QUESTION 1

Annual net cash flows are defined as

annual cash inflows minus annual cash outflows. annual cash inflows minus annual cash outflows minus depreciation expense. annual revenues plus cash expenses. annual cash inflows minus depreciation expense.

2 points

QUESTION 2

A company is referred to as a diversified company or a conglomerate if it operates in

many related industries. many unrelated industries. many and varied locations throughout the world. one single major industry.

2 points

QUESTION 3

After management has set short-term goals, the budgeting process typically starts with

a clearly defined timetable of events. input only from the accounting personnel. the naming of an efficient coordinator or director. a set of procedures or instructions.

2 points

QUESTION 4

A common measure of profitability is the

asset turnover. debt to equity ratio. current ratio. receivable turnover.

2 points

QUESTION 5

Campbell Inc. earned sales revenue of $150,000 in 2014. Campbell sells each unit of its product for $6.00 and has a 32 percent contribution margin. Campbell has fixed costs of $36,000. What is Cambells breakeven point in sales dollars?

$205,714 $112,500 $150,000 $69,120

2 points

QUESTION 6

A company that is leveraged is one that

contains debt financing. contains equity financing. has a high earnings per share. has minimized its risk of loss by acquiring a portfolio of investments.

2 points

QUESTION 7

Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statementsInterest Income (assume that cash received is equal to amount reported)indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Add to net income to arrive at net cash flows from operating activities. Subtract from net income to arrive at net cash flows from operating activities. Not used to adjust net income to calculate net cash flows from operating activities.

2 points

QUESTION 8

Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statementsDecrease in Inventoryindicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Add to net income to arrive at net cash flows from operating activities. Subtract from net income to arrive at net cash flows from operating activities. Not used to adjust net income to calculate net cash flows from operating activities.

2 points

QUESTION 9

A responsibility accounting system ensures that

generally accepted accounting principles reporting requirements are met. managers will not be held responsible for items they cannot change. 99 percent of businesses utilizing such a system will be profitable. easy correlations between revenues and costs can be drawn.

2 points

QUESTION 10

Assume revenues are received in cash and expenses, except for depreciation, are paid in cash. Based on this assumption, which of the following statements is true?

Net cash flows for a period are equal to net income minus depreciation expense. Net cash flows for a period are equal to net income. Net cash flows for a period are equal to net income plus depreciation expense. Net cash flows for a period are equal to net income plus income tax expense.

2 points

QUESTION 11

Breakeven analysis adjusted for a targeted profit

is a difficult computation that is not normally employed. decreases the number of units required to breakeven. is excellent for performing what-if analysis. is a poor basis for evaluating the profitability of a venture.

2 points

QUESTION 12

A cash budget

is an optional feature of a master budget. requires input from all parts of the organization. involves nonmonetary information. can only be prepared at year end.

2 points

QUESTION 13

Costs such as salary of supervisors and other support personnel, which are accounted for as overhead costs, are called

period labor costs. sales assistance costs. indirect labor costs. prime labor costs.

2 points

QUESTION 14

.Product unit costs computed using activity-based costing compared to product unit costs computed using a traditional costing approach will

sometimes be the same. always be higher. always be the same. always be lower.

2 points

QUESTION 15

A nonvalue-adding activity is defined as a(n)

administrative or support activity that adds overhead cost to the product and increases its market value. activity that adds cost to a product but does not increase its market value. activity that adds no cost to the product but increases its market value. wasteful but unavoidable production activity.

2 points

QUESTION 16

A performance management and evaluation system is a set of procedures that account for and report on

qualitative performance. standard performance. employee performance. financial and nonfinancial performance.

2 points

QUESTION 17

Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statementsDecrease in Accrued Liabilitiesindicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Add to net income to arrive at net cash flows from operating activities. Subtract from net income to arrive at net cash flows from operating activities. Not used to adjust net income to calculate net cash flows from operating activities.

2 points

QUESTION 18

A company with a current ratio of 2.4 times will see that ratio decrease when the company

pays a large current liability. declares a 10 percent stock dividend on its common stock. borrows cash by issuing a short-term note payable. converts a short-term liability to a long-term liability.

2 points

QUESTION 19

A company pays for 25 percent of its purchases by credit terms n/60, 40 percent of its purchases by credit terms n/30, and the remaining 35 percent by a two-month advance payment. The sources for June's cash payments schedule for direct materials would not include which of the following?

June's schedule of expected cash payments for direct materials August's schedule of expected cash payments for direct materials May's schedule of expected cash payments for direct materials April's schedule of expected cash payments for direct materials

2 points

QUESTION 20

All manufacturing costs incurred and assigned to products that are being produced are classified as

variable costs. allocated costs. product costs. overhead costs.

2 points

QUESTION 21

If a management accountant confides to a relative that his or her company has a confidential plan to merge with another company in the near future, the accountant has

not violated ethical standards. violated ethical standards only if the relative owns stock in the company. violated ethical standards because the relative could stand to gain personally from that information. not violated ethical standards because the information was relayed to a family member only.

2 points

QUESTION 22

Alex International needs 20,000 units of a certain part to use in its production cycle. If Alex buys the part from Nicole Company instead of making it, Alex could not use the released facilities in another activity; thus, all of the fixed overhead applied will continue regardless of what decision is made. Accounting records provide the following data: Cost to Alex to make the part:

Direct materials $4.00 Direct labor 9.00 Variable overhead 12.00 Fixed overhead applied 9.00 Cost to buy the part from the Nicole Company 26.00

What should Alexs decision be, and what is the total cost savings that would result?

Buy, $180,000 Buy, $20,000 Make, $180,000 Make, $20,000

2 points

QUESTION 23

Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statementsIncrease in Prepaid Expensesindicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Add to net income to arrive at net cash flows from operating activities. Subtract from net income to arrive at net cash flows from operating activities. Not used to adjust net income to calculate net cash flows from operating activities.

2 points

QUESTION 24

Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statementsDecrease in Accounts Receivableindicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Add to net income to arrive at net cash flows from operating activities. Subtract from net income to arrive at net cash flows from operating activities. Not used to adjust net income to calculate net cash flows from operating activities.

2 points

QUESTION 25

A combined set of operational budgets and a set of financial budgets for the entire organization is known as a

master budget. flexible budget. month-to-month budget. constant budget.

2 points

QUESTION 26

Assume that the forecasted cost of goods sold is $800,000, budgeted selling and administrative expenses are $320,000, planned capital expenditures are $320,000, and the tax rate is 40 percent. What is the forecasted net income if 15,000 units are expected to be sold at $150 per unit?

$678,000 $452,000 $805,000 $483,000

2 points

QUESTION 27

Depreciation expense could be

a period cost. a product cost. a fixed cost. All of these

2 points

QUESTION 28

Analysis of the financing activities section of the statement of cash flows will disclose

the extent of investments in plant and equipment. net income for the period. purchases and sales of treasury stock. the amount of money loaned to others.

2 points

QUESTION 29

A continuous budget is prepared

annually. semi-annually. monthly. quarterly.

2 points

QUESTION 30

A company with $75,000 in current assets, $37,500 in quick assets, and $45,000 in current liabilities makes a payment of a $3,000 oncurrent debt. As a result of this transaction, the current ratio and quick ratio will

both decrease. increase and decrease, respectively. both increase. remain the same and decrease, respectively.

2 points

QUESTION 31

A just-in-time environment has smaller inventories than the traditional manufacturing environment. As a result,

larger production lot sizes are the rule, in order to realize the cost-effectiveness of long production runs. the amount of working capital required for inventory typically increases. the just-in-time environment experiences a lower inventory turnover than the traditional environment. the just-in-time environment typically experiences a higher inventory turnover than the traditional environment.

2 points

QUESTION 32

A manufacturing companys human resource department is most likely a

cost center. discretionary cost center. revenue center. profit center.

2 points

QUESTION 33

A common measure of long-term solvency is the

receivable turnover. asset turnover. debt to equity ratio. current ratio.

