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244 Cards in this Set
- Front
- Back
- 3rd side (hint)
AICPA |
American Institute ofCertified Public Accountants |
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_________ _________ firms offer professional accounting and related services for a fee tocompanies, other organizations, and individuals. |
Public accounting |
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CPA |
Certified PublicAccountant |
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Auditing is for |
A business seeking a loan or attempting to have its securities traded on a stock exchange |
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ICMA |
Institute of Certified Management Accountants |
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CMAs |
Certified Management Accountants |
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CIA |
Certified Internal Auditor |
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Financial accounting appears in ___________ |
financial statements |
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The external users of accounting information fall into six groups; |
Owners and prospective owners. Creditors and lenders. Employees and their unions. Customers. Governmental units. General public. |
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financial statements are _______ reports |
formal |
Type of report |
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GAAP |
generally accepted accounting principles |
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deciding what amounts of capital (funds) are needed to run the businessand whether to secure these funds from owners (stockholders) or creditors is ____________ decisions |
Financial |
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deciding how the total capital of a company is to be invested is __________ _________ decisions. |
Resource allocation |
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deciding what products are to be produced, by what means, andwhen is _________ decisions |
Production |
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setting selling prices and advertising budgets are ___________ decisions |
Marketing |
Setting what? |
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APB |
Accounting Principles Board |
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FASB |
Financial Accounting Standards Board |
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GASB |
Governmental Accounting Standards Board |
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SEC |
Securities and ExchangeCommission |
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AAA |
American Accounting Association |
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The Financial Executives Institute members are primarily _________ _________-__________ executives |
financial policy-making |
Members are |
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MAP Committee |
Management AccountingPractices Committee |
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A __________ is any business organization that exists as an economic unit |
business entity |
"Blank" that exists as an what? |
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Financial Accounting intended primarily for _________. |
external use |
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________ provides information on a company's financial position, cash inflows and outflows, and the results of operations. |
financial statements |
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Four Basic Financial Statements...: |
The income statement. The statement of retained earnings The balance sheet The statement of cash flows |
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________ present the profitability and strength of acompany. |
Financial Statements |
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The ________ _________ reflects a company’s profitability |
Income Statement |
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The ________ _________ shows the change in retained earnings between the beginning and end of a period (e.g. a month or a year). |
Statement of Retained Earnings |
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The ______ ____ reflects a company’s solvency andfinancial position. |
Balance Sheet |
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The _________ shows the cash inflows and outflows for a companyover a period of time. |
statement of cash flows |
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_________ are the inflows of assets (such as cash) resulting from the sale of productsor the rendering of services to customers. |
Revenues |
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__________ are the costs incurred to produce revenues. |
Expenses |
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Net income=... |
= Revenues – Expenses |
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net loss occurs when... |
...When expenses exceed revenues |
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The _________ explains the changes in retained earnings between two balance sheet dates. |
The statement of retained earnings |
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A ________ is a payment (usually of cash) to the owners of the business |
dividend |
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The _________, sometimes called the statement of financial position, |
balance sheet |
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__________ are things of value owned by the business. |
Assets |
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________ are also called the resources of the business. |
Assets |
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________ are amounts due from customers for services previously rendered |
accounts receivable |
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_________ are the debts owed by a business |
Liabilities |
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__________ ________ are amounts owed to suppliers for previous purchases |
accounts payable |
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_________ are written promises to pay a specific sum of money |
notes payable |
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__________ refers to The owners’ interest in a corporation |
stockholders’ equity |
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___________ shows the amount of the owners’investment in the corporation. |
Capital stock |
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__________ generally consists of the accumulated net income of the corporation minus dividends distributed to stockholders. |
Retained earnings |
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statement of cash flows shows... |
...shows the cash inflows and cash outflows |
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__________ shows the cash inflows and cash outflows from operating, investing, andfinancing activities. |
statement of cash flows |
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__________ __________ generally include the cash effects of transactions and other events involving creditors and owners (stockholders). |
Financing activities |
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_________ are all claims to, or interests in, assets |
Equities |
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accounting equation...: |
Assets A = Liabilities L + Stockholders’ Equity SE (A = L + SE) |
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_________ is a business activity |
transaction |
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_________ is any written or printed evidence of a business transaction |
source document |
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__________ describes the essential facts of that transaction |
source document |
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__________ concept (or accounting entity concept) is Data gathered in anaccounting system relates to a specific business unit or entity |
Business entity |
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_________ _____________ concept is Economic activity that is initially recorded and reported in a common monetary unit of measure—the dollar in the United States |
Money measurement |
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___________ concept (principle) Most of the amounts in an accountingsystem are the objective money prices determined in the exchange process. |
