Identify and explain the advantages and disadvantages of bond financing.
Answer:
Montgomery Marketing Co. had assets of $475,000; liabilities of $275,500; and equity
of $199,500. Calculate its debt ratio.
Answer:
A company reported net sales for Year 1 of $285,000 and $575,000 for Year 2. The
year-end balances of accounts receivable were $49,000 for Year 1 and $85,000 for Year
2. Calculate the days’ sales uncollected at the end of each year for this company and
describe any changes in the apparent liquidity of the company’s receivables.
Answer:
Define the cash flow on total assets ratio and explain how it is used to evaluate cash
flows and to assess company performance.
Answer:
Explain the debt ratio and its use in analyzing a company’s financial condition.
Answer:
Based on predicted production of 25,000 units, Best Co. anticipates $175,000 of fixed
costs and $137,500 of variable costs. What are the flexible budget amounts of total
costs for 20,000 and 30,000 units?
Answer:
Explain some of the disadvantages of the departmental overhead rate method.
Answer:
A company is trying to decide which of two new product lines to introduce in the
coming year. The predicted revenue and cost data for each product line follows:
The company has a 30% tax rate, uses the straight-line depreciation method, and
predicts that cash flows will be spread evenly throughout each year. Calculate each
product’s payback period. If the company requires a payback period of three years or
less, which, if either, product should be chosen?
Answer:
A company is beginning a savings plan. It will save $15,000 per year for the next 10
years. How much will the company have accumulated after the tenth year-end deposit,
assuming the fund earns 10% interest?
Answer:
Internal rate of return is expressed as a _________________.
Answer:
A company’s property records revealed the following information about its plant assets:
Calculate the depreciation expense for each machine for the year ended December 31,
2013, and for the year ended December 31,
Machine 1:
2012 _______________________
2013 _______________________
Machine 2:
2012 _______________________
2013 _______________________
Answer:
The future value of an ordinary annuity is the accumulated value of each annuity
payment with interest one period after the date of the final payment.
Answer:
Information to prepare the statement of cash flows usually comes from three sources:
(1) __________________________, (2) _______________________ and (3)
____________________.
Answer:
An _______________ is a series of equal payments at equal time intervals.
Answer:
________________________ refers to products that a company owns and intends to
sell.
Answer:
Elroy Co. has prepared the following fixed budget for the year, assuming production
and sales of 30,000 units. This level of production represents 80% of capacity.
Calculate the following flexible budget amounts at the indicated levels of capacity:
Answer:
Describe the purpose of a job cost sheet and explain what information is found on the
job cost sheet.
Answer: