1. (TCO 1) Which financial statement is prepared first

Balance sheet

Income statement

Retained earnings statement

Statement of cash flows

2. (TCO 1) Management s views on the company s short-term debt paying ability, expansion financing, and results of operations are found in which of the following?

auditor s report

management discussion and analysis section

notes to the financial statements

president s state of the company report

3. (TCO 4) Using the following balance sheet and income statement data, what is the earnings per share?

Current assets $ 9,000 Net income $ 12,000

Current liabilities 4,000 Stockholders equity 27,000

Average assets 44,000 Total liabilities 6,000

Total assets 30,000

Average common shares outstanding was 10,000





4. (TCO 4) Which of the following is not considered a measure of liquidity

Current ratio

Working capital

Debt to total assets ratio

Each of the above are liquidity measures

5. (TCO 2) Which pair of the listed accounts follows the rules of debits and credits, in relation to increases and decreases, in the same manner?

Salary Expense and Notes Payable

Common Stock and Rent Expense

Accounts Receivable and Advertising Expense

Service Revenue and Equipment

6. (TCO 2) The principle purpose of posting is which of the following

help identify errors made in the journal

accumulate the effects of journalized transactions in the individual accounts

enter transactions directly into the ledger

help determine if the financial statements are ready to be prepared

7. (TCO 3) Joe is a warehouse custodian, and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates ___ .

documentation procedures are violated

independent internal verification is violated

segregation of duties is violated

establishment of responsibility is violated

8. (TCO 3) The following information was taken from Niland Company cash budget for the month of April:

Beginning cash balance $30,000

Cash receipts 27,000

Cash disbursements 34,000

If the company has a policy of maintaining end of the month cash balance of $25,000, the amount the company would have to borrow is which of the following





9. (TCO 11) Managerial accounting does which of the following

is concerned with costing products

is governed by generally accepted accounting principles

pertains to the entity as a whole and is highly aggregated

places emphasis on special-purpose information

10. (TCO 11) Which of the following is not a manufacturing cost category

Cost of goods sold

Direct materials

Direct labor

Manufacturing overhead

11. (TCO 11) Which of the following are period costs

Raw materials

Direct materials and direct labor

Direct labor and manufacturing overhead

Selling expenses

12. (TCO 11) Ranger Company reported total manufacturing costs of $65,000, manufacturing overhead totaling $13,000, and direct materials totaling $15,000. How much is direct labor cost





13. (TCO 11) Hardigan Manufacturing Company reported the following year-end information:

beginning work in process inventory, $80,000

cost of goods manufactured, $980,000

beginning finished goods inventory, $50,000

ending work in process inventory, $70,000

and ending finished goods inventory, $40,000

How much is Hardigan s cost of goods sold for the year?





14. (TCO 5) What effect do changes in activity have on fixed costs per unit

No effect. Fixed costs per unit stay the same at every activity level.

An inverse effect.

A directly proportional effect.

It depends on the particular level of activity.

15. (TCO 5) Which of the following is an underlying assumption of CVP analysis

Factors other than changes in activity may affect costs.

Cost classifications are reasonably accurate.

Increases in inventories cause increase in total fixed costs.

Unit costs remain the same over the relevant range.

1. (TCO 5) A company has total fixed costs of $150,000 and a contribution margin ratio of 30%. How much sales are necessary to break even?





2. (TCO 5) How much sales are required to earn a target income of $80,000, if total fixed costs are $100,000 and the contribution margin ratio is 40%





3. (TCO 6) Which one of the following is not a benefit of budgeting?

It facilitates the coordination of activities.

It provides definite objectives for evaluating performance.

It provides assurance that the company will achieve its objectives.

It requires all levels of management to plan ahead on a recurring basis.

4. (TCO 6) Which one of the following would most likely cause an unrealistic budget to result?

All levels of management contributed to its development.

The budget has been developed in a participative approach.

The budget has been developed in a top down fashion.

The budget was developed after considerable planning.

5. (TCO 6) What three differences exist between long-range planning and budgeting

Amount of detail, content, and emphasis

Time periods involved, amount of detail, and content

Content, emphasis, and amount of detail

Emphasis, time periods involved, and amount of detail

6. (TCO 6) Which of the following statements about a budgeted income statement is true?

It is prepared before the operating budgets are prepared.

It reflects the cash to be received and paid as a result of operations.

It is prepared after the cash budget is prepared.

It is prepared using the individual operating budgets.

7. (TCO 7) Which statement is true concerning a static budget report

It considers performance at numerous activity levels.

It is appropriate in evaluating a manager s effectiveness in controlling fixed costs.

It should be used when the actual level of activity is materially different from the master budget activity level.

It is most effective when evaluating a manager s effectiveness in controlling variable costs.

8. (TCO 7) The foreign subsidiary of a large corporation is which of the following

not a responsibility center

a profit center

a cost center

an investment center

9. (TCO 7) The best measure of the performance of the manager of a profit center is which of the following

rate of return on investment

success in meeting budgeted goals for controllable costs

amount of controllable margin generated by the profit center

amount of contribution margin generated by the profit center

10. (TCO 7) Merck Pharmaceuticals is evaluating its Vioxx division, an investment center. The division has a $45,000 controllable margin and $300,000 of sales. How much will Merck s average operating assets be when its return on investment is 10%?