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ACC 556 Week 1 Discussion
"Financial Statements" Please respond to the following:
From the e-Activity, analyze Apple’s most recent financial statements. Based on your
analysis, predict whether Apple’s financial health will likely improve or deteriorate over
the next five (5) years. Provide a rationale for your response.
From the e-Activity, examine Apple’s statement of cash flows. Recommend at least two
(2) actions that Apple could take in order to maximize the use of its cash flows. Provide a
rationale for your response.
ACC 556 Week 1 Homework Chapter 1
Question 1
A business organized as a separate legal entity owned by stockholders is a partnership.
Answer
True
False
Question 2
Accounting communicates financial information about a business to both internal and external
users.
Answer
True
False
Question 3
The primary purpose of the statement of cash flows is to provide information about the cash
receipts and cash payments of a company for a specific period of time.
Answer
True
False
Question 4
One way of stating the accounting equation is: Assets + Liabilities = Stockholders’ Equity.
Answer
True
False
Question 5
Claims of creditors and owners on the assets of a business are called liabilities.
Answer
True
False
Question 6
A business organized as a corporation
Answer
is not a separate legal entity in most states.
requires that stockholders be personally liable for the debts of the business.
is owned by its stockholders.
has tax advantages over a proprietorship or partnership.
Question 7
The accounting equation may be expressed as
Answer
Assets = Stockholders’ Equity – Liabilities.
Assets = Liabilities + Stockholders’ Equity.
Assets + Liabilities = Stockholders’ Equity.
Assets + Stockholders’ Equity = Liabilities.
Question 8
Which of the following activities involves collecting the necessary funds to support the business?
Answer
Operating
Investing
Financing
Delivering
Question 9
Which of the following is an asset?
Answer
Mortgage payable
Investments
Common stock
Retained earnings
Question 10
Which of the following would not be considered an external user of accounting data for the
Julian Company?
Answer
Internal Revenue Service agent
Management
Creditors
Customers
Question 11
Ashley’s Accessory Shop started the year with total assets of $140,000 and total liabilities of
$80,000. During the year the business recorded $220,000 in revenues, $110,000 in expenses, and
dividends of $40,000. The net income reported by Ashley’s Accessory Shop for the year was
Answer
$80,000.
$100,000.
$130,000.
$110,000.
Question 12
Stockholders’ equity is comprised of
Answer
common stock and dividends.
common stock and retained earnings.
dividends and retained earnings.
net income and retained earnings.
Question 13
Marvin Services Corporation had the following accounts and balances:
Accounts payable $18,000 Equipment $21,000
Accounts receivable 3,000 Land 21,000
Buildings ? Unearned service revenue 6,000
Cash 9,000 Total stockholders' equity ?
If the balance of the Buildings account was $42,000 and $3,000 of Accounts Payable were paid
in cash, what would be the balance of the total stockholders' equity?
Answer
$81,000
$72,000
$102,000
$78,000
Question 14
All of the following are interrelationships that are important to understand when preparing
financial statements except
Answer
the net income from the income statement is used in the retained earnings statement.
the ending retained earnings from the retained earnings statement is used in the
stockholder's equity section of the balance sheet.
the cash on the balance sheet should be equal to the cash at the end of the period on the
statement of cash flows.
all of the payments on the balance sheet should be equal to the cash payments for operating
activities on the statement of cash flows.
Question 15
External users want answers to all of the following questions except
Answer
Is the company earning satisfactory income?
Will the company be able to pay its debts as they come due?
Will the company be able to afford employee pay raises this year?
How does the company compare in profitability with competitors?
Question 16
Which of the following statements is not true regarding the Sarbanes-Oxley Act (SOX)?
Answer
The Act calls for increased oversight responsibilities for boards of directors.
The Act has resulted in increased penalties for financial fraud by top management.
The Act calls for decreased independence of outside auditors reviewing corporate financial
statements.
The Act is meant to decrease the likelihood of unethical corporate behavior.
Question 17
When expenses exceed revenues, which of the following is true?
Answer
a net loss results
a net income results
assets equal liabilities
assets are increased
Question 18
The financial statement that summarizes the changes in retained earnings for a specific period of
time is the
Answer
balance sheet.
income statement.
statement of cash flows.
retained earnings statement.
Question 19
Which of the following is not a common way that managers use the balance sheet?
Answer
To analyze the balances of assets, liabilities, and stockholders’ equity throughout the
accounting period
To determine if the cash balance is sufficient for future needs
To analyze the balance between debt and common stock financing
To analyze the balance of accounts receivable on the last day of the accounting period
MT
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Distribution
s of cash
Answer
A Corporatio
from a
corporation
to its stock
holders.
Read
Answer
Items for
Question 20
Consumed
assets or
services.
Read
Answer
Items for
Question 20
Ownership
is limited to
one person.
Read
Answer
Items for
Question 20
Officers
and others
who
manage the
business.
Read
Answer
. n
B
.
Dividends
C
.
Manageme
nt
discussion
and
analysis
D
.
Assets
E
.
Sole
proprietors
hip
F. Internal
users
G
.
Expenses
H
.
Annual
report
I. Investing
activities
J. Liabilities
Items for
Question 20
Creditor
claims
against the
assets of the
business.
Read
Answer
Items for
Question 20
A separate
legal entity
under state
laws.
Read
Answer
Items for
Question 20
A report
prepared by
managemen
t that
presents
financial
information
.
Read
Answer
Items for
Question 20
A section of
the annual
report that
presents
managemen
t’s views.
Read
Answer
Items for
Question 20
Future
economic
benefits.
Read
Answer
Items for
Question 20
Involves
acquiring
the
resources
necessary
to run the
business.
Read
Answer
Items for
Question 20
ACC 556 Week 1 Homework Chapter 2
Question 1
Cash and supplies are both classified as current assets.
Answer
True
False
Question 2
Earnings per share measures the net income earned on each share of common stock.
Answer
True
False
Question 3
Net cash provided by operating activities takes into account that a company must invest in
capital expenditures just to maintain its current level of operations.
Answer
True
False
Question 4
In order for information to be relevant, it must be reported on a monthly basis.
Answer
True
False
Question 5
For accounting purposes, business transactions should be kept separate from the personal
transactions of the stockholders of the business.
Answer
True
False
Question 6
In a classified balance sheet, assets are usually classified as
Question 7
Equipment is classified on the balance sheet as
Question 8
Use the following data to determine the total dollar amount of assets to be classified as
current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2014
Cash $ 130,000 Accounts payable $ 140,000
Accounts receivable 100,000 Salaries and wages payable 20,000
Inventory 110,000 Mortgage payable 160,000
Prepaid insurance 60,000 Total liabilities $320,000
Stock investments 170,000
Land 180,000
Buildings $210,000 Common stock $240,000
Less: Accumulated Retained earnings 500,000
depreciation (40,000) 170,000 Total stockholders’ equity $740,000
Trademarks 140,000 Total liabilities and
Total assets $1,060,000 stockholders’ equity $1,060,000
Question 9
N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings
of $475,000. What are the creditors’ claims on their assets?
Question 10
The following information is available for Bradshaw Corporation and Newell Corporation:
(in millions)
Bradshaw Corporation Newell Corporation
2014 2013 2014 2013
Preferred dividends 25 10 0 30
Net income 500 480 490 520
Shares outstanding at the
end of the year
200 180 150 200
Shares outstanding at the
beginning of the year
180 150 200 220
Based on this information, the earnings per share calculations (rounded to two decimals)
suggest
Question 11
Reporting a net income of $95,000 will
Question 12
Based on the following data, what is the amount of current assets?
Accounts payable……………………………………………………….. $62,000
Accounts receivable…………………………………………………….. 100,000
Cash………………………………………………………………………. 50,000
Intangible assets………………………………………………………… 100,000
Inventory…………………………………………………………………. 138,000
Long-term investments…………………………………………………. 160,000
Long-term liabilities……………………………………………………… 200,000
Short-term investments…………………………………………………. 80,000
Notes payable……………………………………………………………. 56,000
Property, plant, and equipment…………………………………………… 1,340,000
Prepaid insurance……………………………………………………….. 2,000
Question 13
Using the following balance sheet and income statement data, what is the debt to assets ratio?
Current assets $ 14,000 Net income $ 21,000
Current liabilities 8,000 Stockholders’ equity 39,000
Average assets 80,000 Total liabilities 21,000
Total assets 60,000
Average common shares outstanding was 10,000.
