Bank On It

Ellis is a piano teacher. He provides lessons to students all week long. If a student pays him for a lesson, he records the transaction. When Ellis orders a new batch of sheet music on account, he doesn't record the transaction until he actually pays for the order at the end of the month. Which type of accounting method does Ellis use?

Cash basis

Multiple choice. Which of the following is NOT a warning sign of a deceptive practice? A.You can attend a demonstration with no obligation to buy B.You can get something for nothing C.You lose the opportunity if you don't act now D.All of the above are warning signs of a deceptive practice

D. All of the above are warning signs of a deceptive practice

This kind of financial statement reports two or more periods side-by-side in columnar form. A.Biweekly B.Duplicate C.Consecutive D.Comparative

D. Comparative

Calculate the interest for the following note: The principal is $9,600, the interest rate is 9% and the term is 4 months. A.$300.25 B.$316.50 C.$288.00 D.$277.00

C.$288.00 Principal x Interest Rate x Time = Interest, so: $9,600 (principal) x (.09) (interest rate) x (4/12) (loan term) = $288.00

True or False. You must be a licensed Certified Public Accountant (CPA) in order to become a Chartered Global Management Accountant (CGMA)

False

True or False? All accountants must spend at least two years performing either tax or audit work.

False In fact, many accountants never work in taxes or auditing. Accounting offers a ton of career opportunities, such as information management, dealing with big data, business intelligence and predictive analytics, just to name a few.

Copy software

False. It is unethical for an employee to copy a software program used by his or her employer for personal use. Copyright laws protect software from unauthorized use, making the choice to pirate software is not only unethical but also illegal.

Another name for the balance sheet is the Statement of ___________.

Financial Position

A CPA who works as a(n) _________ accountant helps track down (as well as helps businesses avoid) accounting crimes.

Forensic

Roberto does the accounting for Sterling Office Supply. After transactions are recorded, Roberto destroys the business paper containing the information for the entries. Helen, a CPA, suggests that the business papers be kept for future reference. Roberto argues that once a transaction has been recorded, the business paper is of no value. Who is right? Roberto Helen

Helen

Selling costs and manufacturing overhead can be either fixed or variable costs.

True

The formula for calculating a bank discount is: Face Value x Discount Rate x Time = Bank Discount

True

There are for-profit businesses that are organized legally to avoid paying income taxes.

True

There is a three-step checklist to help determine whether actions demonstrate ethical behavior under the AICPA's Rules of the Code of Professional Conduct.

True

The Franklin Auto Company manufactures car parts. Last month they produced a total of 560 oil pans. If they sold 417 oil pans for $24 each how much was their sales revenue before expenses?

$10,008 417 (number of units sold) x $24 (price per unit) = $10,008

Find Your Balance. Balance this accounting equation: Assets = $10,000 Owner's Equity = $7,000 Liabilities = ? Your answer:

$3,000

This way to CPA. Most states require that you have at least ________semester hours of education to receive certification.

150

Fill in the blank. The board of ___________ is responsible for the affairs of a corporation.

Directors

What is the term used to refer to a check that has been written but has not yet cleared the bank? A.Cashed check B.Processed check C.Paycheck D.Outstanding check

D. Outstanding Check

An amount of cash kept on hand and used for making small payments is called _________ cash.

Petty cash is cash kept on hand and used for making small payments.

Discount on Notes Payable is a(n) _____ account.

contra liability

To increase the balance of the Supplies account, you would _______ the account.

debit

The accounting term that refers to a reduction in the selling price of an item or services.

discount

The term that refers to a written promise to pay a certain amount of money in a specific time.

promissory note

Case study. If an essential oils company's net sales in Q1 are $52,935 and the cost of the merchandise sold totals $36,232, then what is the company's gross profit on sales in Q1? $16,703.00 $17,653.00 $15,041.00 $16,573.00

$16,703 $52,935 (total sales) - $36,232 (cost of merchandise) = $16,703

Account for it. The Knead Bread bakery sold 500 loaves of bread last week at $2.25 per loaf. The raw materials for each loaf cost $1.80. Calculate their profit for the week (before other expenses).

$225 500 (# loaves sold) x $2.25 (price for loaf) = $1,125 (total revenue) 500 (# loaves sold) x $1.80 (cost per loaf) = $900 (total cost) $1,125 (revenue) - $900 (cost) = $225 (profit)

Account for it. Your house just burned down. The market value of your home is $150,000. It would cost $200,000 to rebuild. You have $50,000 of possessions. If you have a $500,000 home insurance policy, how much will your insurer reimburse you for?

$250,000 Insurers will pay replacement value and no more. They look at the cost to rebuild your home rather than at the market value to calculate the replacement value. $200,000 (cost to replace home) + $50,000 (cost to replace belongings) = $250,000 replacement cost

Keon wrote a promissory note to Scooters R Us for four new motorized scooters for his breakfast delivery business. The total principal was $5,500, the interest rate was 10% and the term of the note was 180 days (180/365). How much interest will Keon pay on the maturity date?

$271.23 $5,500 (principal) x .1 (10% interest rate) x 180/365 (time period of 180 days out of 365) = $271.23

Case study. Caring and Sharing Childcare Center offers three levels of childcare service: full-day, half-day and after-school care. Full-day is $200 per week, half-day is $100 per week and after-school care is $75 per week. Projections for enrollment for the next three weeks are below. Estimate the total revenue for the three weeks. Week 1 Full-day 30 Half-day 25 After-school 20 Week 2 Full-day 30 Half-day 30 After-school 23 Week 3 Full-day 30 Half-day 27 After-school 21. Your answer:

$31,000

If the beginning merchandise inventory is $63,247 and the net purchases total $12,682, then the cost of merchandise available for sale is _____.

$75,929 $63,247 (beginning inventory) + $12,682 (net purchases) = $75,929

You are the accounting clerk for a restaurant supplier. You are preparing an invoice to send to Donald's Dog House for the following supplies: 6 cartons of napkins at $4.88 per carton 3 boxes of small paper cups at $7.28 per 4 boxes of medium paper cups at $8.24 per box 3 boxes of salt packets at $3.19 per box Calculate the total invoice.

$93.65

1.The number one audit risk for S-Corporations is: A.Unreported tips B.Bad credit C.Salary and wages paid to officers of the corporation (Reasonable compensation) D.Tax write-offs for business expenses 2.Repatriation of funds refers to the process of a company bringing profit earned in a foreign country into its home country. 3.As an owner-employee of an S-corporation, you must pay yourself a ___________ of a reasonable amount.

1. C.Salary and wages paid to officers of the corporation (Reasonable compensation) 2. True 3. Salary

1.Fill in the blank. The act of taking ill-gotten gains and passing the money through a business to make it look legitimate is called money _______________. 2.Businesses sometimes commit this type of financial statement fraud in order to deceive their investors into thinking the company is doing better than it really is. A.Understating inventory B.Overstating profits C.Understating revenue D.Overstating expenses 3.CPA auditors must report all suspicious accounting practices and blatant fraud to the proper regulatory agencies.

1. Laundering 2.B.Overstating profits 3.False

Which of the following scenarios will result in the largest total cost of credit, assuming that the principal is the same? 4% 1 year term 4%, 2 year term 5%, 1 year term 5%, 2 year term

5%, 2 year term Cost of credit increases as the interest percentage and loan terms increase, so the option with the longest term and highest interest percentage has the highest cost of credit.

Do you know the difference? Accounting terms can sound similar but mean different things. Which of the definitions below best describes Net pay and Gross pay. A.Net pay: The amount of pay actually received by an employee. Gross pay: The amount of pay before payroll deductions B.Net pay: The amount of pay you pay taxes on. Gross pay: The amount of pay you take home C.Net pay: The amount of pay before payroll deductions Gross pay: The amount of pay actually received by an employee

A. Net pay is the amount of pay actually received by an employee. Gross pay is the amount of pay before payroll deductions.

CGMA vs. CPA: Which duty is a CGMA (Chartered Global Management Accountant) more likely to be responsible for: A.Evaluating and managing business risk B.Internal auditing C.Creating regulatory reports D.Asset tracking

A.Evaluating and managing business risk

The statement, "Accountants expect a business to last indefinitely," matches which accounting assumption? A.Going concern B.Business entity C.Accounting period

A.Going concern

Approvals of IT program changes and system access are examples of which of the following? A.IT general controls B.Application controls C.CAATs D.Data analytics

A.IT general controls

Yolanda owns a small pet store. When she orders feed for her birds, she records the transaction at the time that she orders and then when she pays the bill. Which type of accounting method does Yolanda use?

Accrual Yolanda uses accrual accounting.

