accounting intro BUSA

12. The total assets of a diary products manufacturing company are calculated. However, a sum of 5 million from the value of the company's PPE assets is not taken into account as the machinery is bound to become unusable after a certain period of time. In the context of balance sheets, the amount of 5 million that is subtracted from the original value of the total assets is called

accumulated depreciation

Fiona, the external auditor reviewing a telecommunications company's accounts, finds that the company's internal accountants have entered false data in the company records. Instead of stating the actual figures, which would reveal the poor performance of the company, the accountants have overstated the company's earnings. In this case, she will most likely offer a ____ in the independent auditors report.

adverse opinion

in the context of balance sheets, resources owned by a firm are known as ______

assets

Costs are deducted from revenue in several stages to show how net income is determined. the first step in the process is to deduct

cost of goods sold

in the context of balance sheets, accounts receivable is an example of _____

current assets

The financial Accounting Standards Board (FASB) is barred from modifying and expanding the generally accepted accounting principles (GAAP)

FALSE

in the accounting equation, assets are equal to liabilities minus the owners equity

FALSE

Alexis decides to check with his accountant as to how much money his company owes to the raw materials supplier. To determine this, Alexis should ask the accountant to provide him with the company's balance sheet

TRUE

the first stage in activity based costing is to :

identify specific activities that create indirect costs and determine the factors that drive the costs of these activities

in the context of budget preparation, which of the following is an advantage of using bottom up budgeting?

middle managers are likely to be highly motivated to achieve budgetary goals

the management of a fertilizer company decides to increase the company's cash flow by increasing its financing activities. in this context, the company is most likely to:

take short term and long term loans

in the context of owners equity, which of the following sit true of retained earnings

they are accumulated earnings reinvested in a company rather than being paid to the owners

Miller is the owner of a restaurant that has several franchises. One of the franchisees owes Miller a sum of $18,000 for the goods that he had bought from Miller on credit. In this scenario, the money owed to Miller ins known as

accounts receivable

the overstating of needs or setting low budget goals by managers in a budgeting process can result in _____

budgetary slack

In the context of statement of cash flows, cash flows from operating activities show the amount of cash that flowed into the company from:

dividends

Maurice, the supervising manager of a telecommunications company, requires detailed information about the expense that the company incurred from its monthly operations in the last fiscal year. IN this scenario, Maurice should refer to the ______

profits and loss statement

Jenny, an external auditor from a public accounting firm, verified the financial statements of a real estate company. At the end of her review, Jenny did not find any discrepancies in the figures presented by the company and the accounting methods of the company. In this scenario the independent auditor's report most likely offered a ___

unqualified opinion

Ashley, a manager at a toy manufacturing company, needs to created a financial document for the company that would show how the company's operating, investing, and financing activities are expected to affect the asset, liability, and owners' equity accounts. To prepare this document, Ashley needs to collect data from:

the budgeted income statement, capital expenditure budget, and cash budget

the securities and exchange commission (SEC) bans publicly traded corporations from making comparative financial statements

FALSE

which of the following is a difference between managerial accounting and financial accounting

financial accounting is governed by a set of GAAP, whereas managerial accounting uses procedures developed internally that are not required to follow GAAP

the employees of an information technology company complain that the company has been spending a lot of funds in wasteful activities, such as office renovation, instead of revising the employees' salaries. In this case, the company should hire a _____ to keep check on the company's expenses and prevent the problem from aggravating

internal auditor

Lossaire, a jewelry house, needs to increase the company's declining cash inflow through its financing activities. In this context, Lossaire is most likely to:

issue additional shares of its own stock

Sebastian is an employee at Plowell Inc. His duties include preparing reports and analyzing company data. He also appraises financial performances and verifies the accuracy and valididty of the company's internal records. In this scenario, Sebastian's role is that of a ____ in the organization.

management accountant