Exam 8: Accounting: Decision Making by the Numbers

Sebastian is an employee at Plowell Inc. His duties include preparing reports and analyzing company data. He also appraises financial performances and verifies the accuracy and validity of the company's internal records. In this scenario, Sebastian's role is that of a _____ in the organization.

A book publishing company follows a budgeting approach wherein the senior managers of the company prepare the annual budget with little or no input from the supervisory and middle managers. The company uses this approach as the owners of the company believe that the senior managers are more aware of the long-term strategic needs of the company. In this scenario, the book publishing company is using _____.

Hopins, a medium-sized firm, has total assets whose value is equivalent to the sum of the funds provided by its owners and the loans taken by the firm from several financial institutions to purchase those assets. In this context, it can be said that:

Fiona, an external auditor reviewing a telecommunications company's accounts, finds that the company's internal accountants have entered false data in the company records. Instead of stating the actual figures, which would reveal the poor performance of the company, the accountants have overstated the company's earnings. In this case, Fiona is most likely to offer a(n) _____ in the independent auditor's report.

In the context of owners' equity, which of the following is true of retained earnings?

John and Elizabeth evaluate three telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help in the determination of the increase in their profits.

Which of the following is true of accumulated depreciation?

Ashley, a manager at a toy manufacturing company, needs to create a financial document for the company that would show how the company's operating, investing, and financing activities are expected to affect the asset, liability, and owners' equity accounts. To prepare this document, Ashley needs to collect data from:

The _____ of a company is a simple statement that shows how the accumulated revenues that have been reinvested in the company have changed from one accounting period to the next.

_____ indicate the cash a firm spends, or other assets it uses up, to carry out the business activities necessary to generate its revenue.

Which of the following would most likely be a question asked by the stockholders of a firm?

The members of the Financial Accounting Standards Board (FASB) can be reappointed to serve two additional terms after the completion of their first term.

In the context of balance sheets, retained earnings are a major component of the _____ section.

In the context of an independent auditor's report, if the auditor identifies some minor concerns but believes that on balance the firm's statements remain a fair and accurate representation of the company's financial position, the report will offer a(n) _____ opinion.

A public accounting firm takes up a contract to perform an external audit for an oil manufacturing company. The firm, however, is already in a consulting contract with the oil company. Because of its prior association with the oil company and the hefty fee the oil company pays the firm, the firm manipulates the audit report. Which of the following laws is violated in this scenario?

The management of Normanster Corp., a multinational company, is in the process of preparing the operating budget for the company. It has already created the sales budget and the production budget. It is now creating a financial statement that would present a forecast of the expected revenue of the company from the projected sales. In the given scenario, the management is creating _____.

The first stage in activity-based costing is to:

Balance sheets usually organize liabilities into two broad categories, which are:

_____ perform a variety of accounting functions for local, state, or federal agencies, such as the Internal Revenue Service (IRS) and the Federal Deposit Insurance Corporation (FDIC).

In the context of budget preparation, which of the following is a disadvantage of participatory budgeting?