Unlocking the Secrets of Managerial Accounting
19. 71) Refer to the table below, which shows the results of payback, net present value, and internal...
71) Refer to the table below, which shows the results of payback, net present value, and internal rate of return analysis of four projects. Which is preferred by the net present value criterion?
A) Project A
B) Project B
C) Project C
D) Project D
72) Refer to the table below, which shows the results of payback, net present value, and internal rate of return analysis of four projects. Which is preferred by the payback criterion?
A) Project A
B) Project B
C) Project C
D) Project D
73) Dysfunctional employee behavior in response to implementation of a new computerized information system is likely to be the result of
A) poor human resource policies.
B) lack of communication and training.
C) weak system controls.
D) inadequate compensation policies.
74) The least time-consuming method of collecting data for use in a systems survey is
A) observation.
B) interviews.
C) questionnaires.
D) reviewing system documentation.
75) Which of the following is the most important and frequently analyzed aspect of a feasibility study?
A) Economic feasibility
B) Technical feasibility
C) Legal feasibility
D) Operational feasibility
76) Which of the following aspect of a feasibility study is concerned with meeting external reporting requirements?
A) Technical feasibility
B) Legal feasibility
C) Scheduling feasibility
D) Operational feasibility
77) Which of the following aspect of a feasibility study is concerned with human resources?
A) Technical feasibility
B) Legal feasibility
C) Scheduling feasibility
D) Operational feasibility
78) Identify the main reasons why companies change existing systems?
20. 11. A common criticism of capital ROI as a performance measurement criterion is that it...
11. A common criticism of capital ROI as a performance measurement criterion is that it encourages a long-term orientation sometimes to the detriment of shorter-term planning.
12. Residual income is calculated by subtracting the minimum acceptable return on the average invested capital from the operating income.
13. Operating earnings rather than net income is used to compute return on sales.
14. The main objective of the balanced scorecard system of performance measurement is achieving the organization's strategic goals.
15. The value chain starts with the supplier and ends with the consumer.
16. Stock based performance evaluation of managers is considered more risky than accounting based performance evaluation.
17. Most organizations try to achieve their goals by providing incentives to employees who use resources wisely.
18. Accounting systems do not offer any benefit to management in generating and focusing employee motivation.
19. Using only ROI as a business performance measure often leads to the best decisions.
20. Residual income is the difference between net operating income at breakeven and actual net operating income.
21. EVA stands for "evaluating value added" performance.
22. Bonuses may be used to reward employees who meet performance goals.
21. You are an audit senior with Gooch & Brown CPA, LLP, a local accounting firm specializing in...
You are an audit senior with Gooch & Brown CPA, LLP, a local accounting firm specializing in audits of information systems and financial statements. Your1040Return.com engaged your firm to perform its financial statement audit. You have been asked by the partner to perform the following tasks: (a) Why does Your1040.com need to have its financial statements audited? How might understanding the reasons for the audit of the financial statements inform the auditor about potential audit risk? (b) Describe to Stephen Chicago why it is important for your firm to have an understanding of Your1040Return.com s business model. (c) Identify Your1040Return.com s major business risks and describe how those risks may increase the likelihood of material misstatements in Your1040Return.com s financial statements. (d) Indicate what Your1040Return.com should do to improve its internal control? (e) Explain what audit implications arise if you decide that the controls over electronic records at Your1040Return.com are inadequate to ensure that records have not been altered? (f) Steven Chicago has indicated that he is exploring upgrades to the company s IT systems. Your audit partner would like you to explore whether cloud computing is an option that your firm might recommend for consideration by Steven, Perform research to explain what cloud computing is and why it might offer benefits to Your1040.com. (g) Authoritative literature provides guidelines for proper revenue recognition po