Exchange-price (or cost) |
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Going-concern (continuity) concept is .. |
... Unless strong evidence exists to the contrary,accountants assume that the business entity will continue operations into the indefinite future |
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__________ concept is an entity’s life can be subdivided into time periods |
Periodicity (time periods) |
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5 Underlying assumptions or concepts are... |
*Business entity concept (or accounting entity concept) *Money measurement concept. *Exchange-price (or cost) concept (principle). *Going-concern (continuity) concept. *Periodicity (time periods) concept. |
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_________ of _________ are a teaching tool. |
summary of transactions |
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_______ of _______ shows the effects of transactions on theaccounting equation. |
summary of transactions |
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__________ increases the amount of retained earnings |
Revenues |
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Expenses and dividends decrease... |
the amount of retained earnings |
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the equity ratio= |
=Stockholders 'equity/Totalequities |
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Solvency is... |
...Is the Ability to pay debts as they become due. |
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The Financial Executives Institute was established in... |
...in 1931 |
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Information important enough to influence the decision of an informed user of the financial statements should be published |
... Full disclosure |
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Expenses that should be recognized as they are incurred to produce revenues is known as __________ recognition |
Matching |
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Gains may be recorded only when realized, but losses should be recorded when they first become evident are __________ recognition. |
Gain and loss |
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Revenues should be earned and realized before they are recorded... |
Revenue recognition |
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Transfers of resources are recorded at prices agreed on by the parties at the time of the exchange... |
Exchange-price (cost) |
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_________ decisions determines the location of a company's markets and how to reach them. |
Marketing |
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The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the...
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Income Statement
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The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the...
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Balance Sheet
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Under the accrual basis of accounting, revenues are reported in the accounting period when the...
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Service Or Goods Have Been Delivered
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Under the accrual basis of accounting, expenses are reported in the accounting period when the _________ matches the _________ Or Is Used Up |
Expense ; Revenues |
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Revenues minus expenses equals __________.
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net income
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Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as __________.
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assets
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Assets are usually reported on the balance sheet at which amount?
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Cost
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Obligations (amounts owed) are reported on the balance sheet and are referred to as __________.
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liabilities
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Liabilities often have the word __________ in their account title.
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payable
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Unearned Revenues is what type of account?
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Liability
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Accounting entries involve a minimum of how many accounts?
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Two
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The listing of all of the accounts available for use in a company's accounting system is known as the __________.
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chart of accounts
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Assets minus liabilities equals __________.
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stockholders' equity or owner's equity(net assets if a nonprofit)
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Which term is associated with "left" or "left-side"?
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Debit
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Which term is associated with "right" or "right-side"?
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Credit
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When cash is received, the account Cash will be...
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Debited
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When a company pays a bill, the account Cash will be...
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Credited
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What will usually cause an asset account to increase?
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Debit
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What will usually cause the liability account Accounts Payable to increase?
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Credit
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Entries to expenses such as Rent Expense are usually...
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Debits
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Entries to revenues accounts such as Service Revenues are usually...
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Credits
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Cash is always _________ when cash is received.
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debited
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Should the $500 entry to the Cash account be a debit?
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Yes |
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Should the $500 entry to Mary Smith, Capital be a debit?
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No |
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This owner's equity account should be ________, not debited.
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credited
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A company using the accrual method of accounting performed services on account in August. The services were for $2,000 and the company gave the customer credit terms that state the amount is to be paid to the company in September. Assuming that the company prepares monthly income statements, what will be the account debited for $2,000 in August?
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Accounts Receivable
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A company using the accrual method of accounting performed services on account in August. The services were for $2,000 and the company gave the customer credit terms that state the amount is to be paid to the company in September. Which account should the company credit for $2,000 in August?
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Service Revenue
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A company using the accrual method of accounting performed services on account in August. The services were for $2,000 and the company gave the customer credit terms that state the amount is to be paid to the company in September. In September when the company receives the $2,000 from the customer, which account should the company debit?
