Final Study | Princ. of Fin. + Man. Acc.

How is it possible for an accountant to intentionally deceive financial statement users and yet still technically be in compliance with generally accepted accounting principles (GAAP)?
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How is it possible for an accountant to intentionally deceive financial statement users and yet still technically be in compliance with generally accepted accounting principles (GAAP)?
There is flexibility inherent in the assumptions underlying the preparation of financial statements.
Alliah Company just released its public accounting data for 20X9. Which user of accounting information will monitor this data to ensure that the company is providing sufficient information for investors?
Government agencies
A new product line manager approaches the accounting department in order to understand the past performance of the product line he has been asked to manage in the future. Which role of accounting involves obtaining and using financial information to determine the financial health and performance of a business or product line?
Evaluation
You read in the newspaper that a local company you are familiar with has been found guilty in court of publishing financial statements that are false and misleading to users of those financial statements. In this situation, what could the American Institute of Certified Public Accountants (AICPA) do in response to the accountants who were found guilty of unethical conduct in accounting practices?
Implement professional sanctions
What is the purpose of the financial accounting cycle?
To turn transactions into financial statements and provide useful financial information for decision makers
In the context of the financial accounting cycle, what is the definition of an account?
A specific accounting record that provides an efficient way to categorize similar types of transactions
What is an arm's-length transaction?
An exchange between two independent parties
Which item is a liability?
Mortgage
After Oliver records each transaction, how should he ensure that the accounting equation remains in balance?
Add up the balances in all of the asset accounts and compare them to the sum of all the liability and owners' equity accounts
After determining the company's financial position, Oliver recommends that the company borrow money from the bank for the next accounting period. What is the effect of borrowing money from the bank for the next accounting period on the company's books?
Cash (an asset) and a liability account both increase.
Which account is an example of a liability?Accounts payableWhat is the name for the authoritative set of accounting standards in the United States?GAAPWhat is owners' equity?The remaining claim to the assets of a business after liabilities have been deductedWhich event is an example of collecting, analyzing, and summarizing accounting information?Gathering checkbook informationWhich resource or tool is used to identify unique companies in the SEC's 10-K filing database?Central Index Key (CIK)How often is the Form 10-Q filed?QuarterlyWhat is a gain?Making money from an activity outside the normal activities of a businessWhich statement best characterizes the elements and purposes of a statement of retained earnings?A statement of retained earnings portrays the accumulated profits or losses of a company at a point in time.Why do the notes to the financial statements contain additional information about summary totals?Because one summary number in the financial statements represents literally thousands of individual items0 / 1 Information about accounting policies and practices, including assumptions, estimates, and judgments, are included in which element of the financial statements?The notes to the financial statementsHow is a common-size income statement created?By dividing all income statement amounts for a given year by sales for that yearVertical analysis allows an accountant to determine how expenses are changing relative to which line item on the income statement?Total salesWhat would have been the income before income tax if the percentage of sales represented by cost of goods sold had remained at 56% in 20X2? (Assume that all other percentages of sales in 20X2 had also remained constant as percentages from 20X1.)56% x $885,000 = $495,600 cost of goods sold in 20X2, or $74,400 lower than it was in 20X1. If we add the $74,400 to the income before taxes, the result would be $248,400 ($174,000 + $74,400 = $248,400).What does your horizontal and vertical analysis suggest about the company's profitability?The company's increase in COGS is hurting its profitability.Which section of the SEC's website contains Company Annual Report on Form 10-K filings?EDGARWhich item below is a revenue item?SalesWhich type of activities are financing activities?Those activities whereby cash is obtained from or repaid to owners and creditorsWhich statement best characterizes the purpose of the income statement?An income statement portrays the results of operations of a company over a period of time.Which action would help improve the company's profitability in 20X2?Keep the percentage of sales for selling and general