CVP analysis helps shareholders and investors prepare for and respond to economic changes, such as increasing costs and pressure to drop sales price.

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True

False

The budgeted cash collections from credit customers generally only reflect sales made in the current month.

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True

False

Target profit analysis is used to calculate the sales volume that is needed to avoid a loss.

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True

False

The primary purpose of financial accounting information is to help external users make investing and lending decisions.

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True

False

The excess of the selling price per unit over the variable cost of obtaining and selling each unit reflects the product's contribution margin per unit.

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True

False

For the purposes of the Statement of Cash Flow, "Cash" includes cash on hand, cash in the bank and cash equivalents.

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True

False

Lower fixed costs and higher variable costs is a characteristic of high operating leverages companies.

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True

False

The process of evaluating the results of business operations against a plan and then making adjustments to that plan is called budgeting.

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True

False

To evaluate a companys performance, investors and creditors generally do so by using a single year's data.

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True

False

The reason why cash increased or decreased during the period is reflected on the Statement of Cash Flows.

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True

False

The point of breakeven can either be computed in terms of number of units or in terms of sales revenue.

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True

False

A fundamental measurement of a company's liquidity is the acid-test ratio.

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True

False

When calculating the contribution margin as a percentage of sales revenue, contribution margin should be divided by variable costs.

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False

Financial accounting differs from managerial accounting because it focuses on the future rather than historical transactions.

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Statement of cash flows can be used to evaluate a firm's profitability.

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A budget created through participative budgeting is more likely to be accepted by managers but the process is more complex and time consuming.

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A budget is a quantitative expression of a plan that helps managers coordinate and implement the plan.

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Each revenue or expense item is shown as a percentage of net sales in a common-size income statement.

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True

False

Production budget is the first component of the operating budget.

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True

False

A form of vertical analysis is trend analysis.

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True

False