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Accounting Last Test
| Question | Answer |
|---|---|
| Stock | Corporation sells shares of ownership |
| Corporation | is a legal entity |
| Stockholders/Shareholders | They can buy and sell stock without effecting corporation…. Own the stock |
| Characteristics of Corporation | - separate legal existence - transferable units ownershp - limited stockholder liability - subject taxes |
| Forming corporation | Application approved state grants a charter or articles of incorporation….. prepare by laws board of directors |
| Charter | #of shared stock a corporation authorizes |
| Outstanding stock | remaining in the hands of stockholders |
| Par value | Shares of stock are often assigned a dollaramount |
| 3 major rights of share of stock are: | - right to vote - right to share distributions of earnings - right to share in assets upon liquidation |
| Two primary classes paid in capital: | Common Stock & Preferred Stock |
| Cumulative Preferred stock | has a right to receive regular dividends that were not declared (paid) in prior years. |
| In arrears | Cumulative preferred stock dividends that have not been paid in prior years are said to |
| Premium | more than par |
| Discount | less than par |
| Date of declaration: | date board of directors formally authorized payment on dividend |
| Date of record: | date corporation uses to determine which stockholders will receive dividend |
| Treasury Stock | stock is stock that a corporation has issued and then reacquired. A corporation may purchase its own stock for a variety of reasons |
| Stock split | split is a process by which a corporation reduces the par or stated value of its common stock and issues a proportionate number of additional shares. |
| Budget | a comprehensive financial plan for achieving the financial and operational goals of an organization |
| Sales Budget | Comes First!!! |
| 6 Budgets | Sales, Production, Raw Materials Purchases Budget, DIrect Labor Budget, Manufacturing Overhead Budget & Selling and Administrative Expense Budget |
| Standard Cost System | - Carefully predetermined amounts - Planning labor, material, and overhead requirements - Expected level of performance |
| Attainable Standards vs ideal | Ideal 100% efficiency |
| Quantity Standard | Amount of input that should go into a single unit of product |
| Price Standard | Price that should be paid for a specific quantity input |
| Rate Variance | Results from paying more or less than expected for overhead items and from excessive usage of overhead items |
| Efficiency Variance | A function of the selected allocation measure.Does not reflect overhead control |
| Budgeted Fixed Overhead Rate= | Budgeted Fixed Overhead/ Budgeted Volume |
| Decentralization offen occurs when…. | organizations continue to grow |
| Decentralization | pushes decision making down to a lower level managers |
| Which of the following requires managers to determine whether a proposed capital investment meets some minimum criteria? A) preference decision B) screening decision C) cash payback period D) none of the above | B |
| When choosing among several independent projects are not mutually exclusive managers should.. A) Rel B) Compare their net present value regardless C) Calculate profitability index of each project for comparison D)Rely soely on internal rates of return | C |
| When deciding whether to lease or buy a longterm asset managers should? A) Compare net present value of two options B) Consider only the cash outflows C) Always choose to buy long term asset | A |
| Which methods ignore the time value of money? A) Payback method accounting rate of return B) Payback method internal rate of return C) Net present value and profitability index | A |
| Which is true? A) when interest rate increases, present value single amount decreases B) when # interest periods increase the pv of single amount increases C) interest rate increases the present value single amount increases | A |
| ** Discounted cash flow methods recognize the time value of money ** | ** |
| Budget Help companies A) Meet short term objectives B) Meet long term objectives C) Both A and B D) None of the above | C |
| Which phases of management process are impacted by budgeting? A) Planning B) Directing/leading C) Controlling D)All | D |
| Shasta Company plans t double its profits in 5 years.. Example? A) Long term objective B) Short term objective C) Tactic D) Sales forecast | A |
| Which budgets would be prepared earliest in a companies budgeting process? A) Budgeted income statement B) Budgeted balance sheet C) Raw Mat. purchases budget D) Production budget | D |
| Not considered an operating budget? A) Cash budget B) Budgeted income statement C) Selling and administrative expense budget D) Raw materials purchases budget | A |
| Variance tells managers…. A) nothing B) whom to promote and whom to fire C) whether budgeted goals are being achieved D) which departments are running full capacity | C |
| Between budgets and standards which is true? A) exactly the same thing B) standards are used to develop budgets C) budgets are used to develop standards D) budgets and standards are unrelated | B |
| Spending variances may be separated into A) price and quantity variance B) price and volume variances C) volume and quality variances D) quantity and quality variance | A |
| When computing spending variances actual results are A) The flexible budget B) The master budget C) The variances D) None | A |
Created by:
murphy1717
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