Accounting for decision makers C213 WGU
"Break even analysis" - ANS - Cost Volume profit analysis (CVP)
\"the line" is income from continuing operations. Reported "net of taxes" - ANS -
Below the line items
\1 paid in capital, 2 retained earnings, 3 treasure stock, 4 accumulated other
comprehensive income. - ANS - Owners Equity
\1. Identify overhead cost. 2. Analyze individual overhead costs in terms of cost
activities COST POOLS. 3. Identify measurable cost drivers (numerical # such as
gallons). 4. Assign overhead. 5. Use the ABC date to make decisions - ANS - 5
steps in the activity based costing (ABC)
\1. Invoice by invoice, detail categorization. 2. Scattergraph method, a visual
approach. 3. high-low method, a computational approach. - ANS - 3 approaches
to do the CVP:
\1. Prepare 2. Analyze 3. Gather 4. Make decisions 5. Implement 6. Observe. - ANS
- Accounting steps.
\5 steps of ABC system - ANS - Identify overhead cost activities, analyze
individual overhead costs in terms of those cost activities, identify measurable
cost drivers, assign overhead, and use the cost data to make decisions
\A common-size balance sheet is often prepared using total ? - ANS - assets to
standardize each amount instead of using total sales, in which case the asset
percentages are a good indication of the company's asset mix.
\A company's asset mix is strongly influence by - ANS - the companies industry
\A company's asset mix is: - ANS - the proportion of total assets in each asset
category and is largely determined by the industry in which the company
operates. Financing mix is the result of management decisions.
\A company's break-even point would change if there were an increase in: - ANS -
Total fixed costs due to a plant addition
\A company's internal control structure can be divided into five basic categories -
ANS - The control environment
Risk assessment
Control activities
Information and communication
Monitoring
\A cost incurred outside the factory or production facility. These costs are
reported as an expense in the period in which they are incurred. - ANS - Period
costs:
,\A cost that changes directly with changes in the level of sales or production.
Examples are materials costs and sales commissions. - ANS - Variable costs
\A cost that doesn't change based on changes in the level of sales or production.
Examples are building rent and executive salaries. - ANS - Fixed costs
\A future cost that can be changed by a decision made now. An example is
monthly rent for an apartment. - ANS - Differenital costs:
\A measure of a company's performance that includes all items that are expected
to continue into the future is - ANS - income from continuing operations
\A measure of a company's performance that is intended to summarize in one
number the overall economic performance of a company in a given period is - -
ANS - Net income
\A measure of rise - ANS - Operating leverage is=
\A more accurate allocation of manufacturing overhead and product costing can
take place when costs are assigned on the basis of: - ANS - Cost drivers
\A past cost that cannot be changed by any decision made now. An example
would be last month's paid rent. - ANS - Sunk Costs:
\A system for providing quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in making economic
decisions. - ANS - Definition of accounting:
\ABC assume that: - ANS - Activities that consume overhead cost
\According to Sarbanes-Oxley, which services is an accounting firm permitted to
provide to its audit client? - ANS - Opinions about the reliability of internal
controls
\According to U.S. law, companies selling stock to the public must provide
potential investors with? - ANS - Financial statements
\Accounting equation - ANS - Assets=liabilities+equity
\Accounts payable - ANS - Money the company owes to pay its creditors. (this will
be an addition +, b/c you owe this amount, but still have it)
\Accounts payable, accounts receivable, and inventory - ANS - Typical cash
budgeting accounts that are allocated:
\Accounts payable, accured liabilities, short term loans payable, current portion
of long term debt, unearned revenue. - ANS - Examples of current liabilities
\Accounts receivable - ANS - Money owed to the company for goods and services
(this will be a subtraction -, b/c people owe it to you, but you do not have it).
\ACTIVITIES consume overhead costs - ANS - ABC system assumes that:
\Activity cost pools. - ANS - Activity Based Costing ABC utilizes direct costs like
traditional costing, but breaks down the overhead costs into pieces called:
\ADD - ANS - If current liabilities are up you
\ADD (preserves cash) - ANS - If current assets are down you
,\Add the decrease - ANS - Account: Current Asset. Direction of change: Decrease.
Necessary adjustment:...
