DEVRY ACCT 301 Week 4 Midterm - 3 Sets

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ACCT 301 Week 4 Midterm - 3 Sets

1. (TCO 1) Suppose your company sold $25,000 in merchandise to a customer for

cash. How does this transaction impact the accounting equation? (Points : 12)

2. (TCO 2) Suppose your company sold $50,000 in merchandise to a customer for

cash. How does this transaction impact the accounting equation? (Points : 12)

3. (TCO 3) Rationalization is one of the components of the fraud triangle. What types
of rationalization could a person use to justify misconduct? How can a company
protect itself from rationalization as a part of fraud? (Points : 12)

4. (TCO 4) What is horizontal analysis of financial statements? How does horizontal

analysis differ from vertical analysis? (Points : 12)

1. (TCO 3) Separation of duties is a key feature in an internal control system. Why is

separation of duties such an important internal control? Give an example of
separation of duties as an internal control. (Points : 24)
 2. . (TCO 1) Describe the balance sheet. Why is this statement important to the
company, creditors, and investors? (Points : 24)

3. (TCO 4) Name and describe one liquidity ratio. What does this ratio measure?
What is the formula for this ratio? (Points : 24)

1. Question (TCO 1) The retained earnings statement shows all of the following
except which one?

2. Question (TCO 1) Management’s views on the company’s short-term debt paying

ability, expansion financing, and results of operations are found in which of the
following?

3. Question (TCO 4) For 2010, Fielder Corporation reported net income of $30,000;
net sales $400,000; and average share outstanding 6,000. There were no preferred
stock dividends. What was the 2010 earnings per share?

4. Question (TCO 4) A useful measure of solvency is which of the following?

5. Question (TCO 2) Which pair of accounts follows the rules of debit and credit, in
relation to increases and decreases, in the same manner?

6. Question (TCO 2) The principle purpose of posting is which of the following?

7. Question (TCO 3) Joe is a warehouse custodian, and also maintains the accounting
record of the inventory held at the warehouse. An assessment of this situation
indicates

8. Question (TCO 3) The following information was taken from Hurlbert Company
cash budget for the month of June:

9. Question (TCO 11) Managerial accounting information does which of the

following?

10. Question (TCO 11) Which one of the following is not a direct material?

11. Question (TCO 11) Sales commissions are classified as which of the following?

12. Question (TCO 11) Manufacturing costs include which of the following?

13. Question (TCO 11) Neeley Manufacturing Company reported the following year-
end information:

14. Question (TCO 5) What effect do changes in activity have on fixed costs per unit?
 15. Question (TCO 5) Which one of the following is not an assumption of CVP
analysis?

1. Question (TCO 5) A company has total fixed costs of $210,000 and a contribution
margin ratio of 30%. How much sales are necessary to break even?

2. Question (TCO 5) How much sales are required to earn a target income of $70,000,
if total fixed costs are $100,000 and the contribution margin ratio is 40%?

3. Question (TCO 6) For which one of the following budgeting aspects does the budget
committee generally have the responsibility?

4. Question (TCO 6) Under what situation might a budget be most effective?

5. Question (TCO 6) How does long-range planning compare to a master budget?

6. Question (TCO 6) Which one of the following is a source of information used to

prepare the budgeted income statement?

7. Question (TCO 7) When is a static budget most appropriate in evaluating a

manager’s performance?

8. Question (TCO 7) Which type of center is the housekeeping department of a

manufacturing company?

9. Question (TCO 7) For which of the following is an investment center manager

responsible?

10. Question (TCO 7) Merck Pharmaceuticals is evaluating its Vioxx division, an

investment center. The division has a $45,000 controllable margin and $300,000 of
sales. How much will Merck’s average operating assets be when its return on
investment is 10%?

11. Question (TCO 11) Financial and managerial accounting are both concerned with
the economic events of an enterprise. Similarities between financial and managerial
accounting do exist, but they have a different focus. Briefly distinguish between
financial and managerial accounting as they relate to (1) the primary users, (2) the
type and frequency of reports, (3) the purpose of reports, and (4) the content of
reports.

12. Question (TCO 4) Are short-term creditors, long-term creditors, and stockholders
primarily interested in the same characteristics of a company? Explain.
 13. Question (TCO 5) In the month of September, Nixon Company sold 800 units of
product. The average sales price was $30. During the month, fixed costs were $7,200
and variable costs were 60% of sales.