You spent $6,547 on your trip to Africa. To use your credit card overseas you were charged a 5% processing fee. How much is the service fee you will be paying on the cost of your trip? A.$412.15 B.$327.35 C.$246.25 D.$447.77

B.$327.35 $6,547(credit card) x .05 (processing fee) =$327.35

Multiple Choice. A local bank is advertising that you can double your money in six years if you invest with them. If interest earned = Principal x rate x time, and you have $3,000 to invest, what interestrateis the bank offering? A.12.50% B.16.67% C.18.73% D.19.44%

B.16.67% I(interest earned) = P(principal) x r(rate) x t(time) $3,000 = $3,000 x r x 6 $3,000= $18,000r $3,000/$18,000 = r r= .01667

Which of these errors would be revealed by a trial balance? A. An entire entry was never posted B. A transaction was never journalized C. A credit entry was never posted

C. A credit entry was never posted

Which of the following is a benefit to working as a CPA for a public accounting firm vs. working as a private accountant? A.Opportunity to improve profit margins and grow business from the inside B.Opportunity to specialize in one particular industry C.Opportunity to diversify your experience as an accountant and professional D.Opportunity for a more traditional work schedule

C. Opportunity to diversify your experience as an accountant and professional

CGMA or CPA? _________ are more often tasked with creating ways to unify stakeholders.

CGMA's

The initial investment of an owner (or owners) into a business is called __________?

Capital

This term refers to an amount of money, consisting of varying denominations of bills and coins that is used to make change in cash transactions.

Change Fund

Fill in the blank. __________ is a type of auditing that allows an audit to continuously monitor systems, sample large amounts of data and manipulate large quantities of data. (Basically it's auditing for the information age.)

Computer Assisted Auditing Caat

Accounting 101. Which of the following terms describes the individual in an organization responsible for all accounting-related activities? Chief Executive Office (CEO) Chief Operating Officer (COO) Controller Head of Accounts

Controller

CGMA's are considered ___________ leaders in the business world. Thought Team Financial All of the above

D. All of the above

You've just graduated college and found a job out of state, but your job doesn't start for another four months. Your lease is up and can be renewed at the price of $700 over a 6-month period or for $850 on a month-to-month basis. It would be cheaper overall to sign the 6-month lease.

False

Fill in the blank. _____ tax is a tax paid by employers that's 0.6% of every employee's first $7,000 of their wages.

Federal unemployment tax

Accounting 101. Also known as 'financial year' or sometimes 'budget year', '_______ year' refers to an annual period for calculating financial statements for businesses and other organizations.

Fiscal Fiscal years are used to calculate annual financial statements and can vary from business to business as to when their 12-month period begins and ends.

Cars Vs. Cash. Your sustainable building supply company is considering a new employee perk: an incentive of $1,000 for workers who purchase hybrid vehicles. You have more than 175 employees, so the potential cost of the program could be close to $200,000 if everyone wants one. Then again, saving the environment could be considered priceless. Your competitor has rolled out a similar program but you're unsure of its success. Do you invest in the hybrid vehicle incentive?

Go for it Being in the sustainable supply industry means it's important that you are true to protecting the environment in your business operations. Individuals that value benefits such as the hybrid vehicle incentive are the same ones that are will be passionate about your sustainable products. This incentive will be a great recruiting tool.

Sharing or stolen ideas? You recently attended your company's quarterly strategic planning session. Several new distribution ideas were discussed as ways to get your company's content in the hands of consumers. You were not pleased with your management team's response to what seemed like great ideas. You're planning to start your own company based on the ideas and concepts discussed in the meeting. Is this stealing from the company?

Go for it Even though the ideas discussed in the meeting are not tangible assets of the company, they do belong to the company where they were generated. In opening your own business based on their ideas, you are not only stealing but also likely burning a bridge with your former employer.

Fill in the blank. _______, as a capital asset, cannot be depreciated. It is the most common non-depreciable asset a company can have.

Land

Accounting 101. Capital + _______ = Assets

Liabilities

Collect Your Reward. Your company is publically traded and has always rewarded employee performance with a portion of the earnings in good years. In the past, employees have received their compensation in the form of long-term incentive investments, which reward them with payouts in the future (after additional years of service). Now, your company is considering changing the incentive structure to compensate employees with short-term, bonus-style payments once a year that will be paid immediately instead. The upfront cost of the two incentive options is the same. Do you make the change to bonus-style compensation?

Pass

Discount Shopping. You work for an international public manufacturing company in an industry that's declining. An opportunity has come up for you to expand your market share by purchasing other factories at a big discount. The product you make is currently used across many applications, but has the potential to become outdated (timeframe unknown). Your manufacturing process uses high-tech equipment, so there are high asset and operating costs to consider. Do you invest in the additional locations?

Pass

Just Landed. You work for a small social networking company that's built on one acre of land. The company just started up six months ago and the CEO dreams of tripling the company's size. He asks your opinion on buying the three acres of land that surround the current office, in case he wants to expand in the future. It will offer no return; the land in your area has not increased in value in years. But the sale price is quite good. Do you invest in the land?

Pass

Super Spending. Your company normally spends $500,000 per year on marketing. This year, the marketing team wants to do a Super Bowl commercial-which will mean $500,000 for just one day. The team argues the number of viewers is worth the investment, the buzz will be huge, and the timing is right because you have a new product launching and success relies on high awareness. Should you sign off on the Super Bowl commercial?

Pass

Time To Party? Your division of a large company has struggled with meeting goals this year and sales have been slow. Your Senior VP has asked for your recommendation on whether to have the division's annual holiday party. The party has always been the highlight of the year and is a great time for co-workers to gather outside of work. The party also always seems to boost employee morale and get everyone excited about the new year. You know that the money just isn't in the budget, but you could reallocate funds from a discretionary account to pay for the party. Do you recommend holding the holiday party?

Pass

Which of the following is NOT a benefit of leasing a car? The monthly payment is generally less than a car loan payment The leasing company is responsible for major repairs The leasing company is responsible for routine maintenance You may have the option to buy the car for its value at the end of the agreement

The leasing company is responsible for routine maintenance

Which of the following is an advantage of being a sole proprietorship (self-owned) business? More paid vacation No overhead costs Total control over the business Easy to expand

Total control over the business

True or False? CPAs can help with cybersecurity.

True

True or False? In the double-entry accounting system, debits always go on the left side AND credits always go on the right side for all accounts.

True

You're your balance. If you have $1,500 in your checking account and you write three checks: one for $467.10, one for $650.15 and one for $478.90 have you overdrawn your account? Yes or No?

Yes

The term that refers to a written request that a certain item or items be purchased.

purchase requisition

The _____ costing method can help determine the number of items on hand, even when a perpetual inventory is kept.

weighted average

Money taken from the business by the owner for personal use is a __________.

withdrawal

In a rolling budget that covers 12 months, the budget always looks forward one full ____________.

year

Which of the following is not a section of the CPA Exam? A.BEC (Business Environment & Concepts) B.TAC (Taxes & Accounting for Corporations) C.AUD (Audit & Attestation) D.FAR (Financial Accounting & Reporting)

B. TAC (Taxes & Accounting for Corporations)

In your small business you have $12,000 in assets and $4,000 in liabilities. What would your owner's equity be? A.$16,000 B.$8,000 C.$12,000 D.$4,000

B.$8,000

True or False? If you don't owe taxes you won't be penalized for not filing your taxes.

True

True or False? A business pays sales tax to the federal government whether they charge the customer for it or not.

True. If a business decides to role the sales tax into the cost of the item and doesn't explicitly charge the customer sales tax on the purchase, the business must still pay the percentage of the sales revenue to the federal government as sales tax on the purchase

True or False: It would be more difficult to practice under a CPA license in another country than it would be to practice management accounting internationally.

True. CPA credentials are only reciprocated in a handful or nations outside of the US. The CGMA designation is recognized and respected globally.

True or False? A memorandum (or memo) may be used as a source document if no other source document (such as an invoice, check stub or receipt) can be found.

True. Memorandums, or brief written messages describing transactions, can be used in lieu of an invoice, check stub, receipt or other source document as evidence of a business transaction.

When performing a financial statement audit, an auditor must first understand the company's information technology systems.

True. The financial statement auditor is required to understand how transactions are initiated, approved and recorded within the financial statements. During this process it's necessary to gain an understanding of the information systems and technology utilized for business transactions that are processed and ultimately recorded on the financial statements.

Fill in the blank. A _____ will decrease a liability account.

Debit

Total assets - Total liabilities = ________

Net worth

Define it. This term means to examine and verify financial records and reports.

