A200 Final Exam Polling Questions

Indiana Inc projects $100,000 in sales for January. ½ will be cash and ½ on account. If the sales on account are received one month later, what is the total budgeted revenue and budgeted cash receipts for January? $100,000 revenue, $100,000 receipts $50,000 revenue, $100,000 receipts $100,000 revenue, $50,000 receipts $50,000 revenue, $50,000 receipts

$100,000 revenue, $50,000 receipts

Hoosier Inc projects $100,000 in sales for January and $120,000 in sales for February. ½ will be cash and ½ on account. If the sales on account are received one month later, what is the total budgeted revenue and budgeted cash receipts for February? $120,000 revenue, $100,000 receipts $110,000 revenue, $110,000 receipts $120,000 revenue, $120,000 receipts $120,000 revenue, $110,000 receipts

$120,000 revenue, $110,000 receipts

Griffin Inc. borrowed $120,000 at 10% interest on August 1, 2022. Principal and interest are due at maturity. If the company's year-end is 12/31, what amount of interest expense should be reported in the 2022 income statement? $5,000 ($120,000 * 10%*5/12) $6,000 ($120,000 * 10%*5/10) $1,000 ($120,000 * 10%/12) $0, the loan is due in 2023 $12,000 ($120,000 * 10%)

$5,000 ($120,000 * 10%*5/12)

Jones Inc. borrowed $50,000 on April 1, 2022. The loan matures in 10 months. What is the maturity date? 1/1/2023 2/28/2023 1/31/2023 12/31/2022

1/31/2023

A bakery has the capacity to produce up to 1000 cupcakes each day. Which of the following production levels is OUTSIDE of the relevant range? 0 cupcakes 900 cupcakes 1100 cupcakes 50 cupcakes More than 1 answer is correct

1100 cupcakes

Continuous budgeting is when A company plans for multiple years in advance A company doesn't really plan but operates day to day A company budgets for the next month (or quarter) after completing the current month (or quarter)

A company budgets for the next month (or quarter) after completing the current month (or quarter)

When Land is sold how is the income statement affected? Sales increase, Expenses increase Assets and Liabilities are both changed A gain or loss is recorded

A gain or loss is recorded

Goal congruence seeks to Align the operating and master budgets Align organizational and individual goals Determine plans and goals for the company Set compensation for upper executives

Align organizational and individual goals

Which of the following is included in the cost of equipment? Invoice price Cost of delivery to bring the equipment to the company Cost of customization Cost of testing All of the above are included in the cost

All of the above are included in the cost

Financial accounting Is what we just learned about the last few weeks Results in a set of 4 financial statementsIs used by decision makers outside of the company Follows generally accepted accounting principles (GAAP) All of the answers are correct

All of the answers are correct

Which of the following is NOT a financial statement ELEMENT? Assets Liabilities Expenses Revenues All of the other answers are elements

All of the other answers are elements

The interest rate used to calculate interest expense will always be given as what type of rate? The rate for the length of the loan (i.e. 9 month rate for a 9 month loan) An annual rate The monthly rate

An annual rate

What is the formula used to calculate inventory on the balance sheet? Ending Inventory + COGS Beg Inventory + Purchases - COGS Beg Inventory - COGS

Beg Inventory + Purchases - COGS

How do you calculate ending retained earnings? Beg RE + Net income - dividends Net income - expenses Beg RE - Net income + dividends

Beg RE + Net income - dividends

What does pro forma mean (in reference to pro forma financial statements) Historical financial statements Fiscal year financial statements Budgeted or projected financial statements Master financial statements

Budgeted or projected financial statements

In what order are liabilities reported on the balance sheet? By maturity date Smallest to largest Largest to smallest Alphabetically

By maturity date

Goodwill is: Never recorded on the balance sheet Calculated as the purchase price of another company less the value of the assets and liabilities of the company Expensed immediately The same as a trademark or patent

Calculated as the purchase price of another company less the value of the assets and liabilities of the company

