Exam 8: Accounting: Decision Making by the Numbers

Tina has requested her accountant to give her a detailed description of how indirect costs are related to the individual hair care products that she produces. The accountant can use the two­stage process of activity­based costing for this purpose.

Ultimate legal authority to set and enforce accounting standards lies with the _____.

Budgeting encourages communication and coordination among managers and employees in various departments within an organization.

_____ is a system for recognizing, organizing, analyzing, and reporting information about the financial transactions that affect an organization.

The _____ budget of a firm brings together all of its budgeting documents to provide a unified plan for a specific budget period.

Rosalyn owns stock in Parts, Parts, and More, Inc. and has just received the company's annual report. If she wants to see the total value of Parts, Parts, and More's assets, she should look at the company's balance sheet.

_____ are costs that change directly with the level of production.

The cash budget identifies when a firm might have a temporary surplus of cash that it could invest.

Cost is defined by accountants as the value of what is given up in exchange for something else.

Revenue is a decrease in the amount of cash and other assets that a firm earns from the sale of goods.

A balance sheet summarizes the financial position of a firm at a particular point in time by identifying and reporting the value of the firm's assets, liabilities, and owners' equity.

Which of the following is used to verify the financial statements of a firm?

Liabilities do not include bank loans and current payments owed to suppliers.

It is mandatory for publicly traded firms in the United States to have an independent CPA firm perform an annual external audit of their financial statements.

By subtracting dividends paid to shareholders from the net income, accountants are able to calculate the:

A statement of cash flows identifies cash flows from three types of activities: production, sales, and promotional activities.

Briefly discuss operating and investing cash flows activities.

Current liabilities are debts that come due within a year of the date on the balance sheet.

What is a balance sheet and how does it reflect the accounting equation? Define each term in the accounting equation.

The final stage in the preparation of an operating budget is the creation of a _____.