22. ACCT 301 SectionFall 2018 Name Midterm Exam #1 : Chapters 1, 2, 3, and 4 Part I. Multiple-Choice ...
ACCT 301 SectionFall 2018 Name Midterm Exam #1 : Chapters 1, 2, 3, and 4 Part I. Multiple-Choice Questions 15 questions x 4 points each Total 60 points 1. According to Statements of Financial Accounting Concepts (SFAC), nsstrality is an ingredient of Ver. B Faithful Yes Yes No No Relevanss Yes No Yes No A. B. D. 2. According to the FASB conceptual framework, the relevance of providing information in financial statements is subject to the constraint of A. Comparability Cost-benefit. B. C. Reliability D. Faithful representation. E. Timeliness. 3. What is the main difference between accrual and deferral adjustments? A. Deferral adjustments are required to update previously recorded items whereas accrual adjustments are required to include items not previously recorded. B. Deferral adjustments are required under the cash basis of accounting whereas accrual adjustments are required under the accrual basis of accounting C. Deferral adjustments are required to include items not previously recorded whereas accrual adjustments are required to update previously recorded items. D. Deferral adjustments are used for expenses whereas accrual adjustments are used for revenues. E. There is no difference between deferral and accrual adjustments. 4. The premium on a three-year insurance policy expiring on December 31, year 3, was paid in total on January 1, year 1. The original payment was initially debited to a prepaid asset account. The appropriate journal entry has been recorded on December 31, year 1. The balance in the prepaid asset account on December 31, year 1, should be: A. Zero. B. The same as it would have been if the original payment had been debited initially to an expense account. C. The same as the original payment D. Higher than if the original payment had been debited initially to an expense account. E. Lower than if the original payment had been debited initially to an expense account 5. Which of the following is not a valuation technique used in fair value estimates? A. Income approach B. Residual value approach C. Market approach D. Cost approach E. All of the above are valuation techniques used in fair value estimates
23. Why can the formal announcement of a new system technique be crucial?
1. Why can the formal announcement of a new system technique be crucial?
2. Discuss the various feasibility measures that should be considered. Give an example of each.
3. What are the broad classes of facts that need to be gathered in the system survey?
4. What are the primary fact-gathering techniques?
24. In 2004 Iris King bought shares of stock as an investment, at a cost of $10,000. During 2006, when...
Items 1 and 2 are based on the following data:
In 2004 Iris King bought shares of stock as an investment, at a cost of $10,000. During 2006, when the fair market value was $8,000, Iris gave the stock to her daughter, Ruth.
If Ruth sells the shares of stock in 2007 for $7,000, Ruth’s recognized loss would be
- $3,000
- $2,000
- $1,000
- $0
Ruth’s holding period of the stock for purposes of determining her loss
- Started in 2004.
- Started in 2006.
- Started in 2007.
- Is irrelevant because Ruth received the stock for no consideration of money or money’s worth.
25. Evaluation of Transaction Processing Control Design...
Southwest Appliances Inc. | WP C.1. | ||||
Evaluation of Transaction Processing Control Design | Initials | Date | |||
Prepared by | |||||
Reviewed by | |||||
Potential Control Weakness | Potential Misstatement | Recommended Correction | Possible Weakness | ||
Sales | |||||
Delivery | |||||
Document Preview:
Southwest Appliances Inc.WP C.1.Evaluation of Transaction Processing Control DesignInitialsDatePrepared byReviewed byPotential Control WeaknessPotential MisstatementRecommended CorrectionPossible WeaknessSalesDelivery
Southwest Appliances Inc.WP C.1.Evaluation of Transaction Processing Control DesignInitialsDatePrepared byReviewed byPotential Control WeaknessPotential MisstatementRecommended CorrectionPossible WeaknessBillingCollections Management and Write-offs
Southwest Appliances Inc.WP C.1.Evaluation of Transaction Processing Control DesignInitialsDatePrepared byReviewed byPotential Control WeaknessPotential MisstatementRecommended CorrectionPossible WeaknessSales ReturnsCash Receipts
Southwest Appliances Inc.WP C.1.Evaluation of Transaction Processing Control DesignInitialsDatePrepared byReviewed byPotential Control WeaknessPotential MisstatementRecommended CorrectionPossible WeaknessMerchandise PurchasesThis document was truncated here because it was created in the Evaluation Mode.
26. 1.28 A quality-control technician selects assembled parts from an assembly line and records the...
