WGU C213. PREASSESSMENT:ACCOUNTI NG FOR DECISION MAKERSPVAC

WGU C213. PREASSESSMENT:ACCOUNTI NG FOR DECISION MAKERSPVAC (Image) What do total revenues equal at the break-even point? - $4,500 (Image) Which statement is true with respect to the point on this graph when sales are at 150 units per month? - Total costs equal $3,500. A company budgeted the following purchases for raw materials: Month January February March April May June July Budget $10,000 $20,000 $25,000 $22,000 $27,000 $30,000 $24,000 The company has a policy of paying for 40% of the purchases in the month of purchase, 35% in the month following the purchase, and 25% in the second month following the purchase. Based on this information, what are the budgeted cash disbursements for May? - $24,750 A company has projected the following sales for the spring quarter of 2014: April $200,000 May $250,000 June $275,000 65% of all sales are paid for with cash. The remainder is on credit. The pattern for credit receivables collections are: Month of Sale 60% Month After Sale 30% Second Month After Sale 10% What are the forecasted cash collections for the month of June? - $269,750 A company is experiencing an increase in their bad debt expense. Which change in credit policy would cause this increase? - Credit limits were increased for all customers. A company manufactures and sells widgets. The following information is available: • Each widget sells for $100. • The variable cost per widget is $50. • Total fixed costs per month are $300,000. How many widgets does the company need to sell each month to break even? - 6,000 A company manufactures custom-built wooden bookshelves. Which two costs would the company classify as period costs? Choose 2 answers - Salary cost of the receptionist. Advertising cost. A company plans to purchase inventory for the second half of 2014 as follows: July $100,000 August $75,000 September $225,000 October $125,000 November $250,000 December $30,000 They usually pay 50% of inventory purchases in the month of purchase, 35% in the following month, and 15% in the second month. Based on this information, what are the forecasted total 2014 cash payments for inventory purchased in the second half of 2014? - $752,500 A company reported the following information for the production and sale of 500,000 gallons of oil: (Image) Overhead was applied based upon the following predetermined overhead rates: $0.75 per gallon $500 per batch $1,000 per ingredient What would be the gross profit if the company increased their selling price per gallon by $0.10? - $20,000 A company's statement of cash flows includes the following cash transactions: Sales 1,250,000 Inventory Purchase -750,000 Property and Equipment Purchase -270,000 Interest Payment on Long-Term Debt -25,000 Payment of Wages -315,000 Payment of Rent -40,000 Borrowing Long-Term Debt 200,000 Payment of Cash Dividends -15,000 Repurchase of Treasury Stock -40,000 Total Cash Flows -5,000 Assuming the company uses US GAAP standards, what is the total cash flow from financing activities? - $145,000 A corporation has total liabilities of $300 million, total owners' equity of $100 million, and current assets of $50 million. What is the value of the firm's long-term assets? - $350 million A furniture company using accrual accounting purchased 20 sofas in November 2011. In December 2011, 8 of the 20 sofas were sold to customers. The customers all signed contracts agreeing to pay half the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the company was reasonably sure the customers would pay the amount owed. The furniture company pays its salespeople a commission on each sofa sold, with commissions for December 2011 sales paid in January 2012. The furniture company paid $3,000 for advertising that ran in the local newspaper in November 2011. In which month should advertising costs be expensed? - November 2011 A manufacturer produces three products: A, B, and C. The company uses the following information to determine activity rates for each pool: Cost Pool Costs Total Activity Pool 1 $300,000 20,000 hours Pool 2 $20,000 500 pounds Pool 3 $10,000 100 moves Total $330,000 Data concerning the three products appear below: Cost Driver Products A Products B Products C Number of hours 10,000 7,500 2,500 Number of pounds 150 250 100 Number of moves 20 30 50 What is the total amount of overhead applied to product A? - $158,000 A running shoe manufacturer produces three types of shoes: traditional, minimalist, and spikes. The company uses the following information to determine activity rates for each pool: Cost Pool Costs Total Activity Shoe Production $250,000 20,000 pairs of shoes Shoe batches $10,000 500 batches Shoe design $5,000 100 parts Total $265,000 Data concerning the three shoe products appear below: Cost Driver Traditional Minimalist Spikes Number of pairs of shoes 10,000 7,500 2,500 Number of batches 150 250 100 Number of parts 20 30 50 What is the total amount of overhead applied to spikes shoes? - $35,750 Company A calculated the following information under traditional and activity-based costing for the production and sale of 1,000 units of Product B: Traditional ABC Sales $100,000 $100,000 Cost of goods sold $70,000 $110,000 Gross margin $30,000 ($10,000) Which decision should be made about the selling price of Product B? - The price of Product B should be increased. Conservatism - Information related to recognizing losses as they occur