Final

Question 1

Multiple Step Income Statement: What does it highlight

Answer 1

The components of Net Income

Question 2

Multiple Step Income Statement: 3 items

Answer 2

Gross Profit, Income from Operations, Net Income

Question 3

What is Gross Profit?

Answer 3

The excess of net sales over cost of goods sold

Question 4

How to find GP

Answer 4

Net Sales - COGS

Question 5

Nonoperating activities

Answer 5

Various revenues and expenses and gains and losses that are unrelated to the company’s main line of operations

Question 6

Income from operations is also known as

Answer 6

Operating Income

Question 7

The periodicity assumption states that:

Answer 7

the economic life of a business can be divided into time periods.

Question 8

What are the four primary financial statements?

Answer 8

I|S, Retained Earnings, B|S, Statement of Cash Flows

Question 9

Calculate N|I

Answer 9

Rev - Exp

Question 10

Calculate end R|E

Answer 10

Beg R|E - +N|I - Dividends

Question 11

Activity-based costing.

Answer 11

A method of allocating overhead based on each product’s use of activities in making the product.

Question 12

Balanced scorecard.

Answer 12

A performance-measurement approach that uses both financial and nonfinancial measures, tied to
company objectives, to evaluate a company’s operations in an integrated fashion

Question 13

Corporate social responsibility.

Answer 13

A company’s efforts to employ sustainable business practices with regards to its employees, society,
and the environment.

Question 14

Just-in-time (JIT) inventory.

Answer 14

Inventory system in which goods are manufactured or purchased just as they are needed for use.

Question 15

Total quality management (TQM).

Answer 15

Systems implemented to reduce defects in finished products with the goal of achieving zero defects.

Question 16

Statement of Ethical Professional Practice.

Answer 16

A code of ethical standards developed by the Institute of Management Accountants.

Question 17

Value chain.

Answer 17

All activities associated with providing a product or performing a service.

Question 18

Contribution margin

Answer 18

The amount of revenue remaining after deducting variable costs.

Question 19

Mixed costs

Answer 19

Costs that contain both a variable and a fixed element.

Question 20

Contribution margin ratio

Answer 20

The percentage of sales dollars available to cover fixed costs and produce income.

Question 21

Activity index

Answer 21

Identifies the activity which causes changes in the behavior of costs.

Question 22

Margin of safety

Answer 22

The difference between actual or expected sales and sales at the break-even point.

Question 23

Variable costs

Answer 23

Costs that vary in total directly and proportionately with changes in the activity level.

Question 24

Break-even point

Answer 24

The level of activity at which total revenues equal total costs.

Question 25

Relevant range

Answer 25

The range over which the company expects to operate during the year.

Question 26

Fixed costs

Answer 26

Costs that remain the same in total regardless of changes in the activity level.

Question 27

High-low method

Answer 27

A method that uses the total costs incurred at the high and low levels of activity.

Question 28

List the five components of Cost-Volume-Profit (CVP) analysis.

Answer 28

(1) volume or level of activity (2) unit selling prices (3) variable costs per unit (4) total fixed costs (5) sales mix

Question 29

The master budget consists of which budgets?

Answer 29

Operating and Financial

Question 30

Long-range planning

Answer 30

A selection of strategies to achieve long-term goals.

Question 31

Sales budget

Answer 31

An estimate of expected sales for the budget period.

Question 32

Financial budgets

Answer 32

Budgets that indicate the cash resources needed for expected operations and planned capital

Question 33

Sales forecast

Answer 33

The projection of potential sales for the industry and the company's expected share of such sales

Question 34

Budget

Answer 34

Management's plans expressed in financial terms for a specified future time period.

Question 35

Cash budget

Answer 35

A projection of anticipated cash flows.

Question 36

Budget committee

Answer 36

A group responsible for coordinating the preparation of the budget.

Question 37

Production budget

Answer 37

A projection of production requirements to meet expected sales.

Question 38

Master budget

Answer 38

A set of interrelated budgets that constitute a plan of action for a specified time period.

Question 39

Direct materials budget

Answer 39

An estimate of the quantity and cost of direct materials to be purchased.

Question 40

Classify managers’ activities and responsibilities into three broad functions.

Answer 40

Planning, Directing, Controlling

Question 41

What are the responsibilities of the controller?

Answer 41

Maintaining the accounting records, Ensuring an adequate system of internal control, Preparing financial statements, tax returns, and internal reports.

Question 42

List the three manufacturing cost categories.

Answer 42

Direct materials, direct labor, and manufacturing overhead.

Question 43

Define direct materials

Answer 43

can be physically and directly associated with the finished product during the manufacturing process.

Question 44

product costs

Answer 44

costs that are a necessary and integral part of producing the finished product.

Question 45

indirect materials

Answer 45

materials that cannot be easily associated with the finished product

Question 46

period cost

Answer 46

costs that are matched with the revenue of a specific time period rather than included as part of the cost of a salable product

Question 47

Financial accounting

Answer 47

General-purpose reports

Question 48

Financial accounting

Answer 48

Prepared in accordance with generally accepted accounting principles

Question 49

Financial accounting

Answer 49

Limited to historical cost data

Question 50

Financial accounting

Answer 50

Financial statements

Question 51

Financial accounting

Answer 51

Reports generally pertain to the business as a whole

Question 52

Financial accounting

Answer 52

Reports issued quarterly or annually

Question 53

Managerial Accounting

Answer 53

Reports are used internally

Question 54

Managerial Accounting

Answer 54

Special purpose reports

Question 55

Managerial Accounting

Answer 55

Reporting standard is relevance to the decision to be made

Question 56

Managerial Accounting

Answer 56

Reports generally pertain to subunits

Question 57

Advertising

Answer 57

period cost

Question 58

Sales salaries

Answer 58

period cost

Question 59

Repairs to office equipment

Answer 59

period cost

Question 60

Direct materials used

Answer 60

product cost

Question 61

Indirect factory labor

Answer 61

product cost

Question 62

Factory manager's salary

Answer 62

product cost

Question 63

Direct labor

Answer 63

product cost

Question 64

Indirect materials

Answer 64

product cost