Product costs are Capitalized as inventory costs until the product is sold Expensed as inventory costs until the product is sold Capitalized and depreciated over the life of the asset Expensed during the period the product is produced

Capitalized as inventory costs until the product is sold

How are product costs recorded in the accounting records Expensed- the cost is reported on the income statement Expensed- the cost is reported on the balance sheet Capitalized- the cost is initially recorded in inventory (asset account) and then expensed when sold Capitalized- the cost is initially recorded in inventory which is an expense account

Capitalized- the cost is initially recorded in inventory (asset account) and then expensed when sold

What method of accounting is not allowed under GAAP? Cash Accrual

Cash

A cost is considered VARIABLE if it changes due to: Inflation Supplier price increases Changes in production levels Changes in the design of the product

Changes in production levels

Which of the following shareholders have voting rights? Common shareholders Preferred shareholders Treasury shareholders All of the above shareholders have voting rights

Common shareholders

Treasury stock is Common stock that has been repurchased by the company A special class of stock that gives the shareholders special rights and responsibilities An example of Preferred stock Stock that earns a steady dividend amount each period

Common stock that has been repurchased by the company

Breakeven means Contribution margin - Fixed costs = zero Fixed costs - Variable costs = zero Contribution margin - profit = zero

Contribution margin - Fixed costs = zero

A company that issues stock is a ____ Proprietorship Corporation Partnership

Corporation

What is "book value" for equipment? Cost minus total accumulated depreciation Carrying value plus accumulated depreciation Cost plus depreciation expense Depreciable cost

Cost minus total accumulated depreciation

What is COGS? Cost of sold inventory Sum of company's operating expenses Unsold inventory

Cost of sold inventory

Which of the following is an example of a variable cost for a bakery? Cost of the company accountant Cost of the depreciation on the baking machines Cost of the frosting ingredients Cost of advertising

Cost of the frosting ingredients

Which of the following describes a VARIABLE cost? Cost that stays the same, per unit and in total, when the activity level changes Cost that changes, per unit and in total, when the activity level changes Cost that stays the same per unit, but changes in total, when the activity level changes Cost that stays the same in total, but changes per unit, when the activity level changes

Cost that stays the same per unit, but changes in total, when the activity level changes

Why is it important to know a company's relevant range? Costs that are fixed may change when the company is operating above the relevant range Costs that are variable may change when the company operates at less than the relevant range

Costs that are fixed may change when the company is operating above the relevant range

A highly leveraged company relies heavily on ___? Equity Debt Assets

Debt

Which of the following is a manufacturing overhead cost for the cupcake factory? Cost of flour and sugar Wages paid to the bakers Cost to ship the cupcakes to the customers Depreciation cost of the ovens and cooling racks Cost of the human resources supervisor salary

Depreciation cost of the ovens and cooling racks

Regular repairs and maintenance costs are: Expensed immediately and will reduce net income Included in the cost of tangible assets Included in the cost of intangible assets Expensed immediately but will not affect net income

Expensed immediately and will reduce net income

The formula to calculate breakeven point in units is: VC divided by CM per unit FC divided by CM per unit FC + VC divided by CM per unit

FC divided by CM per unit

Cost of goods sold includes both product and period costs. True False

False

Costs are classified by fixed, variable, and mixed so the company can prepare the company's financial statements. True False

False

Direct labor is an example of a period cost. True False

False

Gain contingencies increase net income True False

False

If no-par stock is issued by a company, the total amount of capital raised is recorded in the Paid-in-Capital in Excess account True False

False

Par value is the same as market value True False

False

Period costs are included in cost of goods sold on the income statement. True False

False

Sales tax collected from a customer and owed to the state government reduces the company's net income True False

False

Rent on the factory building is an example of what type of cost? Fixed cost Variable cost Mixed cost

Fixed cost

Which of the following is TRUE? Variable cost per unit decreases when more items are produced Fixed cost per unit decreases when more items are produced Mixed costs are mostly fixed costs and just a little variable costs Product costs are always variable costsPeriod costs are always fixed costs

