Cracking the Code of Corporate Governance-Winter 2024
1. 1. Usually, current assets are listed in a specific order, starting with cash. What is the...
1. Usually, current assets are listed in a specific order, starting with cash. What is the objective of this order of listing?
2. Differentiate between marketable securities and long-term investments. What is the purpose of owning each?
3. Differentiate between accounts receivable and accounts payable.
2. 1. A base used to allocate the cost of a resource to the different activities using that resource is
1. A base used to allocate the cost of a resource to the different activities using that resource is a(n):
A. resource driver
B. activity driver
C. final cost object
D. driver
E. none of the above
2. A base used to allocate the cost of products, customers, or other final cost objects is a(n):
A. resource driver
B. activity driver
C. final cost object
D. driver
E. none of the above
3. Examples of activities at the batch level of costs include:
A. cutting, painting, and packaging
B. scheduling, setting up, and moving
C. designing, changing, and advertising
D. heating, lighting, and security
E. none of the above
4. Examples of activities at the product level of costs include:
A. cutting, painting, and packaging
B. scheduling, setting up, and moving
C. designing, changing, and advertising
D. heating, lighting, and security
E. none of the above
5. Examples of activities at the plant level of costs include:
A. cutting, painting, and packaging
B. scheduling, setting up, and moving
C. designing, changing, and advertising
D. heating, lighting, and security
E. none of the above
6. Examples of activities at the unit level of costs include:
A. cutting, painting, and packaging
B. scheduling, setting up, and moving
C. designing, changing, and advertising
D. heating, lighting, and security
E. none of the above
7. Examples of unit-level costs are:
A. portions of electricity and indirect materials
B. salaries of schedulers and setup personnel
C. salaries of designers and programmers
D. depreciation and insurance on buildings
E. none of the above
8. Examples of product-level costs are:
A. portions of electricity and indirect materials
B. salaries of schedulers and setup personnel
C. salaries of designers and programmers
D. depreciation and insurance on buildings
E. none of the above
9. Examples of plant-level costs are:
A. portions of electricity and indirect materials
B. salaries of schedulers and setup personnel
C. salaries of designers and programmers
D. depreciation and insurance on buildings
E. none of the above
10. Examples of batch-level costs are:
A. portions of electricity and indirect materials
B. salaries of schedulers and setup personnel
C. salaries of designers and programmers
D. depreciation and insurance on buildings
E. none of the above
3. In marginal costing, the cost of production includes
In marginal costing, the cost of production includes
a. prime cost and variable overhead
b. direct cost and indirect cost
c. prime cost and fixed overhead
d. none of these
4. Combining the activities of Kellogg and General Mills would violate the a. cost principle. b. e...
Combining the activities of Kellogg and General Mills would violate the a. cost principle. b. economic entity assumption. C. monetary unit assumption. d. ethics principle.
5. 109. Current ratio is 4:1.Net Working Capital is Rs.30,000.Find the amount of current Assets.a) Rs.1
109. Current ratio is 4:1.Net Working Capital is Rs.30,000.Find the amount of current Assets.a) Rs.10,000b) Rs.40,000c) Rs.24,000d) Rs.6,000110. Current ratio is 2:5.Current liability is Rs.30000.The Net working capital isa) Rs.18,000b) Rs.45,000c) Rs.(-) 45,000d) Rs.(-)18000111. Quick assets do not includea) Govt.bondb) Book debtsc) Advance for supply of raw materialsd) Inventories.112. The ideal quick ratio isa) 2:1b) 1:1c) 5:1d) None of the above
6. 1. Competitive advantage can best be described as:
1. Competitive advantage can best be described as:
A. increased efficiency.
B. what sets an organization apart.
C. a strength of the organization.
D. intangible resources.
2. Which one of the following factors is considered to make an organization's resources unique
A. Durabilitya
B. Imitability
C. Quality
D. Efficiency
3. Experiences, characteristics, and knowledge are all aspects that represent:
A. financial resources.
B. intangible resources.
C. human resources.
D. physical resources.
4. Imitability of a resource can occur through:
A. duplication.
B. exploitation.
C. substitution.
D. duplication and substitution.
7. 31) Appraisal costs include all of the following EXCEPT 31) ______ A) inspection. B) process...