Audit

You're your balance. Your starting balance for the month was $3,780.19.These are the following transactions in your checkbook for the month. Check 224 written to Office Supplies, Inc. $234.50 Check 225 written to Cleaning Crew $70.00 Check 226 written to Utilities & Water $425.18, Check 227 written to Millennium Mortgage $1,200.77 Deposit of $567.80. If all of the checks have cleared except Check 225, what is your current bank balance? Your answer:

$2,487.54 $3,780.19 (starting balance) - $234.50 (Check 224) - $425.18 (Check 226) - $1,200.77 (Check 227) + $567.80 (deposit) = $2,487.54 While your current balance indicates how much is in your checking account, you need to account for outstanding checks when determining the actual amount of money you have to work with.

Find Your Balance. Balance this accounting equation: Assets = $7,500 Owner's Equity = $3,000 Liabilities = ?

$4,500

1.The act of altering entries in the accounts to cover up fraud or simply not recording certain entries is called _________ the books. 2.True or false? Conviction for income tax evasion is a misdemeanor. 3.Choose wisely. MacGyver's Solutions Firm rents office space in the A-Frame Office Building. The leasing company that owns the building is also an investor in the firm. Is this a red flag for closer examination of the leasing agreement?

1.cooking 2. False 3. Yes

Fill in the blank. The banker's method is a method for computing interest based on a _____ -day calendar year.

360

Case study. If Amelia started her pay period with 55 hours of vacation time and she earned 3 hours of vacation time and used 12 hours of vacation time during this pay period, then what is her total available vacation time?

46

Accounting 101. This financial calculation is a measure of a company's liquidity. It involves dividing a company's current assets by its current liabilities. What is this ratio called? A.Liquidity Ratio B.Current Ratio C.Net Ratio D.Liability Ratio

B.Current Ratio

This number is a measure of a company's liquidity, which is used to measure its ability to pay its short-term debt obligations. A.Net income B.Current ratio C.Profit margin D.Current assets

B.Current ratio

Multiple choice. A charge card has which of the following characteristics? A.It is always associated with a store account B.It has a line of revolving credit C.It must be paid off every month D.It is a form of service credit

C.It must be paid off every month Charge cards are a form of credit card where the balance must be paid in full every month. There is no interest (because it is always paid in full), so these cards often require a large annual fee.

Accounting 101. All accountants use the same set of rules called GAAPs. What does GAAP stand for: A.Generally Accepted Accounting Policies B.General Annual Accounting Practices C.General Accounting & Actuary Policies D.Generally Accepted Accounting Principles

D. Generally Accepted Accounting Principles

Which of the following items is NOT included on an employee's Form W-2? A.FICA tax withheld B.401k contributions C.Employees Social Security Number D.Employee's Job title

D.Employee's Job title

Which of the following events is generally not covered under a standard home insurance policy? A.Fire B.Break-ins C.A guest slips and falls D.Floods

D.Floods

Define it. What is the name of the ratio that explains how efficiently a company is using their assets to generate revenue. A.income ratio B.revenue asset ratio C.receivables turnover ratio D.asset turnover ratio

D.asset turnover ratio

A liability is a business owner's financial claim to their assets.

False

A proprietorship is difficult to establish.

False

Stock Option. You're the CFO of an international, publicly held shoe corporation. You and your partners have decided to sell your company to a wealthy investor. One of your partners has an idea: you could all buy stock in the corporation ahead of the sale, and likely make a nice personal profit. You would each have to invest about $100,000 of your own money, which is affordable to you, and you'd see profits of $1 million. Do you invest in the additional stock?

Pass Your partner's idea is highly illegal. You would all be sued for insider trading by the SEC and find yourself in jail because it's a crime to use insider knowledge to affect a stock price. As a CPA, it's your job to remain ethical and make sure no shady business like this goes down under your watch.

Fill in the blank. Interest received on a note receivable, that is recorded in the Interest Income account is classified as _____.

other revenue

Worksheet headings contain three types of information: The name of the business, the name of the accounting form, and the ____________.

Accounting period

Your company bought $100,000 of new inventory items during February. $250,000 of inventory was sold that had a cost of goods sold (COGS) of $75,000. Inventory costs at the beginning of the month were $150,000. What was the cost for inventory in February? A.$175,000 B.$50,000 C.$180,000 D.$125,000

A. $175,000 Beginning Inventory + New Inventory - COGS = Cost of Inventory $150,000 (Beginning Inventory) + $100,000 (New Inventory) - $75,000 (COGS) = $175,000 Cost of Inventory

Which organization is responsible for scoring the CPA exams? A.AICPA B.The Internal Revenue Service (IRS) C.The Financial Accounting Standards Board (FASB) D.The National Association of State Boards of Accountancy

A.AICPA

For determining indirect overhead costs for manufacturing companies, one cost allocation method is called the ABC method or what? A.Activity-based costing B.Accounting based costing C.Appliance-based costing D.Asset-based costing

A.Activity-based costing This method identifies the necessary, supporting activities for each part of the production process and collects costs into separate pools for each activity.

Account for it. Krystal Marshall owns a car wash. She paid $50 for advertising in a local newspaper. Use double-entry accounting to balance the accounting equation for her records. The Cash in Bank account decreased by $50 and the Krystal Marshall, Capital account: Increased by $50 Decreased by $50 Increased by $100 Stayed the same

B. Decreased by $50

The three types of business operations are: Sole proprietorship, partnership and corporation Service, merchandising and manufacturing For-profit, not-for-profit and non-profit

B.Service, merchandising and manufacturing

True or False. You may become a Chartered Global Management Accountant (CGMA) through either the American Institute of Certified Public Accountants or the Chartered Institute of Management Accountants pathway.

True

True or False: CPAs are more likely than CGMAs to work for individuals and businesses and CGMAs are more likely to work within corporations than they are to work for individuals or small businesses.

True

True or False? Employees can have money deducted from their paycheck (pre-tax) as direct bank draft donations to nonprofits.

True

FASB

(Financial Accounting Standards Board)

This statement, "The personal property of a business owner is not included in the accounting records of the business" matches which accounting assumption? A.Business Entity B.Going Concern C.Accounting Period D.Ethics

A. Business Entity

CGMA vs. CPA. Which duty is a CPA more likely to be responsible for: A.Preparing payroll and month-end statements B.Producing guidelines and policy for accounting operations C.Advising on debtor risk mitigation methods D.Providing leadership and coaching to team members on cost control and reporting issues

A. Preparing payroll and month-end statements While a CGMA must certainly be familiar with the responsibilities of preparing payroll and month-end statements, that job would be more likely to be preformed by someone who is not a CGMA but a CPA.

Party Time. There's a big conference being held in your city this year, which hundreds of people and potential customers from your industry will be attending. The CEO would like to throw a party for conference attendees, which would cost the company $25,000. You've already spent the discretionary budget for the year, and would be eating into 40% of the budget for the following year. Do you invest in the party?

Go for it Opportunities like this don't fall into your backyard very often. You shouldn't pass up the chance to host and mingle with so many people who could have a positive impact on your business. Make sure your staff is prepped to have great conversations and track the amount of deals you make from them. Just think of the ROI. Next year, you can scale back to make up for it.

Account for it. You earn $250 per week at your summer job, with the potential for $33 per week in overtime pay depending on your weekly schedule. What is your weekly fixed income?

250 Fixed income is income that you regularly receive, so your weekly earnings of $250 are your fixed income, and any extra you make is flexible income.

CGMA vs. CPA. Which duty is a CGMA (Chartered Global Management Accountant) more likely to be responsible for: A.Performing bookkeeping duties B.Managing short-term finance C.Appraising and evaluating real property D.Formulating and evaluating financial strategy

D.Formulating and evaluating financial strategy CGMAs are often involved in higher level accounting analysis used to inform business decision-making and strategy. This means they often go beyond typical accounting technical skills and would be more likely to formulate and evaluate financial strategies.

True or Flase A check means don't post

True As strange as it is, a check mark recorded below the totals of a column indicates that they are not to be posted to the ledger.

True or False: Licensed CPAs can practice accounting anywhere in the world.

False

True or False? A financial auditor owns Google stock in his personal investment portfolio and has recently been assigned to audit Google's financial statements. This doesn't present any issues of conflict because the auditor doesn't own a material share of the company stock.

False

True or False? An individual can be forced into a partnership if one of the parties involved owes the other party more than $100,000.

False

True or False? Having balanced books means your records are error-free.

False

True or False? Information technology controls are always tested during an internal audit.

False

True or False? Inherent risk is the ability of internal controls to prevent or detect a material misstatement in a timely manner.

False

True or False? The steps of the accounting process are different for manual and computerized accounting systems.