Fixed cost per unit decreases when more items are produced

Costs that do not change in total, even when the activity level changes, are Fixed costs Mixed costs Variable costs Product costs

Fixed costs

Which of the following costs do not change IN TOTAL when the activity or output level changes? Variable costs Product costs Fixed costs Mixed costs

Fixed costs

When the activity level changes the costs that change are: Fixed costs in total and variable costs per unit Fixed costs per unit and Variable costs in total Fixed costs in total and variable costs in total Fixed costs per unit and variable costs per unit

Fixed costs per unit and Variable costs in total

Total Sales Dollars at the breakeven point equal: Fixed costs Variable costs Contribution margin Fixed costs plus variable costs

Fixed costs plus variable costs

What do we call the accounting rules in the US? GAAP FASB IFRS

GAAP

Which of the following has an indefinite life? Patents Goodwill Computers Buildings

Goodwill

What kind of account is unearned or deferred revenue? Stockholders equity (revenue) Liability Asset Stockholders equity (expense)

Liability

Intangible assets are: Current assets Long term assets

Long term assets

The contribution margin income statement is used for Financial and managerial accounting Financial statements only Managerial decision making only

Managerial decision making only

Which of the following is a true statement? Margin of safety is the same as breakeven. Margin of safety is the amount sales can fall before losing money. Margin of safety is the point where contribution margin equals sales. Margin of safety is the number of items that need to be sold at breakeven.

Margin of safety is the amount sales can fall before losing money.

Which of the following are product costs? Upstream costs Midstream costs Downstream costs All of these are product costs

Midstream costs

Are the notes to the financial statements optional? No Yes

No

What effect does purchasing land for cash have on total assets? Increase Decrease No effect

No effect

What is the name of a liability account that might be included in either current and long term liabilities? Bonds payable Notes payable Salaries payable Utilities payable

Notes payable

Which of the following is an indirect materials cost for a cupcake? Flour Sugar Frosting Oil sprayed on the pan

Oil sprayed on the pan

Most companies use what method to account for inventory? Perpetual method Periodic method Cost method

Perpetual method

Which of the following is NOT a part of the operating budget? S&A budget Purchases budget Pro forma balance sheet Cash budget

Pro forma balance sheet

For a loss contingency to affect the financial statements it must be both: Probable and estimable Significant and possible Negative and material Relevant and reliable

Probable and estimable

Indirect labor costs is a Period cost, manufacturing overhead Period cost, indirect labor cost Product cost, manufacturing overhead Product cost, direct labor cost

Product cost, manufacturing overhead

Why do companies identify product and period costs? Product costs are included in net income immediately Product costs are included in the cost of inventory, until the product is sold Period costs increase the cost of goods sold Product costs are expensed as incurred

Product costs are included in the cost of inventory, until the product is sold

A company with 1 owner is ____ Corporation Partnership Proprietorship

Proprietorship

Which of the following would NOT increase total profit (assuming no change in number of units sold)? Reduce variable costs Reduce fixed costs Reduce selling price Increase contribution margin

Reduce selling price

What is one of the FUNDAMENTAL qualities of Financial Reporting?Investment Relevance Measurement Equity

Relevance

Which of the following is a FIXED cost for a cupcake bakery? Cost of the frosting Cost of the baker's wages Rent on the baking kitchen building Utilities cost of running the baking machines

Rent on the baking kitchen building

What are the two primary stockholders' equity accounts? Common stock and cash Retained earnings and common stock Assets and liabilities

Retained earnings and common stock

How is the contribution margin calculated? Revenue - Product costs Revenue - Fixed costs Revenue - Variable costs Fixed costs - Variable costs

Revenue - Variable costs

Which of the following is a temporary account? Accounts receivable Sales Supplies Common Stock

Sales

How do you calculate gross profit? Revenues - Expenses Sales - COGS Sales - Operating Expenses

Sales - COGS

What is the first budget prepared in the sequence of the master budget? Sales budget Production budget Purchases budget Cash budget

Sales budget

When inventory is sold how is the income statement affected? Assets and Liabilities are both changed A gain or loss is recorded Sales increase, Expenses increase

