Balance Sheet Equation_Winter Guide for Students

Published: 11 months ago

Balance Sheet Equation_Winter Guide for Students

What kinds of organizations find decentralization to be preferable to?centralization?

A.

Organizations with top managers who like to be involved in all?decision-making are more likely to prefer decentralization.

B.

Decentralization is usually most successful in organizations where segments are relatively independent. If segments buy from or sell to one?another, or if there are many common customers or?suppliers, decentralization is less likely to be desirable.

C.

?Profit-seeking organizations prefer decentralization because if a local manager makes poor?decisions, the results will be less obvious.

D.

Decentralization is usually most successful in nonprofit organizations?(where results can be measured more?easily).

According to agency?theory, employment contracts balance what three?factors?

A.

Return on?investment, economic profit and economic value added?(EVA).

B.

Managerial?effort, productivity and residual income.

C.

Capital?turnover, invested capital and incentives.

D.

Incentives created for?managers, the risk imposed on?managers, and the cost of developing and using the performance measurement system.

What is the major benefit of the ROI technique for measuring?performance?

A.

The fact that managers who make decisions to improve their?segment's performance also increase the performance of the organization as a whole.

B.

?Decision-making is the responsiblity of those local managers who often have the best information concerning local conditions.

C.

The manager is rewarded based on his or her individual performance rather than noncontrollable factors.

D.

Its attention to the required asset investment in relation to operating income.

What two major items affect?ROI?

A.

ROI is affected by a?division's income and the amount of its investment.

B.

ROI as the product of return on sales and capital turnover.

C.

ROI is affected by a?division's income and the return on sales.

D.

ROI as the product of the amount of its investment and capital turnover.

E.

Both A and B.

F.

Both A and C.

G.

Both B and D.

"Managers who use a?historical-cost accounting system look backward at what something cost?yesterday, instead of forward to what it will cost?tomorrow." Do you?agree?

Yes, I agree

No, I don’t agree

Why do companies need?transfer-pricing systems?

A.

Companies need?transfer-pricing systems to accurately determine the efficiency of various divisions of a?company's operation when using profit or investment centers. In?addition, transfer pricing is an?attention-directing device that highlights good performance and motivates personnel to maintain efficiency. Transfer pricing systems also preserve segment autonomy.

B.

Companies need?transfer-pricing systems because it gives the company a way to budget for the level of employees needed to maximize efficiency while producing products. In?addition, transfer pricing gives managers a way to monitor employees productivity and can assist in finding inefficient methods.

C.

Companies need?transfer-pricing systems to accurately know how much must be produced in order to stay profitable and not over produce. In?addition, transfer pricing is a way for the organization to ensure employees are utilized efficiently to ensure inventory levels do not rise to a high level.

D.

Companies need?transfer-pricing systems because it allows the company to ensure that they will always be profitable for the segments involved as well as the organization as a whole. In?addition, transfer pricing gives managers a way to know what products to focus on to maximize profits.

Describe management by objectives?(MBO).

A.

Management by objectives?(MBO) is the process by which organizations concentrate decision making within a particular location or group.

B.

In organizations using management by objectives?(MBO), managers and their superiors jointly formulate and agree on the goals and plans for the forthcoming period. Managers are then evaluated against these?agree-upon goals and plans.

C.

The delegation of?decision-making power to managers of segments of an organization is called management by objectives?(MBO).

D.

An organization using management by objectives?(MBO) motivates its managers by evaluating a?segment's return on investment?(ROI).

How can performance measurement lead to unethical behavior by?managers?

A.

An ideal performance metric measures and rewards a manager for uncontrollable as well as controllable factors. This creates a conflict for most managers and encourages them to manipulate their results.

B.

Managers focus their efforts in areas where an organization does not measure performance.?Therefore, any organization which utilizes performance measurements is sure to encourage behavior which is not in the best interest of the company.

C.

Performance measurement in a decentralized organization is nearly impossible. This provides the opportunity for managers to make poor?decisions, or even steal from the?company, with no repercussions.

D.

When making performance targets becomes too?important, managers may be tempted to manipulate the numbers to meet their targets. Such pressures can result in unethical behavior.

