Payment of Cash Dividends -15,000 Repurchase of Treasury Stock -40,000 Total Cash Flows -5,000 Assuming the company uses US GAAP standards, what is the total cash flow from financing activities? O $175,000 O $160,000 O $145,000 O $120,000

Borrowing Long-Term Debt 200,000 Payment of Cash Dividends -15,000 Repurchase of Treasury Stock -40,000 O $145,000

In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, the following events occurred: January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. January 3 The corporation borrowed $250,000 from bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2. January 5 The corporation purchased equipment to be used in the business for $200,000 cash. January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. January 30 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1. What will be the impact of the January 5 event on the company's balance sheet on that date? O Cash will decrease $200,000, and loan payable will decrease $200,00 O Equipment will increase $200,000, and cash will decrease $200,000.

Equipment will increase $200,000, and cash will decrease $200,000.

A diagram that represents the flexibility a manager has, within GAAP, to report one earnings number from among many possibilities based on different methods and assumptions

GAAP oval

What situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual basis accounting?

IN 2014, a company provides services to a customer for which cash will be collected the next year (2015)

A company has projected the following sales for the spring quarter of 2014: April $200,000 May $250,000 June $275,000 65% of all sales are paid for with cash. The remainder is on credit. The pattern for credit receivables collections are: Month of Sale 60% Month After Sale 30% Second Month After Sale 10% What are the forecasted cash collections for the month of June? O $275,000 O $269,750 O $178,750 O $248,750

If 65% of sales are paid for in cash, then this mean 35% are paid for with credit. April: 200,000 x .35 = $70,000 2nd month collection $70,000 x .10 = $7,000 May: 250,000 x .35 = 87,500 Month After Sale $87,500 x .30 = $26,250 June Cash: $275,000 x .65 = 178,250 Month of Sale $275,000 x .35 x .60 = $57,750 7,000 + 26,250 + 17,8250 + 57,750 = O $269,750

A furniture company using accrual accounting purchased 20 sofas in November 2011. In December 2011, 8 of the 20 sofas were sold to customers. The customers all signed contracts agreeing to pay half the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the company was reasonably sure the customers would pay the amount owed. The furniture company pays its salespeople a commission on each sofa sold, with commissions for December 2011 sales paid in January 2012. The furniture company paid $3,000 for advertising that ran in the local newspaper in November 2011. In which month should advertising costs be expensed? O February 2012 O January 2012 O December 2011 O November 2011

November 2011

In which scenario would activity-based costing be more appropriate than traditional costing? O A company produces five different products. The products are highly differentiated and have significantly different demands for their use of overhead costs. O Direct labor and direct materials are the major costs associated with a company's two products. The small overhead cost is closely associated with the products' use of direct labor hours. O A company produces one product line. All of the overhead is, therefore, allocated to that product line. O A company produces several different products. The products have very similar requirements for their production and have minimal variation between them.

O A company produces five different products. The products are highly differentiated and have significantly different demands for their use of overhead costs.

A company is experiencing an increase in their bad debt expense. Which change in credit policy would cause this increase? O Some customers were allowed to pay their bills in 60 days versus the normal 30 days. O Credit terms of 2/10, n/30 were granted on all credit sales. O Credit limits were increased for all customers. O The company tightened their credit policy.

O Credit limits were increased for all customers

Which two costs are included when calculating inventory costs? Choose 2 answers O Direct labor O Legal O Selling O Overhead

O Direct labor O Overhead

Which two requirements must accounting firms that audit public companies meet under the Sarbanes-Oxley Act? Choose 2 answers O Firms must report to and be retained by the audit committee rather than the CFO or other company management. O Firms must not audit the same public company for more than five consecutive years. O Firms must not provide certain nonaudit services to audit clients, such as management functions or legal services. O Firms must help to develop and enforce a code of ethics on audit clients

O Firms must not provide certain nonaudit services to audit clients, such as management functions or legal services. O Firms must report to and be retained by the audit committee rather than the CFO or other company management.

Which two items' subtotals are included in a multi-step income statement? Choose 2 answers O Total assets O Gross profit O Current liabilities O Income from operations

O Gross profit O Income from operations

Which two concepts are studied in cost-volume-profit analysis? Choose 2 answers O Levels of activity O Profits O Inventory O Liabilities

O Levels of activity O Profits

How does management accounting differ from financial accounting? O Management accounting is used primarily for internal planning, control, and evaluation. O Management accounting is restricted to providing financial rather than nonfinancial data. O Management accounting is not used to gain a competitive advantage in the marketplace. O Management accounting presents an unbiased view of a company's economic performance.

O Management accounting is used primarily for internal planning, control, and evaluation.

