1. (TCO 1) Which financial statement is prepared firstBalance sheetIncome statementRetained earnings statementStatement of cash flows2. (TCO 1) Management s views on the company s short-term debt paying ability expansion financing and results of operations are found in which of the following? auditor s reportmanagement discussion and analysis sectionnotes to the financial statementspresident s state of the company report3. (TCO 4) Using the following balance sheet and income statement data what is the earnings per share?Current assets $ 9000 Net income $ 12000Current liabilities 4000 Stockholders equity 27000Average assets 44000 Total liabilities 6000Total assets 30000Average common shares outstanding was 10000$1.20$2.00$0.83$0.444. (TCO 4) Which of the following is not considered a measure of liquidityCurrent ratioWorking capitalDebt to total assets ratioEach of the above are liquidity measures5. (TCO 2) Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the same manner? Salary Expense and Notes PayableCommon Stock and Rent ExpenseAccounts Receivable and Advertising ExpenseService Revenue and Equipment6. (TCO 2) The principle purpose of posting is which of the followinghelp identify errors made in the journalaccumulate the effects of journalized transactions in the individual accountsenter transactions directly into the ledgerhelp determine if the financial statements are ready to be prepared7. (TCO 3) Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates ___ . documentation procedures are violatedindependent internal verification is violatedsegregation of duties is violatedestablishment of responsibility is violated8. (TCO 3) The following information was taken from Niland Company cash budget for the month of April:Beginning cash balance $30000Cash receipts 27000Cash disbursements 34000If the company has a policy of maintaining end of the month cash balance of $25000 the amount the company would have to borrow is which of the following$29000$5000$2000$09. (TCO 11) Managerial accounting does which of the followingis concerned with costing productsis governed by generally accepted accounting principlespertains to the entity as a whole and is highly aggregatedplaces emphasis on special-purpose information10. (TCO 11) Which of the following is not a manufacturing cost categoryCost of goods soldDirect materialsDirect laborManufacturing overhead11. (TCO 11) Which of the following are period costsRaw materialsDirect materials and direct laborDirect labor and manufacturing overheadSelling expenses12. (TCO 11) Ranger Company reported total manufacturing costs of $65000 manufacturing overhead totaling $13000 and direct materials totaling $15000. How much is direct labor cost$52000$37000$94000$2900013. (TCO 11) Hardigan Manufacturing Company reported the following year-end information:beginning work in process inventory $80000cost of goods manufactured $980000beginning finished goods inventory $50000ending work in process inventory $70000and ending finished goods inventory $40000How much is Hardigan s cost of goods sold for the year?$980000$990000$970000$100000014. (TCO 5) What effect do changes in activity have on fixed costs per unitNo effect. Fixed costs per unit stay the same at every activity level.An inverse effect.A directly proportional effect.It depends on the particular level of activity.15. (TCO 5) Which of the following is an underlying assumption of CVP analysisFactors other than changes in activity may affect costs.Cost classifications are reasonably accurate.Increases in inventories cause increase in total fixed costs.Unit costs remain the same over the relevant range.1. (TCO 5) A company has total fixed costs of $150000 and a contribution margin ratio of 30%. How much sales are necessary to break even? $450000$120000$54000$5000002. (TCO 5) How much sales are required to earn a target income of $80000 if total fixed costs are $100000 and the contribution margin ratio is 40%$300000$200000$450000$3300003. (TCO 6) Which one of the following is not a benefit of budgeting? It facilitates the coordination of activities.It provides definite objectives for evaluating performance.It provides assurance that the company will achieve its objectives.It requires all levels of management to plan ahead on a recurring basis.4. (TCO 6) Which one of the following would most likely cause an unrealistic budget to result? All levels of management contributed to its development.The budget has been developed in a participative approach.The budget has been developed in a top down fashion.The budget was developed after considerable planning.5. (TCO 6) What three differences exist between long-range planning and budgetingAmount of detail content and emphasisTime periods involved amount of detail and contentContent emphasis and amount of detailEmphasis time periods involved and amount of detail6. (TCO 6) Which of the following statements about a budgeted income statement is true? It is prepared before the operating budgets are prepared.It reflects the cash to be received and paid as a result of operations.It is prepared after the cash budget is prepared.It is prepared using the individual operating budgets.7. (TCO 7) Which statement is true concerning a static budget reportIt considers performance at numerous activity levels.It is appropriate in evaluating a manager s effectiveness in controlling fixed costs.It should be used when the actual level of activity is materially different from the master budget activity level.It is most effective when evaluating a manager s effectiveness in controlling variable costs.8. (TCO 7) The foreign subsidiary of a large corporation is which of the followingnot a responsibility centera profit centera cost centeran investment center9. (TCO 7) The best measure of the performance of the manager of a profit center is which of the followingrate of return on investmentsuccess in meeting budgeted goals for controllable costsamount of controllable margin generated by the profit centeramount of contribution margin generated by the profit center10. (TCO 7) Merck Pharmaceuticals is evaluating its Vioxx division an investment center. The division has a $45000 controllable margin and $300000 of sales. How much will Merck s average operating assets be when its return on investment is 10%? $450000$495000$300000$255000
