Fundamental Managerial Accounting Concepts Exam Questions with Detailed Answers Latest Update 2024 (Already Passed)

Fundamental Managerial Accounting Concepts Exam Questions with Detailed Answers Latest Update 2024 (Already Passed) Assume Durango Co. has sales of $100,000 for the month of November. The company expects sales to grow 10% each month. Durango Co. collects 60% of sales in the month of sale and 40% in the month after sale. What should Durango Co. project for cash collections in December? - Answers $106,000--December sales = $110,000 (November sales of $100,000 X 1.1) Cash Collections for December: November sales $100,000 X 0.4 = $40,000 December sales = $110,000 X 0.6 = $66,000 Total Collections = $40,000 + $66,000= $106,000 The schedule of cash receipts may include - Answers collections of accounts receivable current cash sales Select the correct equation for the inventory purchases budget. - Answers Cost of budgeted sales + desired ending inventory - beginning inventory = required purchases Durango Co. desires to maintain an ending inventory equal to 10% of next month's cost of budgeted sales. Assume that Durango Co. maintained this level of ending inventory for the month of September. The cost of budgeted sales for October is $100,000 and the cost of budgeted sales for November is $200,000. Calculate required purchases for the month of October. - Answers $110,000---Desired ending inventory for September = $20,000 ($200,000 x.1) + $100,000 budgeted sales for October - $10,000 beginning inventory for October = $110,000. Finn Company projects cost of goods sold to be $100,000 in October and $140,000 in November. It is Finn's policy to maintain an ending inventory equal to 25% of the next month's projected cost of goods sold. Calculate Finn's desired ending inventory for October. - Answers $35,000--- $140,000 X 25% In the inventory purchases budget, total inventory needed is computed using the amount of inventory - Answers needed during the period. Assume Durango Co. has sales of $200,000 for the month of November. The company expects sales to grow 10% each month. Durango Co. collects 60% of sales in the month of sale and 40% the month after sale. What should Durango Co. project for cash collections in December? - Answers $212,000---December sales = $220,000 (November sales of $200,000 X 1.1) Cash Collections for December: November sales $200,000 X 0.4 = $80,000 December sales = $220,000 X 0.6 = $132,000 Total Collections = $80,000 + $132,000= $212,000 Durango Co. pays 30% of its accounts payable in the month of purchase and 70% the following month. Durango Co. expects to purchase $100,000 of inventory in October and $100,000 in November. How much should Durango budget for cash disbursements for inventory for the month of November? - Answers $100,000---$30,000 (30% of November's accounts payable) + $70,000 (70% of October's accounts payable) = $100,000. Where does a company record its current cash sales and collections of accounts receivable? - Answers Schedule of cash receipts In the inventory purchases budget, cost of budgeted sales______ desired ending inventory____________ beginning inventory equals required purchases. - Answers plus, minus Which of the following line items from a 3-month inventory purchases budget are presented on the pro forma financial statements? Assume that 40% of accounts payable are paid in the month of purchase and 60% are paid the following month. (Select all that apply.) - Answers 60% of purchases for the last month shown as accounts payable on the balance sheet Total cost of goods sold (i.e. cost of budgeted sales) for the three months Desired ending inventory (i.e. ending inventory) for the last month Finn Company projects cost of goods sold to be $250,000 in October and $400,000 in November. It is Finn's policy to maintain an ending inventory equal to 10% of the next month's projected cost of goods sold. Calculate Finn's desired ending inventory for October. - Answers $40,000---$400,000 X 10% Which of the following items are shown on the selling and administrative expense budget? (Select all that apply.) - Answers Depreciation expense Salary expense The inventory necessary to meet budgeted sales and desired ending inventory is called - Answers total inventory needed Durango Co. pays 40% of its accounts payable in the month of purchase and 60% the following month. Durango Co. expects to purchase $40,000 of inventory on account in October and $100,000 on account in November. How much should Durango budget for cash disbursements for inventory for the month of November? - Answers $64,000---$40,000 (40% of November's accounts payable) + $24,000 (60% of October's accounts payable) = $64,000. Durango Co. reported the following on the selling and administrative expense budget: Salary expense for October $100,000 Salary expense for November $200,000 Utilities expense for October $10,000 Utilities expense for November $8,000 Depreciation expense $30,000 Salaries and utilities are paid in the month following their occurrence. How much should Durango Co. budget for cash disbursements for selling and administrative expenses for the month of November? - Answers $110,000--$100,000 of October salary expense =10,000 of October utility expense = $110,000. Depreciation is not a cash expense. Which of the following line items from a 3-month selling and administrative expense budget are presented on the pro forma financial statements? Salaries and utilities are paid in the month following their occurrence. (Select all that apply.) - Answers Selling and Admin. expenses Salaries payable Utilities payable Which of the following line items from a 12-month inventory purchases budget are presented on the pro forma financial statements? Assume that all purchases are paid in the month of purchase. (Select all that apply.) - Answers Desired ending inventory (i.e. ending inventory) for the last month Total cost of goods sold (i.e. cost of budgeted sales) for the twelve months Which of the following items are shown on the selling and administrative expense budget? (Select all that apply.) - Answers Salary expense Depreciation expense Expected interest expense Rent expense In the inventory purchases budget, total inventory needed equals - Answers cost of budgeted sales plus desired ending inventory. How can management plan for cash shortages? (Select all that apply.) - Answers Management