chpt 12 quiz

The process of determining the effect of price and quantity changes on revenues and expenses refers to

Variance analysis

An expense recognized at the time of a sale of merchandise in the amount of the cost of the merchandise to the seller is called

cost of goods sold.

Which of the following is not something a manager needs in order to make good decisions?

efficient ways to condense information so it is understandable

Which of the following accounting functions focuses the most on automatically calculating and accumulating depreciation?

fixed asset accounting

Financial statements are defined as

formal summaries of the content of an accounting system's records of transactions.

The first step in preparing a master budget is to prepare a ________ budget.

sales

The rule of thumb for evaluating current ratio is that the minimum acceptable ratio is

2.0

Lenders use operating income as

a measure of how much debt a business can support.

A financial plan for the future based on a single level of operations is called a(n)

budget

Regardless of your business's size, the one essential element of an accounting system is ________ that is accurate, easy to use, and tracks all checks written and all deposits made.

cash accounting

In break even analysis, the price of one unit minus the variable cost of one unit is called the

contribution margin.

Which of the following statements lists revenues and expenses and shows the amount of profit a business makes for a specified period of time?

income statement

While there are six common financial statements, most small businesses only use three of those six. Which of the following is not one of the financial statements commonly used by small businesses?

income statement

Properly prepared financial statements agree such that the cash flow statement provides the ending cash balance for the

income statement.

When preparing pro forma statements for your business plan, once sales have been projected, the next step is to plan for

inventory purchases.

Which of the following is considered an investing activity?

the acquisition of equipment

Which financial report provides the value of the things the business owns and who has a claim on that value?

the balance sheet

Which of the following is an operating activity?

the receipt of cash from customers

The difference between an actual and budgeted revenue or cost is called

variance.

In the accounting equation, assets equal

liabilities plus owner's equity.

Juan's Auto Repair is preparing its income statement. The report shows sales revenue of $80,000, cost of goods sold at $30,000, and sales, general, and administrative expenses of $25,000. Since Juan uses the single-step format for his income statement, what is Juan's net income?

$55,000

Which of the following is true of theories based on the bounded rationality models?

It assumes that people are inefficient processors of information.

Which of the following is a difficulty that arises in understanding and interpreting the income statements?

There are disputes over when to recognize revenues.

The "going concern" concept states that

a successful business will stay in business.

An implication of the bounded rationality models of management is that

all decision making processes are inherently perfect as human beings are rational beings.

Identify the managerial accounting technique that looks at the fixed and variable costs of a business to arrive at a number of unit sales to maximize gains.

cost-volume-profit analysis

Which of the following ratios is used to estimate the liquidity of a business?

current ratio

In the context of accounting functions, which of the following is true of accounts receivable?

it records provision of credit to customers

An accounting method that is specifically intended to be used for planning, directing, and controlling a business is called

managerial accounting.

The sum of all profits and losses, less all dividends paid since the beginning of the business is called

retained earnings.