Having external auditors test the company’s financial records and evaluate the
effectiveness of the internal control system is part of the internal control principle of
________________________.
The four building blocks of financial analysis are (1) ____________________, (2)
__________________________, (3) ____________________ and (4)
_____________________.
At the end of the current period, a company reported $475,000 in net credit sales and
$75,000 in ending accounts receivable. Calculate this company’s days’ sales uncollected
at the end of the current period.
Identify the types of adjusting entries and explain the purpose of each type.
The following information is available for Trico and its two main competitors in the
industry (Duco and Unico):
The industry standard for the current ratio is 1.8 and the industry standard for the
acid-test ratio is 1.
Required:
1) Calculate the current ratio and acid-test ratio for each firm.
2) Rank the firms in decreasing order of liquidity.
3) Comment on Trico’s relative liquidity position.
Present Value of 1
Future Value of 1
Present Value of an Annuity of 1
Future Value of an Annuity of 1
When you reach retirement age, you will have one fund of $100,000 from which you
are going to make annual withdrawals of $14,702. The fund will earn 6% per year. For
how many years will you be able to draw an even amount of $14,702?
____________________________ are banks authorized to accept deposits of amounts
payable to the federal government, including amounts due for payroll taxes.
Expenditures incurred in the process of converting raw materials to finished goods, that
include direct labor and factory overhead are known as _________________________.
Partners in a partnership are taxed on _______________________, not on their
withdrawals.
A company is planning to introduce a new portable TV to its existing product line.
Management must decide whether to make the TV case or buy it from an outside
supplier. The lowest outside price is $100. If the case is produced internally, the
company will have to purchase new equipment that will yield annual depreciation of
$130,000. The company will also need to rent a new production facility at $200,000 a
year. At 20,000 cases per year, a preliminary analysis of production costs shows the
following:
Required:
(1) Determine whether the company should make the cases or buy them from the
outside supplier.
(2) What decision should be made if only 15,000 cases are needed?
(3) What other factors, besides cost, should the company consider?
In preparing flexible budgets, the costs that remain constant in total are
_______________ costs. Those costs that change in total are _______________ costs.
Match each of the following transactions and events to the accounting principle
applicable to recording and reporting them.
1) An insurance company receives insurance premiums for six future month’s worth of
coverage.
2) Helen Cho, a sole proprietor, pays for her daughter’s preschool out of business funds.
3) To make the balance sheet look better, Helen Cho added several thousand dollars to
the Equipment account that she believed was undervalued.
4) A building is for sale at $480,000. An appraisal is given for $450,000.
5) Mayan Imports receives a shipment from Mexico. The invoice is stated in pesos.
a. Business entity principle
b. Objectivity principle
c. Cost principle
d. Going concern principle
e. Monetary unit principle
f. Revenue recognition principle
The difference between the actual sales and the flexible budget sales is called the
______________________ variance.