\Add the increase - ANS - Account: current liability. Direction of change: increase.
Necessary adjustment:...
\Adudit - ANS - A financial statement that furthermore decreases uncertainty.
\AIPCA: American INSTITUTE of certified public accountants. - ANS - What sets
auditory standards, continue education credits, CPA exam, and is the code of
professional conduct?
\All factory costs that are not direct materials or direct labor. Examples are
factory supervisor salaries, factory building depreciation, and miscellaneous
indirect materials such as glue or screws. - ANS - Manufacturing overhead:
\Allows a company to anticipate financing needs - ANS - What is the benefit of a
cash budget for a company
\Always at the bottom of the income statement. Net income/outstanding number
of shares of stock - ANS - EPS: Earnings per share
\Amount of cash generated or liabilities satisfied through doing business.
Revenues = increase $ - ANS - Revenues
\Amount to buy the company - ANS - What is market value of equity?
\an operating cost. Ex: Collection on account, paid for investors, paid investor on
debt, paid miscellaneous expense, paid income tax...these are operating, NOT
financial as one would assume - ANS - By definition, anything that is an expense
is...
\Analysis of financial statement numbers can be used to diagnose existing
problems and - ANS - To forecast how a company will perform in the future.
\Analysis of financial statements can be misleading if statements are not - ANS -
comparable or if statements exclude significant information. In addition, analysis
of historical data may distract one's attention from relevant current information.
\Analyze results, provide feedback, reward performance, identify problems - ANS
- Evaluating
\Any factor, usually some measure of activity, that causes cost to be incurrent.
Examples are labor hours, machine hours, or some other measure of activity
who's change causes corresponding changes in the cost object. - ANS - Cost
Driver:
\AOCI: Accumulated other comprehensive income.Market related gains and
losses that are not included on the income statement. - ANS - MARKET EVENTS
that result in an increase or decrease in equity are:
\Articulation - ANS - Details. All three financial statements are not isolated but
rather an integrated set of reports on a companies financial status.
\As compared to a company with a low operating leverage, a company with a high
operating leverage will: - ANS - Have a larger loss below the breakeven point
, \Aspects of management accounting that deal with issues as what additional
major resources (PPE) are needed to meet a companies long run goals - ANS -
Capital Budgeting
\asset (capital equipment). - ANS - When a company purchases equipment, it
exchanges one asset (cash) for another...
\Asset Turnover - ANS - Sales/total assets. A measure of a companies efficiency.
This number can be understated and can be misleading. IT is the number of
dollars in sales generated by each dollar of asset.
\Asset turnover. It is the number of dollars in sales generated by each dollar of
assets. - ANS - Efficiency
\Assets (resoures) - ANS - Resources owned or controlled by a company that will
provide probable future economic benefit.
\Assets mix - ANS - the proportion of assets in each asset category.
\Assets up=Cash down. Liabilities up=Cash up - ANS - On the statement of cash
flows, if Assets go up, cash goes?
If Liabilities go up, cash goes?
\Assets-to-equity ratio - ANS - The number of dollars of assets acquired for each
dollar invested by stockholders. LEVERAGE. Assets/equity
\Assets-to-equity ratio. It is the number of dollars of assets a company is able to
acquire using each dollar invested by stockholders. - ANS - Leverage
\Authorizing and approving the execution of transactions; for example, approving
the sale of a building or land. - ANS - Authorization.
\Average collection period - ANS - Average number of days that elapse between
the sale and cash collection. AVERAGE ACCOUNTS RECEIVABLE/ AVERAGE
DAY OF SALES. Add all up and divide by 2.
\Bad debt expense - ANS - Sell on credit to increase sales, cost of selling on
credit is not paying.
\balance sheet - ANS - First thing listed on this document is cash. this document
goes in order of liquidity
\Balance sheet - ANS - Mother of all financial statements.