2 points

QUESTION 34

As production decreases, fixed costs per unit will

increase. decrease. remain the same. either increase or decrease, depending on the variable cost.

2 points

QUESTION 35

A framework for classifying activities according to the level at which their costs are incurred is called a

bill of activities. full product cost. value chain. cost hierarchy.

2 points

QUESTION 36

Boston Corp. is evaluating three projects. Each project will return a total of $600,000 to the company in cash flows over a three-year period. The cash flows for the three projects are as follows:

Year 1 Year 2 Year 3 Total Project A $300,000 $200,000 $100,000 $600,000 Project B 200,000 200,000 200,000 600,000 Project C 100,000 200,000 300,000 600,000

Using the payback period method, which project represents the best investment for Boston?

Project A Project B Project C All projects are equally good investments.

2 points

QUESTION 37

Anderson Co. makes and uses 5,000 components each year in its manufacturing operations. An outside supplier has offered to supply the components to Anderson at $66 per unit. Anderson's production costs are as follows:

Direct materials $ 8 Direct labor 32 Variable overhead 12 Fixed overhead (based on normal capacity) 34

If Anderson accepts the order, $8 of fixed overhead per unit will be eliminated. If the offer is accepted, operating income will

increase by $100,000. decrease by $70,000. decrease by $30,000. increase by $60,000.

2 points

QUESTION 38

All of the following are relevant in a sell or process-further decision except

sales value at the split-off point. sales value after further processing. additional processing costs. joint costs.

2 points

QUESTION 39

From Jolier's year-end income statement, you observe that the finished goods inventory has doubled during the year. This would indicate that during the year Jolier

sold more goods than were produced. produced more goods than last year. produced more goods than were sold. sold more goods than last year.

2 points

QUESTION 40

According to the just-in-time philosophy,

maintaining inventories wastes resources and frequently covers up poor work or other problems. push-through manufacturing flows are the most efficient. inventories of finished goods should always be available to meet customer demand. long production runs and large production lot sizes take advantage of economies of scale.

2 points

QUESTION 41

At the breakeven point, the total contribution margin

is at the maximum. minus total fixed costs equals a negative number. equals fixed costs. is at the minimum.

2 points

QUESTION 42

Awards are often used to encourage

intermediate performance. short-term performance. long-term performance. both short-term and long-term performance.

2 points

QUESTION 43

Excerpts from cost-volume-profit analysis of Nutshell Inc. indicate fixed costs of $85,000, a contribution margin per unit of $40, a selling price of $95, and a sales level of 4,000 units. What must be the targeted level of profit?

$116,875 $103,125 $85,000 $75,000

2 points

QUESTION 44

A good example of a profit center would be

a car manufacturer's assembly line. a local Home Depot store. Avis Car Rental's national reservation center. a manufacturer's human resources department.

2 points

QUESTION 45

A responsibility center in which the relationship between resources and products or services produced is not well defined is known as a(n)

investment center. profit center. cost center. discretionary cost center.

2 points

QUESTION 46

At production levels below the breakeven point,

fixed costs are recovered. profit is negative. variable costs are zero. fixed costs are zero.

2 points

QUESTION 47

A project is accepted under the net present value method when

the net present value is zero or negative. the total amount of cash inflows exceeds the purchase price of the asset. the purchase price of the asset is less than the present value of net cash inflows. the present value of net cash inflows exceeds a predetermined minimum amount.

2 points

QUESTION 48

All manufacturing costs that are assigned to completed (but unsold) products should be classified as

materials inventory costs. cost of goods sold. work in process inventory costs. finished goods inventory costs.

2 points

QUESTION 49

.Johnson Products Company is in the process of adopting the just-in-time operating philosophy for its idol-making operations. Indicate which of the following overhead costs is a nonvalue-adding cost (NVA).

Machine electricity Machine repairs Depreciation of the machine used Machine setup labor

2 points

QUESTION 50

Avoidable costs are important for

sales mix decisions. pricing decisions for special orders. sell or process-further decisions. decisions to eliminate unprofitable segments.

2 points

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