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Cash
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A company using the accrual method of accounting performed services on account in August. The services were for $2,000 and the company gave the customer credit terms that state the amount is to be paid to the company in September. In September when the company receives the $2,000 from the customer, which account should the company credit?
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Accounts Receivable
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Accounts Payable
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Credit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Cash
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Land
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Notes Payable
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Credit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Accounts Receivable
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Mary Smith, Capital
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Credit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Supplies
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Supplies Expense
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Prepaid Insurance
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Service Revenue
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Credit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Mary Smith, Drawing
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Equipment
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Debit
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To increase the balance in the following accounts, would you debit the account or would you credit the account? Unearned Revenue
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Credit
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Accounts Payable
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Debit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Cash
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Credit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Land
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Credit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Notes Payable
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Debit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Accounts Receivable
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Credit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Mary Smith, Capital
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Debit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Supplies
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Credit
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Supplies Expense
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Credit
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Prepaid Insurance
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Credit
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Service Revenue
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Debit |
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Mary Smith, Drawing
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Credit
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Equipment
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Credit
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To decrease the balance in the following accounts, would you debit the account or would you credit the account? Unearned Revenue
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Debit |
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What is the normal balance for the following accounts? Accounts Payable
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Credit
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What is the normal balance for the following accounts? Cash
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Debit
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What is the normal balance for the following accounts? Land
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Debit
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What is the normal balance for the following accounts? Notes Payable
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Credit
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What is the normal balance for the following accounts? Accounts Receivable
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Debit
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What is the normal balance for the following accounts? Mary Smith, Capital
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Credit
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What is the normal balance for the following accounts? Supplies
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Debit
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What is the normal balance for the following accounts? Supplies Expense
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Debit
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What is the normal balance for the following accounts? Prepaid Insurance
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Debit
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What is the normal balance for the following accounts? Service Revenue
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Credit
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What is the normal balance for the following accounts? Mary Smith, Drawing
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Debit
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What is the normal balance for the following accounts? Equipment
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Debit
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What is the normal balance for the following accounts? Unearned Revenue
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Credit
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Generally when an expense is involved in a transaction, an expense will be...
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Debited
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Generally when revenues are involved in a transaction, a revenue account will be...
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Credited
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The accountant's word to indicate that an entry will be recorded on the left-side of an account is...
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Debit
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A contra-asset account such as Accumulated Depreciation will likely have which balance?
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Credit
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A contra-liability account such as Discount on Notes Payable will likely have which balance?
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Debit
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True/False: The chart of accounts is a listing of the accounts presently having balances in the general ledger.
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False
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True/False: Some accounting software will classify some accounts as "income" accounts, while accountants might refer to these accounts as "revenue" accounts.
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True
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True/False: The digits of the account numbers assigned to general ledger accounts often have significance. For example, an account number beginning with a "1" might signify that the account is an asset account, a "6" might signify an operating expense, etc.
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True
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The accounts shown in the chart of accounts can be broadly classified into two categories: balance sheet accounts and __________ accounts.
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income statement
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Every transaction will affect how many accounts?
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Two Or More
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In addition to the standard chart of accounts for a specific industry, you will likely want to expand and/or modify the chart of accounts to fit your business. One tool that would be helpful in determining the accounts for your company would be your company's __________ chart.
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organization
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Revenues – Expenses= |
Net Income |
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The two main methods of bookkeeping and accounting are 1) the cash method, and 2) the __________method.
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Accruel |
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__________-entry bookkeeping means that every transaction will affect two or more accounts.
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Double |
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A __________ amount will appear on the left side of a T-account.
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Debit |
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A listing of the balances in the accounts in order to determine whether debits are equal to credits is a __________ balance.
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Trial |
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The listing of accounts that are available for posting transactions is the __________ of accounts.
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Chart |
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When a check is written, a cash account should be __________.
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Credited |
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Liability accounts will normally have __________ balances.
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Credit |
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Revenue accounts will normally have __________ balances.
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Credit |
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The bookkeeping or accounting equation is Assets = Liabilities + Owner's __________.
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Equity |
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The book of original entry is the definition of a __________.
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Journal
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When a sale is made on credit, the seller will debit the asset account Accounts __________.
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Receivable
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Asset, __________, and stockholders' equity accounts are known as balance sheet accounts.
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Liability
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Large corporations should report revenues on their income statements when the __________.
