Using the Banner Corporation Financial Statements, what is the Quick Ratio?

Using the Banner Corporation Financial Statements, what is the Debt to Equity Ratio?

Using the Banner Corporation Financial Statements, what is the Inventory Turnover Ratio?

LMM330 Managerial Budgeting and Accounting Mid-Term Quiz ANSWER KEY 30-points All multiple choice = 1-point 1. The accounting concept requiring that an accounting system reflect information relating only to those economic events pertaining to a particular entity is the: A) business entity concept B) going entity concept C) monetary unit concept D) periodicity concept 2. According to Concept Statement #2 accounting information should be: A) B) C) D) Relevant and Reliable Responsible and Reconcilable Accurate and Meaningful Accurate and Timely 3. A sporting-goods store sells a set of golf clubs to a customer for cash. This is an example of a(n): A) B) C) D) planning activity investing activity financing activity operating activity 4. Which of the following ratios measures the profitability of the money invested in the firm's assets? A) B) C) D) Quick Ratio Return on Owners' Equity Gross Margin Ratio Return on Investment 5. Customer response time is part of which of the following balanced scorecard perspectives? A) B) C) D) Financial Perspective Learning and Growth Perspective Customer Perspective Internal Perspective 6. At May 31, Allegro Company had a general ledger cash balance of $7,400. At the end of May, the bank statement had a balance of $7,500. Deposits in transit amounted to $1,000 and there was a service charge of $10. Outstanding checks totaled $1,110. What is the correct amount of cash? A) B) C) D) $7,390 $7,000 $6,390 $6,380 7. Short-term decision making differs from normal operating decision in two ways; which of the following are the two ways? A) Short-term decision can not be planned and address routine operating decision. B) Short-term operating decisions are unique and can not be planned C) Short-term operating decisions are routine and anticipated D) Short-term operating decisions are unique and will expand plant capacity 8. The salary of an executive who decides to quit her job and return to school full time is a(n): A) sunk cost B) incremental cost C) opportunity cost D) incremental revenue 9. Panascope manufactures high-definition TVs (HDTVs). It costs Panascope $1,500 to produce one HDTV. Panascope, planning to "make hay while the sun shines" has priced its HDTVs at $12,000. This is an example of which pricing strategy? A) penetration pricing B) life-cycle pricing C) price skimming D) pioneer price 10. The final step in a master budget is the preparation of the: A) cash budget B) sales budget C) pro forma financial statements D) selling and administrative costs budget 11. Accountants use the term "credit" to refer to A) a firm's good accounting events B) a reduction in amounts owed C) events that increases in accounts D) an amount entered on the right-hand side of an account 12. Expenses are increased with ______ because they ______ owners' equity. A) debits, decrease B) credits, increase C) debits, increase D) credits, decrease 13. The estimated amount of overhead per cost driver is referred to as the: A) predetermined overhead rate B) accounting cost rate C) overhead cost pool D) activity cost pool 14. The strategy whereby a company uses the current period's budget as a starting point in preparing next period's budget is referred to as: A) mandated budgeting B) zero-based budgeting C) incremental budgeting D) participative budgeting Question #15 = 6-points 15. Using the financial statements below calculate each of the following ratios and briefly describe what the results of each indicate. (a.) (b.) (c.) (d.) (e.) (f.) Return on Investment Quick Ratio Debt to Equity Ratio Return on Owners' Equity Accounts Receivable Turnover Inventory Turnover Banner Corporation Balance Sheet December 31, 2008 Current Assets Cash Accounts Receivable Inventory (2007 Y.E. Inv.=$350K) Total Current Assets Property, Plant & Equipment Land Buildings Equipment Total Property Plant & Equipment Total Assets Total Assets 12/31/07 Total Owners' Equity 12/31/07 (Note: Inventory on 12/31/07 = $350,000) Current Liabilities $ 20,000 Accounts Payable 100,000 Wages Payable 300,000 Total Current Liabilities $420,000 Long-Term Liabilities Long Term Notes Payable $300,000 Total Liabilities 800,000 90,000 Owners' Equity $1,190,000 Total Liabilities and $1,610,000 Owners' Equity 1,400,000 Accts Rec 12/31/07 $250,000 Accts Pay 12/31/07 Banner Corporation Income Statement For the year ended Dec 31, 2008 Sales Cost of Goods Sold Gross Margin Operating Expenses Operating Income $ 140,000 200,000 $ 340,000 $4,200,000 1,800,000 $2,400,000 1,800,000 $ 600,000 $1,000,000 $1,340,000 $ 270,000 $1,610,000 $75,000 $100,000 Tax Expense Net Income 180,000 $ 420,000 a.) Return on Investment = b.) Quick Ratio = c.) Debt to Equity = d.) Return on Equity = e.) Accounts Receivable Turnover = f.) Inventory Turnover = Question #16 = 5-points (1/2-pt. each) 16. Match the following terms with the descriptions below. A. Fixed Cost B. Mixed Cost C. Fixed Revenue D. Mixed Revenue E. Variable Cost F. Variable Revenue G. Revenue Behavior H. Cost Behavior I. Activity Driver J. Relevant Range ____ 1. A revenue that changes in direct proportion to the change in activity. ____ 2. Basis that reflect the consumption or provision of resources. _____ 3. How a cost reacts to change in the level of operating activity _____ 4. A cost that does not change in total as the amount of activity changes _____ 5. A cost that varies, but not proportionately, to a change in activity. _____ 6. The span of operating activity that is considered normal for a company. _____ 7. How a revenue reacts to a change in the level of operating activity. _____ 8. A cost that changes in direct proportion to the change in activity. _____ 9. A revenue that changes, but not proportionately, to a change in activity. _____ 10. A revenue that does not change in total as activity changes. Essay Question #17 = 5-points Limit: 100-150 words 17. What is the distinction between penetrating and predatory pricing