Question 14
Which of the following is not considered a measure of liquidity?
Question 15
Free cash flow provides an indication of a company’s ability to
Question 16
If Morris Corporation has a negative $131 million free cash flow, which of the following
statements is most likely true?
Question 17
Accounting information should be neutral in order to enhance
Question 18
The principle that indicates that assets should be reported at the price received to sell an asset
is the
Question 19
Garrison Company prepares quarterly reports, which it distributes to all stockholders and
other entities that rely on its accounting information. Which of the following is the best term
for the key assumption in financial reporting that Garrison is following?
Question 20
Each of the following statements is justified by a fundamental quality or an enhancing of
quality accounting. Write the letter in the blank next to each statement corresponding to the
quality involved.
Question Selected Match
Consistency E.
A company uses the same accounting principles from year to year.
Verifiable B.
Information that is free from error.
Understandability A.
Information presented in a clear and concise fashion.
Relevance C.
Information that makes a difference in a decision.
Faithful
representation
D.
Information accurately depicts what really happened.
ACC 556 Week 2 Discussion
"Accounting Systems and Accruals" Please respond to the following:
From the e-Activity, examine the greatest threats to a computerized accounting system.
Suggest two (2) preventive measures or remedies to protect the system and / or mitigate
negative impact to the system. Provide a rationale for your response.
Pretend that you are a criminal and want to commit fraud by altering your company’s
accruals. Create a brief (one [1] paragraph) plan for committing the fraud. Predict the
major potential resulting damage to the company’s financial statements from the fraud.
ACC 556 Week 2 Homework Chapter 3
Question 1
Economic events that require recording in the financial statements are called accounting
transactions.
True
False
Question 2
An account is often referred to as a T-account because of the way it is constructed.
True
False
Question 3
Revenues are a subdivision of stockholders’ equity.
True
False
Question 4
Salaries and wages payable is a type of expense.
True
False
Question 5
Operating activities are the types of activities the company performs to generate profits.
True
False
Question 6
If total liabilities decreased by $4,000, then
Question 7
An expense
Question 8
Are advanced receipts from customers treated as revenue at the time of receipt? Why or why
not?
Question 9
Which statement about an account is true?
Question 10
Which one of the following represents the expanded basic accounting equation?
Question 11
Which of the following is not an example of a source document that provides evidence of a
transaction?
Question 12
The primary purpose of the trial balance is to
Question 13
Which of the following statements is not true?
Question 14
All of the following are characteristics of every accounting information system except it is a
system
Question 15
On June 1, 2014, England Inc. reported a cash balance of $21,000. During June, England
made deposits of $8,000 and made disbursements totaling $24,000. What is the cash balance
at the end of June?
Question 16
All of the following statements regarding the double-entry system are true except
Question 17
Borrowing money and issuing shares of stock are
Question 18
The purpose of the ledger is to
Question 19
Which statement is incorrect?
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Question Selected Match
Account E.
An accounting record of increases and decreases in specific assets,
liabilities, and stockholders’ equity items.
Normal account
balance
C.
The side which increases an account.
Debit D.
Left side of an account.
Revenue account A.
Has a credit normal balance
Ledger J.
The entire group of accounts maintained by a company.
Journal F.
Shows the debit and credit effects of specific transactions.
Posting G.
Transferring journal entries to ledger accounts.
Chart of accounts B.
A list of all the accounts used by a company.
Trial balance H.
A list of accounts and their balances at a given time.
Source document I.
Evidence that a transaction has taken place.
ACC 556 Week 2 Homework Chapter 4
Question 1
The revenue recognition principle dictates that revenue be recognized in the accounting
period in which the performance obligation is satisfied.
True
False
Question 2
An adjusting entry to a prepaid expense is required to recognize expired expenses.
True
False
Question 3
Unearned revenue is a prepayment that requires an adjusting entry when services are
performed.
True
False
Question 4
When closing entries are prepared, each income statement account is closed directly to
retained earnings.
True
False
Question 5
The accounting cycle begins with the journalizing of the transactions.
True
False
Question 6
Management usually wants ________ financial statements and the IRS requires all
businesses to file _________ tax returns.
Question 7
A flower shop makes a large sale for $1,000 on November 30. The customer is sent a
statement on December 5 and a check is received on December 10. The flower shop follows
GAAP and applies the revenue recognition principle. When is the $1,000 considered to be
recognized?
Question 8
Which statement is correct?
Question 9
Given the data below for a firm in its first year of operation, determine net income under the
cash basis of accounting.
Cash received from customers $48,000
Accounts receivable 12,000
Cash paid for expenses 26,000
Accounts payable (related to expenses) 3,000
Prepaid rent for next period 7,000
Question 10
Accrued expenses are:
Question 11
If a resource has been consumed but a bill has not been received at the end of the accounting
period, then:
Question 12
Depreciation is the process of:
Question 13
If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will
this have on that month's financial statements?
Question 14
Why do generally accepted accounting principles require the application of the revenue
recognition principle?
Question 15
Which of the following would not result in unearned revenue?
Question 16
Failure to prepare an adjusting entry at the end of the period to record an accrued expense
would cause:
Question 17
At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees
was omitted. Which of the following statements is true?
Question 18
Can financial statements be prepared directly from the adjusted trial balance?
Question 19
Which statement is correct concerning the adjusted trial balance?
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Periodicity assumption H.
The economic life of a business can be divided into artificial
time periods
Cash basis B.
Events recorded only in periods the company receives or pays
cash
Revenue recognition
principle
D.
Revenue is recognized when the performance obligation is
satisfied.
Prepaid expenses E.
Expenses paid before they are incurred
Expense recognition
principle
C.
Efforts are related to accomplishments
Accrued revenues A.
Revenues earned but not yet received
Depreciation F.
A cost allocation process
Post-closing trial balance G.
Includes only permanent—balance sheet—accounts
Accrued expenses I.
Expenses incurred but not yet paid
ACC 556 Week 3 Discussion
"Accounting for Inventories" Please respond to the following:
Suggest which type of income statement a retailer should use. Defend your suggestion.
Analyze inventory valuation methods discussed in the textbook. Based on your analysis,
recommend the most accurate valuation method that reflects current economic
conditions. Provide a rationale for your recommendation.
ACC 556 Week 3 Homework Chapter 5
Question 1
An advantage of using the periodic inventory system is that it requires less record keeping
than the perpetual inventory system.
True
False
Question 2
The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within
the 10 days discount period.
True
False
Question 3
Sales allowances and Sales discounts are both designed to encourage customers to pay their
accounts promptly.
True
False
Question 4
Freight-out appears as an operating expense in the income statement.
True
False
Question 5
With the periodic inventory system, goods available for sale must be calculated before cost
of goods sold.
True
False
Question 6
Merchandising companies that sell to retailers are known as
Question 7
The primary source of revenue for a wholesaler is
Question 8
Which of the following is a true statement about inventory systems?
Question 9
Which of the following items does not result in an adjustment in the merchandise inventory
account under a perpetual system?
Question 10
Farwell Company purchased merchandise with an invoice price of $2,000 and credit terms of
1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the
credit terms?
Question 11
As the president of Harter Company, you notice that no discounts have been taken when
settling accounts payables. What would be an acceptable explanation?
Question 12
A sales invoice is prepared when goods
Question 13
The Sales Returns and Allowances account does not provide information to management
about
Question 14
The collection of a $700 account beyond the 2 percent discount period will result in a
Question 15
Which statement is incorrect?
Answer
Selected Answer:
Sales discounts are recorded as debits to the sales revenue account.
Question 16
Multiple-step income statements show
Question 17
Financial information is presented below:
Operating expenses $ 28,000
Sales returns and allowances 7,000
Sales discounts 3,000
Sales revenue 150,000
Cost of goods sold 91,000
The gross profit rate would be
Question 18
What is an advantage of using the multiple-step income statement?
Question 19
Which of the following provides the best rationale regarding analysts' views about the
information value of the gross profit rate versus the gross profit amount?
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Net sales I.
Sales less sales returns and allowances and sales discounts.
Sales discount E.
A reduction given by the seller for prompt payment of a credit sale.
Credit terms H.
Specifies the amount of cash discount and time period during
which it is offered.
Periodic inventory
system
D.
Requires a physical count of goods on hand to compute cost of
goods sold.
Gross profit rate G.
Gross profit divided by net sales.
Contra revenue A.
An account that is offset against a revenue account on the income
statement.
