Chapter 08: Assignment

In the context of the approaches to budget preparation, which of the following statements is true of participatory budgeting? a. It is more resource intensive than the top-down approach. b. It demotivates the middle and first-line managers. c. It includes entry-level employees in the budgeting process. d. It is less time consuming than the top-down approach.

a. It is more resource intensive than the top-down approach.

In the context of budget preparation, the document created in the final stage of an operating budget is referred to as a _____. a. budgeted income statement b. budgeted balance sheet c. static cash budget d. capital expenditure budget

a. budgeted income statement

Companies that are not publicly traded: a. obtain external audits at their own discretion. b. are mandated by the Securities and Exchange Commission to provide comparative financial statements. c. do not incur any out-of-pocket costs. d. are required to perform horizontal analysis to identify changes in their key account values.

a. obtain external audits at their own discretion.

If a firm's assets equal $18,000 and its liabilities equal $7,500, then the owners' equity is _____. a. $1,35,000000 b. $10,500 c. $25,500 d. $2.4

b. $10,500

Which of the following statements is true of managerial accounting? a. It focuses exclusively on financial information. b. It involves presenting customized information on request. c. It is intended for external stakeholders. d. Its practices are subject to the generally accepted accounting principles.

b. It involves presenting customized information on request.

Which of the following is a difference between managerial accounting and financial accounting? a. Managerial accounting presents financial statements on a predetermined schedule, whereas financial accounting creates reports upon request by management. b. Managerial accounting is intended to provide information to internal stakeholders, whereas financial accounting is primarily intended to provide information to external stakeholders. c. Managerial accounting prepares a standard set of investment statements, whereas financial accounting prepares customized reports to deal with specific problems or issues. d. Managerial accounting summarizes the past performance of a company, whereas financial accounting provides reports on past performance and makes projections about the future.

b. Managerial accounting is intended to provide information to internal stakeholders, whereas financial accounting is primarily intended to provide information to external stakeholders.

Frank is a loan officer who approves loans for small businesses. One factor he looks at carefully when making loan decisions is the amount of outstanding debt a firm already has—an information that he can find in the firm's: a. operating budget. b. balance sheet. c. franchise agreement. d. articles of incorporation.

b. balance sheet.

The top managers of Promedium Inc. are creating a master budget for the company. They require a statement of the budget goals from each of its departments to be able to make an appropriate master budget. Karren, the manager of the sales department, overstates her needs in the budget and presents the statement to the top managers. The outcome of Karren's actions is known as _____. a. a budgetary crisis b. budgetary slack c. a budgetary deficit d. budget maximization

b. budgetary slack

In the context of managerial accounting, _____ are usually easy to measure because they involve actual expenditures of money or other resources. a. opportunity costs b. out-of-pocket costs c. breakeven costs d. implicit costs

b. out-of-pocket costs

Lance signs a contract with Gerove Corp. to perform an external audit for the company. In his audit, he finds certain minor issues in the firm's financial statements but is of the view that the statements are, nevertheless, an accurate representation of the firm's financial status. In this scenario, Lance is most likely to issue a(n) _____ opinion. a. unqualified b. qualified c. concurring d. adverse

b. qualified

Which of the following is a difference between a statement of retained earnings and a stockholders' equity statement? a. A stockholders' equity statement only shows changes in stockholders' equity that arise from the issuance of additional shares of stock, whereas a statement of retained earnings also shows how net income and dividends affect retained earnings. b. Preparing a statement of retained earnings is mandatory for a firm, whereas preparing a stockholders' equity statement is optional. c. A statement of retained earnings only shows how net income and dividends affect retained earnings, whereas a stockholders' equity statement also shows changes in stockholders' equity that arise from the issuance of additional shares of stock. d. Preparing a stockholders' equity statement is mandatory for a firm, whereas preparing a statement of retained earnings is optional.

c. A statement of retained earnings only shows how net income and dividends affect retained earnings, whereas a stockholders' equity statement also shows changes in stockholders' equity that arise from the issuance of additional shares of stock.

Which of the following statements is true of the Financial Accounting Standards Board (FASB)? a. Its members are encouraged to form ties with private firms for the ease of communication. b. It is a 12-member team that is appointed by the Internal Revenue Service. c. It is a private organization responsible for developing accounting rules. d. It led to the establishment of the Securities and Exchange Commission.

c. It is a private organization responsible for developing accounting rules.

Financial accounting: a. seldom adheres to the standardized and accepted accounting practices. b. records detailed information about a company's various divisions. c. addresses the needs of stockholders, creditors, and government regulators. d. provides information to internal stakeholders such as union heads.

c. addresses the needs of stockholders, creditors, and government regulators.