False

Working as a private accountant means mainly acting as an independent third-party to examine financial statements and accounting systems of client companies.

False

True or False? You just got a raise and you really want to pay down your debt so you can have a stronger FICO score. The first thing you should do is pay the bills that are the most overdue.

False You should pay off your most recent debt first, this will help boost your FICO score.

Case study. Chuck and Kendall are equal partners in their marketing firm. Patrick recently graduated with a marketing degree and Chuck and Kendall have offered him a partnership in the firm. Because of Patrick's lack of experience, they offer him a 20% interest in return for a $40,000 investment. The revenue for their business averages $10,000 a week. If Patrick becomes a partner, he could generate an additional $3,500 in revenue a week. Compute his 20% share of the total revenue per week.

$2,700 $10,000 (Current weekly revenue) + $3,500 (Additional weekly revenue generated by Patrick) = $13,500 (Projected weekly revenue) $13,500 (Projected weekly revenue) x .2 (Patrick's share of 20%) = $2,700

Case study. Thomas Tire Company produced 790 tires last month and sold 630 tires at a price of $120 apiece. If the cost per tire to manufacture (including direct labor, raw materials and overhead) was $55 each, what was the company's profit last month?

$32,150 790 (total units produced) x $55 (cost of production per tire) = $43,450 (production expenses) 630 (total units sold) x $120 (price of unit) = $75,600 (total sales revenue) $75,600 (total sales revenue) - $43,450 (production expenses) = $32,150 (profit)

Do the math. You've just been hired at a great new startup. The only problem is that it is fairly far away from where you live. You determine it would cost $12 a day if you took public transportation and $16 a day if you take your car. How much cheaper would it be to take public transportation over the course of a month assuming you work 22 days?

$88 $16 (cost of car travel) - $12 (cost of public transportation) = $4 $4 (difference in cost) x 22 (work days in a month) = $88

Pay to Play. Shoenique is a local retail shoe store. They have five employees. Joanna and Lashanda are store supervisors and are paid hourly at a rate of $10/hour. Alice, the store manager, receives a monthly salary of $4,000. Kalen and Roger are paid on a commission basis at a rate of 5% of their individual sales. During February, the following occurred: Joanna (152 hours worked, $23,000 sales made) Lashanda (160 hours worked, $30,000 sales made) Alice (180 hours worked, $50,000 sales made) Kalen (100 hours worked, $25,000 sales made) Roger (120 hours worked, $32,000 sales made) What is the gross payroll for Shoenique for February?

$9,970

Case study. If the principal amount on a note is $900, the interest rate is 12.25% and the term is for 120 days, what is the maturity value of that promissory note? $36.25 $936.25 $35.75 $935.75

$936.25 To find the maturity value of a note, you must first calculate the interest of that note, then add that amount to the principal. So: $900 (principal) x (.1225) (interest rate) x (120/365) (loan term) = $36.25 (interest paid) $36.25 (interest) + $900 (principal) = $936.25

1.The process of using analytics to identify variances and root causes and prepare creative solutions 2.The process of examining the organization's tax return and position for compliance 3.The process of anticipating and arranging, during a person's life, for the management and disposal of that person's financial wealth during the person's life and at and after death, while minimizing gift, estate, generation skipping transfer, and income tax 4.Which of the following words would CPAs NOT use to describe their career? 5.True or False. Non-profit organizations do not need the services of CPAs. 6.True or False. In order to qualify for the CPA license you must have a degree in accounting. 7.The key process that uses two sets of records to ensure figures are accurate and in agreement 8.The process of determining how to balance the organization's cash needs 9.The process of implementing policies, evaluating and managing risks associated with the organization's investment, funding activities, collections and disbursements

1. 2. 3. 4. Static 5.False 6.False 7. 8. 9.

1.Double-check the numbers. The Small Business Health Care Tax Credit offers a maximum credit of 35% of health care expenses for employers that pay at least 50% of the cost of single (not family) health care coverage for each employee. If your company's total healthcare expense for the tax year is $50,000 and their eligible credit is 20%, what is the amount of the tax credit? 2.Choose wisely. A multi-national computer company develops software in the U.S. In an effort to avoid paying taxes on earnings from that software, it shifts the Intellectual Property rights of some of its software to its divisions in lower-taxed countries. Is this considered tax evasion or tax avoidance? 3.Fill in the blank. The act of adjusting sales revenues and expenses over years to provide the picture of consistent upward growth is referred to as ____________.

1. $10,000 2. Tax Avoidance 3. Profit Smoothing

Your number is up. 1.Your income tax return has been chosen for audit. You are married, filing jointly. Last year, you and your spouse's adjusted gross incomewas $74,000 after deductions for charitable contributions and additional business expenses. Your spouse had a major surgery last year and insurance only covered $7,400 of the total $9,500. You deducted the additional $2,100. Identify the problem. A.You cannot deduct any medical expenses on your tax return. B.You cannot deduct unpaid medical expenses if they do not equal more than 7.5% of your adjusted gross income. C.You cannot deduct unpaid medical expenses if they are more than $2,000. D.You cannot deduct medical expenses if you have insurance. 2. Which of the following types of deductions is not considered a "hot button" for potential audit? A.Travel B.Office furniture C.Automobiles D.Entertainmen Define a method (legal or illegal) of minimizing or decreasing an investor's taxable income, and as a result, their tax liability.

1. B You cannot deduct unpaid medical expenses if they do not equal more than 7.5% of your adjusted gross income. 2.Office furniture . People who are trying to evade taxes typically try to claim a deduction for something that is not actually a business expense. It is more likely that someone purchased office furniture legitimately for their business than it is that they purchased a brand new BMW. 3.Abusive tax shelters are a huge problem particularly in large corporations. The IRS even has a tax shelter hotline to encourage people to report suspicious tax avoidance behavior.

1.The process of determining how to balance the organization's cash needs 2.The process of reviewing and analyzing an organization's financial statements in order to make better economic decisions 3.The process of establishing and managing both internal and external stakeholder relationships in an effort to meet organizational objectives and fulfill governance responsibilities 4.Fill in the blank: Lobbying to build behind the scenes support for ideas and plans is a skill that falls within the _____________ knowledge area. A.Leadership B.People C.Technical D.Business 5.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. All of the following skillsets fit into the Leadership knowledge area EXCEPT: A.Devising strategy to maximize opportunity and minimize risk B.Promoting the expectation of exceptional performance as the norm C.Recognizing and reward team and individual achievement D.Participating in developing training 6.True or False: You can hire a personal CGMA. 7.The process and set of procedures used to estimate the economic value of an owner's interest in a business 8.The process in which a business determines and evaluates potential expenses or investments that are large in nature and benefits are usually expected to be derived over a longer time period. 9.The process of planning and monitoring structured activities or operations that generate a specific service or product.

1. Cash Management 2. Financial Analysis 3. Business relations 4. B.People 5. A.Devising strategy to maximize opportunity and minimize risk 6.False 7. Business Valuation 8. Capital Budgeting 9. Process Management

1.True or false? If a taxpayer disagrees with an audit finding, they must pay the fine anyway. 2.Case study. The Francesco's Italian Restaurant located in Des Moines, Iowa filed their business tax return, which included a deduction of $26,000 for business travel to Florence, Italy. Cal's Auto Deals (also located in Des Moines, Iowa) included on their tax return a deduction of $34,000 for business travel across the U.S. to several car auction locations. Who is more likely to be audited? 3.Choose wisely. A U.S. based business has subsidiaries across the country as well as around the world. The company keeps much of its income overseas where it is exempt from federal income tax. However, when some of their American operations had cash flow issues the company sent the money through loans from their foreign divisions. Is that income now subject to taxation? Yes No

1. False 2.Francesco's Italian Restaurant 3. No

1.The ability to have an effect on people, relationships, processes and products while driving business performance in both domestic/international dealings 2.The ability to support, implement and monitor effective performance management to achieve results 3.The process of ensuring that the organization understands and conducts operations based on statutory, regulatory and common-law rules applicable to its line of business. 4.Fill in the blank: Celebrating individual and group achievements is a skill that falls within the ____________ knowledge area A.People B.Business C.Leadership D.Technical 5.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Which of the following skills DOES NOT fall under People knowledge area? A.Communicating effectively and assertively in high stakes situations B.Lobbying to build behind the scenes support for ideas and plans C.Encouraging the sharing of ideas and best practices to improve outcomes D.Identifying new and innovative ways to achieve required outputs of projects 6.Fill in the blank: Identifying opportunities for synergy and integration of processes falls within the ______________ knowledge area. A.Business B.Leadership C.People D.Technical 7.A corporate action in which a company buys most, if not all, of another firm's ownership stakes to assume control of it 8.One or more defining capability(ies) or advantage(s) that distinguish a business or organization from its competitors 9.The ability to recognize the need for change and embrace new ways of thinking and working that align with business objectives and financial targets.