\Balance Sheet - ANS - Point in time, Assets (resources) and liabilities
(obligations)
\Balance sheet equation - ANS - Assets= liabilities + equity
\Balance sheet, income statement, and statement of cash flows - ANS - The
financial statement includes what 3 documents
\Batch - ANS - activities that take place in order to support a batch or production
run, regardless of the size of the batch. Examples:• Inspections
• Machine setups
"Break even analysis" - ANS - Cost Volume profit analysis (CVP)
\"the line" is income from continuing operations. Reported "net of taxes" - ANS -
Below the line items
\1 paid in capital, 2 retained earnings, 3 treasure stock, 4 accumulated other
comprehensive income. - ANS - Owners Equity
\1. Identify overhead cost. 2. Analyze individual overhead costs in terms of cost
activities COST POOLS. 3. Identify measurable cost drivers (numerical # such as
gallons). 4. Assign overhead. 5. Use the ABC date to make decisions - ANS - 5
steps in the activity based costing (ABC)
\1. Invoice by invoice, detail categorization. 2. Scattergraph method, a visual
approach. 3. high-low method, a computational approach. - ANS - 3 approaches
to do the CVP:
\1. Prepare 2. Analyze 3. Gather 4. Make decisions 5. Implement 6. Observe. - ANS
- Accounting steps.
\5 steps of ABC system - ANS - Identify overhead cost activities, analyze
individual overhead costs in terms of those cost activities, identify measurable
cost drivers, assign overhead, and use the cost data to make decisions
\A common-size balance sheet is often prepared using total ? - ANS - assets to
standardize each amount instead of using total sales, in which case the asset
percentages are a good indication of the company's asset mix.
\A company's asset mix is strongly influence by - ANS - the companies industry
\A company's asset mix is: - ANS - the proportion of total assets in each asset
category and is largely determined by the industry in which the company
operates. Financing mix is the result of management decisions.
\A company's break-even point would change if there were an increase in: - ANS -
Total fixed costs due to a plant addition
\A company's internal control structure can be divided into five basic categories -
ANS - The control environment
Risk assessment
Control activities
Information and communication
Monitoring
\A cost incurred outside the factory or production facility. These costs are
reported as an expense in the period in which they are incurred. - ANS - Period
costs:
,\A cost that changes directly with changes in the level of sales or production.
Examples are materials costs and sales commissions. - ANS - Variable costs
\A cost that doesn't change based on changes in the level of sales or production.
Examples are building rent and executive salaries. - ANS - Fixed costs
\A future cost that can be changed by a decision made now. An example is
monthly rent for an apartment. - ANS - Differenital costs:
\A measure of a company's performance that includes all items that are expected
to continue into the future is - ANS - income from continuing operations
\A measure of a company's performance that is intended to summarize in one
number the overall economic performance of a company in a given period is - -
ANS - Net income
\A measure of rise - ANS - Operating leverage is=
\A more accurate allocation of manufacturing overhead and product costing can
take place when costs are assigned on the basis of: - ANS - Cost drivers
\A past cost that cannot be changed by any decision made now. An example
would be last month's paid rent. - ANS - Sunk Costs:
\A system for providing quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in making economic
decisions. - ANS - Definition of accounting:
\ABC assume that: - ANS - Activities that consume overhead cost
\According to Sarbanes-Oxley, which services is an accounting firm permitted to
provide to its audit client? - ANS - Opinions about the reliability of internal
controls
\According to U.S. law, companies selling stock to the public must provide
potential investors with? - ANS - Financial statements
\Accounting equation - ANS - Assets=liabilities+equity
\Accounts payable - ANS - Money the company owes to pay its creditors. (this will
be an addition +, b/c you owe this amount, but still have it)
\Accounts payable, accounts receivable, and inventory - ANS - Typical cash
budgeting accounts that are allocated:
\Accounts payable, accured liabilities, short term loans payable, current portion
of long term debt, unearned revenue. - ANS - Examples of current liabilities
\Accounts receivable - ANS - Money owed to the company for goods and services
(this will be a subtraction -, b/c people owe it to you, but you do not have it).
\ACTIVITIES consume overhead costs - ANS - ABC system assumes that:
\Activity cost pools. - ANS - Activity Based Costing ABC utilizes direct costs like
traditional costing, but breaks down the overhead costs into pieces called:
\ADD - ANS - If current liabilities are up you
\ADD (preserves cash) - ANS - If current assets are down you
,\Add the decrease - ANS - Account: Current Asset. Direction of change: Decrease.
Necessary adjustment:...