Freight-out C.
Freight cost to deliver goods to customers reported as an operating
expense.
Gross profit J.
Net sales less cost of goods sold.
Sales invoice B.
Provides support for a credit sale.
Purchase discount F.
A cash discount claimed by a buyer for prompt payment of a
balance due.
ACC 556 Week 3 Homework Chapter 6
Question 1
Raw materials inventories are the goods that a manufacturing company has completed and
are ready to be sold to customers.
True
False
Question 2
Goods held on consignment should be included in the consignor’s ending inventory.
True
False
Question 3
If a company has no beginning inventory and the unit cost of inventory items does not
change during the year, the value assigned to the ending inventory will be the same under
LIFO and average cost flow assumptions.
True
False
Question 4
The LIFO method is rarely used because most companies do not sell the last goods they
purchase first.
True
False
Question 5
The FIFO reserve is a required disclosure for companies that use FIFO.
True
False
Question 6
Manufactured inventory that has begun the production process but is not yet completed is
Question 7
Which of the following should not be included in the physical inventory of a company?
Question 8
At December 31, 2014 Howell Company’s inventory records indicated a balance of
$858,000. Upon further investigation it was determined that this amount included the
following:
• $168,000 in inventory purchases made by Howell shipped from the seller 12/27/14 terms
FOB destination, but not due to be received until January 2nd
• $111,000 in goods sold by Howell with terms FOB destination on December 27th. The
goods are not expected to reach their destination until January 6th.
• $9,000 of goods received on consignment from Westwood Company
What is Howell’s correct ending inventory balance at December 31, 2014?
Question 9
Noise Makers Inc has the following inventory data:
July 1 Beginning inventory 20 units at $19 $ 380
7 Purchases 70 units at $20 1,400
22 Purchases 10 units at $22 220
$2,000
A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand.
Using the average cost method, the value of ending inventory is
Question 10
Inventory costing methods place primary reliance on assumptions about the flow of
Question 11
Many companies use just-in-time inventory methods. Which of the following is not an
advantage of this method?
Question 12
Which of the following statements is correct with respect to inventories?
Question 13
In periods of rising prices, which is an advantage of using the LIFO inventory costing
method?
Question 14
Jenks Company developed the following information about its inventories in applying the
lower of cost or market (LCM) basis in valuing inventories:
Product Cost Market
A $57,000 $60,000
B 40,000 38,000
C 80,000 81,000
If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet
would be
Question 15
Selection of an inventory costing method by management does not usually depend on
Answer
Selected Answer:
the fiscal year end.
Question 16
Which statement concerning lower of cost or market (LCM) is incorrect?
Question 17
Use the following information regarding Black Company and Red Company to answer the
question “Which of the following is Red Company's "cost of goods sold" for 2014 (to the
closest dollar)?”
Year
Inventory
Turnover Ratio Ending Inventory
Black Company 2012 $26,340
2013 10.7 $29,890
2014 10.2 $30,100
Red Company 2012 $25,860
2013 9.0 $24,750
2014 9.5 $22,530
Question 18
A low number of days in inventory may indicate all of the following except
Question 19
The LIFO reserve is
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Merchandise Inventory F.
Goods ready for sale to customers by retailers and wholesalers.
Work in process B.
Goods that are only partially completed in a manufacturing
company.
FOB shipping point A.
Title to the goods transfers when the public carrier accepts the
goods from the seller.
FOB destination C.
Title to goods transfers when the goods are delivered to the
buyer.
Specific identification
method
D.
Tracks the actual physical flow for each inventory item
available for sale.
First-in, first-out (FIFO)
method
G.
Ending inventory valuation consists of the most recent
inventory purchases.
Last-in, first-out (LIFO)
method
I.
Cost of goods sold consists of the most recent inventory
purchases.
Average cost method J.
The same unit cost is used to value ending inventory and cost
of goods sold.
LIFO reserve E.
The difference between inventory reported using LIFO and
inventory using FIFO.
Inventory turnover ratio H.
Measures the number of times the inventory sold during the
period.
ACC 556 Week 4 Discussion
"Internal Controls" Please respond to the following:
Imagine that a coworker wants to circumvent an internal control to steal money from
your company. Speculate on two (2) internal controls that your coworker might attempt
to circumvent in order to steal the money. Recommend two (2) actions that the company
could take in order to prevent the theft.
Outline an anti-fraud program that you would implement at your company (current or
previous). Suggest the approach you would take to sell this program to your senior
executives. Provide a rationale for your response.
ACC 556 Week 4 Homework Chapter 7
Question 1
The most important element of the fraud triangle is rationalization.
True
False
Question 2
Requiring employees to take vacations is a weakness in the system of internal controls
because it does not promote operational efficiency.
True
False
Question 3
Under an effective system of internal control, errors occur only as a result of fraud or
dishonesty.
True
False
Question 4
Control over cash disbursements is improved if major expenditures are paid by check.
True
False
Question 5
Cash equivalents are highly liquid investments that can be converted into a specific amount
of cash.
True
False
Question 6
Which of the following is not one of the main factors that contribute to fraudulent activity?
Question 7
Under the concept of establishment of responsibility, how many people should have the
ultimate responsibility?
Question 8
A consequence of separation of duties is that
Question 9
In large companies, the independent internal verification procedure is often assigned to
Question 10
Sam’s Grocery Store has the following policy. ‘Only one cashier can have access to a cash
drawer.’ Which internal control principle supports this policy?
Question 11
Supervisors counting cash receipts daily is an example of
Question 12
Blank checks
Question 13
All of the following are true regarding bank statements except
Question 14
Which of the following would be added to the balance per bank on a bank reconciliation?
Question 15
Notification by the bank that a deposited customer check was returned NSF requires that the
company make the following adjusting entry:
Question 16
Clark Company developed the following reconciling information in preparing its September
bank reconciliation:
Cash balance per bank, 9/30 $30,800
Note receivable collected by bank 16,800
Outstanding checks 25,200
Deposits in transit 12,600
Bank service charge 210
NSF check 3,360
Using the above information, determine the cash balance per books (before adjustments) for
the Clark Company.
Question 17
Of the following employees, who should prepare the bank reconciliation?
Question 18
In the month of May, Lopat Company Inc. wrote checks in the amount of $55,500. In June,
checks in the amount of $75,948 were written. In May, $50,808 of these checks were
presented to the bank for payment, and $65,298 in June. What is the amount of outstanding
checks at the end of May?
Question 19
All of the following are true regarding the management and monitoring of cash except
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Prenumbered documents F.
Prevent a transaction from being recorded more
than once.
Custody of an asset should be kept
separate from the record-keeping for that
asset
J.
Segregation of duties.
Television monitors, garment sensors and
burglar alarms are examples
L.
Physical control devices.
Bonding employees H.
Insurance protection against misappropriation
of assets.
Collusion M.
Two or more employees circumventing
prescribed procedures.
Cash N.
Anything that a bank will accept for deposit.
Cash budget G.
A projection of anticipated cash flows.
Restricted cash I.
Cash that is not available for general use, but
instead is restricted for a particular purpose.
Invest idle cash D.
A basic principle of cash management.
Canceled checks K.
Checks which have been paid by the depositor's
bank.
NSF checks E.
Checks which have been returned by the
maker's bank for lack of funds.
Outstanding checks B.
Issued checks that have not been paid by the
bank.
Petty cash receipt C.
Document indicating the purpose of a petty
cash expenditure.
Cash equivalents A.
Highly liquid investments.
ACC 556 Week 5 Discussion
"Accounts Receivable Management" Please respond to the following:
Examine the five (5) steps to managing accounts receivable. Speculate on the step that is
most vulnerable to fraud. Suggest at least two (2) actions that a company can take in
order to protect this step from fraud.
Imagine that your company has tasked you with developing a plan for factoring accounts
receivables. Create one (1) scenario that demonstrates the key benefits and / or detriments
to your company from factoring accounts receivable.
ACC 556 Week 5 Homework Chapter 8
Question 1
An aging of accounts receivable schedule is based on the premise that the longer the period
an account remains unpaid, the greater the probability that it will eventually be collected.
True
False
Question 2
Allowance for Doubtful Accounts is a contra account that is deducted from Accounts
Receivable on the balance sheet.
True
False
Question 3
Under the allowance method, Bad Debt Expense is debited when an account is deemed
uncollectible and must be written off.
True
False
Question 4
Interest on a 6-month, 10 percent, $10,000 note is calculated by multiplying $10,000 0.10
6/12.