1. Influence 2. Driving Performance 3. Taxation Law 4. C.Leadership 5. D.Identifying new and innovative ways to achieve required outputs of projects 6. A.Business 7. Acquisition 8. Core Competency 9. Change Management

1.A deal to unite two existing companies into one new company 2.Cost that has been incurred or committed prior to a decision point. It is not relevant to subsequent decisions. 3.The process of analyzing, planning and managing costs for individual business projects and initiatives. 4.Each CGMA skillset will fit into one of four different knowledge areas: Technical, Business, People or Leadership. All of the following fit into the People knowledge area EXCEPT: A.Mentoring and coaching B.Diffusing political debates at work C.Understanding non-verbal communication D.Relating to others from different cultural backgrounds 5.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Which of the following skills DOES NOT fall under Leadership knowledge area? A.Leading up implementation of technology upgrades B.Promoting trust and respect for others C.Orienting new employees on the job D.Monitoring team performance 6.True or False. Developing a writing style and materials to effectively communicate and influence business partners is a skill which falls into the People knowledge area. 7.The process of determining whether a new business model or service line will be profitable by calculating whether the production of one unit or one service hour is profitable 8.A review of the actual results of a project in order to compare these with the expectations contained in the project proposals 9.The process of using historic financial data and events to determine future trends, opportunities and pitfalls

1. Merger 2. Sunk Cost 3. Cost Management 4. A.Mentoring and coaching 5. A.Leading up implementation of technology upgrades 6. True 7. Economics of One 8. Post-Completion Audit 9.Forecasting

1.The process of recording financial records for tax purposes as prescribed by taxation law 2.The process of implementing policies, evaluating and managing risks associated with the organization's investment, funding activities, collections and disbursements 3.The act of combining the value and performance of two organizations or entities to produce greater results 4.True or False. Recommending implementation of new technology when appropriate falls into the Technical knowledge area. 5.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Choose the skill below that DOES NOT fall under Business knowledge area: A.Understanding competitors strengths B.Approving settlements of tax audits C.Staying current on external global factors that may impact the performance of the business D.Advising others on regulatory regime 6.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Choose the skill below that DOES NOT fall under People knowledge area: A.Presenting complex or controversial information to all levels of the organization with confidence B.Negotiating with internal and external stakeholders in tough situations C.Remaining professional in difficult or uncomfortable situations D.Ensuring standardization is applied to all processes 7. The process of delivering, discussing and reporting on the organization's operations and financial conditions 8. The process of articulating the organization's general sense of identity and direction, outlining why the organization exists, and what the stakeholders require. 9. The ability to use one's time effectively and productively while meeting goals and deadlines

1. Tax Accounting 2. Treasury Policies and Treasury Risk Management 3.Synergy 4.True 5. B.Approving settlements of tax audits 6. D.Ensuring standardization is applied to all processes 7. Management Reporting 8. Strategy 9. Time Management

1.True or false? If a CPA auditor issues a clean opinion for a business, the auditor can be sued if it becomes clear that the company is actually engaging in fraud. 2.The Ten-Pin Bowling alley has been selected for audit. The business owner is preparing for his audit appointment and his payroll records have been requested. How many years of records should he be able to produce for the interview? 15 4 6 2 3.Double-check the numbers. Your client, a local entrepreneur, has recently been notified of an impending IRS audit. In reviewing their tax return, you notice that they used their car for business purposes and reported the expense on their taxes. In talking with your client, they tell you that they tracked their mileage on trips to and from their office location. If they drove 300 miles making these trips in that tax year and the standard mileage rate is $.55/mile, what is the correct amount that they should have reported on their taxes for this expense?

1. True 2. 4 3. A business owner cannot deduct any expenses related to commuting from their home to their place of work. To be safe, it's best to keep a record of their mileage, and calendar entries specifying the starting and ending addresses, and business purpose for every time they use the car for business.

1.True or False. S Corporations are different than C Corporations in that deductions and income are passed to shareholders where there they are subject to income tax. 2.Multiple Choice. This form of taxation results from the practice of first taxing the corporation for income and then taxing shareholders on any dividends they receive from the corporation. A.Secondary taxation B.Double taxation C.Shareholder taxation D.Additional taxation 3.Mutiple Choice When a business chooses not to record all sales revenue in order to deflate their taxable income this is referred to as? A.Sales skimming B.Sales deflation C.Embezzlement D.Sales evasion

1. True 2.B.Double taxation 3.A.Sales skimming

Account for It. If Jamire's Copy Center has Current Assets of $4,395, Current Liabilities of $3,234, Sales of $5,029, and Shareholders Equity of $3,987. What is Jamire's Copy Center's current ratio rounded to the nearest hundredth?

1.36 Current ratio is equal to Current Assets divided by Current liabilities. $4,395 (Current Assets) / $3,234 (Current Liabilities) =1.3589914 1.3589914 rounded to the nearest hundredth = 1.36

1.Fill in the blank. If a company's debt has too many characteristics of _______ capital, the IRS may disallow the interest to be deducted. 2.Publicly held companies are required by law to put in place internal controls specifically designed to address risks related to financial reporting. These internal controls must be assessed annually by an independent auditor. 3.One of the two main kinds of tests carried out by an auditor, tests of controls directly measure monetary error in accounting records.

1.Equity 2. True 3. False

1. True or False. It's ok to complete Form 1040EZ Income Tax Return for Single and Joint Filers if you only have one dependent child? 2.Double Check The Numbers. GoGreen Lawn Care had $198,976 of net income during the previous tax year. Using the tax table provided below, calculate GoGreen's federal income tax due. 15% of net income before taxes, $50,000 - $100,000 25% of net income before taxes, $100,000 - $140,000 29% of net income before taxes, $140,000 - $180,000 33% of net income before taxes, $180,000 - $200,000 $------------ 3.Sadie and Paul just started their own organic farm. The start-up costs were $45,000. At tax time, Sadie and Paul itemize their expenses for their first year. How should they record the start-up costs on their income tax return in order to avoid being flagged for an audit? A.Amortize the costs over five years and take a fractional deduction each year B.Deduct the entire $45,000 as a start-up expense C.Categorize the costs and deduct the $45,000 across expense categories _ Example Farm equipment $20,000, consulting fees $5,000, et D.Divide the costs over ten years and take a fractional deduction each year

1.False 2.Total Tax: $15,000 + $10,000 + $11,600 + $6,262.08 = $42,862.08 3.A.Amortize the costs over five years and take a fractional deduction each year Amortize the costs over five years and take a fractional deduction each year . Amortization is a term that means spreading the cost of something over several years. Businesses are not allowed to deduct total start-up costs in year one. They must amortize the cost over five years or more.

1.The process of examining the organization's tax return and position for compliance 2.The process of adopting and integrating new and improved technology solutions to support the organizational objectives 3.The ability to use proper influence skills to obtain positive outcomes and make decisions that align with the strategic direction of the organization. 4.How many years of experience must you have as a management accountant before you can become a CGMA designation holder? A.10 B.1 C.5 D.3 5.True or False. Ensuring accountability within the team to stretch targets falls within the Business knowledge area. 6.True or False. Negotiating with internal and external stakeholders in tough situations is a Leadership skill. 7. The process of developing and implementing procedures to mitigate identified risks or exposure to risk, and disclosing risk information to both internal and external stakeholders. 8.The process of understanding and applying organizational policies or procedures to manage and control both financial and non financial risks to which the organization might be exposed 9.The ability to convey financial and non-financial information effectively to all levels both internally and externally as needed

1.Tax Audit 2. Technology and IT recommendations 3. Negotiating and Decision-Making 4. D.3 5.False 6.False 7. Risk response and Reporting 8. Risk management Policies and Procedures 9. Communication

1.The ability to drive team performance by promoting and encouraging participation and sharing of ideas that align with the organizational strategy and maximize goals 2.The process of creating an IT environment and understanding the interrelationships between the various components and systems, including the workflow of data through the systems 3.The process of implementing a control framework to ensure the integrity of operations, financial and accounting practices 4.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Which of the following skills DOES NOT fall under Technical knowledge area? A.Advising on solutions for complex tax projects B.Benchmarking C.Establishing and maintaining integrity in cross-functional business partnerships D.Management reporting 5.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. All of the skills below fall under Technical knowledge area EXCEPT: A.Designing effective charts of account B.Advising on the ethical selection of relevant accounting policies C.Managing cost challenge processes D.Promoting trust and respect for others 6.Fill in the blank: Enforcing compliance procedures is a skill that falls within the ____________ knowledge area. A.Leadership B.Technical C.Business D.People 7. The ability to train and advise others on how to perform, improve and succeed by producing best results 8. The process of integrating all aspects of a project, ensuring resources and knowledge are available and most importantly ensuring that the expected outcome is produced in a timely, cost-effective and quality controlled manner. 9.The process of examining, analyzing and providing an independent and objective opinion on the effectiveness of an organization's operations

