Exam 8: Accounting: Decision Making by the Numbers

A college student registers for classes and pays tuition with a credit card. As the college uses accrual­basis accounting, it will recognize the payment as revenue after it receives the cash in its bank account.

Expenses = Revenue ­ Net Income.

Laura and Abby are evaluating three telecommunication companies to determine the best company to invest in. Horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help determine the increase in their profits.

Ascot Inc. has decided to adopt activity­based costing. One reason the firm's accountants decided on this approach was to:

Jane has completed 150 semester hours of college and has passed a rigorous two­day, four­part accounting exam. She also has a year's experience of working as an assistant accountant for a fashion company. She provides management consultancy for multiple organizations on a fee basis. Given her qualifications and experience, Jane is a certified _____ accountant.

_____ are costs that are the result of a firm's general operations and are not explicitly tied to any specific cost object.

A bottom­up approach to budgeting allows lower level managers to participate in the development of budgets.

Timber Grand Inc. has applied to United Bank for a business loan. In order to best assess the loan case, loan officer Salvatore decides to look at the company's net income figure. Salvatore will find this information in Timber Grand's _____.

It is mandatory for all members of the Financial Accounting Standards Board (FASB) to sever all ties with any firms or institutions they served prior to joining the board.

A stockholders' equity statement shows:

Internal auditors identify mismanagement and employee theft in organizations which employ them.

Comparative balance sheets _____.

A statement of cash flows reports the revenues, expenses, and net income that results from a firm's operations over a given period of time.

In the United States, the SEC has delegated the responsibility for developing accounting standards to a private organization called the .

The Financial Accounting Standards Board is a private organization with the legal authority to develop and enforce generally accepted accounting principles.

A budget that shows the appropriate budgeted level costs for each level of sales is known as a _____.

In a statement of cash flows, which of the following items would indicate investing activities?

Stockholders typically want to view a firm's accounting information to _____.

The _____ is tasked with making U.S. accounting practices more consistent with those in other nations.

According to the _____ method of accounting, revenues are recognized when they are earned, and payment is reasonably assured.