True
False
Question 5
If a company has significant concentrations of credit risk, it must discuss this risk in the
notes to its financial statements.
True
False
Question 6
Interest is usually associated with
Question 7
On January 15, Nifty Company sells merchandise on account to Martinez Associates for
$3,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $600 to
Nifty. On January 24, payment is received from Martinez for the balance due. What is the
amount of cash received?
Question 8
The expense recognition
Question 9
Which one of the following is not a principle of sound accounts receivable management?
Question 10
Bad Debt Expense is considered
Question 11
When an account is written off using the allowance method, the
Question 12
All of the following statements regarding the financial statement presentation of receivables
are true except:
Question 13
Which of the following is not true regarding a promissory note?
Question 14
The bookkeeper recorded the following journal entry
Allowance for Doubtful Accounts 1,000
Accounts Receivable – Richard James 1,000
Which one of the following statements is false?
Question 15
The direct write-off method is acceptable for financial reporting purposes only if the bad debt
losses are insignificant.
Question 16
When calculating interest on a promissory note with the maturity date stated in terms of days,
the
Question 17
The interest on a $4,000, 9%, 90-day note receivable is
Question 18
Which of the following is a way of disposing of a note receivable?
Question 19
The accounts receivable turnover
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Aging the accounts
receivable
H.
Analysis of customer account balances by length of time they
have been unpaid.
Direct write-off method A.
Bad debt losses are not estimated and no allowance account is
used.
Trade receivables B.
Notes and accounts receivable that result from sales
transactions.
Accounts receivable
turnover
G.
A measure of the liquidity of receivables.
Percentage of receivables
basis
C.
Emphasizes expected cash realizable value of accounts
receivable.
Promissory note F.
A written promise to pay a specified amount on demand or at a
definite time.
Dishonored note E.
A note which is not paid in full at maturity.
Cash net realizable value D.
The net amount expected to be received in cash.
Credit card sales I.
Sales that involve the customer, the retailer, and the credit card
issuer.
ACC 556 Week 5 Midterm Exam Part 1
Question 1
A concentration of credit risk is a threat of nonpayment from a single customer or class of
customers that could adversely affect the financial health of the company.
Question 2
The partnership form of business organization
Question 3
Goods that have been purchased FOB destination but are in transit, should be excluded from a
physical count of goods by the buyer.
Question 4
The revenue recognition principle dictates that revenue be recognized in the accounting period in
which the performance obligation is satisfied.
Question 5
An aging of accounts receivable schedule is based on the premise that the longer the period an
account remains unpaid, the greater the probability that it will eventually be collected.
Question 6
To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by
the employee authorized to sign checks.
Question 7
The economic resources that are owned by a business are called stockholders’ equity.
Question 8
Consistent use of the same accounting principles and methods is necessary for meaningful
analysis of trends within a company.
Question 9
Use the following data to calculate the current ratio.
Carne Auto Supplies
Balance Sheet
December 31, 2014
Cash $ 35,000 Accounts payable $ 65,000
Accounts receivable 50,000 Salaries and wages payable 10,000
Inventory 70,000 Mortgage payable 90,000
Prepaid insurance 40,000 Total liabilities $165,000
Stock investments 80,000
Land 95,000
Buildings $100,000 Common stock $120,000
Less: Accumulated Retained earnings 250,000
depreciation (30,000) 85,000 Total stockholders’ equity $370,000
Trademarks 70,000 Total liabilities and
Total assets $535,000 stockholders’ equity $535
Question 10
Requiring employees to take vacations is a weakness in the system of internal controls because it
does not promote operational efficiency.
Question 11
Which of the following would not be classified as a long-term liability?
Question 12
Management may choose any inventory costing method it desires as long as the cost flow
assumption chosen is consistent with the physical movement of goods in the company.
Question 13
Which of the following is not a common way that managers use the balance sheet?
Question 14
Solvency ratios measure the short-term ability of the company to pay its maturing obligations.
Question 15
Lankston Company began the year by issuing $90,000 of common stock for cash. The company
recorded revenues of $825,000, expenses of $720,000, and paid dividends of $45,000. What was
Lankston’s net income for the year?
Question 16
Marvin Services Corporation had the following accounts and balances:
Accounts payable $18,000 Equipment $21,000
Accounts receivable 3,000 Land 21,000
Buildings ? Unearned service revenue 6,000
Cash 9,000 Total stockholders' equity ?
If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000,
what would be the total of stockholders' equity?
Question 17
The best definition of assets is the
Question 18
Owners of business firms are the only people who need accounting information.
Question 19
An advantage of using the periodic inventory system is that it requires less record keeping than
the perpetual inventory system.
Question 20
Expense recognition is tied to revenue recognition.
Question 21
Source documents can provide evidence that a transaction has occurred.
Question 22
The multiple-step income statement is considered more useful than the single-step income
statement because it highlights the components of net income.
Question 23
Bathlinks Corporation has a debt to assets ratio of 73%. This tells the user of Bathlinks’s
financial statements that
Question 24
Which of the following is the least likely consideration that management uses when deciding
whether to pay a dividend?
Question 25
Financing activities include the purchase or sale of long-lived assets or the purchase or sale of
investment securities.
ACC 556 Week 5 Midterm Exam Part 2
Question 1
A company usually determines the amount of supplies used during a period by:
Question 2
Which statement is incorrect?
Question 3
If Morris Corporation has a negative $131 million free cash flow, which of the following
statements is most likely true?
Question 4
Which one of the following is not an objective of a system of internal controls?
Question 5
Regions Inc. pays its rent of $48,000 annually on January 1 and makes monthly adjusting entries.
If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following are
true?
Question 6
Management usually wants ________ financial statements and the IRS requires all businesses to
file _________ tax returns.
Question 7
If a company is given credit terms of 2/10, n/30, it should
Question 8
Smithson Corporation’s unadjusted trial balance includes the following balances (assume normal
balances):
• Accounts Receivable $3,357,000
• Allowances for Doubtful Accounts $ 63,900
Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense
will the company record?
Question 9
All of the following are characteristics of every accounting information system except it is a
system
Question 10
A revenue generally
Question 11
Receivables are
Question 12
All of the following are true regarding the management and monitoring of cash except
Question 13
Olympus Climbers Company has the following inventory data:
July 1 Beginning inventory 20 units at $19 $ 380
7 Purchases 70 units at $20 1,400
22 Purchases 10 units at $22 220
$2,000
A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand.
Using the FIFO inventory method, the amount allocated to cost of goods sold for July is
Question 14
The primary difference between accrued revenues and unearned revenues is that accrued
revenues have:
Question 15
Bad Debt Expense is considered
Question 16
Dobler Company gathered the following reconciling information in preparing its June bank
reconciliation:
Cash balance per books, 6/30 $8,400
Deposits in transit 600
Notes receivable and interest collected by bank 1,480
Bank charge for check printing 50
Outstanding checks 3,000
NSF check 280
The adjusted cash balance per books on June 30 is
Question 17
At Emerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper
enters the collections in the journal and ledger. Which of the following is the best explanation of
this type of internal control principle over cash receipts?
Question 18
Fehr Company sells merchandise on account for $5,000 to Kelly Company with credit terms of
2/10, n/30. Kelly Company returns $1,000 of merchandise that was damaged, along with a check
to settle the account within the discount period. What is the amount of the check?
Question 19
Independent internal verification of the physical inventory process occurs when
Question 20
A trial balance proves
Question 21
A merchandiser will earn an operating income of exactly $0 when
Question 22
Which of these would cause the inventory turnover ratio to increase the most?
Question 23
Which of the following is least likely to help a company minimize losses as credit standards are
relaxed?
Question 24
What is an advantage of using the multiple-step income statement?
Question 25
Two companies report the same cost of goods available for sale but each employs a different
inventory costing method. If the price of goods has increased during the period, then the
company using
ACC 556 Week 6 Discussion
"Plant Assets" Please respond to the following:
Imagine that you are the Chief Financial Officer (CFO) of a startup airline company. The
executive management team has tasked you with making a recommendation about
whether the company should buy or lease airplanes. Analyze the major pros and cons for
leasing and buying assets. Based on your analysis, provide a recommendation to the
executive team.
Compare and contrast the three (3) methods for depreciating plant assets. Recommend
the method that maximizes profits for both a shorter period of time and a longer period of
time.