1.Team building 2. Information systems environment 3. Internal controls 4. C.Establishing and maintaining integrity in cross-functional business partnerships 5. D.Promoting trust and respect for others 6. B.Technical 7. Mentoring 8. Project management 9. Internal Audit

Your number is up. Your income tax return has been chosen for audit. You run an in-home daycare. Your total income earned was $37,800. Your home is 3200 sq. feet and you use the basement, which is 1600 sq.feet to run your daycare. Because the daycare space is half of the sq. footage of your house, you calculate 50% of your expenses for the house (mortgage, utilities, etc) and deduct that amount as business expenses. Identify the problem. A.You must also calculate the percentage of time the space is used for business vs. personal. B.You cannot deduct more than 20% of your mortgage for business use. C.You must deduct only utilities (you cannot deduct any part of your mortgage for business use). D.You cannot deduct expenses like toys. T or F An unqualified opinion is the best type of report an auditee (business or entity being audited) can hope to receive from an external auditor. Your number is up. Your income tax return has been chosen for audit. You are an owner-employee of an S-corporation.Last year your business earned $255,000 in profit. Your dividend was $75,000. Your salary paid by the business was $15,000. Identify the problem. A.Your dividends from your company cannot be more than your salary from your company. B.As the owner-employee of the corporation, you cannot make a salary on top of receiving dividends. C.Your salary is too low for your role in the company. D.Your dividend is less than 50% of the companies profit.

1.You must also calculate the percentage of time the space is used for business vs. personal. 2.True. While the terminology may not sound positive, an unqualified opinion is equivalent to a "clean bill of health," indicating that the auditor has found the financial statements to be free of material mistakes, complies with GAAP and is a good representation of the financial health of the business. 3.Your salary is too low for your role in the company The IRS looks closely at the compensation of S-corporation officers. A salary of $15,000 is most likely not reasonable for the role in the company. You will probably be required to increase your salary (and as a result, the employee taxes you will pay on your newly adjusted salary).

1.The method of accounting where all the costs of manufacturing, (including fixed, variable and mixed costs) are allocated to the produced units 2.The process of detecting and evaluating risk factors that could adversely affect the implementation of the organization's strategy 3.The process of using analytics to identify variances and root causes and prepare creative solutions 4.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Which of the following skills DOES NOT fall under Business knowledge area? A.Setting demanding but realistic targets for process improvement B.Developing computer literacy on accounting applications C.Lead critical decisions between the organization and third-party regarding contract terms D.Understanding the fundamentals of the domestic and global economy 5.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Which of the following skills DOES NOT fall under Leadership knowledge area? A.Building the confidence in others in their own capacity to succeed B.Harnessing the collective energy of the team to achieve business success C.Defining process improvement to achieve business performance D.Encouraging an environment where people value diversity 6.Each CGMA skillset fits into one of four different knowledge areas: Technical, Business, People or Leadership. Choose the one below that DOES NOT fall into the Technical knowledge area: A.Approving tax returns to ensure accuracy B.Understanding the steps to achieve long-term business strategy C.Recommending implementation of new technology when appropriate D.Addressing complex problems with respect to the internal audit plan 7.The process of comparing organizational procedures and performance to other organization and industry best practices 8.The ability to establish relationships and cross-functional partnerships through demonstrated integrity to create value for the business 9.The process of understanding and interpreting the impact of external factors on the organization such as market/industry trends, geographic trends, cultural needs, stakeholders and consumers

1.absorption 2. Risk identification and assessment 3. Variance Analysis 4 .B.Developing computer literacy on accounting applications 5. C.Defining process improvement to achieve business performance 6. B.Understanding the steps to achieve long-term business strategy 7. Bench Marking 8. Collaborating and Partnering 9. Macroeconomic Analysis

1. Melissa is a self-employed hairdresser. Melissa's income varies from week to week depending on the number of clients she schedules. Some of her clients pay with check, some with cash and some with credit card. Melissa doesn't always record the payment immediately and if she spends the cash before she records it, she sometimes forgets. However, she knows that she averages between $700 and $800 a week. If she decides to report at least $700 per week on her tax return, does that cover her in the event that she missed a few dollars here or there? 2.Which of the following is most likely to be an example of an arm's length transaction? The sale of real estate from a parent to a child. The transfer of assets from one company to a subsidiary. The purchase of equipment from a 3rd party. The sale of a home from one sibling to another for a discounted price. 3.Your number is up. Your income tax return has been chosen for audit. You are married, filing jointly. Last year, you and your spouse had a combined income of $156,000. You both decided to make large charitable donations in the form of cash and donated items totaling $80,000. You deducted a total of $80,0000 on your income tax return for charitable contributions. Identify the problem. You must file separately in order to report charitable contributions. You cannot deduct more than 50% of your income for charitable contributions. You cannot deduct the value of donated items. You cannot itemize deductions if you make more than $150,000.

1.no 2. C.The purchase of equipment from a 3rd party. 3. B.You cannot deduct more than 50% of your income for charitable contributions.

Case study. Carla's Cupcakes is introducing a new product. Premiering Carla's Cupcake Pops will involve the purchase of a special freezer at a cost of $4,500. Carla hopes to be able the sell the pops for $3.00. Raw materials are expected to cost $1.00 per pop and direct labor is expected to be $.50 per pop. How many pops will Carla need to sell in order to break-even? 1,500 3,000 3,750 4,500

3,000 pops

Leon is a partner in a restaurant. The total partnership investment between Leon and his partner was $180,000. Leon's individual investment was $60,000. What is the percentage of Leon's capital investment (rounded to the nearest hundredth)?

33.33% $60,000 (Leon's capital investment) / $180,000 (Total partnership investment) = .3333 .3333 = 33.33% of the investment

Do you know the difference? Accounting terms can sound similar but mean different things. Which of the definitions below best describes Slide Error and Transposition Error? A Slide Error occurs when a comma moved by mistake in an amount. A Transposition Error occurs when two numbers within an amount are reversed. A Slide Error occurs when a number is slide over into another column in a report. AvTransposition Error occurs when two numbers within an amount are reversed. A Slide Error occurs when a decimal point is moved by mistake. A Transposition Error occurs when two totals on a report are switched in error. A Slide Error occurs when a decimal point is moved by mistake. A Transposition Error occurs when two numbers within an amount are reversed.

A Slide Error occurs when a decimal point is moved by mistake. A Transposition Error occurs when two numbers within an amount are reversed.

CGMAs vs. CPAs: Which duty is a CPA more likely to be responsible for: A.Auditing accounts for errors B.Identifying and overseeing best practices to drive innovative changes to the audit process C.Addressing complex, non-routine problems with the audit process or plan D.Advising others on how to perform audit assessments

A.Auditing accounts for errors CPAs are more likely be involved in technical accounting tasks and analysis such as auditing accounts for error.

Which of the following is NOT one of the three questions asked to determine whether or not an action is ethical under the AICPA's Rules of the Code of Professional Conduct? A.Does the action increase profits? B.Is the action illegal? C.Does the action violate company or professional standards? D.Who is affected, and how, by the action?

A.Does the action increase profits? is NOT one of the questions asked. It doesn't matter whether an action will increase profits if it is unethical. Ethics are highly upheld within the CPA community.

Multiple choice. The first step in the accounting cycle is to: A.collect and verify source documents B.analyze each transaction C.prepare a trial balance D.post each transaction to the ledger

A.collect and verify source documents

Multiple choice. Which of these interest rate types is different from the others? A.effective B.stated C.face D.nominal

A.effective

Questions on the CPA Exam are written by the _______.

AICPA

Nicholas and Esther have a partnership in a deli restaurant business. If Nicholas takes out a loan of $7,200 to purchase a vehicle for deliveries, how will that transaction affect the Accounts Payable account and by how much?

Accounts Payable is a liability account. It will increase when a loan is taken out against the business. The other account affected will be the Assets account, which will increase by $7,200.