Which two values affect the measurement of net income? o dividends paid o operating expenses o ordinary gains and losses o stockholder contributions

O Operating expenses O Ordinary gains and losses

In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, it focused on obtaining the financing needed to start its operations. In February of year 1, the company sold inventory costing $25,000 for $75,000 cash. In February of year 1, the company provided technology-related services worth $10,000. Customers paid a total of $4,000 in cash for these services and promised to pay the remainder the following month. What will be the total impact of these services provided on the company's balance sheet other than an increase in cash of $4,000? Choose 2 answers O Retained earnings will increase $6,000. O Accounts receivable will decrease $6,000. O Retained earnings will increase $10,000. O Accounts receivable will increase $6,000. O Retained earnings will decrease 52,000.

O Retained earnings will increase $10,000. O Accounts receivable will increase $6,000

A company manufactures custom-built wooden bookshelves. Which two costs would the company classify as period costs? Choose 2 answers O Salary cost of the receptionist O Wood cost O Advertising cost O Salary cost of the craftsperson

O Salary cost of the receptionist O Advertising cost

What does management accounting provide? Choose 2 answers O The insight that management needs so the business can perform more effectively O The information needed by the IRS to decide if a company should have a tax audit performed O The detailed data that managers need to make decisions that will give the business a competitive edge O The insight that outside stakeholders need to choose a company that has a competitive advantage over competitors

O The insight that management needs so the business can perform more effectively O The detailed data that managers need to make decisions that will give the business a competitive edge

Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received? O The accounts payable department utilizes prenumbered checks in the payment of supplier invoices. O The company requires two signatures on each check in order for a payment to be sent. O The inventory department counts and inspects items as received and forwards the receiving record to accounts payable. O The purchasing department authorizes the order of all items before they occur.

O The inventory department counts and inspects items as received and forwards the receiving record to accounts payable.

Company A calculated the following information under traditional and activity-based costing for the production and sale of 1,000 units of Product B: Traditional Sales: $100,000 Cost of Goods Sold: $70,000 Gross Margin: $30,000 ABC Sales: $100,000 Cost of Goods Sold: $110,000 Gross Margin: ($10,000) Which decision should be made about the selling price of Product B? O The price of Product B should be decreased. O The price of Product B should be increased. O Traditional costing should be used instead of activity-based costing. O The number of production batches of Product B should be increased.

O The price of Product B should be increased.

What are two common reasons for managers to manipulate reported earnings? Choose 2 answers O They are preparing to qualify for a bank loan. O They are feeling pressured to meet internal sales goals. O They are feeling pressured to comply with an external auditor. O They are preparing to meet Sarbanes-Oxley requirements.

O They are preparing to qualify for a bank loan O They are feeling pressured to meet internal sales goals.

What is a significant role of the U.S. Securities and Exchange Commission (SEC) in financial reporting? O They ensure that auditors have the resources and information necessary to provide valuable professional services. O They provide representation and training to controllers of public companies. O They support company management and boards of directors in the effective discharge of their responsibilities. O They ensure that financial statement users are provided with reliable information to use in decision making.

O They ensure that financial statement users are provided with reliable information to use in decision making.

Which two requirements must management of public companies meet under the Sarbanes-Oxley Act? Choose 2 answers O They must support a stronger board and audit committee. O They must provide an assessment of the effectiveness of internal controls with each annual report. O They must authorize any loans to members of the board of directors. O They must be rotated every five years.

O They must support a stronger board and audit committee. O They must provide an assessment of the effectiveness of internal controls with each annual report.

Which two actions do internal auditors perform to assist in maintaining the integrity of financial statements? Choose 2 answers O They issue opinions regarding whether financial statements align with Generally Accepted Accounting Principles (GAAP). O They review financial records and internal controls. O They search for and investigate fraud. O They perform the initial accounting for various transactions.

O They review financial records and internal controls. O They search for and investigate fraud.

What role do ethical standards have in management accounting? O To prevent all unethical behavior of anyone the management accountant may work with O To guide the resolution to possible ethical dilemmas that the managerial accountant may encounter O To provide the management accountant with the ability to work with only companies that follow strict ethical principles O To provide the management accountant with the ability to know if a person will act ethically or not

O To guide the resolution to possible ethical dilemmas that the managerial accountant may encounter

What are two impacts on costs as sales volume increases? Choose 2 answers O Total fixed costs will increase in direct proportion. O Total fixed costs will stay the same. O Fixed costs per unit will increase. O Fixed costs per unit will stay the same. O Fixed costs per unit will decrease. O Total fixed costs will decrease in direct proportion.

O Total fixed costs will stay the same. O Fixed costs per unit will decrease.

In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, the following events occurred: January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. January 3 The corporation borrowed $250,000 from a bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2. January 5 The corporation purchased equipment to be used in the business for $200,000 cash. January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. January 31 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1. What will be the impact of the January 31 event on the company's balance sheet on that date? O Cash will decrease $6,000, and accounts receivable will increase $6,000. O Prepaid insurance will decrease $6,000, and accounts payable

Prepaid insurance will increase $6,000, and cash will decrease $6,000.

