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37) How often should managerial accounting reports be prepared? A) Annually B) Quarterly C) Monthly D) As often as necessary 38) Which of the following statements is true regarding managerial accounting information? A) It is audited by CPAs. B) It emphasizes relevance. C) It is prepared annually and quarterly. D) It must be prepared in conformity with generally accepted.
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13.1   Learning Objective 13-1 1) Vertical analysis highlights changes in financial statement balances from period to period. 2) The best way to analyze a company is by examining the financial data for several years. 3) Trend percentages are computed only for balance sheet items. 4) It is generally considered more useful to know the.
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15) Depots Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year-end balance of $510,000. Net sales for the year totaled $2,100,000. The average collection period of the receivables was: A) 162 days. B) 41 days. C) 51 days. D) 81 days. 16) The ratio that provides.
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11) Comprehensive income is: A) used to determine earnings per share. B) used to determine net income. C) not used to determine net income or earnings per share. D) used to determine net income or earnings per share. 12) Westside Corporation had an investment in available-for-sale securities of $60,000. This investment experienced an unrealized loss.
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11) Period to period percentage change in comparative financial statements is often called: A) benchmarking. B) horizontal analysis. C) vertical analysis. D) common-size statements. 12) The primary focus of horizontal analysis is: A) percentage changes in comparative financial statements. B) the balance sheet only. C) the changes in individual financial statement amounts as a percentage of some related.
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6) Depreciation expense is listed on the direct-method statement of cash flows because it affects income. 7) Under the direct method, cash receipts from dividend revenue affect the statement of cash flows, but not the income statement. 8) During 2012, ABC Corporation's purchases totaled $250,000 and Accounts Payable decreased by $7,000; therefore,.
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36) Under the indirect method of preparing the operating section of the statement of cash flows, net cash provided by operating activities is $207,000. If the direct method of preparing the operating section of the statement of cash flows was used: A) cash provided by operating activities would be the same,.
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21) Prior-period adjustments: A) only decrease retained earnings. B) only increase retained earnings. C) can either increase or decrease retained earnings. D) do not affect retained earnings. 22) A prior-period adjustment for overstated net income will be: A) debited to the Retained Earnings account. B) credited to the Retained Earnings account. C) shown as a liability on the.
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9) Extraordinary gains and losses are shown "net of tax" on the income statement. 10) An event or transaction should be considered as an extraordinary item if it is unusual in nature and if it occurs infrequently. 11) Income tax expense appears on the: A) tax return. B) statement of stockholders' equity. C) income statement. D).
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10.6   Learning Objective 10-6 1) The purchase of treasury stock appears on the statement of cash flows as a financing activity. 2) A stock split appears on the statement of cash flows as a financing activity. 3) On the Stockholders' Equity section of the Balance Sheet, Common Stock is listed before Preferred Stock. 4).
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6) In the statement of cash flows, depreciation and amortization are considered a use of funds. 7) In the statement of cash flows, sales of marketable securities are considered an operating activity. 8) In the statement of cash flows, purchases of fixed assets are considered to be investing activities. 9) In the statement.
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11.5   Learning Objective 11-5 1) Items of comprehensive income, other than net income, do not enter into the determination of earnings per share. 2) Comprehensive income is the company's change in total stockholders' equity from all sources other than from the owners of the business. 3) Comprehensive income does not include foreign-currency translation.
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26) In preparing a statement of cash flows, converting bonds into common stock would be reported in: A) the operating activities section. B) the investing activities section. C) the financing activities section. D) a separate schedule or note to the financial statements. 27) Which of the following transactions does NOT affect cash during a period? A).
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11) The ratio that uses weighted-average number of shares of common stock outstanding in the denominator is the: A) earnings per share. B) gross profit percentage. C) price-earnings ratio. D) current ratio. 12) Earnings per share (EPS) is calculated as: A) the number of shares of common stock outstanding at the end of the year divided.
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16) Under the direct method of preparing the statement of cash flows, cash payments from operating activities do NOT include: A) payments to suppliers. B) payments to employees. C) payment of dividends. D) payment of interest. 17) Anderson Corporation reports a decrease in Salaries Payable of $5,000. If Salaries Expense totaled $187,000 for the year,.
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8) Operating income is typically equal to cash flow from operating activities. 9) Under the indirect method, a decrease in a current asset other than cash indicates a decrease in cash. 10) An increase in common stock would be an investing activity under the statement of cash flows. 11) To convert net income.
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11) Which of the following is not one of the primary responsibilities of management? A) Adhering to GAAP B) Planning C) Directing D) Controlling 12) Planning involves which of the following activities? A) Evaluating the results of operations B) Overseeing the company's day-to-day operations C) Setting goals and objectives for the company D) None of the above 13) Which of.
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1) Evaluating operations by comparing actual results to budgeted results is a part of the controlling responsibility of management. 2) Controlling means overseeing the company's day-to-day operations. 3) The purpose of managerial accounting is to gather, summarize, and report the cost and revenue data relevant to each decision that is made. 4) Budgeting.
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21) Which of the following is considered to be a cash equivalent? A) Investments in short-term U.S. Government securities B) Accounts receivable C) Notes receivable D) Trading securities 22) Which of the following does NOT apply to cash equivalents? A) Highly-liquid B) Readily convertible into cash C) Short-term D) Fluctuates with the market interest rate 23) The statement of cash.
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6) Cash flow from financing activities is the most important category on the statement of cash flows because it is considered the best way to evaluate future income. 7) The cash payment of interest on bonds payable is a cash outflow from operating activities. 8) Collections on a loan are reported as.
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29) Prepare a vertical analysis for Winkler Corporation using the information shown below (round percentages to the nearest one-tenth percent): 2012 Sales $450,000 Cost of goods sold 200,000 Gross profit 250,000 Operating expenses 118,000 Net income 132,000 30) Prepare a vertical analysis for Crestwood Corporation's balance sheet to determine the component percentages of its assets, liabilities, and stockholders' equity. Round percentages to.
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28) Activities that affect stockholders' equity and long-term debt are: A) operating activities. B) investing activities. C) financing activities. D) noncash investing and financing activities. 29) Land was purchased with the proceeds from the issuance of common stock. This transaction would be reported on the statement of cash flows as a(n): A) operating activity. B) investing activity. C).
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20) In performing a vertical analysis, the base for interest expense is: A) net sales. B) total operating expenses. C) net income. D) interest income. 21) Given the following data: Current liabilities $450,000 Noncurrent liabilities 650,000 Stockholders' equity 500,000 In vertical analysis, current liabilities would be expressed as: A) 356%. B) 90%. C) 111%. D) 28%. 22) In performing a vertical analysis, the base for sales returns.
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11) A statement of cash flows: A) may be combined with the income statement at the option of management. B) is typically prepared at the request of major creditors. C) is a basic financial statement required for publicly-held companies. D) may be combined with the balance sheet. 12) The statement of cash flows: A) can be.
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15) If economic value added (EVA) is negative: A) stockholders' wealth has decreased. B) stockholders' wealth has increased. C) stockholders' wealth has stayed the same. D) stockholders' earnings per share have increased. 16) The cost of capital: A) is lower for a start-up company since it is untested. B) can be obtained from the financial statements. C) is.
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47) Which statement is true? A) Management uses financial information to analyze costs. B) Management uses financial information to plan internal operations. C) Management uses reports created for internal parties. D) All of the above are true. 48) Which of the following statements is false? A) Financial accounting helps investors make decisions. B) Financial accounting provides sufficient.
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27) GAAP must be followed when preparing managerial accounting reports. 28) Management accounting requires independent audits of the firm's books. 29) The primary purpose of managerial accounting information is to help external users make investing and lending decisions. 30) Internal users such as managers are the primary users of managerial accounting information..
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16) Investing activities include: A) obtaining cash from creditors. B) collecting cash on loans. C) obtaining capital from owners. D) repaying borrowed money. 17) Usually, the most important category on the statement of cash flows is cash flows from: A) operating activities. B) investing activities. C) financing activities. D) noncash activities. 18) Increases and decreases in the long-term assets available.