During its first month of operations, a manufacturer incurs the following costs (in dollars) related to activities within its factory: Direct materials $15,000 Direct labor $30,000 Manufacturing overhead $40,000 What amount should be reported as cost of goods sold on the income statement if 5,000 units are produced and 4,000 are sold? - $68,000 During its first month of operations, a manufacturer incurs the following costs in dollars related to activities within its factory: Direct materials costs $5,000 Indirect materials $2,000 Direct labor $15,000 Indirect labor $3,000 Factory rent $10,000 Depreciation on factory equipment $8,000 What are the manufacturer's total product costs for the month? - $43,000 Given the following information: Pairs of shoes expected to be produced 1,950,000 Pairs of shoes produced 2,500,000 Overhead rate $0.75 What is the amount of applied overhead? - $1,875,000 How does management accounting differ from financial accounting? - Management accounting is used primarily for internal planning, control, and evaluation. In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, it focused on obtaining the financing needed to start its operations. In February of year 1, the company sold inventory costing $25,000 for $75,000 cash. In February of year 1, the company provided technology-related services worth $10,000. Customers paid a total of $4,000 in cash for these services and promised to pay the remainder the following month. What will be the total impact of these services provided on the company's balance sheet other than an increase in cash of $4,000? Choose 2 answers - Accounts receivable will increase $6,000. Retained earnings will increase $10,000. In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, the following events occurred: January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. January 3 The corporation borrowed $250,000 from a bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2. January 5 The corporation purchased equipment to be used in the business for $200,000 cash. January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. January 31 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1. What will be the impact of the January 31 event on the company's balance sheet on that date? - Prepaid insurance will increase $6,000, and cash will decrease $6,000. In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, the following events occurred: January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. January 3 The corporation borrowed $250,000 from bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2. January 5 The corporation purchased equipment to be used in the business for $200,000 cash. January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. January 30 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1. What will be the impact of the January 5 event on the company's balance sheet on that date? - Equipment will increase $200,000, and cash will decrease $200,000. In which scenario would activity-based costing be more appropriate than traditional costing? - A company produces five different products. The products are highly differentiated and have significantly different demands for their use of overhead costs. Material - Information that is important enough to make a difference On May 1, 2011, a company using accrual accounting purchased equipment costing $500,000. It expects the equipment to have a useful life of five years. At the time of purchase, the company also purchased a one-year insurance policy on this equipment, which cost $6,000. How much insurance expense should the company have recognized for the year ending in 2011? - $4,000 Order the steps in the decision cycle from first (1) to last (5). Select your answers from the pull-down list. - 1 Prepare financial statements. 2 Analyze financial statements. 3 Gather information. 4 Make decision. 5 Implement decision. Partial financial information for a company is as follows: Current assets $36,543 Total assets $58,719 Current liabilities $24,824 Total liabilities $48,561 Stockholders' equity $10,158 Sales $46,997 Net Income $ 3,761 Market value of shares $41,316 What is the price-earnings (PE) ratio for this company? - 11.0 Relevant - Information having to do with the matter at hand Reliable - Information that can be verified steps in the decision cycle - 1 Prepare financial statements. 2 Analyze financial statements. 3 Gather information. 4 Make decision. 5 Implement decision The company uses the following information to determine activity rates for each pool: Cost Pool Costs Total Activity Pool 1 $300,000 20,000 hours Pool 2 $20,000 500 pounds Pool 3 $10,000 100 moves Total $330,000 Data concerning the three products appear below: Cost Driver Products A Products B Products C Number of hours 10,000 7,500 2,500 Number of pounds 150 250 100 Number of moves 20 30 50 What is the total amount of overhead applied to product A? - $158,000 The director of a marathon race wants to assign the cost of having police officers along the race route to manage crowd control. Which consideration is an appropriate cost driver? - The number of race participants and spectators What are two common reasons for managers to manipulate reported earnings? Choose 2 answers - They are feeling pressured to meet internal sales goals. They are preparing to qualify for a bank loan. What are two impacts on costs as sales volume increases? Choose 2 answers - Total