16 Jan Question 25 Once cost is established

ACC556 Financial Accounting for Managers

FINAL Exam Part 1

Question 1 A budget can be used as a basis for evaluating performance.

Question 2 Intangible assets are rights, privileges, and competitive advantages that result from ownership of long-lived assets without physical substance.

Question 3 The master budget reflects management’s long-term plans encompassing five years or more.

Question 4 On January 1, 2014, Ermler Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2014, is

Question 5 A company whose current liabilities exceed its current assets may have a liquidity problem.

Question 6 The market rate of interest is often called the

Question 7 The partnership form of business organization

Question 8 On January 1, a machine with a useful life of five years and a residual value of $15,000 was purchased for $75,000. What is the depreciation expense for year 2 under straight-line depreciation?

Question 9 During 2014, Phelps Corporation reported net sales of $3,000,000, net income of $1,320,000, and depreciation expense of $80,000. Phelps also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Phelps’s asset turnover ratio is

Question 10 Under the corporate form of business organization

Question 11 Which of the following is not properly classified as property, plant, and equipment?

Question 12 Vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place.

Question 13 A current liability is a debt that can reasonably be expected to be paid

Question 14 A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.

Question 15 Accountants do not attempt to measure the change in a plant asset’s market value during ownership because

Question 16 The debt to assets ratio measures the percentage of the total assets provided by creditors.

Question 17 All of the following are true regarding financial statement analysis ratios associated with liabilities except

Question 18 One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

Question 19 Bonds with a face value of $400,000 and a quoted price of 104¼ have a selling price of

Question 20 Budget reports provide the feedback needed by management to see whether actual operations are on course.

Question 21 A corporation is not an entity that is separate and distinct from its owners.

Question 22 A master budget is most useful in evaluating a manager’s performance in controlling costs.

Question 23 The book value of a plant asset is the difference between the

Question 24 Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Question 25 Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.