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6) The audit report is signed-off by the corporation's management, confirming the audit was completed properly. 7) The combined audit report on financial statements and internal control over financial reporting typically contains five paragraphs. 8) An unqualified opinion by independent auditors indicates the fairness of the company's financial statements and the effectiveness.
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10) A thorough analysis of financial statements will include either horizontal or vertical analysis, but not both. 11) Which of the following is typically used as the base in a vertical analysis of an income statement? A) Cash B) Inventory C) Net income D) Net sales 12) Which of the following is typically used as the.
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19) Western Corporation has taxable income of $390,000 and pretax accounting income of $363,000. The company's income tax rate is 35%. The entry to record the income tax includes a: A) debit to Income Tax Expense $136,500. B) debit to Deferred Tax Asset $127,050. C) debit to Deferred Tax Asset $9,450. D) credit to.
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13.3   Learning Objective 13-3 1) Common-size financial statements report only dollar amounts. 2) Benchmarking is the process of comparing a company to standards set by the leading company in the industry. 3) A common-size statement is less effective than a horizontal analysis when comparing companies. 4) Common-size financial statements are particularly valuable for identifying.
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16) Purchases of fixed assets is a sign of: A) a struggling company. B) reinvestment in the company. C) a shortage of cash. D) a decrease in inventory. 17) On a statement of cash flows, an increase or decrease in inventory is considered: A) an operating activity. B) an investing activity. C) a financing activity. D) an investing or.
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11.1   Learning Objective 11-1 1) The revenue recognition principle requires that sales revenues be recognized when they are earned. 2) U.S. GAAP and IFRS do not have the same revenue recognition criteria. 3) Recognizing revenue before it is earned is a major source of financial statement fraud. 4) Financial statement fraud does not include.
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11) Revenue fraud includes all of the following EXCEPT: A) reporting revenue when goods have not yet been delivered. B) channel stuffing. C) sales to nonexistent customers. D) recognizing revenue when earned. 12) Steadily decreasing cost of goods sold as a percentage of net sales is a sign of: A) increasing earnings quality. B) decreasing earnings quality. C).
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11) When benchmarking financial statements of two key competitors, the gross margin of Company A is expressed as a percentage of: A) the total gross margins of Companies A and B. B) Company B's gross margin. C) a common standard for both Company A and Company B. D) Company A's sales. 12) Walton Company's return.
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21) Components of earnings quality include all of the following EXCEPT: A) low operating expenses compared to sales. B) high and improving gross margin. C) a low gross profit. D) proper revenue and expense recognition. 22) Shown below is a partial consolidated income statement for B&B Brothers, Inc. for 2011 and 2012. Required:  Calculate the missing.
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12.1   Learning Objective 12-1 1) The statement of cash flows is presented for a period of time. 2) The statement of cash flows is an optional statement that can be prepared along with the income statement, balance sheet, and statement of retained earnings. 3) The statement of cash flows shows the relationship of.
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5) If a corporation's economic value added is negative, stockholders will probably be displeased with the company. 6) Cost of capital varies with a company's market value of its common stock. 7) If a corporation's cash flows are consistently lower than net income, it could be a sign of a cash shortage.
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21) When performing a horizontal analysis on a statement of retained earnings, which would NOT show a percentage change value? A) Dividends paid B) Net income C) Expenses D) Beginning balance of retained earnings 13.2   Learning Objective 13-2 1) When comparing companies of different sizes, vertical analysis would be a useful tool. 2) When performing vertical analysis.
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21) Overseeing the day-to-day operations of a company is an example of which of the following management functions? A) Directing B) Planning C) Analyzing D) Controlling 22) Preparing budgets is an example of which of the following management functions? A) Planning B) Directing C) Analyzing D) Controlling 23) Evaluating results against the plan is an example of which of.
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18) Under the indirect method of preparing a statement of cash flows, amortization expense for the current period is: A) added in the investing activities section. B) subtracted in the investing activities section. C) added in the financing activities section. D) added in the operating activities section. 19) In computing net cash provided by operating.
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