expenses constant from 20X1.What is offsetting the decrease in sales of the company in 20X2 enough to keep the percentage of sales for net income about the same between 20X1 and 20X2?The decrease in cost of goods sold from 20X1 to 20X2What factors below contribute to a company's pattern of cash collections?Industry, firm size, and the firm's credit policiesSee the Select Data Source window below. From this window, what is the correct way to add labels to each column in a chart?Click the Edit button under "Horizontal Axis Labels" and reference the appropriate cells.It is November 1 of Year 1. Sales for Earl Company for November and December (of Year 1) and January (of Year 2) are forecasted to be as follows: November, 400,000; December, 500,000; January, 200,000 100% of sales are credit sales. Of these credit sales, 10% are collected during the month of sale, 20% in the following month, and 65% in the second following month; 5% are never collected. Total sales for September and October of Year 1 were 100,000 and 150,000, respectively. What is the forecasted amount of total cash collections in January (of Year 2)?380,000It is January 1 of Year 2. Sales for Mac Company for January, February, and March are forecasted to be as follows: January, 200,000; February 400,000; March, 500,000 80% of sales are credit sales; the remaining 20% of sales are cash sales. Of these credit sales, 10% are collected during the month of sale, 30% in the following month, and 60% in the second following month. Total sales for November and December of Year 1 were 200,000 and 400,000, respectively. What is the forecasted amount of total cash collections in March of Year 2?332,000Han Company is preparing its financial records to get ready to apply for an important bank loan. In the past when Han has applied for bank loans, the bank loan officer has asked Han to provide a forecast of the amount of cash payments the company will have to make to its suppliers for inventory purchases. The bank loan officer needs this information in order to assess Han's ability to repay any bank loans. Han was embarrassed in the past because he did not have that cash payment forecast. This time he will be prepared. It is January 1 of Year 2. Purchases for Han Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000 20% of purchases are for cash. Of the credit purchases, 30% are paid during the month of the purchase, 50% in the month following the purchase, and 20% in the second month following the purchases. Total purchases for November and December of Year 1 were $200,000 and $400,000, respectively. What is the forecasted amount of total cash payments for purchases in March of Year 2? (Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months.)412,000It is November 1 of Year 1. Sales for Corbin Company for November and December of Year 1 and January of Year 2 are forecasted to be as follows: November, 400,000; December 600,000; January, 200,000 On average, cost of goods sold is 70% of sales. During this period, Corbin Company expects inventory levels to remain constant. This means that inventory purchases are expected to equal the amount of cost of goods sold. 40% of purchases are for cash. Of the credit purchases, 5% are paid during the month of the purchase, 65% in the month following the purchase, and 30% in the second month following the purchase. Sales for September and October of Year 1 were 100,000 and 150,000, respectively. What is the forecasted amount of total cash payments for November of Year 1?173,950It is November 1 of Year 1. Sales for Soren Company for November and December of Year 1 and January of Year 2 are forecasted to be as follows: November, 400,000; December 600,000; January, 200,000 On average, cost of goods sold is 70% of sales. During this period, Soren Company expects inventory levels to remain constant. This means that inventory purchases are expected to equal the amount of cost of goods sold. 100% of purchases are on credit. Of the credit purchases, 5% are paid during the month of the purchase, 65% in the month following the purchase, and 30% in the second month following the purchase. Sales for September and October of Year 1 were 100,000 and 150,000, respectively. What is the forecasted amount of total cash payments for purchases in January of Year 2? (Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months.)364,000It is November 1 of Year 1. Sales for Julian Company for November and December of Year 1 and January (of Year 2) are forecasted to be as follows: November, 300,000; December 700,000; January, 200,000 On average, cost of goods sold is 60% of sales. During this period, Julian Company expects inventory levels to remain constant. This means that inventory purchases are expected to equal the amount of cost of goods sold. 100% of purchases are on credit. Of the credit purchases, 5% are paid during the month of the purchase, 35% in the month following the purchase, and 60% in the second month following the purchase. Sales for September and October of Year 1 were 100,000 and 150,000, respectively. What is the forecasted amount of total cash payments for purchases in November of Year 1? (Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months.)76,5000 / 1 The sales and administrative expense budget includes which expenses?All expenses besides production-related expensesThe production budget supplies the information required for which other budget in the master budgeting process?Direct materials budgetWhich items does a manager have control over in a profit center?Costs and revenuesWhat is the correct sequence of budgets in a manufacturing business?Sales, production, direct laborWhat is a cost variance?The amount by which the actual cost differs from the budgeted costWhat label is given to a business unit in which the manager is responsible for costs and revenues only?Profit centerThe purchasing agent for Bob Bee Company has been told to be more careful about planning raw materials purchases. In the past, the purchasing agent has purchased the same amount of raw materials each month. During some months, this has led to a huge amount of extra raw materials stored in every available corner. In other months, this has led to some shortages and emergency purchases near the end of the month. Given the company's raw materials storage capacity, starting in October, Bob Bee intends to have an inventory policy of maintaining ending raw materials inventory at the end of every month equal to the next two months' production needs. For example, ending inventory at the end of October should be equal to forecasted raw materials needs for November production plus forecasted raw materials needs for December production. The sales team for Bob Bee have created a careful and realistic sales forecast which has been used to create a month-by-month production budget. What additional factor should the purchasing agent consider in planning next month's purchases?Amount of beginning inventoryWhich activity involves the process of tracking the actual performance of a company?ControllingWhich types of costs does a merchandiser have?Both product and period costsWhat costs are included in manufacturing overhead?All manufacturing costs that are not classified as direct materials or direct laborWhat type of cost are the wages paid to a factory supervisor?Manufacturing overheadWhich product costs are substantial in both a service company and a manufacturing company?Direct labor and overheadBaby Jude Company manufactures car seats. Your colleague works in the sales and marketing department, and is trying to understand the differences between a product and a period cost for Baby Jude Company including examples for both. Which item is a period cost for Baby Jude Company?Wages of the janitors in the executive office buildingYoshida Company manufactures cell phones. Which item is a product cost for Yoshida Company?Bonuses paid to the phone assemblers who work on the production lineWhich statement is true with respect to fixed and variable costs?A fixed cost is fixed in total and decreases per unit as the number of units increases.Which statement below is true with regard to fixed costs?Total fixed costs do not change in total within a relevant range of activity.If overhead is underapplied during a period, which statement below is true?The total cost of goods sold will be understated.Garcia Company reported the following data. Price per unit = $10 Variable cost per unit = $7 Fixed cost = $1,500 Number of units sold = 700 units Given these data, compute the contribution margin per unit.$3 per unitThese data are for Ren Miller Company. Total sales revenue $250,000 Number of units sold 100,000 Variable costs$100,000 Fixed costs$50,000 Calculate the total contribution margin.$150,000In a job order costing system, how are factory supervisor wages classified?Manufacturing overheadWhat is a period cost?A cost associated with activities occurring outside the factoryFor some production processes, job order costing is the correct production costing system to use. With other production processes, process costing is more appropriate. For which product is process more appropriate?Manufacturing identical residential refrigeratorsFour tax consulting companies serve very different sets of customers. Which of these four tax consulting companies is most likely to use a process system in determining the cost of each customer engagement?A company that serves tax customers who are middle-income individuals who all have basically the same tax issuesGold Leaf Trophies has discovered an export market for one of the trophies they manufacture, which can be mass-produced. The manufacturing manager understands that process costing can be applied in this situation in order to measure the costs of mass-producing this particular trophy. How would production costs be assigned to this trophy using process costing?Total manufacturing cost and total units of production would be used to assign production costs equally to identical trophies.What is manufacturing overhead?All manufacturing costs that are not classified as either direct materials or direct laborWhat is a cost driver?A numerical measure reflecting the amount of a cost associated with a particular overhead cost activityWhat is the appropriate situation in which to use process costing?When a company produces a large volume of products using a series of uniform processes