ACC 556 Week 6 Homework Chapter 9
Question 1
All plant assets (fixed assets) must be depreciated for accounting purposes.
True
False
Question 2
Recording depreciation on plant assets affects the balance sheet and the income statement.
True
False
Question 3
Additions and improvements to a plant asset that increase the asset's operating efficiency,
productive capacity, or expected useful life are generally expensed in the period incurred.
True
False
Question 4
If a plant asset is sold at a gain, the gain on disposal should reduce the cost of goods sold
section of the income statement.
True
False
Question 5
Research and development costs that result in a successful product that is patentable are
charged to the Patent account.
True
False
Question 6
A company purchased land for $350,000 cash. Real estate brokers' commission was $25,000
and $35,000 was spent for demolishing an old building on the land before construction of a
new building could start. Under the historical cost principle, the cost of land would be
recorded at
True
False
Question 7
The four subdivisions for plant assets are
Question 8
Which of the following is included in the cost of constructing a building?
Question 9
Accountants do not attempt to measure the change in a plant asset's market value during
ownership because
Question 10
Equipment was purchased for $68,000 on January 1, 2013. Freight charges amounted to
$2,800 and there was a cost of $8,000 for building a foundation and installing the equipment.
It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year
useful life. What is the amount of accumulated depreciation at December 31, 2014, if the
straight-line method of depreciation is used?
Question 11
The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that
Question 12
A plant asset was purchased on January 1 for $45,000 with an estimated salvage value of
$5,000 at the end of its useful life. The current year's Depreciation Expense is $5,000
calculated on the straight-line basis and the balance of the Accumulated Depreciation
account at the end of the year is $25,000. The remaining useful life of the plant asset is
Question 13
Grant Company has decided to change the estimate of the useful life of an asset that has been
in service for 2 years. Which of the following statements describes the proper way to revise a
useful life estimate?
Question 14
A company sells a plant asset that originally cost $240,000 for $80,000 on December 31,
2014. The accumulated depreciation account had a balance of $120,000 after the current
year's depreciation of $20,000 had been recorded. The company should recognize a
Question 15
The book value of an asset will equal its fair value at the date of sale if
Question 16
The following information is provided for Nguyen Company and Northwest Corporation.
(in $ millions) Nguyen Company Northwest
Corporation
Net income 2014 $275 $390
Net sales 2014 1,500 4,100
Total assets 12/31/12 1,000 2,400
Total assets 12/31/13 1,050 3,000
Total assets 12/31/14 1,150 4,000
What is Northwest's asset turnover ratio for 2014?
Question 17
Intangible assets are the rights and privileges that result from ownership of long-lived assets
that
Question 18
Intangible assets
Question 19
Which of the following statements concerning financial statement presentation is false?
Question 20
Indicate whether each of the following expenditures should be classified as land (L), land
improvements (LI), buildings (B), equipment (E), or none of these (X).
Answer
Question Selected Match
Parking lots B.
Land Improvements
(LI)
Electricity used by a machine E.
None of these (X)
Excavation costs C.
Buildings (B)
Interest on building construction loan C.
Buildings (B)
Cost of trial runs for machinery D.
Equipment (E)
Drainage costs A.
Land (L)
Cost to install a machine D.
Equipment (E)
Fences B.
Land Improvements
(LI)
Unpaid (past) property taxes assumed A.
Land (L)
Cost of tearing down a building when land and a building on it are
purchased
A.
Land (L)
ACC 556 Week 6 Assignment 1
Assignment 1: Financial Analysis
Due Week 6 and worth 160 points
Use the Internet or Strayer databases to research one (1) publicly traded company and review its
last annual report. Use an investor’s view to perform financial analysis and discuss various non-
financial factors impacting investment decision.
Write a two to three (2-3) page paper in which you:
1. From an investor’s view, review the last annual report for chosen company. Use financial
analysis tools of liquidity, profitability, and solvency to evaluate the company’s
performance and reasons for investing or not investing. Include the company’s ranking in
the industry, and its major competitors.
2. From an investor’s views, discuss at least three (3) non-financial factors that suggest
investing in this company. These may include environmental responsibility
(sustainability), corporate governance, etc. Explain the main reasons why these are
important to an investor.
3. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and
other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins
on all sides; citations and references must follow APA or school-specific format. Check
with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the
professor’s name, the course title, and the date. The cover page and the reference page are
not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Analyze and interpret financial statements.
Evaluate management control systems and examine their relationship with accounting
and planning, including feedback and non-financial performance measurements.
Use technology and information resources to research issues in financial accounting for
managers.
Write clearly and concisely about financial accounting using proper writing mechanics.
ACC 556 Week 7 Discussion
"Liabilities" Please respond to the following:
Hypothesize a scenario in which one could intentionally misstate liabilities for his or her
personal financial gain. Recommend two (2) actions that companies can take to prevent
or detect intentional misstatements of liabilities for personal financial gain. Justify your
response.
From the e-Activity, imagine that you are advising an investor who is considering
purchasing bonds from the selected company. Analyze the types of bonds the chosen
company issues and make a recommendation to the investor as to which type of bond
would provide the most value. Justify your response.
ACC 556 Week 7 Homework Chapter 10
Question 1
A current liability must be paid out of current earnings.
True
False
Question 2
Most notes are not interest bearing.
True
False
Question 3
Unearned revenues are received before goods are delivered or services are rendered.
True
False
Question 4
The carrying value of bonds is calculated by adding the balance of the Discount on Bonds
Payable account to the balance in the Bonds Payable account.
True
False
Question 5
Material gains or losses on bond redemption are reported as an extraordinary item on the
income statement.
True
False
Question 6
Liabilities are classified on the balance sheet as current or
True
False
Question 7
With an interest-bearing note, the amount of assets received upon issuance of the note is
generally
Question 8
The interest charged on a $70,000 note payable, at the rate of 6%, on a 90-day note would be
Question 9
On January 1, 2014, Keisler Company, a calendar-year company, issued $700,000 of notes
payable, of which $175,000 is due on January 1 for each of the next four years. The proper
balance sheet presentation on December 31, 2014, is
Question 10
Norlan Company does not ring up sales taxes separately on the cash register. Total receipts
for October amounted to $29,400. If the sales tax rate is 5%, what amount must be remitted
to the state for October's sales taxes?
Question 11
Stockholders of a company may be reluctant to finance expansion through issuing more
equity because
Question 12
Which of the following is not an advantage of issuing bonds instead of common stock?
Question 13
When authorizing bonds to be issued, the board of directors does not specify the
Question 14
If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest
annually would sell at an amount
Question 15
If bonds are issued at a discount, it means that the
Question 16
In the balance sheet, the account Discount on Bonds Payable is
Question 17
If bonds have been issued at a discount, then over the life of the bonds the
Question 18
Ervay Company has $875,000 of bonds outstanding. The unamortized premium is $12,600.
If the company redeemed the bonds at 101, what would be the gain or loss on the
redemption?
Question 19
The relationship between current assets and current liabilities is
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Bonds that mature in installments. J.
Serial bonds
Unsecured bonds issued against the general credit of the
borrower.
G.
Debenture bonds
A legal document that sets forth the terms of a bond issue. F.
Bond indenture
The rate investors demand for loaning funds to a
corporation.
D.
Market interest rate
Occurs when the contractual rate of interest is less than the
market rate of interest.
I.
Discount on bonds payable
A measure of a company’s short-term liquidity. H.
Current ratio
Produces a periodic interest expense that is the same amount
each interest period.
E.
Straight-line method of
amortization
A measure of a company’s solvency. B.
Times interest earned
Bonds subject to retirement at a stated dollar amount prior to
maturity.
C.
Callable bonds
The time that the final payment on a bond is due from the
bond issuer.
A.
Maturity date
ACC 556 Week 7 Homework Chapter 11
Question 1
A corporation is not an entity that is separate and distinct from its owners.
True
False
Question 2
A stockholder has the right to vote in the election of the board of directors.
True
False
Question 3
The acquisition of treasury stock by a corporation increases total assets and total
stockholders’ equity.
True
False
Question 4
Cash dividends are not a liability of the corporation until they are declared by the board of
directors.
True
False
Question 5
A detailed stockholders’ equity section in the balance sheet will list the names of individuals
who are eligible to receive dividends on the date of record.
True
False
Question 6
Under the corporate form of business organization
Question 7
Which of the following statements reflects the transferability of ownership rights in a
corporation?
