ACG 3173 UCF - Exam 4 Practice Questions With 100% Accurate Verified Answers Graded A+.

Margin of Safety = - correct answer Current Sales – Break Even Sales The independent auditors' report usually: - correct answer includes an opinion that the financial statements present fairly, in all material respects, financial information about the company. Units (for sale) = - correct answer(Fixed Expenses + Operating Income) / CM Current Sales = - correct answer Break Even Dollars + Margin of Safety or Units * Price per unit Margin of Safety Ratio = - correct answer Margin of Safety / Current Sales BreakEven Units = - correct answer Fixed Expenses / CM per Unit CM Ratio = - correct answer CM / Sales BreakEven Revenue = - correct answer Fixed Expenses / CM Ratio or BreakEven Units * Price per Unit Degree of Operating Leverage = - correct answer(S - V) / (S - V - F) or CM / Operating Income Maximum Charge (Price) = - correct answer(Change in CM) / (1 + required ROI) Sarbanes-Oxley Act (SOX) of 2002 - correct answer- most powerful legislation to date - this created the Public Accg. Oversight Board (PCAOB) as the authoritative watchdog over the accounting and auditing profession Dodd-Frank Act - correct answer- response of the 2008 financial crisis - allowed gov't to break up financial institutions that were "too big to fail" (institutional point of view) - prohibited predatory lending (consumer point of view) Income Statement Financial Misstatements - correct answer- recording revenue too soon - recording bogus revenue - boosting income using one-time or unsustainable activities - shifting current expenses to a later period Cash Flow Financial Misstatements - correct answer- shifting financing cash inflows to the operating section - shifting normal operating cash outflows to the investing section - inflating operating cash flow using acquisitions or disposals - boosting operating cash flow using unsustainable activities Reporting to the SEC - correct answer companies registered with the SEC file 10-K or 10-Q 10-K - correct answer annual AUDITED financial statements 10-Q - correct answer quarterly financial statements Managerial ACG - correct answer- internal - relevance Financial ACG - correct answer- external - reliability Total VARIABLE costs - correct answer change when activity changes (wages, supplies, warranty) Total FIXED costs - correct answer remain unchanged when activity changes (salaries, rent, utilities) Mixed costs = - correct answer" semi variable costs" Total Costs - (Variable + Fixed) Total Mixed Cost = - correct answer Fixed Cost + Variable Cost Total Cost = - correct answer Fixed Cost + Variable Cost or Fixed Cost + (Variable rate per unit of activity * #units of activity) Cost Formula = - correct answer Fixed + (Variable rate × Volume) MORE fixed costs = - correct answer MORE risky High-Low Method - correct answer Variable Rate = (High Cost - Low Cost) / (High Activity - Low Activity) Fixed costs can put you out of business - correct answer True Contribution Margin Format income Statement - correct answer expenses are calculated by behavior CM income statement - correct answer Revenues - Variable Expenses = Contribution Margin - Fixed Expenses = Operating Income the HIGHER the CM Ratio - correct answer the HIGHER the Operating Leverage the GREATER the amount of fixed expenses, - correct answer the greater the operating leverage & the riskier the business Revenue Act of 1861 - correct answer first tax of individual income Types of Taxes - correct answer Income, Sales, Real Estate, Transfer, Tangible, Intangible, Payroll Types of Authorities - correct answer Federal Gov't (Congress IRS), States (Fl. Dept. of Revenue), Counties, Cities (NY, Detroit) Taxed Entities - correct answer Individuals, Businesses-Income/Sales, Estates, Trusts, Property ... Tax Base * Tax Rate = - correct answer Tax Liability Tax Code incentives - correct answer- Economic: Revenue for Gov't - Social: Charitable Contributions - Environmental: Tax Credit for Developing Alternative Fuels - Political: Roth IRA Taxable Income Deductions - correct answer all ordinary & necessary business expenses Gross Income Exclusions (NOT COUNTED IN TAXABLE INCOME) - correct answer- Municipal Bond Interest - Dividends Received Deductions: Less than 20% ownership = 70%, between 20-80% ownership = 80%, over 80% = 100% Deductions Allowed - correct answer- NOLs: back 2, forward 20 - Capital Gains & Losses (gains- ordinary income, losses- back 3, forward 5) - interest vs. Dividends - Depreciation - MACRS Required Tax Disclosures - correct answer1. Components of Income Before Taxes 2. Components of Income Tax Expense 3. Reconciliation of Income Tax Rates 4. Components of Deferred Taxes Deferred Taxes - correct answer arise due to differences between GAAP & Tax Code potential Deferred Tax liabilities: - correct answer depreciation, inventory methods, installment receivables, intangible drilling costs