1.28 A quality-control technician selects assembled parts from an assembly line and records the following information concerning each part: X: defective or nondefective Y: the employee number of the individual who assembled the part Z: the weight of the part a. What is the population? b. Is the population finite or infinite? c. What is the sample? d. Classify the three variables as either attribute or numerical. 1.29 Select 10 students currently enrolled at your college and collect data for these three variables: X: number of courses enrolled in Y: total cost of textbooks and supplies for courses Z: method of payment used for textbooks and supplies a. What is the population? b. Is the population finite or infinite? c. What is the sample? d. Classify the three variables as nominal, ordinal, discrete, or continuous.
27. On March 1, 2013, Eckert and Kelley formed a partnership. Eckert contributed $99,000 cash and...
On March 1, 2013, Eckert and Kelley formed a partnership. Eckert contributed $99,000 cash and Kelley contributed land valued at $79,200 and a building valued at $109,200. The partnership also assumed responsibility for Kelley’s $89,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert is to receive an annual salary allowance of $31,000, both are to receive an annual interest allowance of 8% of their beginning-year capital investment, and any remaining income or loss is to be shared equally. On October 20, 2013, Eckert withdrew $32,000 cash and Kelley withdrew $25,000 cash. After the adjusting and closing entries are made to the revenue and expense accounts at December 31, 2013, the Income Summary account had a credit balance of $85,000.
28. PepsiCo’s Project in Brazil PepsiCo recently decided to invest more than $300 million for...
PepsiCo’s Project in Brazil PepsiCo recently decided to invest more than $300 million for expansion in Brazil. Brazil offers considerable potential because it has 150 million people and their demand for soft drinks is increasing. However, the soft drink consumption is still only about one-fifth of the soft drink consumption in the United States. PepsiCo’s initial outlay was used to purchase three production plants and a distribution network of almost 1,000 trucks to distribute its products to retail stores in Brazil. The expansion in Brazil was expected to make PepsiCo’s products more accessible to Brazilian consumers
. a. Given that PepsiCo’s investment in Brazil was entirely in dollars, describe its exposure to exchange rate risk resulting from the project. Explain how the size of the parent’s initial investment and the exchange rate risk would have been affected if PepsiCo had financed much of the investment with loans from banks in Brazil.
b. Describe the factors that PepsiCo likely considered when estimating the future cash flows of the project in Brazil.
c. What factors did PepsiCo likely consider in deriving its required rate of return on the project in Brazil?
d. Describe the uncertainty that surrounds the estimate of future cash flows from the perspective of the U.S. parent
e. PepsiCo’s parent was responsible for assessing the expansion in Brazil. Yet, PepsiCo already had some existing operations in Brazil. When capital budgeting analysis was used to determine the feasibility of this project, should the project have been assessed from a Brazilian perspective or a U.S. perspective? Explain.
29. The following are the statements of comprehensive income of four companies for the year ended 31...
The following are the statements of comprehensive income of four companies for the year ended 31 October 2006, the end of their most recent financial year.
The following additional information is available:
(a) All shares issued by the companies have a face value of $1.
(b) The companies made the following dividend payments to shareholders during the year ended 31 October 2006:
Under IAS 32 Financial Instruments: Disclosure and Presentation dividends on preference shares have been included in interest payable.
(c) Afjar owns 60% of the ordinary shares in Jikki, 40% of the shares in Hupin and 25% of the shares in Sofrin. Jikki is a subsidiary of Afjar, Hupin is an associate of Afjar, and Sofrin is a joint venture.
(d) During the year ended 31 October 2006 Afjar sold inventory which had cost $640,000 to Jikki at a mark up of 25%. Jikki had resold 65% of these items by 31 October 2006.
(e) On 1 July 2006 Jikki made a long term loan of $500,000 to Afjar. The loan bears interest at 12% a year payable every six months in arrears.
Required:
Prepare, in so far as the information given permits, the consolidated statement of comprehensive income of Afjar for the year ended 31 October 2006. Your statement of comprehensive income should include a figure for earnings per share with a supportive disclosure note.