Questions and Answers of Financial Accounting Tool

What is a long-term plan?
What types of budgets are prepared annually?
What are some of the benefits of operating budgets?
What are the preliminary steps in budget preparation?
How can forecasting using curved lines help an organization keep inventory levels low?
What does workload refer to?
Using the assumptions in the chapter, prepare a flexible budget for the coming month for Finkler Corporation assuming that sales are either 36,000 or 44,000 units.
Assume that Finkler Corporation is budgeted to begin its year with $\$ 25,000$ of cash. Further assume that revenues for the coming month (on an accrual basis) are budgeted to be $\$ 160,000$.
What is the first and foremost reason for developing a business plan?
What are some questions that drive a business plan?
What are the elements of a business plan document?
What is wrong with listing roles in the business plan organization structure section as "to be announced"?
For a complex project, would it be reasonable to have a 5 page executive summary?
In order to undertake a proposed project, the reader must feel comfortable with the business plan document's answers to what key questions?
For most prospective decision making should we rely on average costs?
Cost varies as volume changes because of what type of cost?
What are the stages of inventory once we acquire it, up until we sell a finished product?
Are general administrative expenses considered to be product or period expenses?
Explain the three major approaches to product costing.
What is the basic approach to cost allocation in a non-ABC system?
What is the focus of the $\mathrm{ABC}$ approach to cost allocation?
What are the two major types of leverage? Define each.
When does it make the most sense to have high leverage?
Assume that you can invest $\$ 50,000$ for one year in a project that is expected to have a $20 %$ profit. You can borrow money at a $12 %$ interest rate. If you borrow $\$ 40,000$ and invest $\$
Considering the information in question 4 above, what would be your rate of return on your investment if the project winds up with a $15 %$ loss instead of a $20 %$ profit?
What is the rule of OPM?
If you have a choice of leasing a machine that you can return after each month, or buying the machine, if you buy it, that would be an example of what type of leverage?
What is contribution margin?
What are two forms of the formula to find the break-even quantity?
Can managers take actions that affect events?
Does an expected value represent the most likely outcome?
True or false: A rational decision maker would always want to undertake a proposed project with a positive expected value.
In expected value calculations, how reliable are the probabilities used?
What is network analysis?
What is network cost budgeting?
Design a network cost budget. Show an initial plan, and then revise it to reduce the period of time needed. Explain how each time savings is achieved. Show the critical path. Show slack. Prepare a
We are planning the staff level for a company. The managers want to know what it will cost for labor for each unit made. They have decided to staff for a moderate number of units. If volume is low,
Why does investment analysis focus on cash flow rather than revenue and expense?
Suppose that two projects each cost $\$ 10,000$. The first project returns $\$ 3,000$ a year for 7 years. The second project returns $\$ 5,000$ a year for two years. Which has the better payback
How much will $\$ 8,000$ invested at 3 percent simple interest be worth in three years? What will it be worth if the interest rate is 5 percent?
How much will $\$ 8,000$ invested at 3 percent interest be worth in three years if it is compounded annually? Quarterly? How much if the interest rate is 5 percent?
If someone offered to pay you $\$ 5,000$ a year for five years and you could earn 6 percent interest per year, how much would that be worth today?
Suppose that you have $\$ 50,000$ and need to invest it so that you will have $\$ 1,000,000$ twenty years from now to repay a debt. What interest rate do you have to earn, assuming monthly
Suppose that you have $\$ 50,000$ available today and can invest it at $7 %$ per year. How long will it be before you have accumulated $\$ 500,000$ in the investment?
Coffin Corporation wants to buy a new hearse for $\$ 60,000$. It will last for five years. They expect to make 100 trips per year. Coffin uses a discount rate of 6 percent. If they charge $\$ 150$
Assume that Executive Corporation is considering investing $\$ 5,000$ today in a new piece of equipment that will provide a service they can charge for. The annual cash profits from the machine will
How much did the Big Dig go over budget?
