WGU C213 Accounting for Decision Makers
A company is experiencing an increase in bad debt expense, which change in
credit policy would cause this increase? - ANS - Some customers were allowed to
pay their bills in 60 days versus the normal 30 days
\A company manufactures custom-built wooden bookshelves. Which two costs
would the company classify as period costs? - ANS - Advertising costs.
Salary of the receptionist.
\A corporation has total liabilities of $300 million, total owner's equity of $100
million, and current assets of $50 million. What is the value of the firm's long-term
assets? - ANS - $350 million
\A furniture company using accrual accounting purchased 20 sofas in November
2011, In December 2011, 8 of the sofas were sold to customers. The customers all
signed contracts agreeing to pay half the amount owed in February 2012 and the
remaining half in March 2012. At the time of sale, the company was reasonably
sure the customers would pay the amount owed.
In which month should advertising costs be expended? - ANS - November 2011
\aAssuming the company uses US GAAP standards, what is the total cash flow
from financing activities? - ANS - 145000
\How does management accounting differ from financial accounting? - ANS -
Management accounting is used primarily for internal planning, control, and
evaluation
\In January of year 1, a company began doing business as a corporation in order
to sell technology-related accessories and services. What will be the impact of
the January 31 event on the company's balance sheet on that date?
Jan. 31 Corp paid $6k cash for one-year insurance policy. Policy begins Feb. 1,
year 1.
What will be impact of Jan. 31 event on company's balance sheet on that date? -
ANS - Prepaid insurance will INCREASE $6k, and cash will DECREASE $6k
\In which scenario would activity-based costing be more appropriate than
traditional costing? - ANS - A company produces five different products. The
products are highly differentiated and have significantly different demands for
their use of overhead costs
\On May 1, 2011, a company using accural accounting purchased equipment
costing $500,000. It expects the equipment to have a useful life of five years. At
the time of purchase, the company also purchased a one-year insurance policy
on this equipment, which cost $6,000.
, How much insurance expense should the company have recognized of the year
ending in 2011? - ANS - $4,000
\Order the step in the decision cycle - ANS - 1 prepare financial statements
2 analyze financial statement
3Gather information
4 make decisions
5 implement decisions
\Partial Financial information for a company is as follows
11.0
In January of year 1, a company began doing business as a corporation in order
to sell technology-related accessories and services. What will be the impact of
the January 5 event on the company's balance sheet on that date?
Jan. 5 corp purchased equipment to be used in business for $200k cash.
What will be impact of the Jan. 5 event on companies balance sheet on that date?
- ANS - Equip will INCREASE $200k, and cash will DECREASE $200k
\The director of a marathon race wants to assign the cost of having police officers
along the race route to manage crowd control. Which consideration is an
appropriate cost driver? - ANS - The cost of liability insurance for the race.
The number of participants and spectators.
\What are two common reasons for managers to manipulate reported earnings? -
ANS - They are preparing to qualify for a bank loan.
They are feeling pressured to meet internal sales goals.
\What are two impacts on costs as sales volume increases? - ANS - Total fixed
costs will increase in direct proportion.
Fixed costs per unit will decrease.
\What does accounting focus on? - ANS - The impact a business's activities have
on it's overall financial performance
\What does it mean if a company has a debt ratio of 101.5%? - ANS - The
company has 1.5% more total liabilities that total assets
\What does management accounting provide? - ANS - The insight that
management needs so the business can perform more effectively.
The detailed data that managers need to make decisions that will give the
business a competitive edge.
\What has had the most significant impact on accounting practices? - ANS -
Information Technology
\What impact does the sale of equipment have on the statement of cash flows? -
ANS - Increase in cash from investing activities
\What is a common category in a statement of cash flows? - ANS - Cash from
investing activities
A company is experiencing an increase in bad debt expense, which change in
credit policy would cause this increase? - ANS - Some customers were allowed to
pay their bills in 60 days versus the normal 30 days
\A company manufactures custom-built wooden bookshelves. Which two costs
would the company classify as period costs? - ANS - Advertising costs.
Salary of the receptionist.
\A corporation has total liabilities of $300 million, total owner's equity of $100
million, and current assets of $50 million. What is the value of the firm's long-term
assets? - ANS - $350 million
\A furniture company using accrual accounting purchased 20 sofas in November
2011, In December 2011, 8 of the sofas were sold to customers. The customers all
signed contracts agreeing to pay half the amount owed in February 2012 and the
remaining half in March 2012. At the time of sale, the company was reasonably
sure the customers would pay the amount owed.
In which month should advertising costs be expended? - ANS - November 2011
\aAssuming the company uses US GAAP standards, what is the total cash flow
from financing activities? - ANS - 145000
\How does management accounting differ from financial accounting? - ANS -
Management accounting is used primarily for internal planning, control, and
evaluation
\In January of year 1, a company began doing business as a corporation in order
to sell technology-related accessories and services. What will be the impact of
the January 31 event on the company's balance sheet on that date?
Jan. 31 Corp paid $6k cash for one-year insurance policy. Policy begins Feb. 1,
year 1.
What will be impact of Jan. 31 event on company's balance sheet on that date? -
ANS - Prepaid insurance will INCREASE $6k, and cash will DECREASE $6k
\In which scenario would activity-based costing be more appropriate than
traditional costing? - ANS - A company produces five different products. The
products are highly differentiated and have significantly different demands for
their use of overhead costs
\On May 1, 2011, a company using accural accounting purchased equipment
costing $500,000. It expects the equipment to have a useful life of five years. At
the time of purchase, the company also purchased a one-year insurance policy
on this equipment, which cost $6,000.
, How much insurance expense should the company have recognized of the year
ending in 2011? - ANS - $4,000
\Order the step in the decision cycle - ANS - 1 prepare financial statements
2 analyze financial statement
3Gather information
4 make decisions
5 implement decisions
\Partial Financial information for a company is as follows
11.0
In January of year 1, a company began doing business as a corporation in order
to sell technology-related accessories and services. What will be the impact of
the January 5 event on the company's balance sheet on that date?
Jan. 5 corp purchased equipment to be used in business for $200k cash.
What will be impact of the Jan. 5 event on companies balance sheet on that date?
- ANS - Equip will INCREASE $200k, and cash will DECREASE $200k
\The director of a marathon race wants to assign the cost of having police officers
along the race route to manage crowd control. Which consideration is an
appropriate cost driver? - ANS - The cost of liability insurance for the race.
The number of participants and spectators.
\What are two common reasons for managers to manipulate reported earnings? -
ANS - They are preparing to qualify for a bank loan.
They are feeling pressured to meet internal sales goals.
\What are two impacts on costs as sales volume increases? - ANS - Total fixed
costs will increase in direct proportion.
Fixed costs per unit will decrease.
\What does accounting focus on? - ANS - The impact a business's activities have
on it's overall financial performance
\What does it mean if a company has a debt ratio of 101.5%? - ANS - The
company has 1.5% more total liabilities that total assets
\What does management accounting provide? - ANS - The insight that
management needs so the business can perform more effectively.
The detailed data that managers need to make decisions that will give the
business a competitive edge.
\What has had the most significant impact on accounting practices? - ANS -
Information Technology
\What impact does the sale of equipment have on the statement of cash flows? -
ANS - Increase in cash from investing activities
\What is a common category in a statement of cash flows? - ANS - Cash from
investing activities