fixed costs will stay the same. Fixed costs per unit will decrease. What does accounting focus on? - The impact a business's activities have on its overall financial performance What does it mean if a company has a debt ratio of 101.5%? - The company has 1.5% more total liabilities than total assets. What does management accounting provide? Choose 2 answers - The insight that management needs so the business can perform more effectively. The detailed data that managers need to make decisions that will give the business a competitive edge. What has had the most significant impact on accounting practices? - Information technology What impact does the sale of equipment have on the statement of cash flows? - Increase in cash from investing activities What is a common category in a statement of cash flows? - Cash from investing activities What is a cost that will change in the future based upon the decision made? - Differential cost What is a significant role of the U.S. Securities and Exchange Commission (SEC) in financial reporting? - They ensure that financial statement users are provided with reliable information to use in decision making What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same? - Continual decrease in sales What is known about the direct and indirect methods of preparing statements of cash flow? - The indirect method is more popular among large U.S. companies What role do ethical standards have in management accounting? - To guide the resolution to possible ethical dilemmas that the managerial accountant may encounter What two items of information are revealed on the balance sheet? Choose 2 answers - Ownership. Debt What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a 22% increase? - $153,279 Where would an investor find a summary of a company's significant accounting policies? - In the notes to financial statements Which account is seen on the balance sheet of a manufacturing company but not on the balance sheet of a service-oriented company? - Inventory Which assurance does an external audit report provide for its readers? - The company's financial statements fairly reflect its financial position Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAAP)? - An increase in its comparability to other companies Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company? - The Public Company Accounting Oversight Board (PCAOB) Which cash flow category would include "cash received from investors"? - Cash from financing activities Which category of ABC activities are machine setup and material movement costs associated with? - Batch-level activities Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors of the company? - Cash flows from financing activities Which form of debt should be reported in the long-term liability category? - Notes payable expected to be paid in 18 months Which formula yields a cash times interest earned ratio of 11? - Cash before interest and taxes of $11,000 / cash paid for interest of $1,000 Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received? - The inventory department counts and inspects items as received and forwards the receiving record to accounts payable. Which item is an investing activity? - Cash payments for purchase of plant assets Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time? - Statement of cash flows Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual-basis accounting? - In 2014, a company provides services to a customer for which cash will be collected the next year (2015). Which term is defined as the residual interest in the net assets of a company? - Owners' equity Which two actions do internal auditors perform to assist in maintaining the integrity of financial statements? Choose 2 answers - They search for and investigate fraud. They review financial records and internal controls. Which two cash flow adequacy ratios represent a cash cow? - $6,991/$5,486. $5,220/$1,875. Which two concepts are studied in cost-volume-profit analysis? Choose 2 answers - Levels of activity. Profits. Which two costs are included when calculating inventory costs? Choose 2 answers - Direct labor costs. Overhead costs Which two examples are period costs? Choose 2 answers - Administrative expenses. Selling expenses. Which two examples represent financial statement errors? Choose 2 answers - The accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability. & The accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned. Which two items' subtotals are included in a multi-step income statement? Choose 2 answers - Gross profit. Income from operations Which two requirements must accounting firms that audit public companies meet under the Sarbanes-Oxley Act? Choose 2 answers - Firms must not provide certain nonaudit services to audit clients, such as management functions or legal services. Firms must report to and be retained by the audit committee rather than the CFO or other company management. Which two requirements must management of public companies meet under the Sarbanes-Oxley Act? Choose 2 answers - They must provide an assessment of the effectiveness of internal controls with each annual report. They must support a stronger board and audit committee. Which two values affect the measurement of net income? Choose 2 answers - Ordinary gains and losses . Operating expenses Which users would have a primary concern with an organization's ability to provide healthcare benefits? - Employees