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Revenues Are Earned
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The difference between the balance in a company's cash account and its bank statement is documented in the __________ of the bank statement.
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reconciliation
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Accrued expenses are likely to pertain to transactions that have __________ been paid. |
Not Yet / Not |
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Deferred revenues likely involve cash amounts that have __________ been received.
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Already |
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A __________ entry typically removes an accrual-type adjusting entry that had been recorded in the preceding accounting period.
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reversing
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Cash and Accounts Receivable are two examples of accounts that are reported on the classified balance sheet under the heading __________ assets.
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current
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A supplier of goods or services is known as a __________.
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Vendor |
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The separation of duties is part of the internal __________ for safeguarding assets.
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controls
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Cash is an ________ account |
Asset |
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Cash is on the ________ ______ of the financial statement |
[Balance Sheet ]
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2. Accounts Receivable is an ________ account
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Asset
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2. Accounts Receivable is on the ________ ______ of the financial statement
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[Balance Sheet ]
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Supplies is an ________ account
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Asset
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Supplies is on the ________ ______ of the financial statement
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[Balance Sheet ]
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Inventory is an ________ account
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Asset
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Inventory is on the ________ ______ of the financial statement
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[Balance Sheet ]
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5. Accounts Payable is an ________ account
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Liability
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5. Accounts Payable is on the ________ ______ of the financial statement
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[Balance Sheet ]
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6. Note Payable is an ________ account
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Liability
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6. Note Payable is on the ________ ______ of the financial statement
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[Balance Sheet ]
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Capital is an ________ _______ account
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[Owner's equity ]
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Capital is on the ________ ______ of the financial statement
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[Balance Sheet ]
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Rent is an ________ account
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Expense
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Rent is on the ________ ______ of the financial statement
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[Income Statement ]
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Utilities is an ________ account
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Expense
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Utilities is on the ________ ______ of the financial statement
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[Income Statement ]
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Sales is an ________ account
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Revenue
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Sales is on the ________ ______ of the financial statement
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[Income Statement ]
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Please give the proper order of preparation of the four main financial statements.
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1. [Income Statement]2. [Statement of Retained Earnings]3. [Balance Sheet]4. [Statement of Cash Flows]
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This characteristic requires accounting information to be free of measurement method bias.
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Neutrality
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This characteristic requires that information on economic activity corresponds to the actual underlying activity.
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Representational faithfulness
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Information has this characteristic when it reveals the relative success of users in predicting outcomes.
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Feedback value
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Information has this characteristic when depicts for users what it purports to represent.
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Reliability
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This characteristic requires that information be pertinent to a decision.
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Relevance
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Information has this characteristic when it reveals differences and similarities that are real and are not the result of differing accounting treatments.
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Comparability
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Information has this characteristic when it supports users’ abilities to anticipate outcomes of events.
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Predictive value
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This characteristic requires that accounting information be available when it is necessary to have for decision making.
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Timeliness
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This characteristic requires disclosure of all significant information in a way that aids understanding and is not misleading.
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Completeness
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Information has this characteristic when it can be significantly duplicated by independent measurers using the same methods.
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Verifiability
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In the United States, we typically have a low rate of inflation. Which accounting assumption or concept takes this into consideration as an important element of its relevance on financial accounting?
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stable dollar
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A Form 10-K gives a comprehensive summary of _____________.
a. a company's materiality b. a company's performance c. a company's structure d. a company's employees |
company's performance
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Leon does his own accounting and feels confident in his foundational understanding of the accounting concepts, assumptions, and principles. He takes a closer look at his assets and decides he needs to reevaluate his gains/losses. He considers lowering the amount of losses and increasing the amount of gains, which would significantly change his asset position in his company. However, based on historical information, he will be overstating his assets and financial position. Which accounting concept tells Leon that he is unable to make this kind of decision?
a. Cost/Benefit b. Conservatism c. Matching d. Revenue recognition |
Conservatism
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The accountant explained that as a multi-billion dollar business, the bank did not track the quantity of the pencils as an expense in terms of financial reporting; however, this fact did not change the reality that Sherry was stealing company merchandise. Based on the statement the accountant made to Sherry and your understanding of the concepts presented in this course, which accounting principle or objective best describes this situation?