What does it mean if a company has a debt ratio of 101.5%?

The company has 1.5% more total liabilities than total assets.

What does accounting focus on?

The impact a business's activities have on its overall financial performance

Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company?

The public company accounting oversight board (PCAOB)

A system of providing "quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.

accounting

when one company sells on credit, creating for itself an account receivable, the company on the other side of the transaction is buying on credit, creating an account payable.

accounts payable

Amounts owed to a business by its credit customers and are usually collected in cash within 10 to 60 days.

accounts receivable

The process that accountants use in adjusting raw transaction data into refined measures of a firm's economic performance.

accrual accounting

Reflects the wear and tear, or depreciation, of these items since they were originally purchased.

accumulated depreciation

Which two examples are period costs? Choose 2 answers O Manufacturing overhead O Administrative expenses O Direct labor O Selling expenses

administrative cost, selling expenses

Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAAP)?

an increase in its comparability to other companies

Shows the average number of days that elapse between sale and cash collection.

average collection period

Which category of ABC activities are machine setup and material movement costs associated with? O Product line activities O Facility support activities O Unit-level activities O Batch-level activities

batch-level activities

What formula yields a cash times interest earned?

cash before interest and taxes/cash paid for interest

What cash flow category would include "cash received from investors"?

cash from financing activities

What is a common category in a statement of cash flows?

cash from investing activities

which item is an investing activity?

cash payments for purchase of pant assets

a financial analysis tool that indicates the interest payment ability of an entitiy

cash times interest earned ratio

what is consistent with a continual decline in gross profit if the firm's cost of good sold remains the same?

continual decreased in sales

Policies and procedures used by management to meet their objectives.

control activities

The way a cost is affected by changes in activity levels

cost behavior

Total cost being generated by a specific overhead cost activity.

cost pool

What is a cost that will change in the future based upon the decision made? O Sunk cost O Differential cost O Opportunity cost O Out-of-pocket cost

differential cost

which users would have a primary concern with an organization's ability to provide healthcare benefits?

employees

the amount of assets consumed from the performance of business operations and thus are the opposite of revenues

expenses

Relationships between financial statement amounts

financial ratios

what impact does the sale of equipment have on the statement of case flows?

increase in cash from investing activities

relevant

information having to do with the matter at hand

conservatism

information related to recognizing losses as they occur

What has had the most significant impact on accounting practices?

information technology

reliable

information that can be verified

material

information that is important enough to make a difference

Policies and procedures established to provide management with reasonable assurance that the objectives of an entity will be achieved.

internal control structure

Which account is seen on the balance sheet of a manufacturing company but not on the balance sheet of a service-oriented company? O Accounts receivable O Cash O Equipment O Inventory

inventory

Composed of publicly traded stocks and bonds.

investment securities

the amount of a company loses on activities that are peripheral to its primary operations

loss

The name given to accounting systems designed for internal users

managerial accounting

Which form of debt should be reported in the long-term liability category?

notes payable expected to be paid in 18 months

Which two cash flow adequacy ratios represent a cash cow? o $6,991/$5,486 o $4510/$4932 o $7589/$9210 o $5220/$1875 o $8091/$9374

o $6991/5486 o $5220/1875

Which two examples represent financial statement errors? Choose 2 answers O The accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned O An accounting employee overpays a supplier and receives a portion of the excess as a kickback O The accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability O The outside auditor disagrees with the amount reported as an allowance for uncollectible accounts receivable

o The accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned O The accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability

where would the investor find a summary of a company's significant accounting policies?

on the notes to financial statement

The performance of the fundamental business operations conducted by a company

operating income

Long-term assets that are not suitable for reporting under any of the previous classifications

other assets

What term is defined as the residual interest in the net assets of a company?

owners equity

What two items of information are revealed on the balance sheet

ownership and debt

Costs not directly related to a product, service, or asset. They are charged as expenses to the income statement in the period in which they are incurred.

period costs

Physical precautions used to protect assets and records

physical safeguards

Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time?

statement of cash flows

What assurance does an external audit report provide for its readers?

the company's financial statements fairly reflect it's financial position

what is known about the direct and indirect methods of preparing statements of cash flow?

the indirect method is more popular among large US companies

The director of a marathon race wants to assign the cost of having police officers along the race route to manage crowd control. Which consideration is an appropriate cost driver? O The cost of liability insurance for the race O The number of race participants and spectators O The amount of hours the director spends on organizing the race O The amount of the registration fee

the number of race participants and spectators

the concept that a business should report the financial results of its activities over a standard time period, which is usually monthly, quarterly, or annually.

time period concept