1. (TCO 1) Which financial statement is prepared first? (Points : 4) Balance sheet Income statement Retained earnings statement Statement of cash flows 2. (TCO 1) Managements views on the companys short-term debt paying ability, expansion financing, and results of operations are found in which of the following? (Points : 4) auditors report management discussion and analysis section notes to the financial statements presidents state of the company report 3. (TCO 4) Using the following balance sheet and income statement data, what is the earnings per share? Current assets $ 7,000 Net income $ 12,000 Current liabilities 4,000 Stockholders equity 27,000 Average assets 40,000 Total liabilities 9,000 Total assets 30,000 Average common shares outstanding was 10,000 (Points : 4) $3.60 $4.00 $1.20 $0.83 4. (TCO 4) Which of the following is not considered a measure of liquidity? (Points : 4) Current ratio Working capital Debt to total assets ratio Each of the above are liquidity measures 5. (TCO 2) Which pair of accounts follows the rules of debit and credit, in relation to increases and decreases, in the same manner? (Points : 4) Accounts Payable and Rent Expense Repair Expense and Notes Payable Prepaid Insurance and Advertising Expense Service Revenues and Equipment 6. (TCO 2) Which of the following is not part of the recording process? (Points : 4) Analyzing transactions Preparing a trial balance Entering transactions in a journal Posting journal entries 7. (TCO 3) An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of _______________________ . (Points : 4) establishment of responsibility is violated independent internal verification is violated documentation procedures is violated segregation of duties is violated 8. (TCO 3) The following information was taken from Mitchell Company cash budget for the month of July: Beginning cash balance $50,000 Cash receipts 48,000 Cash disbursements 68,000 If the company has a policy of maintaining end of the month cash balance of $50,000, the amount the company would have to borrow is which of the following? (Points : 4) $20,000 $10,000 $30,000 $12,000 9. (TCO 11) The major reporting standard for presenting managerial accounting information is which of the following? (Points : 4) relevance generally accepted accounting principles the cost principle the current tax law 10. (TCO 11) A manufacturing process requires small amounts of glue. The glue used in the production process is classified as which of the following? (Points : 4) period cost indirect material direct material miscellaneous expense 11. (TCO 11) Sales commissions are classified as which of the following? (Points : 4) overhead costs period costs product costs indirect labor 12. (TCO 11) Manufacturing costs include which of the following? (Points : 4) direct materials and direct labor only direct materials and manufacturing overhead only direct labor and manufacturing overhead only direct materials, direct labor, and manufacturing overhead 13. (TCO 11) Hardigan Manufacturing Company reported the following year-end information: beginning work in process inventory, $80,000 cost of goods manufactured, $980,000 beginning finished goods inventory, $50,000 ending work in process inventory, $70,000 and ending finished goods inventory, $40,000 How much is Hardigans cost of goods sold for the year? (Points : 4) $980,000 $990,000 $970,000 $1,000,000 14. (TCO 5) Which statement below describes a variable cost? (Points : 4) It varies in total with changes in the level of activity. It remains constant in total over different levels of activity. It varies inversely in total with changes in the level of activity. It varies proportionately per unit with changes in the level of activity. 15. (TCO 5) Which of the following is an underlying assumption of CVP analysis? (Points : 4) Factors 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 $210,000 and a contribution margin ratio of 30%. How much sales are necessary to break even? (Points : 4) $125,000 $630,000 $700,000 $54,000 2. (TCO 5) How much sales are required to earn a target income of $80,000, if total fixed costs are $100,000 and the contribution margin ratio is 40%? (Points : 4) $300,000 $200,000 $450,000 $330,000 3. (TCO 6) Which one of the following is correct concerning a budget? (Points : 4) It can act as a substitute for management. It is a written statement of managements plans for a specified future time period. It is required for all business operations. It is used only by manufacturing companies. 4. (TCO 6) Which one of the following is one of the factors that must be present, if budgets are to be effective? (Points : 4) All upper level managers should verify the validity of the amounts in the budget. Research and analysis should occur in order to set realistic goals. The company must have the stockholders approval of the budget. The budget committee must prepare the budget. 5. (TCO 6) Long-range planning does which of the following? (Points : 4) generally presents more detailed information than an annual budget generally encompasses a longer period of time than an annual budget is usually more accurate than an annual budget is prepared on a quarterly basis if the budget is prepared on a quarterly basis 6. (TCO 6) Which one of the following is a source of information used to prepare the budgeted income statement? (Points : 4) Cash budget Budgeted balance sheet Selling and administrative expense budget Capital expenditure budget 7. (TCO 7) Which statement is true concerning a static budget report? (Points : 4) It considers performance at numerous activity levels. It is appropriate in evaluating a managers 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 managers effectiveness in controlling variable costs. 8. (TCO 7) Which type of center is the housekeeping department of a manufacturing company? (Points : 4) A segment A profit center A cost center An investment center 9. (TCO 7) The best measure of the performance of the manager of a profit center is which of the following? (Points : 4) rate of return on investment success in meeting budgeted goals for controllable costs amount of controllable margin generated by the profit center amount of contribution margin generated by the profit center 10. (TCO 7) Merck Pharmaceuticals is evaluating its Vioxx division, an investment center. The division has a $45,000 controllable margin and $300,000 of sales. How much will Mercks average operating assets be when its return on investment is 10%? (Points : 4) $450,000 $495,000 $300,000 $255,000 11. (TCO 11) Financial and managerial accounting are both concerned with the economic events of an enterprise. Similarities between financial and managerial accounting do exist, but they have a different focus. Briefly distinguish between financial and managerial accounting as they relate to (1) the primary users, (2) the type and frequency of reports, (3) the purpose of reports, and (4) the content of reports