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| Section | Objectives |
|---|---|
| Financial Statement Analysis | - Interpreting financial data for decision-making purposes - Horizontal and vertical analysis - Ratio analysis (liquidity, profitability, solvency, efficiency ratios) |
| Budgeting and Planning | - Operating budgets (sales, production, direct materials, direct labor, overhead) - Variance analysis - Master budget components - Financial budgets (cash budget, budgeted income statement, budgeted balance sheet) |
| Financial Accounting Fundamentals | - Understanding the accounting cycle - Accrual vs. cash basis accounting - Recording transactions and adjusting entries - Preparing financial statements (Income Statement, Balance Sheet, Statement of Cash Flows) |
| Decision Making and Performance Evaluation | - Balanced Scorecard concepts - Capital budgeting techniques (NPV, IRR, Payback Period) - Make-or-buy and special order decisions - Responsibility accounting and performance metrics - Relevant costs for decision making |
| Managerial Accounting Concepts | - Job order and process costing - Contribution margin and break-even analysis - Cost-Volume-Profit (CVP) analysis - Cost classification and behavior (fixed, variable, mixed costs) |
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NEW QUESTION # 21
The following list provides partial financial information for a company.
Beginning cash balance = $1,200
Received cash from sales of goods = $16,000
Paid wages and salaries = $4,500
Received cash from non-trading securities = $5,000
Paid cash for plant assets = $6,000
Received cash from loans = $8,000
Paid cash in repayment of loans = $2,000
What is the ending cash balance for this company?
Answer: A
Explanation:
The correct answer is D. $17,700 . To find the ending cash balance, start with the beginning cash balance and then add all cash inflows and subtract all cash outflows.
Beginning cash = $1,200
Inflows:
Cash from sales = $16,000
Cash received from non-trading securities = $5,000
Cash received from loans = $8,000
Total inflows = $29,000
Outflows:
Wages and salaries paid = $4,500
Cash paid for plant assets = $6,000
Cash paid in repayment of loans = $2,000
Total outflows = $12,500
Now calculate ending cash:
Ending cash = $1,200 + $29,000 - $12,500 = $17,700
This is the amount of cash remaining after considering all listed cash transactions. The classification of the cash flows is not necessary to solve the question, but they include operating, investing, and financing effects.
What matters mathematically is that every cash receipt increases total cash and every cash payment decreases it. Since the net increase in cash is $16,500 , adding that to the beginning cash of $1,200 gives $17,700 .
Therefore, Option D is correct.
NEW QUESTION # 22
Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received?
Answer: B
Explanation:
The correct answer is D . The control designed to prevent payment for goods not actually received is the receiving function's preparation of a receiving report , which is then sent to accounts payable and matched against the supplier invoice and purchase order. This is the essence of a three-way match : purchase order, receiving report, and vendor invoice. AccountingTools explains that payables staff should match the supplier invoice to the related purchase order and proof of receipt before authorizing payment.
Option A is helpful for controlling check completeness and sequence, but it does not verify quantities received. Option B adds authorization control over disbursements, but it also does not confirm whether the shipment matched the invoice. Option C helps ensure purchases are approved before ordering, but it still does not prove what was actually delivered. The receiving department's counting and inspection of goods, followed by forwarding the receiving documentation to accounts payable, directly addresses the risk that a supplier invoice includes more items than were received. Therefore, the best internal control is Option D .
NEW QUESTION # 23
Which two items increase net income?
Choose 2 answers.
Answer: A,D
Explanation:
The correct answers are C. Interest income and D. Gain on sale of assets . Net income increases when revenues and gains increase, while it decreases when expenses and losses increase. Interest income is a type of revenue or other income that adds to earnings. Gain on sale of assets also increases net income because it represents the amount by which proceeds from the sale exceed the asset's carrying value. OpenStax notes that the income statement includes revenues, expenses, gains, and losses in measuring financial performance.
Option A. Income tax expense decreases net income because it is an expense. Option B. Cost of sales also decreases net income because it is a major operating expense deducted in arriving at gross profit and ultimately net income. Gains and interest income improve profitability, whereas expenses reduce it. This distinction is fundamental in preparing and interpreting the income statement. Therefore, the two items that increase net income are Interest income and Gain on sale of assets , making C and D the correct answers.
NEW QUESTION # 24
In September, an airline using accrual accounting received cash from a round-trip ticket sold to a customer for
$1,500. The ticket allowed the customer to fly from Denver to Hawaii in October and from Hawaii back to Denver in November.
When should the airline recognize revenue?
Answer: D
Explanation:
The correct answer is C. In October and November . Under accrual accounting and modern revenue recognition guidance, revenue is recognized when the company satisfies its performance obligations, not merely when cash is received. For an airline ticket, the airline earns the revenue by providing transportation
. SEC disclosures from airlines state that passenger revenue is deferred until transportation is provided, and revenue recognition guidance under Topic 606 also requires recognition when control of the promised service transfers to the customer.
Because this is a round-trip ticket , the airline has not fully earned the revenue in September when the cash is collected. Instead, the service is performed in parts: one flight in October and the return flight in November
. Therefore, the revenue should be recognized as the transportation service is delivered across those two months. Option A is incorrect because September is only the cash receipt date, not the service date. Option B is incorrect because part of the service is provided in October. Option D is incorrect because collecting cash alone does not create earned revenue under accrual accounting. Therefore, October and November is the correct answer.
NEW QUESTION # 25
A company plans to purchase inventory for the second half of a year as follows:
July = $100,000
August = $75,000
September = $225,000
October = $125,000
November = $250,000
December = $30,000
The company usually pays 50% of inventory purchases in the month of purchase, 35% in the following month, and 15% in the second month.
What are the forecasted October cash payments based on this information?
Answer: C
Explanation:
The correct answer is D. $152,500 . To find October cash payments , include the portions of purchases paid in October from three different months:
* 15% of August purchases
* 35% of September purchases
* 50% of October purchases
Now calculate each amount:
15% of August ($75,000) = $11,250
35% of September ($225,000) = $78,750
50% of October ($125,000) = $62,500
Now add them:
$11,250 + $78,750 + $62,500 = $152,500
This is the total forecasted cash payment for October under the company's payment pattern. Budgeted cash disbursement questions often require tracking the timing of payments across multiple months, not just the current month's purchases.
Option B includes only 50% of October purchases. Option C includes only 35% of September purchases.
Option A includes only part of the earlier-month carryover. Since October cash payments must include all three applicable portions, the correct total is $152,500 , making Option D the right answer.
NEW QUESTION # 26
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