Question 8
If a stockholder cannot attend a stockholders’ meeting, he may delegate his voting rights by
means of a(n)
Question 9
If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the
account
Question 10
Holden Packaging Corporation began business in 2014 by issuing 80,000 shares of $5 par
common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock for par. At
year end, the common stock had a market value of $10. On its December 31, 2014 balance
sheet, Holden Packaging would report
Question 11
The following data is available for BOX Corporation at December 31, 2014:
Common stock, par $10 (authorized 30,000 shares) $250,000
Treasury stock (at cost $15 per share) $ 1,200
Based on the data, how many shares of common stock are issued?
Question 12
Which of the following is not a right or preference associated with preferred stock?
Question 13
All of the following statements about preferred stock are true except
Question 14
The board of directors of Benson Company declared a cash dividend of $1.50 per share on
42,000 shares of common stock on July 15, 2014. The dividend is to be paid on August 15,
2014, to stockholders of record on July 31, 2014. The effects of the journal entry to record
the payment of the dividend on August 15, 2014, are to
Question 15
Which of the following statements is not true about a 2-for-1 split?
Question 16
The following selected amounts are available for Thomas Company.
Retained earnings (beginning) $2,500
Net loss 200
Cash dividends declared 200
Stock dividends declared 200
What is its ending Retained Earnings balance?
Question 17
In the stockholders’ equity section of the balance sheet
Question 18
Herman Corporation had net income of $120,000 and paid dividends of $24,000 to common
stockholders and $20,000 to preferred stockholders in 2014. Herman Corporation’s common
stockholders’ equity at the beginning and end of 2014 was $450,000 and $550,000,
respectively. Herman Corporation’s payout ratio for 2014 is
Question 19
Which of the following statements is true regarding corporate performance ratios?
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
QuestionSelected
Match
The chief accounting officer. F.
Controller
A debit balance in retained earnings. A.
Deficit
Measures the percentage of earnings distributed in the form of dividends to
common stockholders.
C.
Payout ratio
A pro rata distribution of the corporation’s own stock to stockholders. E.
Stock dividend
The date the board of directors formally declares a dividend. G.
Declaration
date
Enables stockholders to maintain their same percentage ownership when
new shares are issued.
D.
Preemptive
right
The amount assigned to each share of stock in the corporate charter. H.
Par value
The amount that must be retained in the business for the protection of
creditors.
J.
Legal capital
Corporation’s own stock that has been reacquired by the corporation but
not retired.
I.
Treasury stock
Preferred stockholders have a right to receive current and unpaid prior-
year dividends before common stockholders receive any dividends.
B.
Cumulative
feature
ACC 556 Week 8 Discussion
"Budgeting" Please respond to the following:
Analyze the major pros and cons of preparing company budgets. Determine at least two
(2) critical budget items that you believe are essential in managing a company. Provide a
rationale for your response.
Analyze the most common responsibility reporting systems. From your analysis, argue at
least one (1) pro and one (1) con of using responsibility reporting systems.
ACC 556 Week 8 Homework Chapter 21
Question 1
A benefit of budgeting is that it provides definite objectives for evaluating performance.
True
False
Question 2
Effective budgeting requires clearly defined lines of authority and responsibility.
True
False
Question 3
Financial budgets must be completed before the operating budgets can be prepared.
True
False
Question 4
The budgeted income statement indicates the expected profitability of operations for the next
year.
True
False
Question 5
The budget itself and the administration of the budget are entirely accounting
responsibilities.
True
False
Question 6
Why are budgets useful in the planning process?
True
False
Question 7
Which of the following statements about budget acceptance in an organization is true?
True
False
Question 8
The budget committee would not normally include the
True
False
Question 9
Which of the following is not an operating budget?
True
False
Question 10
The production budget shows expected unit sales are 100,000. The required production units
are 104,000. What are the beginning and desired ending finished goods units, respectively?
Beginning Units Ending Units
True
False
Question 11
A company budgeted unit sales of 204,000 units for January, 2013 and 240,000 units for
February 2013. The company has a policy of having an inventory of units on hand at the end
of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units
of inventory on hand on December 31, 2012, how many units should be produced in January,
2013 in order for the company to meet its goals?
True
False
Question 12
The following information is taken from the production budget for the first quarter:
Beginning inventory in units 1,200
Sales budgeted for the quarter 456,000
Production capacity in units 472,000
How many finished goods units should be produced during the quarter if the company
desires 3,200 units available to start the next quarter?
Question 13
A company determined that the budgeted cost of producing a product is $30 per unit. On
June 1, there were 80,000 units on hand, the sales department budgeted sales of 300,000
units in June, and the company desires to have 120,000 units on hand on June 30. The
budgeted cost of goods manufactured for June would be
Question 14
The single most important output in preparing financial budgets is the
Question 15
What is the proper preparation sequencing of the following budgets?
1 - Budgeted Balance Sheet
2 - Sales Budget
3 - Selling and Administrative Budget
4 - Budgeted Income Statement
Question 16
The formula for determining budgeted merchandise purchases is budgeted
Question 17
Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the
difference in the budgets the two entities will prepare?
Question 18
The primary benefits of budgeting include all of the following except it
Question 19
The budget that is often considered to be the most important financial budget is the
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
Management's plans expressed in financial terms for a specified future
time period.
I.
Budget
Budgets that indicate the cash resources needed for expected operations
and planned capital expenditures.
J.
Financial budgets
A group responsible for coordinating the preparation of the budget. A.
Budget committee
A set of interrelated budgets that constitute a plan of action for a
specified time period.
D.
Master budget
The projection of potential sales for the industry and the company's
expected share of such sales.
H.
Sales forecast
A projection of production requirements to meet expected sales. G.
Production budget
A projection of anticipated cash flows. B.
Cash budget
A selection of strategies to achieve long-term goals. F.
Long-range
planning
An estimate of the quantity and cost of direct materials to be purchased. E.
Direct materials
budget
An estimate of expected sales for the budget period. C.
Sales budget
ACC 556 Week 8 Homework Chapter 22
Question 1
Budget reports comparing actual results with planned objectives should be prepared only
once a year.
True
False
Question 2
A static budget is changed only when actual activity is different from the level of activity
expected.
True
False
Question 3
Management by exception means that management will investigate areas where actual results
differ from planned results if the items are material and controllable.
True
False
Question 4
Budget reports provide the feedback needed by management to see whether actual operations
are on course.
True
False
Question 5
The manager of an investment center can improve ROI by reducing average operating assets.
True
False
Question 6
What is budgetary control?
Question 7
A static budget is appropriate in evaluating a manager's performance if
Question 8
What is the primary difference between a static budget and a flexible budget?
Question 9
If a company plans to sell 48,000 units of product but sells 60,000, the most appropriate
comparison of the cost data associated with the sales will be by a budget based on
Question 10
Nikoto Steel Co. budgeted manufacturing costs for 50,000 tons of steel are:
Fixed manufacturing costs $50,000 per month
Variable manufacturing costs $12.00 per ton of steel
Nikoto produced 40,000 tons of steel during March. How much is the flexible budget for
total manufacturing costs for March?
Question 11
At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000. If $37,400
are incurred at 18,400 direct labor hours, the flexible budget report should show the
following difference for indirect materials:
Question 12
Top management can control
Question 13
A manager of a cost center is evaluated mainly on
Question 14
Given below is an excerpt from a management performance report:
Budget Actual Difference
Contribution margin $600,000 $580,000 $20,000 U
Controllable fixed costs $200,000 $220,000 $20,000 U
The manager's overall performance
Question 15
Bogey Co. recorded operating data for its Cheap division for the year. Bogey requires its
return to be 10%.
Sales $ 1,400,000
Controllable margin 160,000
Total average assets 4,000,000
Fixed costs 100,000
What is the ROI for the year?
Question 16
A measure frequently used to evaluate the performance of the manager of an investment
center is
Question 17
What is the goal of residual income?
Question 18
Which of the following would not be considered an aspect of budgetary control?
Question 19
All of the following statements are correct about management by exception except it
Question 20
Match the items below by entering the appropriate code letter in the space provided.
Answer
Question Selected Match
The use of budgets to control operations. H.
Budgetary control
A projection of budget data at one level of activity. A.
Static budget
A projection of budget data for various levels of activity. E.
Flexible budget
A part of management accounting that involves accumulating and
reporting revenues and costs on the basis of the individual manager
who has the authority to make the day-to-day decisions about the
items.
F.