a. Materiality principle b. Matching principle c. Principle of conservatism d. Cost principle |
Materiality principle
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Generally Accepted Accounting Principles Methodology relies on:
a. literature focused research b. a conceptual framework c. thorough review of facts d. question and answer sessions |
literature focused research
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The decision to disclose an event is based on?
a. generally accepted accounting principles b. the timing of the event c. the voluntary principle d. materiality |
materiality
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In a principle based framework the different interpretations of a similar transaction could result in:
a. multiple financial statements b. a financial statement audit c. more exceptions than a rules-based system d. extensive disclosures in the financial statements |
extensive disclosures in the financial statements
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A retailer had cash sales of $85,000 and sales on account of $26,000 for the year 2017. On December 31, 2017, they were still owed $14,000 from a few customers. How much will they report as revenue for the year 2017?
a. $85,000 b. $97,000 c. $111,000 d. $125,000 |
c. $111,000
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The __________ ________ is the only financial statement which applies to a single point in time of a business's calendar year.
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balance sheet
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Which of the following transactions would be a financing activity on the statement of cash flows?
a. purchase of equipment financed by convertible bonds b. interest received c. interest paid on convertible bonds d. purchase of treasury stock |
d. purchase of treasury stock
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After applying the temporal method a company must report any gains/losses on which financial statement?
a. statement of cash flow b. statement of gains or losses c. balance sheet d. income statement |
d. income statement
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Which of the following is a financing activity that would impact a company's cash flow statement?
a. The company makes a sale on credit to a customer. b. The company issues a discount on the sale of some of its products. c. Company took out a loan from a bank. d. The company makes a loan to one of its employees. |
c. Company took out a loan from a bank.
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When is the temporal method used?
a. when a foreign company wants to convert to U.S. dollars b. when a company's functional currency is the U.S. dollar c. when a company wants to show current market value of its assets d. when a company operates in foreign country |
b. when a company's functional currency is the U.S. dollar
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net sales - cost of goods sold =
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= gross margin
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gross margin = net sales - ____ of ______ ______
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cost of goods sold
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gross margin = _____ _____ - cost of goods sold
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net sales
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gross sales - ( sales returns/allowances and sales discounts) =
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Net Sales |
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Items that a business can use or exchange to produce products of the business are known as _______
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assets
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The trial balance reports $800 of supplies on hand but a physical count of supplies indicates only $300 on hand.
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[Prepaid expense ]
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The fourth month of a 12-month insurance policy has ended.
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[Prepaid expense ]
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Cash was received January 1 for a contract of future services to be provided and services were provided during the month of March.
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[Unearned revenue ]
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A year's worth of rent was received from a lessee on July 1 and year-end adjustments are recorded December 31.
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[Unearned revenue ]
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Machinery with a useful life of five years was used for a third year.
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[Depreciation ]
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The last seven days of the month are included in the payroll period that is paid on the 10th of the following month.
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[Accrued expense ]
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Attorney fees for services provided to a client in December are to be billed in January.
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[Accrued revenue ]
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True or False: Fixed Expenses do not change in total when there is a modest change in sales. |
True
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True or False: An example of a fixed expense would be a 5% sales commission.
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False |
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True or False: Property taxes and rent are often fixed expenses.
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True |
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True or False: Variable expenses change in total as volume changes.
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True |
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True or False: An example of a variable expense is an office manager's monthly salary.
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FALSE |
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True or False: A retailer's cost of goods sold is an example of a variable expense.
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TRUE |
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True or False: Contribution margin is defined as sales (or revenues) minus variable expenses.
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TRUE
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True or False: Break-even point is the point where revenues equal the total of all expenses including the cost of goods sold.
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TRUE
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True or False: The break-even point in dollars of revenues is equal to the total of the fixed expenses divided by the contribution margin per unit.
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FALSE
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True or False: If a company requires a profit of $30,000 (instead of breaking even), the $30,000 should be combined with the fixed expenses in order to compute the point at which the company will earn $30,000.
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TRUE
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True or False: If a company has mixed expenses, the fixed component can be combined with the company's fixed expenses and the variable component can be combined with the company's variable expenses.
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TRUE
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True or False: Decreasing a company's fixed expenses should reduce the break-even point.
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TRUE |
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True or False: The contribution margin per unit is the selling price per unit minus the fixed expenses per unit.
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FALSE |
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True or False: Break-even analysis is useful for companies that sell products, but it is not useful for companies that provide services.
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FALSE |
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