1) Describe how a flexible budget is useful in planning for an organization.
2) Discuss the types of audit opinions that an independent auditor can express on a
company’s financial statements.
3) Why do companies seek to collect their accounts receivable quickly?
4) Pang Company’s current ratio for 2012 was 1.42, which was slightly above the
current ratio for similar companies in its industry. Pang’s quick ratio for 2012 was 0.68,
which is substantially lower than for similar companies in its industry. What conclusion
would you reach based on this information?
5) How does a flexible budget differ from a company’s master budget?
6) If the total claims by owners of Obe’s Gallery are $60,000 and liabilities are $25,000,
what are total assets?
7) Present value factors
The present value of an annuity of $1 at 8% has a factor for 3 periods of 2.577097; for 5
periods at 8% the factor is 3.992710 . For 10% at 5 periods the factor is 3.790787. For
12% at 5 periods the factor is 3.604776 .
Denver Company is considering purchase of equipment that costs $60,000 and is
expected to offer annual cash inflows of $19,000. Denver’s minimum required rate of
return is 10%. How many years must the cash flows last, for the investment to be
acceptable?
8) What sections typically would be included in a selling and administrative expenses
budget?
9) Ortiz Manufacturing is considering developing and marketing one of two new
products, A and B. It has accumulated the following information about the two
products:
Which of these items are relevant to Ortiz’s decision about which of these products it
will launch?