Accounting terms can sound similar but mean different things. Which of the definitions below best describes Calendar Year and Fiscal Year? A. A calendar year begins on January 1st and ends on December 30th. A fiscal year is a period of 12 months that may start in any month. B. A calendar year begins on January 1st and ends on December 31st. A fiscal year is a period of 12 months that may start in any month. C. A calendar year begins on January 1st and ends on December 31st. A fiscal year is a period of 12 months that may start at a different month each year. D. A calendar year begins on January 1st and ends on December 31st. A fiscal year is another term for calendar (or physical) year.

B. A calendar year begins on January 1st and ends on December 31st. A fiscal year is a period of 12 months that may start in any month.

This way to CPA. There are four sections to the CPA exam. Which one of the following is not one of the four sections you must complete as a part of the CPA exam process? A.Audit & Attestation B.Budgeting & Balancing C.Business Environment & Concepts D.Regulation

B.Budgeting & Balancing

A Chief Financial Officer is responsible for managing all of the following for a business except for which one: A.Internal accounting functions B.Insurance benefits C.Risk management D.Investor relations

B.Insurance benefits Insurance benefits would be managed by the human resources department. However, a CFO must oversee any decisions that impact the business financially.

Multiple choice. By what date in the calendar year, are employers required to furnish their employees Form W-2 Wage and Tax Statements? A.Jan 15th B.Jan 31st C.March 15th D.December 15th

B.Jan 31st

Which of the following employees would not be eligible for overtime pay? A.Cashier B.Part-time Secretary C.Manager D.All employees are eligible for overtime pay

B.Part-time Secretary Employees who are paid a salary, rather than being paid hourly, are not eligible for overtime pay regardless of the number of hours they work. Employees paid a salary are also called exempt employees since they are exempted from the overtime pay requirement.

Multiple choice Which of the following is NOT an example of an unpaid expense account? A.Accounts payable B.Utilities C.Accrued expenses payable D.Income tax payable

B.Utilities are not an unpaid expense account. Unpaid expenses are expenses that accrue over an extended period of time and are paid all at once

Multiple choice. An example of a significant expense reported on the income statement as an estimate is _____ expense. A.interest payment B.depreciation C.salary D.entertainment

B.depreciation

Multiple choice. What are the three basic parts of a manufactured product's cost? merchandise inventory, work in process, and finished goods direct materials, manufacturing overhead, and direct labor direct materials,work in process, and finished goods inventory indirect labor, indirect materials, and manufacturing overhead

B.direct materials, manufacturing overhead, and direct labor

Rolling In Dough. You're the controller of an emerging bakery. This is your fifth year in business, a profitable one at that, and you're looking to grow your business by acquiring another small company. A local cake company is for sale at a reasonable price. You even share some of the same customers. However, they haven't been very profitable, which upon investigation seems to be due to a lack of organization. Should you invest in the cake company?

Buying a cake company is a smart move because they're in the same industry as your bakery, so you can expand your product offering without having to build any new infrastructure. While they've been struggling, you know the cause, and you can streamline their operations into yours.

Multiple choice In the chart of accounts, liability accounts are usually assigned which number group based on a standard numbering system? A.1000 _ 1999 B.5000 _ 5999 C.400 _ 40000 D.2000 _ 2999

C.2000 _ 2999 Liability accounts typically begin with 2 and therefore are assigned numbers within the 2000-2999 range (the chart of accounts assigns each account a four-digit code).

Multiple choice In the chart of accounts, Revenue Accounts are usually assigned which number group based on a standard numbering system? A.5000 _ 5999 B.100 _ 10000 C.4000 _ 4999 D.1000 _ 1999

C.4000 _ 4999

Which of the following is not one of the five basic functions within a business? A.Human Resources B.Marketing C.Certification D.Finance and Accounting

C.Certification Certification is not a basic function within a business _ the five functions are: Human Resources, Marketing, Finance and Accounting, Production and Operations, and Information Systems.

All of the following are expenses except: A.Utilities B.Repairs C.Computer desk D.Rent

C.Computer desk

CGMA vs. CPA. Which duty is a CPA more likely to be responsible for: A.Identifying and focusing on future critical areas for the organization or business B.Explaining the strategic direction of the organization to others C.Conducting personal financial planning D.Benchmarking internal performance against external indicators applying best practices to the business

C.Conducting personal financial planning CPAs are much more likely to work personally with their clients (individuals, small business owners, etc.) CGMAs work within organizations/corporations managing teams or people and large company clientele.

Following the end of the calendar year, this form - prepared by a company or organization - shows an individual's earnings for the previous year. A.Form W-4 B.Form 1099 C.Form W-2 D.Form K1

C.Form W-2

Your clunker has finally clunked out. You are ready to buy a new car. When you call the dealership they tell you they can't give you quotes over the phone but he would LOVE to talk to you in person. What do you do? A.Hurry to the dealership B.Call another dealership and hope you get a quote C.Solicit quotes over the internet from companies like Edmunds.com

C.Solicit quotes over the internet from companies like Edmunds.com

Which of the following is a check issued against bank funds? Stop payment Money order Cashier's check Traveler's check

Cashier's check

The selling price of a product less the total variable costs is referred to as the _____. Your answer:

Contribution margin is a useful measure for determining which products "contribute" the most to recovering fixed costs and are therefore most profitable.

Which of the following is not a step in the four-step purchase process. Ordering from a supplier Verifying items received Requesting needed items Creating a sales invoice

Creating a sales invoice

Management accountants are trusted to guide critical __________ decisions and drive strong business performance. Business Financial Operational All of the above

D. All of the above

Do you know the difference? Inventory items can have different costing methods, two of which are Average Cost and FIFO (first-in, first-out). When selling items from inventory, which method pulls out costs based on an average? A.Standard cost B.Average sales price C.FIFO D.Average cost

D. Average Cost Just as the name suggests, the average cost method relies on the average cost of inventory.

Multiple choice Which of the following is NOT an example of internal controls within a business? A.Requiring the signature of two managers to approve transactions over a certain amount B.Using surveillance cameras C.Conducting surprise inventories D.Employing secret shoppers

D. Employing secret shoppers

Do you know the difference? Accounting terms can sound similar but mean different things. What's the difference between beginning inventory and physical inventory? A.Beginning inventory is the actual count made to determine the cost of on-hand inventory. Physical inventory refers to the number of items that make up the on-hand inventory. B.There is no difference between beginning inventory and physical inventory. The terms are interchangeable. C.Beginning inventory is the total cost of all inventory, both on hand and on order, while physical inventory is only includes the cost of on-hand inventory. D.Beginning inventory is the cost of inventory on hand at the beginning of a fiscal period. Physical inventory is the actual count made to determine the cost of on-hand inventory.

D.Beginning inventory is the cost of inventory on hand at the beginning of a fiscal period. Physical inventory is the actual count made to determine the cost of on-hand inventory.

Which one of the below is NOT a benefit of becoming a Chartered Global Management Accountant (CGMA): A.Connection to a global network of CGMAs with access to the best minds in the world of management accounting B.A subscription to CGMA Magazine C.Recognition and regard from business leaders and peers across the world D.Free upgrades on accounting software

D.Free upgrades on accounting software

Shauna Smith owns a consulting firm. She received a $1,000 payment for preparing a report. Use double-entry accounting to balance the accounting equation for her records. The Shauna Smith, Capital account increased by $1,000 and the Cash in Bank account: A.Decreased by $1,000 B.Stayed the same C.Increased by $500 D.Increased by $1,000

D.Increased by $1,000 The Shauna Smith, Capital account increased by $1,000 and the Cash in Bank account increased by $1,000.

Cash

Debit

CGMA vs. CPA. Which duty is a CPA more likely to be responsible for: Applying in-depth understanding of the organization's products and markets to shape strategy Performing internal quality reviews Defining process improvement to achieve business performance Leading critical decisions between the organization and third party regarding contract negotiations

Defining process improvement to achieve business performance maintaining and improving current processes and quality.

This term refers to the system of recordkeeping in which each business transaction affects at least two accounts.

Double-entry accounting

Stocks can only be sold at certain times after they have matured.

False

A biweekly pay period means employees receive a paycheck how often? Twice a week Twice a month Every two weeks Every week

Every two weeks

The American Institute of Certified Public Accountants (the AICPA) is responsible for licensing CPAs.

False

Accountants can generally assume that the information provided out of financial systems is complete and accurate.

False

Backing up data ensures a company is on track with disaster recovery requirements.

False

Gross profit equals sales minus costs of total manufactured goods.

False

Internal control assessments are always done as a part of an audit.

False

Parched. You work for a beverage company that's having a hard time keeping up with sales. There's a huge demand for your product and you're running out of inventory. You have two options: the first is to invest in additional manufacturing facilities, which will be expensive. Your second option is to dilute the formula of your beverage to make more of it. It would change the flavor slightly, but your team believes customers won't notice. Do you invest in the pricey new manufacturing facilities?