31)
Appraisal costs include all of the following EXCEPT
31)
______ A)
inspection. B)
process inspection. C)
product testing. D)
spoilage. E)
none of the above
32)
External failure costs include all of the following EXCEPT
32)
______ A)
liability claims. B)
transportation costs. C)
scrap. D)
customer support. E)
none of the above
33)
Which of the following DOES NOT pertain to control charts?
33)
______ A)
They plot each observation relative to specified ranges that represent the expected distribution, but only those observations outside specified limits. B)
They plot a series of successive observations of a particular step, procedure, or operation. C)
They are used in statistical quality control. D)
They plot each observation relative to specified ranges that represent the expected distribution. E)
They plot only those observations outside specified limits.
34)
When using a control chart, a manager does not investigate the activity when
34)
______ A)
most observations are within the range of 2 standard deviations. B)
all observations are determined to be non-random. C)
most observations are outside the preset range. D)
all observations are within the range of preset standard deviations. E)
all observations are outside the preset range.
35)
Which of the following indicates how frequently each type of failure occurs?
35)
______ A)
control chart B)
frequency chart C)
cause-and-effect diagram D)
Pareto diagram E)
both frequency charts and Pareto diagrams
Use the information below to answer the following question(s).
Capital Manufacturing expects to spend $200,000 in 20x2 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new receiving method it will save $20,000 in fixed appraisal costs and variable costs of $0.20 per item. The new method involves $30,000 in training costs and an additional $80,000 in annual equipment rental. It takes two units of material for each finished product.
Internal failure costs average $40 per failed unit of finished goods. During 20x1, 10 percent of all completed items had to be reworked. External failure costs average $100 per failed unit. The company's average external failures are 2 percent of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
36)
What is the net affect on appraisal costs for 20x2 assuming the new receiving method is implemented and that 400,000 material units are received?
36)
______ A)
$10,000 decrease B)
$115,000 decrease C)
$110,000 increase D)
$100,000 decrease E)
$10,000 increase
37)
How much will internal failure costs change assuming 400,000 units of materials are received and that the new receiving method reduces the amount of unacceptable product units in the manufacturing process by 20 percent?
37)
______ A)
$160,000 decrease B)
$50,000 decrease C)
$10,000 increase D)
$320,000 decrease E)
$500,000 decrease
38)
How much will external failure costs change assuming 400,000 units of materials are received and that the product failures with customers are cut in half with the new receiving method?
38)
______ A)
$500,000 decrease B)
$200,000 decrease C)
$320,000 decrease D)
$10,000 increase E)
$400,000 decrease
Use the information below to answer the following question(s).
Imperial Products has a budget of $600,000 in 20x1 for prevention costs. If it decides to automate a portion of its prevention activities it will save $40,000 in variable costs. The new method will require $12,000 in training costs and $80,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budget includes a production level of 100,000 units.
Appraisal costs for the year are budgeted at $400,000. The new prevention procedures will save appraisal costs of $20,000. Internal failure costs average $10 per failed unit of finished goods. The internal failure rate is expected to be 2 percent of all completed items. The proposed changes will cut the internal failure rate in half. Internal failure units are destroyed. External failure costs average $36 per failed unit. The company's average external failures average 2 percent of units sold. The new proposal will reduce this rate by 80 percent.
39)
What is the net change in the budget of prevention costs if the procedures are automated in 20x2? Will management agree with the changes?
39)
______ A)
$40,000 decrease, yes B)
$52,000 increase, no C)
$52,000 increase, yes D)
$92,000 increase, no E)
$92,000 decrease, yes
40)
How much will appraisal costs change assuming the new prevention methods reduce the amount of material failures during the appraisal phase by 40 percent?
40)
______ A)
$7,450 decrease B)
$20,000 decrease C)
$8,000 decrease D)
$160,000 decrease E)
$40,000 increase
8. prepares its master budget on a quarterly basis....
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:
- As of December 31, (the end of the prior quarter), the company’s general ledger showed the following account balances:
Cash $48,000 (debit)
Accounts receivable $224,000 (debit)
Inventory $60,000 (debit)
Buildings and equipment, net $370,000 (debit)
Accounts payable $93,000 (credit)
Capital stock $500,000 (credit)
Retained earnings $109,000 (credit)
- Actual sales for December and budgeted sales for the next four months are as follows: December $280,000, January $400,000, February $600,000, March $300,000 and April $200,000.
- Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.
- The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
- Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $70,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 per quarter.
- Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.
- One half of the month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
- During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be purchased for cash at a cost of $84,500.
- During January, the company will declare and pay $45,000 in cash dividends.
- Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.
9. Sabina Company had the following two transactions related to its delivery truck.
Sabina Company had the following two transactions related to its delivery truck.
1. Paid $38 for an oil change.
2. Paid $400 to install special shelving units, which increase the operating efficiency of the truck.
Prepare Sabina"s journal entries to record these two transactions.
10. nestor martel law office: post to T account...
post to T account
december 20-received 10500 for legal services rendered to clients.
december 22-paid advertising 3600.
december 24-billed clients for professional services 16400.
december 25-purchased desktop from micro system 60000 on account.
december 26-micro system was partially paid 45000.
december 27-collected accounts from various clients 7500.
december 28-the salary of legal secretary was paid 5500.
december 29-nestor martel withdrew 12000 for personal use.
11. Expected annual usage of a particular raw material is 2,000,000 units, and the economic order
Expected annual usage of a particular raw material is 2,000,000 units, and the economic order quantity is 10,000 units. The invoice cost of each unit is $500, and the cost to place one purchase order is $80. For each of the following sentences, select the correct answer based on the above data:
(a) The average inventory is (1) 1,000,000 units; (2) 5,000 units; (3) 10,000 units: (4) 7,500 units.
(b) The estimated annual order cost is (1) $16,000; (2) $100,000; (3) $32,000; (4) $50,000.
12. The following costs and inventory data were taken from the accounts of Simon Company for 2010:
The following costs and inventory data were taken from the accounts of Simon Company for 2010: January 1, 2011 December 31, 2011 Inventories: Raw materials $ 8,000 $ 7,000 Work in process 15,000 13,000 Finished goods 16,000 12,000 Costs incurred at the end of December 31, 2011:- Raw materials purchases $83,000 Direct labor 42,000 Factory rent 8,000 Factory utilities 10,000 Indirect materials 4,000 Indirect labor 6,000 Operating expenses 17,000 Instructions a. Prepare a schedule showing the amount of direct materials used in production during the year. b. Compute the amount of manufacturing overhead incurred during the year. c. Prepare a schedule of Cost of Goods Manufactured for Simon Company for the year ended December 31, 2011 in good form. d. Prepare the Cost of Goods Sold section of the Income Statement for Simon Company for the year ended December 31, 2011 in good form.
13. The steps in using a worksheet are presented in random order below. List the steps in the proper...
The steps in using a worksheet are presented in random order below. List the steps in the proper order by placing numbers 1–5 in the blank spaces.
(a) _____ Prepare a trial balance on the worksheet.
(b) _____ Enter adjusted balances.
(c) _____ Extend adjusted balances to appropriate statement columns.
(d) _____ Total the statement columns, compute net income (loss), and complete the worksheet.
(e) _____ Enter adjustment data.
14. Collection of an accounts receivable: 1 Increases the total assets of a company. 2 Decreases th...
Collection of an accounts receivable: 1 Increases the total assets of a company. 2 Decreases the total assets of a company. 3 Does not change the total assets of a company. 4 Reduces a company's total liabilities. Hancock prepares monthly financial statements. Which of the following violates the matching principle? 1 A portion of the salary payments made this month are not recognized as expense because some of the work was done by employees last month. 2 The premium on a six-month insurance policy is charged immediately to expense 3 Expenses for the period exceed revenue. 4 The cost of advertising done during the month is charged to expense even though no payment is due for 60 days. A journal entry which records revenue must include: 1 A debit to Cash. 2 A credit to a revenue account. 3 A credit to the owners' equity account. 4 A debit to the owners' equity account. The measures most often used in evaluating solvency-the current ratio, quick ratio, and amount of working capital are developed from amounts appearing in the: 1 Balance sheet. 2 Income statement. 3 Statement of retained earnings. 4 Statement of cash flows. The current ratio: 1 Is computed by dividing current assets by current liabilities. 2 Is computed by subtracting current liabilities from current assets. 3 Remains unchanged throughout the operating cycle. 4 Is a measure of short-term profitability. Which method will yield higher cash flows from operating activities? 1 The indirect method. 2 The direct method. 3 Both direct and indirect methods will yield the same amount. 4 Depends upon the situation.