Sales increase, Expenses increase

Which of the following is a period cost? Direct materials Manufacturing overhead Selling expenses Inventory costs

Selling expenses

Dividends are paid to ____? Creditors Shareholders' Both

Shareholders'

Which of the following is TRUE regarding operating leverage? Small changes in revenues can produce large changes in profitability Small loans can result in large increases in cash for the company Variable costs increase the benefits of operating leverage Shifting from relying on fixed costs to variable costs increases operating leverage

Small changes in revenues can produce large changes in profitability

Why do companies need to know the cost of their products? So they can determine the correct balance for inventory on the balance sheet So they can record an expense called inventory expense when the product is sold So they can determine the best method of shipping their product to customers So they can negotiate the amount of depreciation expense with their accountant

So they can determine the correct balance for inventory on the balance sheet

Which of the following is associated with long term planning? Operations budget Capital budgeting Strategic planning

Strategic planning

Which of the following is primarily a merchandising company? Indiana University NPR Public Radio Target Julie Head CPA, PC

Target

What is salvage value? The estimated value of the asset at the end of the estimated life of the asset The delivery cost to bring the asset to the company The cost of the equipment allocated to expense throughout the asset's life

The estimated value of the asset at the end of the estimated life of the asset

Which of the following is TRUE regarding managerial accounting? The information is readily available to those outside the company The information is forward-focused It is governed by GAAP It is usually prepared quarterly or annually

The information is forward-focused

The purpose of depreciation is: To adjust the asset value to market value. To allocate the cost of the asset as an expense over the useful life of the asset. To reflect the loss of value of the asset to match market expectations.

To allocate the cost of the asset as an expense over the useful life of the asset.

The primary purpose of budgeting is To determine the primary goal of the company To guarantee profitability To quantify the steps of a proposed plan of action To review historical events

To quantify the steps of a proposed plan of action

Breakeven means Fixed costs = variable costs Fixed costs + Variable costs = Total Costs Total Sales = Fixed costs + Variable costs

Total Sales = Fixed costs + Variable costs

Which of the following is an intangible asset? Trademark Land Natural resources Equipment More than 1 answers is an intangible asset

Trademark

Common stock is usually issued at par value True False

True

Cost of goods sold includes both variable and fixed costs. True False

True

Not all companies are required to have a par value assigned to their stock True False

True

Product costs include both fixed and variable costs. True False

True

Variable costs can be either product or period costs. True False

True

Which liability account represents cash payments received from customers for services not yet earned? Unearned revenue Accounts payable Sales tax payable Accounts receivable

Unearned revenue

The cost for the employees' wages who work in the factory making the products is an example of what type of cost? Assume workers are paid hourly. Fixed cost Variable cost Mixed cost

Variable cost

Which of the following is NOT a product cost for a car manufacturer? Metal used in the body of the car Wages paid to the company accountant Electricity used in the factory Depreciation of the factory building

Wages paid to the company accountant

Which of the following is NOT a product cost for a cupcake? Cake batter Frosting cook/baker's wages Baking supervisor salary Electricity for the ovens Wages paid to the research team to make the cupcake recipe healthier All of these are product costs

Wages paid to the research team to make the cupcake recipe healthier

When is revenue for a restaurant recorded? When cash is received from customer When gift card is sold to customer When food is delivered to customer All of the above are correct

When food is delivered to customer

When are expenses recorded under GAAP? When they are incurred, even if they are not yet paid When they are incurred, but only if also paid When they are paid

When they are incurred, even if they are not yet paid

Can depreciation estimates change? Yes Only once No

Yes

Most preferred stock is: cumulative, meaning the company must pay dividends owed to the preferred shareholders before paying the common shareholders non-cumulative, meaning the company can choose to skip the preferred dividends

cumulative, meaning the company must pay dividends owed to the preferred shareholders before paying the common shareholders

Which of the following is a period expense? shipping cost to get products to company shipping cost to send product to customer Cost of products

shipping cost to send product to customer