What are the four critical elements of Expected Value Management?
What is the PV? What other name is it known by?
What is the EV? What other name is it known by?
What information does a comparison of Actual Costs and Planned Value fail to capture?
What is a schedule variance? What are the two ways a schedule variance is measured?
What is a cost variance?
If the $\mathrm{AC}$ line is lower than the $\mathrm{EV}$ line on a cost variance graph, would that indicate a favorable or unfavorable variance?
What is the essential part of creating a plan for the project in EVM?
What do the planned value for the work elements add up to? How is it measured?
What is needed in order to make a determination that work had been accomplished?
What is perhaps the biggest limitation of EVM, according to this chapter?
What accounting principle requires the use of depreciation?
Are costs to get an asset into service, such as the delivery cost we pay when we buy equipment, treated as current expense, or depreciated?
What must be subtracted from the cost of a building or equipment to find its depreciable base?
Assume that a piece of equipment is purchased for $\$ 100,000$. It costs $\$ 5,000$ to install the equipment. We expect it to last for 5 years, and believe that we will be able to sell it for $\$
What are the main elements of the MACRS system for depreciation for tax reporting that causes it to result in high depreciation in the early years of an asset's lifetime?
Over time, does the interest portion of each mortgage payment go up or down?
How would you find the amount that would be paid monthly on a 30-year mortgage?
What is the stated rate of interest on a bond used to compute?
Assume that a 30 year, $5 %$, semiannual, $\$ 10,000$ bond was issued ten years ago. Today current market rates are $4.5 %$. How much could that bond be sold for today?
What are some of the non-tax related advantages of leasing?
What are some disadvantages of leasing?
What are some tax considerations of leasing?
What is net working capital, or simply working capital?
What is working capital management?
What are the most common types of short-term investments?
What are the three principal reasons that organizations keep cash?
What is the period of time from which you write a check until it clears your bank account called?
When cash is invested to earn a higher return than a bank savings account, what are the two primary tradeoffs?
What are the steps from issuance of a bill until we collect payment from a customer and have access to the funds? What role do managers play, aside from issuing the bill?
Why would you want to keep inventory levels low?
What are the variables that have to be considered in the EOQ system for inventory?
Suppose that you need 5,000 units of inventory over the course of a year. Each unit costs $\$ 1$. The costs related to placing each order are $\$ 20$. Your cost of capital is $8 %$. Other carrying
Account payable are sometimes referred to as .
If you are buying something for $\$ 50,000$ and are offered terms of $1 / 10, \mathrm{~N} / 30$ should you take the discount if you normally earn a return of $15 %$ on your money? Show your work.
What are some issues that must be considered regarding payroll policy?
How does periodic inventory work? If you don't keep track of units when you use them, how do you figure out how much you consumed?
How does inflation impact the valuation of an organization's inventory?
Assume your organization has the following inventory changes during the year: Beginning Inventory January purchases April purchasesTotal Units Used 20 units valued at $\$ 7,500$ each 10 units at $\$
What are some uses of budgets for control?
Why is a variance analysis performed?
What is meant by favorable and unfavorable variances?
What are some possible causes of variances?
What is the essence of flexible budget variance analysis?
Does flexible budget variance analysis explain the cause of variances observed?
The following are the department labor costs for the month of March: Actual BudgetVariance $\$ 22,815, \$ 17,250, \$ 5,565 \mathrm{U}$Budgeted volume $ = 1,250$Actual volume $=1,500$Budgeted labor
What is fraud?
In addition to the types of fraud common to a lay person, what are the four main classes of fraud that take place in businesses? Focus on the financial reporting of the firm.
What are the three main approaches for preventing fraud discussed in the chapter?
What are the characteristics of a well-developed corporate ethics program?
What are some examples of the greater level of responsibility that the SOX legislation imposes on senior executives?
Do you think the SOX legislation was adequate to prevent fraud such as the Madoff scandal?
What elements of a control system can be used to safeguard resources? Explain.

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