Responsibility
accounting
Costs that a manager has the authority to incur within a given period
of time.
G.
Controllable costs
The review of budget reports by top management directed entirely or K.
primarily to differences between actual results and planned objectives. Management by
exception
The preparation of reports for each level of responsibility shown in the
company's organization chart.
C.
Responsibility
reporting system
A measure of the profitability of an investment center computed by
dividing controllable margin (in dollars) by average operating assets.
J.
Return on
Investment
A responsibility center that incurs costs and also generates revenues. I.
Profit center
A responsibility center that incurs costs, generates revenues, and has
control over the investment funds available for use.
B.
Investment center
Costs which are incurred for the benefit of more than one profit center. D.
Indirect fixed costs
Costs that relate specifically to a responsibility center and are incurred
for the sole benefit of the center.
L.
Direct fixed costs
ACC 556 Week 9 Discussion
"Cash Flows" Please respond to the following:
Outline a strategy for companies to spend excess cash and maximize the value of that
spend. Provide a rationale for your response.
From the e-Activity, compare and contrast the selected company’s statement of cash
flows to its income statement. Suggest at least two (2) items from each statement that
investors should analyze when deciding whether or not to purchase the company’s stock.
Justify your response.
ACC 556 Week 9 Homework Chapter 12
Question 1
The statement of cash flows is a required statement that must be prepared along with an
income statement, balance sheet, and retained earnings statement.
True
False
Question 2
The activity from the balance sheet to be presented in the financing activities section of the
statement of cash flows is based on an analysis of stockholders’ equity only.
True
False
Question 3
The acquisition of a building by issuing bonds would be considered an investing and
financing activity that did not affect cash.
True
False
Question 4
The cash debt coverage ratio indicates a company’s ability to repay its liabilities from cash
generated from operations.
True
False
Question 5
The current cash debt coverage ratio is considered a better representative of liquidity than the
current ratio because it involves the entire year rather than a balance at one point in time.
True
False
Question 6
The statement of cash flows
Question 7
Generally, the most important category on the statement of cash flows is cash flows from
Question 8
Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate
where, if at all, interest paid on note would be classified on the statement of cash flows.
Question 9
Which of the following transactions does not affect cash during a period?
Question 10
Zoum Corporation had the following transactions during 2014:
1 - Issued $125,000 of par value common stock for cash.
2 - Recorded and paid wages expense of $60,000.
3 - Acquired land by issuing common stock of par value $50,000.
4 - Declared and paid a cash dividend of $10,000.
5 - Sold a long-term investment (cost $3,000) for cash of $3,000.
6 - Recorded cash sales of $400,000.
7 - Bought inventory for cash of $160,000.
8 - Acquired an investment in Zynga stock for cash of $21,000.
9 - Converted bonds payable to common stock in the amount of $500,000.
10 - Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by financing activities?
Question 11
In order to determine net cash provided by operating activities, a company must convert net
income from an accrual basis to a cash basis under
Question 12
The information to prepare the statement of cash flows comes from all of the following
sources except
Question 13
Peninsula Company reported net income of $260,000 for the year. During the year, accounts
receivable increased by $21,000, accounts payable decreased by $9,000 and depreciation
expense of $45,000 was recorded. Net cash provided by operating activities for the year is
Question 14
In calculating cash flows from operating activities using the indirect method, a loss on the
sale of equipment will appear as a(n)
Question 15
The net income reported on the income statement for the current year was $440,000.
Depreciation was $62,000. Accounts receivable and inventories decreased by $20,000 and
$32,000, respectively. Prepaid expenses and accounts payable increased, respectively, by
$2,000 and $16,000. How much cash was provided by operating activities?
Question 16
The statement of cash flows will not provide insight into
Question 17
Laser Performance Inc. has the following information available (amount in thousands).
Net Income $30,000
Average Total Liabilities 80,000
Average Current Liabilities 36,000
Cash Provided by Operations 48,000
Cash Sales 130,000
Capital Expenditures 22,000
Dividends Paid 6,000
What is the current cash debt coverage?
Question 18
Authentic Exposure Company had the following transactions that took place during the year:
I. Paid amount owing to suppliers $2,750.
II. Purchased new equipment for $5,000 by signing a long-term note payable.
III. Purchased a patent and paid $15,000 cash for the asset.
How what is the total effect of these transactions on Free Cash Flow, Current Cash Debt
Coverage, and Cash Debt Coverage respectively?
Free Current Cash Debt Cash Debt
Cash Flow Coverage Coverage
Question 19
All of the following statements are true regarding cash flow presentations except
Question 20
For each of the following items, indicate by using the appropriate code letter, how the item
should be reported in the statement of cash flows, using the indirect method.
Answer
Question Selected Match
Decrease in accounts payable during a
period
C.
Deducted from net income
Declaration and payment of a cash dividend. F.
Cash outflow—investing activity
Loss on disposal of land. D.
Added to net income
Decrease in accounts receivable during a
period.
D.
Added to net income
Redemption of bonds for cash. F.
Cash outflow—investing activity
Proceeds from sale of equipment at book
value.
B.
Cash inflow—investing activity
Issuance of common stock for cash. E.
Cash inflow—financing activity
Purchase of a building for cash. A.
Cash outflow—financing activity
Acquisition of land in exchange for common
stock.
G.
Significant noncash investing and financing
activity
Increase in inventory during a period. C.
Deducted from net income
ACC 556 Week 10 Discussion
"Extraordinary Items and Ratio Analysis" Please respond to the following:
Choose at least two (2) items or events that you would consider to be extraordinary to a
company. Propose the manner in which you would disclose these items or events to
investors. Justify your response.
Determine the two (2) financial ratios that you believe to be the most important indicators
of financial health for a company. Predict two (2) positive or two (2) negative financial
outcomes should the chosen ratios change dramatically from one year to another. Provide
a rationale for your response.
ACC 556 Week 10 Homework Chapter 13
Question 1
Comprehensive income includes all revenues, expenses, gains, losses, and dividends.
True
False
Question 2
A primary purpose of vertical analysis is to observe trends over a three-year period.
True
False
Question 3
In the vertical analysis of an income statement, each item is generally stated as a percentage
of net income.
True
False
Question 4
Leverage and return on equity are closely related.
True
False
Question 5
Because pro forma earnings are based on specific rules, these amounts are highly reliable.
True
False
Question 6
Which of the following income statement figures would probably be the best indicator of a
company’s future performance?
Question 7
The discontinued operations section of the income statement refers to
Question 8
Patchett Company reported income before taxes of $800,000 and an extraordinary loss of
$200,000. Assume that the company’s tax rate is 25%. What amounts will be reported on the
income statement for income before irregular items and extraordinary items, respectively?
Question 9
Comprehensive income would not include
Question 10
All of the following statements are true regarding comprehensive income except
Question 11
Horizontal analysis of comparative financial statements includes the
Question 12
Assume the following cost of goods sold data for a company:
2015 $1,300,000
2014 1,200,000
2013 1,000,000
If 2013 is the base year, what is the percentage increase in cost of goods sold from 2013 to
2015?
Question 13
The best way to study the relationship of the components within a financial statement is to
prepare
Question 14
The following schedule is a display of what type of analysis?
Amount Percent
Current assets $100,000 25%
Property, plant, and equipment 300,000 75%
Total assets $400,000 100%
Question 15
Stockholders are most interested in evaluating
Question 16
Somen to Park Corporation had net credit sales of $4,060,000 and cost of goods sold of
$3,000,000 for the year. The Accounts Receivable balances at the beginning and end of the
year were $650,000 and $750,000, respectively. The accounts receivable turnover was
Question 17
BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders
of $400,000 in 2014. The weighted average number of shares outstanding in 2014 was
500,000 shares. BVI Corporation's common stock is selling for $50 per share on the
NASDAQ. BVI Corporation's payout ratio for 2014 is
Question 18
A successful grocery store would probably have
Question 19
The following information pertains to Blue Flower Company. Assume that all balance sheet
amounts represent both average and ending balance figures. Assume that all sales were on
credit.
Assets
Cash and short-term investments $ 45,000
Accounts receivable (net) 30,000
Inventory 15,000
Property, plant and equipment 210,000
Total Assets $300,000
Liabilities and Stockholders’ Equity
Current liabilities $ 60,000
Long-term liabilities 90,000
Stockholders’ equity—common 15,000
Total Liabilities and Stockholders’ Equity $300,000
Income Statement
Sales revenue $ 121,000
Cost of goods sold 66,000
Gross margin 55,000
Operating expenses 30,000
Net income $ 25,000
Number of shares of common stock 6,000
Market price of common stock $20
Dividends per share on common stock .50
Cash provided by operations $40,000
What is the current ratio for this company?
