1) What is the effect on the accounting equation of a cash payment to creditors?
2) What is a balanced scorecard? How is the balanced scorecard used in performance
evaluation?
3) Indicate whether each of the following statements about promissory notes is true or
false.
1>To the payee on a promissory note, the note is a receivable
2>The payee on a promissory note uses the note to borrow money
3>The interest rate on a promissory note is normally stated as an annual interest rate
4>The maker on a promissory note is responsible for paying the note at maturity
5>Some promissory notes are secured by assets belonging to the payee of the note
4) Harker Company manufactures DVD players and other similar electronic products.
Indicate whether the cost is a product cost or period (selling, general, and
administrative) cost AND whether its cost behavior is fixed, variable, or mixed by
placing X’s in the appropriate boxes. As an example, commissions paid to sales staff
would be classified as a period cost and variable.
Wages paid to production workers
5) Indicate which of the budgets and pro forma financial statements the given item
appears on by placing X’s in the appropriate column or columns.
Budgeted operating income.
6) What is an activity base, and how does the activity base relate to a variable cost?
7) Company A has variable costs per unit of $20, fixed costs of $300,000, and a
break-even sales volume of 60,000 units.
How does total fixed cost behave when volume increases?
8) What information does the sales budget provide for pro forma financial statements?
9) As of December 31, 2012, Walton Corporation had a current ratio of 1.84, quick ratio
of 1.45, and working capital of $18,000. The company uses a perpetual inventory
system and sells merchandise for more than it cost. Indicate how the given transaction,
if it occurred in January 2013, would affect Walton’s current ratio, quick ratio, and
working capital. Use a + for an increase, a – for a decrease, and 0 for no effect.
Walton purchased merchandise on account, $4,000