23. Narayanan purchased goods for Rs 25,000 from Ravinderan on Feb. 01, 2006. Ravinderan drew upon...

Narayanan purchased goods for Rs 25,000 from Ravinderan on Feb. 01, 2006. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravinderan and Narayanan in following cases:

· When the bill was retained by Ravinderan with him till the date of its maturity.

· When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.

· When the bill was endorsed to his creditor Ganeshan.

· When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

24. Chuck Wagon Grills, Inc., makes a single product—a handmade spec

Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $210. Data for last year’s operations follow:



Required:

1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill.

2. Assume that the company uses variable costing. Prepare a contribution format income statement for the year.

3. What is the company’s break-even point in terms of the number of barbecue grillssold?

25. Amy and Bill are fixing up their house by painting walls and installing electrical outlets. In one..

Amy and Bill are fixing up their house by painting walls and installing electrical outlets. 

   In one hour, Amy can paint 8 walls, or install 6 outlets. 

   In one hour, Bill can paint 5 walls, or install 5 outlets

a. If Amy painted 8 walls in the first hour of work, and then switched to doing 6 outlets in the second hour of work, what was the opportunity cost of each of those outlets?

Instructions:  Round your answers to two decimal places.

26. 1) Which one of the following items would never appear on a cash budget? A) Depreciation expense ...

1) Which one of the following items would never appear on a cash budget?

A) Depreciation expense

B) Travel expense

C) Interest expense

D) Office salaries expense

2) A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

3) Which of the following is not a typical cash flow related to equipment purchase and replacement decisions?

4) Bradshaw Inc. is contemplating a capital investment of $88,000. The cash flows over the project's four years are:

The cash payback period is

5) Richman Co. purchased some equipment 3 years ago. The company's required rate of return is 12%, and the net present value of the project was $(900). Annual cost savings were: $10,000 for year 1; $8,000 for year 2; and $6,000 for year 3. The amount of the initial investment was

6) Which of the following is not another name for the term manufacturing overhead?

27. On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account b...

Can anyone help me with that please?

Thanks

IThe fooowing information applies to the questions dispiayed below) On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances: Debit Credit $42,900 Cas Accounts Receivable 44.900 Supplies 7700 Equipment 66,000 $9.200 Accumula ed Depreciation Accounts Payable 14.800 Common Stock, $1 par value 2000 Additional Paid-in Capital 82,000 Retained Earnings 43,500 $161,500 $161,500 Totals During January 2018, the following transactions occur: January 21ssue an additional 2,200 shares of $1 par value common stock for $44,000. January 9 Provide services to customers on account, $14,800. January 10 Purchase additional supplies on account, $5.100. January 12 Repurchase 1.000 shares of treasury stock for $20 per share. January 15 Pay cash on accounts payable, $16.700. January 21 Provide services to customers for cash, $49.300. January 22 Receive cash on accounts receivable, $16.800. January 29 Declare a cash dividend of so.30 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 12.000 shares outstanding on January 1, 2018 and dividends are not paid on treasury stock.) January 30 Reissue 700 shares of treasury stock for S22 per share. January 31 Pay cash for salaries during January, $42,200.

28. Paul’s Book Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10,...

Paul’s Book Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Paul’s inventory consisted of books purchased for $1,800. During June the merchandising transactions shown on page 244 occurred. June 1 Purchased books on account for $1,200 from Logan Publishers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $50 for the freight on this date.

3 Sold books on account to Reading Rainbow for $2,400.The cost of the books sold was $1,440.

6 Received $100 credit for books returned to Logan Publishers.

9 Paid Logan Publishers in full, less discount.

15 Received payment in full from Reading Rainbow.

17 Sold books on account to Cheap Books for $1,800.The cost of the books sold was $1,080.

20 Purchased books on account for $1,500 from Phantom Publishers, FOB destination, terms 2/15, n/30.The appropriate party also made a cash payment of $50 for the freight on this date.

24 Received payment in full from Cheap Books.

26 Paid Phantom Publishers in full, less discount.

28 Sold books on account to Willow Bookstore for $1,300.The cost of the books sold was $780.

30 Granted Willow Bookstore $120 credit for books returned costing $72. Paul’s Book Warehouse’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold.

Instructions

Journalize the transactions for the month of June for Paul’s Book Warehouse using a perpetual inventory system.

29. 2. What relationship exists between the position of an account in the balance sheet equation and...

2.    What relationship exists between the position of an account in the balance sheet equation and the rules for recording increases in that account?

3.    State briefly the rules of debit and credit as applied to asset accounts and as applied to liability and owners’ equity accounts.

30. Part of your company accounting database was destroyed when Godzilla attacked the city.

Part of your company accounting database was destroyed when Godzilla attacked the city. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. (Hint: it is helpful to solve for the unknowns in the order indicated by the letters in the following table.) Direct Material Direct Labor Standard price or rate per unit of input $16 per pound e Standard quantity per unit of output c f Actual quantity used per unit of output a 3.5 hours Actual price or rate per unit of input $14 per pound $21 per hour Actual output 20,000 units 20,000 units Direct material price variance $120,000 F ? Direct material quantity variance b ? Total of direct material variances $40,000 F ? Direct labor rate variance ? d Direct labor efficiency variance ? $200,000 F Total of direct labor variances ? $130,000 F

31. Where there is a long aging or maturation process after harvest, the accounting for such products...

Where there is a long aging or maturation process after harvest, the accounting for such products should be dealt with by

(a) IAS 41.

(b) IAS 2, Inventory.

(c) IAS 16, Property, Plant, and Equipment.

(d) IAS 40, Investment Property.

32. 2.00 points Nova Company's total overhead cost at various levels of activity are presented below:...

2.00 points Nova Company's total overhead cost at various levels of activity are presented below: Month Machine-Hours Total Overhead Cost April 46.000 $205,180 $177,880 36.000 May 56,000 $232,480 June 66,000 July $259,780 Assume that the total overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of hese costs at th e 36,000 machine-hou level of activi Utilities (variable) 54,000 Supervisory salaries (fixed) 65,000 Maintenance (mixed) 58,880 Total overhead cost $177,880 Nova Company's management wants to break down the maintenance cost into its variable an fixed cost d elements Required: 1. Estim how much of the $259,780 of overhead cost in July was maintenance cost. (Hint: To do this, it ate may be helpful to first determine how much of the $259,780 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs Do not round intermediate calculations.) aintenance cost in July S 92,780

33. Which of the following businesses is most likely to use a process costing system? A) an accountin...

Which of the following businesses is most likely to use a process costing system? A) an accounting firm B) a law firm C) a soda manufacturer D) a construction company

34. Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of...

35. 1. What is the difference between “clean” float and “dirty” float? 2. Why do countries intervene...

1. What is the difference between  “clean” float and  “dirty” float?

2. Why do countries intervene in their foreign exchange markets?

3. What is the difference between currency convertibility and exchange rate flexibility?

4. Explain how central bank intervention allows  country to keep its forex rate at  certain level.

5. What is the difference between central bank intervention in the foreign exchange market in the context of floating versus stabilized exchange rates?

36.   When is the Partnership Act enforced ? A. when there is no partnership deed B. where there is a...

When is the Partnership Act enforced ?

A. when there is no partnership deed

B. where there is a partnership deed but there are differences of opinion between the partners

C. when capital contribution by the partners varies

D. when the partner’s salary and interest on capital are not incorporated in the partnership deed

Which one of the following items cannot be recorded in the appropriation account ?

A. interest on capital

B. interest on drawings

C. rent paid to partners

D. partner’s salary

37. Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume...

Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.)Suppose the interest rate is 3.5 percent.Using the rule of 70, the value of Bond A is approximately , and the value of Bond B is approximately .Now suppose the interest rate increases to 7 percent.Using the rule of 70, the value of Bond A is now approximately , and the value of Bond B is approximately .Comparing each bond’s value at 3.5 percent versus 7 percent, Bond A’s value decreases by a percentage than Bond B’s value.The value of a bond when the interest rate increases, and bonds with a longer time to maturity are sensitive to changes in the