Go for it

Cloudy Skies Ahead. You work in the airline industry and your top competitor has offered to buy you out at a reasonable price. Your airline is gradually declining due to the slow economy and will not be able to afford staying in business beyond two more years. However, you strongly disagree with the way your top competitor does business. They don't pay their employees well and refuse to upgrade to any green technologies. Do you sell to your competitor?

Go for it

Community programming has its cost. Your management team is considering investing in a community partnership program that encourages employees to take time off of work and read books to local school children. Due to some pollution issues at one of your manufacturing plants, your company's public image with the community is less than ideal. The program would be open to all employees, but would take them away from their desks for 1 - 2 hours per month as they participate in the schools. Do you recommend they adopt the program?

Go for it

Fashion Forward. Your the CFO of a hip retail and online clothing store. Two new business proposals have hit your desk in the past week and both of them contain proof of a solid ROI. One proposal is to expand marketing efforts in Asian markets where there is already an appreciation for your brand although there aren't any brick and mortar stores there yet. The other proposal is to hire an up-and-coming designer to create a special series of pieces to be sold online and in-stores for the coming year. Both investments cost roughly the same, however you need to decide which proposal will take priority this fiscal year. The designer has already agreed to sign an exclusive deal with your store. Do you go ahead and send him a contract to sign?

Go for it

Give-A-Thon. You work for a mid-sized company that's having a great year, experiencing both a surplus and a good reputation in the region. The executive team is considering a paid volunteer day, where all employees will spend a day giving back in the community instead of going to the office. It sounds nice, but your company will lose an entire day of productivity and you don't really need an image boost at the moment. Do you invest in the volunteer day?

Go for it

The Call Before The Storm. Your catalog mail order business operates a call center with 98 employees in hurricane-prone Florida. Your VP of Technology has asked for your recommendation on pursuing a Voice Over IP phone system. Such a system would mean that you'd never have a phone outage again due to a storm and it would allow you advanced features for routing calls to representatives at alternate locations. The new system would cost you $29.95 a month per employee plus a one-time setup fee of $45 per employee. Your current phone hardware is 5 years old and costs almost $3,000 a month, but it's functional and you've had no outages with your current infrastructure. Do you invest in the new phone system?

Go for it

The Newbies. Your company recently hired a group of energetic college grads who have done considerable research to identify an emerging market in the service industry. They were led by their former professor, a successful man with a lot of work experience in the service field. The group approaches you about investing in this new service they've identified, asking that you build the infrastructure and be the first to market. You have the funds, but you're concerned about the risk of entering uncharted territory. Do you invest in the emerging market?

Go for it

Weekly Feedback. Your company conducts employee input sessions once a year in order to gauge morale, job satisfaction and to mine for great business ideas! It appears employees really appreciate a time to be heard - and your HR manager believes that implementing a weekly employee connect session where employees can share their insights AND receive feedback on specific projects would increase productivity and efficiency. It will cost around $1,000 a week in employee time. Should you give your stamp of approval to the weekly sessions?

Go for it

Tech Tour. You're the controller of a tech start-up that has a patented software system it wants to market to other businesses. An executive would like you to release funds to support taking the software to large industry conferences and tradeshows to get the word out. Your cash flow is negative at the moment, as you've been investing in development and patents and have no sales yet. Do you invest in the tradeshow tour?

Go for it As a startup you shouldn't expect to be cash flow positive from the get go, so don't let that stop you from investing in some practical marketing. Conferences and tradeshows will give your product exposure and get you face time with potential customers, who are the key to your success.

Taking Flight. You're a young, single CPA with the CITP (Certified Information Technology Professional) credential. Your boss has offered you the opportunity to receive training and then work on a large software implementation project on the other side of the country. The project will give you a lot of exposure to c-level management and make you one of only three people in your company with this particular software expertise. On the other hand, you'll need to travel 100% of the time, and work long hours learning and doing something completely new to you. Not to mention you're not a fan of flying. Should you accept the project?

Go for it As long as your personal life allows you to travel, take advantage of the opportunity. Your career is a marathon and will be filled with decisions to make-so if you're in a position where you can jump on an opportunity to learn something new, do it! Bonus: It'll be a great reason to get over your fear of flying.

A Free Lunch. You work for a profitable mid-sized company in a highly competitive industry. The company has a hard time holding on to employees for very long. To combat this, your CEO would like to provide free meals for employees. He believes it will boost morale and help recruit new hires. The investment will be very expensive, however, and you'll have to take the cost out of annual profits. Do you invest in the free meals?

Go for it In a competitive industry it pays to hold on to great employees and free food is a great perk! While it's an additional expense, sometimes you have to spend money to lure and keep great talent. Consider it an investment in your company's future.

Tractors For Charity. The CEO of your tractor company would like the company to begin sponsoring a charity, fighting local hunger. You can afford it, but your sales were down this year so you have less discretionary money than years past. None of your competitors do any charity sponsorship. Do you sponsor the charity?

Go for it Sponsoring a charity is a great way to give back and to distinguish your brand from the competitors, who are not working with any charities. It can also open you up to new markets and connections. This is a good investment of your discretionary income.

Costly Kitchens. You're the controller of a chain of sandwich shops in Nebraska. You have the opportunity to upgrade all your shops'appliances to energy-saving models. The investment will be roughly $58,000, and the appliances will save you $17,000 per year. Do you invest in the new appliances?

Go for it The new appliances aren't just better for the planet, they offer significant cost savings. You'll have them all paid off in just over three years, and from there the savings will go right into your company's pocket. It's worth the large upfront investment.

Which of the following would not be classified as a current asset? Petty cash Accounts receivable Office supplies Investments in bonds

Investments in bonds Temporary investments that will mature in one year are the only type of investment classified as current assets

Supplies for Fido. You are starting Sit4Pets, a pet sitting business on nights and weekends. The copy and supply room at your day job is overflowing with supplies and employees are encouraged to get or order what ever they need. Many of your friends regularly take home printer paper, staplers and other supplies. You could use a few sheets of postboard and some markers to help with marketing Sit4Pets. Should you take or borrow them from the supply room?

PASS Many companies, and likely yours, have HR policies that strictly forbid using office supplies for personal (much less another business) use. In taking the supplies, you are violating trust and misusing company resources. Even if your friends haven't been caught, the unauthorized consumption of supplies is wrong and is costing your company money. You are better off to use your own funds for buying supplies.

Exit Strategy. Your business is characterized by high turnover and your core staff is approaching retirement age. You know that your company has been losing knowledge as employees leave, and this situation will only get worse when the core staff leaves. You could invest in a knowledge management system that employees could save their most valuable insights and files in, but it will be an additional maintenance cost. However, it's not an expense you HAVE to incur today as none of your staff has communicated their retirement plans. You also know that with some good organization and time, you may be able to create your own internal knowledge sharing practices and avoid buying an expensive system. Do you invest in the knowledge management system?

Pass

Incenting that makes cents. Your compensation team has been working on a new incentive structure for customer service representatives at your company. They are considering a new measure that tracks how many customers each representative assists each hour and pays an incentive to representatives that help the highest number of people. Do you recommend the program based on the information they've provided?

Pass

Special Request. You work for a successful online clothing store that runs out of a warehouse in New Jersey. You continuously sell out of your inventory and are profitable. Many of your customers are requesting you open a physical store in nearby New York City as well, so they have a place to see the merchandise in person. Do you make your customers happy and open the store?

Pass

Moving Moolah. Your HR executive, Susan, has approached you. She'd like to institute a program that offers $5,000 to every new hire to pay for their moving costs. She says the company has recently lost out on a couple of good candidates because it wouldn't pay for their relocation. You don't see any room in the budget to make this happen, unless you lower the salaries you're offering. Do you invest in the relocation program?

Pass While Susan is right in that recruiting is important, there's room for compromise here. You can negotiate relocation costs for each candidate on a case-by-case basis. That plan will be kinder to your budget.

The process of determining whether the amounts of cash recorded in the agreement records of a business and in its checkbook agree.

Proving Cash

This type of analysis is helpful for determining relationships between line items on a financial statement and how they change from one accounting period to the next. horizontal vertical periodic quarterly

Vertical

Accounting 101. This accounting calculation is a measure of an entity's solvency and its ability to meet long-term commitments and obligations. Current Ratio Debt-to-Equity Ratio Return on Sales Ratio Quick Ratio

debt-to-equity ratio

Price paid for goods or services used to operate a business.

expense

True or false? You are only considered a "salaried" employee if you receive the same amount of pay monthly.

false

Fill in the blank. Cars owned by a business are depreciated over a _________year period for the purposes of income tax.

five