Question 20
For each of the ratios listed below, indicate by the appropriate code letter, whether it is a
liquidity ratio, a profitability ratio, or a solvency ratio.
Answer
Question Selected Match
Price-earnings ratio A.
Profitability ratio
Return on assets A.
Profitability ratio
Accounts receivable turnover ratio B.
Liquidity ratio
Earnings per share A.
Profitability ratio
Payout ratio A.
Profitability ratio
Current cash debt coverage B.
Liquidity ratio
Current ratio B.
Liquidity ratio
Debt to assets ratio C.
Solvency ratio
Free cash flow C.
Solvency ratio
Inventory turnover B.
Liquidity ratio
ACC 556 Week 10 Assignment 2 Budget Planning and Control
Due Week 10 and worth 160 points
Use the Internet and / or Strayer databases to research budget planning and control. Imagine that
the company that you currently work for, have previously worked for, or would like to work for
in the future has tasked you with preparing a budget plan.
Write a three to four (3-4) page paper in which you:
1. Describe the company that you currently work for, have previously worked for, or would
like to work for in the future. Determine at least two (2) compelling reasons that this
company should prepare and manage a budget. Predict the two (2) most likely positive
and negative financial outcomes for this company if it properly or improperly performs
effective budgeting.
2. Outline a high-level budget plan for the company. In your high-level budget plan,
recommend the most appropriate budgeting phases for the company.
3. Propose two (2) methods and techniques that the company should use to manage its
budget over time in preparation for the fact that budgets are ever changing. Justify your
response.
4. Imagine that the company is facing a financial challenge that is causing the actual
amounts of money that it spends to become significantly off target from its budgeted
amounts. Prepare an action plan to resolve the budget misalignment. In your action plan,
recommend at least one (1) budgeting technique to resolve the budget and actual
discrepancies. Provide a rationale for your response.
5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and
other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins
on all sides; references must follow APA or school-specific format. Check with your
professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the
professor’s name, the course title, and the date. The cover page and the reference page are
not included in the required page length.
The specific course learning outcomes associated with this assignment are:
Evaluate management control systems and examine their relationship with accounting
and planning, including feedback and non-financial performance measurements.
Evaluate decision making tools for capital investments, budgeting, and budgeting
controls.
Analyze financial accounting tools and techniques that convert financial accounting data
into information for decision making.
Use technology and information resources to research issues in financial accounting for
managers.
Write clearly and concisely about financial accounting using proper writing mechanics.
ACC 556 Week 11 Discussion
"Sum It Up" Please respond to the following:
Provide two (2) examples that demonstrate a change in your theories of financial
accounting for managers since the beginning of this course.
Rate the three (3) most important concepts that you have learned in this course in order of
importance (one [1] being the most important; three [3], the least). Provide a rationale for
your rating scheme.
ACC 556 Week 11 Final Exam Part 1
Question 1
The debt to assets ratio measures the percentage of the total assets provided by creditors.
Question 2
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 3
Cash dividends are not a liability of the corporation until they are declared by the board of
directors.
Question 4
The current cash debt coverage ratio is considered a better representative of liquidity than the
current ratio because it involves the entire year rather than a balance at one point in time.
Question 5
All of the following are true regarding financial statement analysis ratios associated with
liabilities except
Question 6
The master budget reflects management's long-term plans encompassing five years or more.
Question 7
One objective of the income statement is to separate the results of continuing operations from
those of discontinued operations.
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
Budget reports provide the feedback needed by management to see whether actual operations are
on course.
Question 10
A company whose current liabilities exceed its current assets may have a liquidity problem.
Question 11
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 12
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 13
A master budget is most useful in evaluating a manager's performance in controlling costs.
Question 14
Under the corporate form of business organization
Question 15
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.
Question 16
Bonds with a face value of $400,000 and a quoted price of 104¼ have a selling price of
Question 17
A current liability is a debt that can reasonably be expected to be paid
Question 18
The book value of a plant asset is the difference between the
Question 19
A budget can be used as a basis for evaluating performance.
Question 20
Which of the following is not properly classified as property, plant, and equipment?
Question 21
Intangible assets are rights, privileges, and competitive advantages that result from ownership of
long-lived assets without physical substance.
Question 22
The market rate of interest is often called the
Question 23
A corporation is not an entity that is separate and distinct from its owners.
Question 24
Accountants do not attempt to measure the change in a plant asset's market value during
ownership because
Question 25
A primary objective of the statement of cash flows is to show the income or loss on investing and
financing transactions.
ACC 556 Week 11 Final Exam Part 2
Question 1
Ratios are used as tools in financial analysis
Question 2
A critical factor in budgeting for a service firm is to
Question 3
Holden Packaging Corporation began business in 2014 by issuing 80,000 shares of $5 par
common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock for par. At year
end, the common stock had a market value of $10. On its December 31, 2014 balance sheet,
Holden Packaging would report
Question 4
A master budget consists of
Question 5
The date on which a cash dividend becomes a binding legal obligation is on the
Question 6
Which one of the following is not a benefit of budgeting?
Question 7
The single most important output in preparing financial budgets is the
Question 8
Assume the following sales data for a company:
2015 $910,000
2014 $770,000
2013 700,000
If 2013 is the base year, what is the percentage increase in sales from 2013 to 2014?
Question 9
Which of the following income statement figures would probably be the best indicator of a
company’s future performance?
Question 10
Which of the following is not typically a characteristic experienced by a company during the
growth phase of the corporate life cycle?
Question 11
A manager of a cost center is evaluated mainly on
Question 12
A comparison with other companies that provides insight into a company's competitive position
is most commonly known as which of the following types of comparisons?
Question 13
Which one of the following items is not necessary in preparing a statement of cash flows?
Question 14
Quincy Corp. earned controllable margin of $500,000 on sales of $6,400,000. The division had
average operating assets of $5,200,000. The company requires a return on investment of at least
8%. How much is residual income?
Question 15
Cochran Corporation, Inc. has the following income statement (in millions):
COCHRAN CORPORATION, INC.
Income Statement
For the Year Ended December 31, 2014
Net Sales $240
Cost of Goods Sold 80
Gross Profit 160
Operating Expenses 65
Net Income $ 95
Using vertical analysis, what percentage is assigned to net income?
Question 16
Bogey Co. recorded operating data for its Cheap division for the year. Bogey requires its return
to be 10%.
Sales $ 1,400,000
Controllable margin 160,000
Total average assets 4,000,000
Fixed costs 100,000
What is the ROI for the year?
Question 17
Zoum Corporation had the following transactions during 2014:
1 - Issued $125,000 of par value common stock for cash.
2 - Recorded and paid wages expense of $60,000.
3 - Acquired land by issuing common stock of par value $50,000.
4 - Declared and paid a cash dividend of $10,000.
5 - Sold a long-term investment (cost $3,000) for cash of $3,000.
6 - Recorded cash sales of $400,000.
7 - Bought inventory for cash of $160,000.
8 - Acquired an investment in Zynga stock for cash of $21,000.
9 - Converted bonds payable to common stock in the amount of $500,000.
10 - Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by operating activities?
Question 18
The primary purpose of the statement of cash flows is to
Question 19
All of the following statements regarding changes in accounting principles are true except which
of the following?
Question 20
Laser Performance Inc. has the following information available (amount in thousands).
Net Income $30,000
Average Total Liabilities 80,000
Average Current Liabilities 36,000
Cash Provided by Operations 48,000
Cash Sales 130,000
Capital Expenditures 22,000
Dividends Paid 6,000
What is the current cash debt coverage?
Question 21
If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired
for inventory at January 31, and 410,000 pounds are required for January production, how many
pounds of raw materials should be purchased in January?
Question 22
A flexible budget
Question 23
On the basis of the budget reports,
Question 24
If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant
expansion, the effect of this action is to
Question 25
The following information pertains to Marsh Company. Assume that all balance sheet amounts
represent average balance figures.
Total asset $400,000
Stockholders’ equity—common 200,000
Total stockholders’ equity 280,000
Sales revenue 120,000
Net income 25,000
Number of shares of common stock 8,000
Common dividends 9,000
Preferred dividends 6,000
What is Marsh’s payout ratio?
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