\Add the increase - ANS - Account: current liability. Direction of change: increase.
Necessary adjustment:...
\Adudit - ANS - A financial statement that furthermore decreases uncertainty.
\AIPCA: American INSTITUTE of certified public accountants. - ANS - What sets
auditory standards, continue education credits, CPA exam, and is the code of
professional conduct?
\All factory costs that are not direct materials or direct labor. Examples are
factory supervisor salaries, factory building depreciation, and miscellaneous
indirect materials such as glue or screws. - ANS - Manufacturing overhead:
\Allows a company to anticipate financing needs - ANS - What is the benefit of a
cash budget for a company
\Always at the bottom of the income statement. Net income/outstanding number
of shares of stock - ANS - EPS: Earnings per share
\Amount of cash generated or liabilities satisfied through doing business.
Revenues = increase $ - ANS - Revenues
\Amount to buy the company - ANS - What is market value of equity?
\an operating cost. Ex: Collection on account, paid for investors, paid investor on
debt, paid miscellaneous expense, paid income tax...these are operating, NOT
financial as one would assume - ANS - By definition, anything that is an expense
is...
\Analysis of financial statement numbers can be used to diagnose existing
problems and - ANS - To forecast how a company will perform in the future.
\Analysis of financial statements can be misleading if statements are not - ANS -
comparable or if statements exclude significant information. In addition, analysis
of historical data may distract one's attention from relevant current information.
\Analyze results, provide feedback, reward performance, identify problems - ANS
- Evaluating
\Any factor, usually some measure of activity, that causes cost to be incurrent.
Examples are labor hours, machine hours, or some other measure of activity
who's change causes corresponding changes in the cost object. - ANS - Cost
Driver:
\AOCI: Accumulated other comprehensive income.Market related gains and
losses that are not included on the income statement. - ANS - MARKET EVENTS
that result in an increase or decrease in equity are:
\Articulation - ANS - Details. All three financial statements are not isolated but
rather an integrated set of reports on a companies financial status.
\As compared to a company with a low operating leverage, a company with a high
operating leverage will: - ANS - Have a larger loss below the breakeven point
, \Aspects of management accounting that deal with issues as what additional
major resources (PPE) are needed to meet a companies long run goals - ANS -
Capital Budgeting
\asset (capital equipment). - ANS - When a company purchases equipment, it
exchanges one asset (cash) for another...
\Asset Turnover - ANS - Sales/total assets. A measure of a companies efficiency.
This number can be understated and can be misleading. IT is the number of
dollars in sales generated by each dollar of asset.
\Asset turnover. It is the number of dollars in sales generated by each dollar of
assets. - ANS - Efficiency
\Assets (resoures) - ANS - Resources owned or controlled by a company that will
provide probable future economic benefit.
\Assets mix - ANS - the proportion of assets in each asset category.
\Assets up=Cash down. Liabilities up=Cash up - ANS - On the statement of cash
flows, if Assets go up, cash goes?
If Liabilities go up, cash goes?
\Assets-to-equity ratio - ANS - The number of dollars of assets acquired for each
dollar invested by stockholders. LEVERAGE. Assets/equity
\Assets-to-equity ratio. It is the number of dollars of assets a company is able to
acquire using each dollar invested by stockholders. - ANS - Leverage
\Authorizing and approving the execution of transactions; for example, approving
the sale of a building or land. - ANS - Authorization.
\Average collection period - ANS - Average number of days that elapse between
the sale and cash collection. AVERAGE ACCOUNTS RECEIVABLE/ AVERAGE
DAY OF SALES. Add all up and divide by 2.
\Bad debt expense - ANS - Sell on credit to increase sales, cost of selling on
credit is not paying.
\balance sheet - ANS - First thing listed on this document is cash. this document
goes in order of liquidity
\Balance sheet - ANS - Mother of all financial statements.
\Balance Sheet - ANS - Point in time, Assets (resources) and liabilities
(obligations)
\Balance sheet equation - ANS - Assets= liabilities + equity
\Balance sheet, income statement, and statement of cash flows - ANS - The
financial statement includes what 3 documents
\Batch - ANS - activities that take place in order to support a batch or production
run, regardless of the size of the batch. Examples:• Inspections
• Machine setups
