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HB 302 Exam 1
HB 302 Managerial Accounting - Kim Spring 2014
| Question | Answer |
|---|---|
| System of reporting revenues and expenses in the period in which they are considered to have been earned or incurred, regardless of the actual time of collection or payment. | Accrual Basis Accounting |
| Accounting principle that requires a that a business maintain its own set of accounts that are separate from other financial interests of its owners. | Business Entity Principle |
| Reporting of revenues and expenses at the time they are collected or paid. | Cash basis accounting |
| Accounting principle that requires that once an accounting method has been adopted, it should be followed from period to period in the future unless a change in accounting methods is warranted and disclosed. | Consistency Principle |
| Accounting principle that requires accounting procedures that recognize expenses as soon as possible, but delay the recognition of revenues until they are ensured. | Conservatism Principle |
| Ex: non-refundable deposits for future services should be recognized as a liability until the service is actually performed is an example of what accounting principle? | Conservatism Principle |
| Accounting principle that requires recording the value of transactions for accounting purposes at the actual transaction cost. | Cost Principle |
| Accounting principle that requires that financial statements must provide information on all the significant facts that have a bearing on their interpretation. Types of disclosures include the accounting methods used, changes in the accounting methods,etc | Full disclosure principle |
| Accounting principle that requires that events be recognized and recorded by accounting procedures if they make a difference as determined by some relatives standard of comparison. | Materiality Principle |
| What principle is recognized by a rule of thumb that states that an item is recognized if it exceed x % or more of total assets or income. | Materiality Principle |
| Accounting principle that the monetary values stated in financial statements should represent a stable unit of value so that meaningful comparisons of current and past periods are possible. | Unit of Measurement Principle |
| Wages Payable | Current Liability |
| Receivables | Current Assets |
| Furnishing & Equipment | Noncurrent Asset |
| Current Maturities of long-term debt | Current Liability |
| Building | Noncurrent Asset |
| Mortgage Payable | Long-term Liability |
| Additional Paid-in Capital | Owner's Equity |
| Accounts Payable | Current Liabilities |
| Capital Stock | Owner's Equity |
| Land | Noncurrent Asset |
| Cash | Current Asset |
| Dividends Payable | Current Liability |
| Operating Equipment (useful more than one year) | Other Assets |
| Marketable Securities (short-term investments) | Current Assets |
| Goodwill | Other Assets |
| Advance Deposit | Current Liability |
| Retained Earnings | Owner's Equity |
| Prepaid Expenses | Current Asset |
| Receivables after one year | Noncurrent Asset |
| Deferred Charges | Other Assets |
| Inventories | Current Assets |
| Treasury Stock | Owner's Equity |
| Deferred Income Taxes | Long-Term Liability |
| Which of the following is not a characteristic of the hosp. industry: A) Short distribution chain B) Labor-intensive business C) Consistent activity level throughout the year D) Fast conversion of raw materials into a finished product | C) Consistent activity level throughout the year |
| Ethics are A) Only ab the law B) Fixed for all times C) The same across all cultures D) Based on the beliefs of a culture. | D) Based on the beliefs of a culture. |
| An entry to increase the accumulated depreciation account is recorded with what entry? A) Debit B) Credit C) Either D) None | B) Credit |
| An insurance premium of $1,500 is paid for insurance coverage for the following year. The payment is recorded as an expense in the month of purchase. This violated which principle? A)Disclosure B)Matching C)Cost D)Conservatism | B) Matching |
| Accounting principle that requires the preparation of accounting records and reports under the assumption that the business will continue indefinitely and that liquidation is not in prospect. | Going Concern Principle/Continuity of the Business Unity Principle |
| What is the fundamental accounting equation? | A = L + OE |
| A business owned by one person is normally referred to as a: | Sole Proprietorship |
| What kind of asset is a prepaid insurance? | Current Asset |
| Things owned by a firm = | Assets |
| What is the largest cost for many hospitality businesses? | Labor |
| A format of business organization that may result in double taxation is S corporation. T/F | False |
| When a corporation is a separate legal entity from its owners it pays income taxes on its profits, then the profits are distributed to share holders who then also have to pay income taxes. This is called what? | Double Taxation |
| Unincorporated firms like sole proprietorships/partnerships do not pay income taxes on profits. Instead all profits pass to the owner of the business who then pays income taxes on the profits. This is called what? | Single Taxation |
| This tax code offers a way for small businesses to avoid double taxation while still enjoying the benefits of an incorporation. The company pays no income tax, instead the profits transfer directly to shareholders who then pay personal income tax on them. | S Corporation |
| What accounting principle requires that the methods of depreciation used be stated in financial statements or in footnotes to the financial statements? | Full Disclosure Principle |
| Certain current assets are reduced to their market values when market is lower than cost - this reflects what principle? | Matching Principle |
| A common-size balance sheet shows what as 100%? A)Assets B)Liabilities C)Owner's Equity D)None of the above | A) Assets |
| The accounting principle that supports recording a hotel building at the purchase price of $1.5 million when the market value is $1.75 million is the: A)Cost Principle B)Monetary Principle C)Going Concern Principle D)Conservatism Principle | A) Cost Principle |
| T/F: Prepaid insurance is a current liability. | False |
| T/F: The lodging industry is considered to be current asset intensive. | False |
| Cost of Asset - Accum. Depr. = | Net Book Value |
| Net Book Value = | Cost of Asset - Accum. Depr. |
| Net Working Capital = | CA - CL |
| Current Assets - Current Liabilities = | Net Working Capital |
| End Ret. Earnings - Beginning Ret. Earnings + Dividends Declared =? | Net Earnings or Net Income |
| Net Earnings or Net Income =? | End Ret. Earnings - Beginning Ret. Earnings + Dividends Declared |
| $ made in stocks that year/stocks sold that year = | Average Selling Price per Stock |
| Average Selling Price per Stock =? | $ made in stocks that year/stocks sold that year = |
| To calculate average selling price per stock you find $ made in stocks for that year which is = | Change between common stock in 2001 & 2002 + Change between Additional Paid in Capital in 2001 & 2002 |
| Investments Purchased = | End Investment Balance - (Beg. Investment Bal. - Investments Sold) |
| End Investment Balance - (Beg. Investment Bal. - Investments Sold) =? | Investments Purchased |
| When calculating the cost of investments purchased or equipment purchased do you use the cost or selling price of investments/equipment sold? | Use cost not selling price. |
| End equipment - (Beg. equip - equip sold) =? | Cost of Equipment Purchases |
| Cost of Equipment Purchases = ? | End equipment - (Beg. equip - equip sold) |
| Long-term Funds Borrowed = ? | End mortgage payable - (Beg. mortgage payable - current maturities of LTD) |
| End mortgage payable - (Beg. mortgage payable - current maturities of LTD) =? | Long-term Funds Borrowed |
| T/F: When calculating long-term funds borrowed and subtracting current maturities of LTD, use the # in current MP for the desired year, do not subtract between the years. | True |
| T/F: There is no cost of sales for rooms department? | True |
| On an income statement, allowances get subtracted from the department under what column? | Net Revenue |
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