Midterm Exam Essay
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)
5. (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) 6. (TCO 1) Describe the balance sheet. Why is this statement important to the company, creditors, and investors? (Points : 24) 7. (TCO 4) Name and describe one liquidity ratio. What does this ratio measure? What is the formula for this ratio? (Points : 24)
ACCT 301 Midterm Exam 2
1. (TCO 1) The retained earnings statement shows all of the following except which one? 2. (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. (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. (TCO 4) A useful measure of solvency is which of the following? 5. (TCO 2) Which pair of accounts follows the rules of debit and credit, in relation to increases and decreases, in the same manner? 6. (TCO 2) The principle purpose of posting is which of the following? 7. (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. (TCO 3) The following information was taken from Hurlbert Company cash budget for the month of June: 9. (TCO 11) Managerial accounting information does which of the following? 10. (TCO 11) Which one of the following is not a direct material? 11. (TCO 11) Sales commissions are classified as which of the following? 12. (TCO 11) Manufacturing costs include which of the following? 13. (TCO 11) Neeley Manufacturing Company reported the following year-end information: 14. (TCO 5) What effect do changes in activity have on fixed costs per unit? 15. (TCO 5) Which one of the following is not an assumption of CVP analysis?
ACCT 301 Midterm Exam 3
1. (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. (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. (TCO 6) For which one of the following budgeting aspects does the budget committee generally have the responsibility? 4. (TCO 6) Under what situation might a budget be most effective? 5. (TCO 6) How does long-range planning compare to a master budget? 6. (TCO 6) Which one of the following is a source of information used to prepare the budgeted income statement? 7. (TCO 7) When is a static budget most appropriate in evaluating a manager’s performance? 8. (TCO 7) Which type of center is the housekeeping department of a manufacturing company? 9. (TCO 7) For which of the following is an investment center manager responsible?
10. (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. (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. (TCO 4) Are short-term creditors, long-term creditors, and stockholders primarily interested in the same characteristics of a company? Explain. 13. (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.