In the context of comparative financial statements, comparative balance sheets: a. compare the financial performance of two or more companies. b. are mandatory for companies that are not publicly traded. c. can be used to check if the owners' equity had increased. d. show the difference between the income of a firm's stakeholders and the top managers.

c. can be used to check if the owners' equity had increased.

In the context of financial statements, the specific accounts listed in the stockholders' equity section of a balance sheet depend on the: a. government accountant conducting the audit. b. contingency funds that a firm needs to retain. c. form of business ownership. d. liability of the top managers.

c. form of business ownership.

The _____ of a firm organizes the operating and financial budgets into a unified whole, representing the firm's overall plan of action for a specified time period. a. static budget b. capital budget c. master budget d. contingency budget

c. master budget

Mark, an accountant, is given the task to lead an external auditing project for a multinational company. In his spare time, Mark also acts as a consultant for Mayfair Hut Inc., a local company. In this scenario, Mark is a: a. management accountant. b. forensic accountant. c. public accountant. d. government accountant.

c. public accountant.

In the context of an independent auditor's report, which of the following is a difference between an unqualified opinion and a qualified opinion? a. An unqualified opinion is given if the independent auditor identifies minor concerns but believes that on balance a firm's statements are a fair representation of the company's financial position, whereas a qualified opinion is given if the independent auditor does not find any problems with the way the firm's financial statements were prepared and presented. b. An unqualified opinion is given if the independent auditor discovers widespread and serious problems with a firm's statements, whereas a qualified opinion is given if the independent auditor does not find problems with the way the firm's financial statements were prepared and presented. c. An unqualified opinion is given if the independent auditor identifies minor concerns but believes that on balance a firm's statements are a fair representation of the company's financial position, whereas a qualified opinion is given if the independent auditor discovers widespread and serious problems with the firm's statements. d. An unqualified opinion is given if the independent auditor does not find any problems with the way a firm's financial statements were prepared and presented, whereas a qualified opinion is given if the independent auditor identifies minor concerns but believes that on balance the firm's statements are a fair representation of the company's financial position.

d. An unqualified opinion is given if the independent auditor does not find any problems with the way a firm's financial statements were prepared and presented, whereas a qualified opinion is given if the independent auditor identifies minor concerns but believes that on balance the firm's statements are a fair representation of the company's financial position.

In the context of financial statements, which of the following statements is true of long-term liabilities? a. They are debts that don't come due until more than a year after the date of the financial audit. b. They are debts that come due within a year of the date on the balance sheet. c. They are debts that come due within a year of the date of the financial audit. d. They are debts that don't come due until more than a year after the date on the balance sheet.

d. They are debts that don't come due until more than a year after the date on the balance sheet.

Which of the following statements is true of management accountants? a. They provide accounting information exclusively to the government. b. They ensure that all government projects meet accounting regulations. c. They work with multiple clients on a fee basis. d. They assist their superiors in preparing financial statements.

d. They assist their superiors in preparing financial statements.

The accountants at Gamone Phones, a cell phone manufacturing company, discover that the firm has performed poorly over the last two quarters, leading to negative financial implications. Instead of stating the actual figures, the managers decide to wrongly present the firm's debts and overstate its earnings. The aspect of financial accounting that should be emphasized to avoid such incidents of accounting fraud is: a. classified fund rating. b. financial forecasting. c. leniency in budgeting. d. ethics in accounting.

d. ethics in accounting.

Nusreen, a financial manager in a company, compares the operating budgets from the past three years to identify trends in the cost of materials purchased and to learn whether the company's net expenses have increased or decreased over the time span. Nusreen is using _____ to compare the financial statements. a. static structuring b. activity-based costing c. liquidity indexing d. horizontal analysis

d. horizontal analysis

Lecona, a start-up company, failed to acquire any major funding from potential investors. Therefore, the owners of the company set up their office in an unoccupied apartment owned by one of them. In this scenario, the company most likely incurred a(n) _____. a. indirect cost b. fixed cost c. out-of-pocket cost d. implicit cost

d. implicit cost

As a shareholder of Syder Corporation, Carl wants to know whether the company had earned a profit over the last financial year. He begins by looking into the net income of the company to know if it has sufficient amount of money to pay off the workers and suppliers and also the amount of money remaining with the owners. In this scenario, Carl is looking at Syder Corporation's _____. a. articles of incorporation b. information repository c. retention schedule d. statement of cash flows

d. statement of cash flows