BUSN Ch.8
In order for CPA firms to perform audits with integrity, they must be tied to the firms they audit. True/False
False
The members of the Financial Accounting Standards Board (FASB) can be reappointed to serve two additional terms after the completion of their first term. True/False
False
The net income of a company is calculated by subtracting expenses from revenue. True/False
True
The management of an electronics company created the annual budget on a single assumed level of sales. This level of sales is to remain constant for the whole year. Later, the management finds it difficult to accurately measure the financial progress of the firm as the values in the estimated budget vary significantly from the actual sales. In the given scenario, the management most likely created a _____. a. static budget b. black budget c. perpetual budget d. zero deficit budget
a. static budget
Buul Inc., a newly established company, is set to prepare its first budget. The top management of the company decides to use a budgeting approach that will seek active participation from the middle and supervisory managers of the company. In the given scenario, Buul Inc. will most likely use the _____ to budgeting. a. zero-based approach b. bottom-up approach c. incremental approach d. top-down approach
b. bottom-up approach
The first stage in activity-based costing is to: a. multiply the total cost of producing each good by the number of goods. b. identify specific activities that create indirect costs and determine the factors that drive the costs of these activities. c. divide the total cost of goods available for sale by the total units available for sale. d. identify specific activities that create direct costs and determine the c. marketing factors that influence the costs of these activities.
b. identify specific activities that create indirect costs and determine the factors that drive the costs of these activities.
_____ is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period. a. Auditing b. Benchmarking c. Budgeting d. Outsourcing
c. Budgeting
Airmaze, a clothing company, purchases 50 sewing machines from a company called KwikSo on credit. Airmaze is supposed to pay an amount of $76,000 to KwikSo. This amount is due within a year of the date on the balance sheet. In this scenario, the amount of credit that Airmaze owes KwikSo is referred to as Airmaze's _____. a. intangible asset b. borrowing base c. current liability d. charge-off
c. current liability
In the context of financial statements of a company, cash flow statements commonly begin with _____. a. net debt b. the shared expenses c. net income d. the shared profit amount
c. net income
Greg, a managerial accountant in a jute manufacturing company, is asked to calculate the total amount of money the company spends on the wages of its workers and on the payments it makes to its suppliers for raw materials. By finding out the company's total actual expenses, the management can come to a decision on whether or not the company can increase its workers' wages by at least ten percent. In this scenario, Greg is asked to calculate the company's _____. a. implicit costs b. opportunity costs c. out-of-pocket costs d. incremental costs
c. out-of-pocket costs
Jessica, an external auditor from a public accounting firm, verified the financial statements of a real estate company. At the end of her review, Jessica did not find any discrepancies in the figures presented by the company or the accounting methods of the company. In this scenario, the independent auditor's report most likely offered a(n) _____. a. adverse opinion b. qualified opinion c. concurring opinion d. unqualified opinion
d. unqualified opinion