ch13
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ch13

Course Number: ECON 1001, Spring 2011

College/University: Virginia Tech

Word Count: 16361

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ch13 Student: ___________________________________________________________________________ 1. A budget is the plan, stated in financial terms, of how an organization expects to carry out its activities and meet its goals. True 2. A master budget consists of (a) organizational goals, (b) strategic long-range profit plan, and (c) tactical short-range profit plan. True 3. False The production budget allows...

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ch13 Student: ___________________________________________________________________________ 1. A budget is the plan, stated in financial terms, of how an organization expects to carry out its activities and meet its goals. True False 2. A master budget consists of (a) organizational goals, (b) strategic long-range profit plan, and (c) tactical short-range profit plan. True False 3. Individual managers' beliefs and expectations are incorporated into the budgeting process using grass roots budgeting procedures. True False 4. Participative budgeting eliminates or reduces the amount of budgetary slack inherent in the budgeting process. True False 5. Sales projections are often the most difficult part of the budgeting process because it involves a considerable amount of subjectivity. True False 6. An organization's sales staff is more likely to provide a lower sales forecast than a forecast provided by market researchers. True False 7. The Delphi technique uses highly sophisticated computerized time series analysis to reduce the subjectivity surrounding the sales forecast. True False 8. The production budget allows management to plan for the resources needed to meet the current sales demand and ensure that inventory levels are sufficient for future sales. True False 9. ABC Company has 10,000 units on hand at the beginning of the year and plans to sell 100,000 units during the year. If the ending inventory needs to be twice the beginning inventory, ABC will need to produce 90,000 units during the year. True False 10. ABC Company wants to have 10,000 units on hand at the end of the year after selling 100,000 units during the year. If the beginning inventory is 5,000 units, ABC needs to produce 105,000 units during the year. True False 11. The production budget must be prepared before the direct materials, direct labor and overhead budgets can be prepared.

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Virginia Tech - ECON - 1001
ch14Student: _1.Divisional income statements do not have to follow generally accepted accounting principles (GAAP)because they are internal reports.True2.One advantage of using after-tax income as a performance measure of divisional results is it's
Virginia Tech - ECON - 1001
ch15Student: _1.A transfer price is the value assigned to the transfer of goods or services between divisions within the sameorganization.True2.Transfer prices are not used to record the exchange between two cost centers within the same organizatio
Virginia Tech - ECON - 1001
ch16Student: _1.In essence, the terms "master budget" and "operating budget" mean the same thing and can be usedinterchangeably.True2.Variances are the difference between actual results and budgeted results.True3.FalseThe difference between ope
Virginia Tech - ECON - 1001
ch17Student: _1.The variable production cost variances are computed using the units produced instead of the units sold.True2.If variances are not prorated at the end of the accounting period, they are closed to the Cost of Goods Sold.True3.False
Virginia Tech - ECON - 1001
ch18Student: _1.One reason financial measures are used to evaluate performance is that they are easily quantifiable.True2.One disadvantage of using nonfinancial measures to evaluate performance is that they are only available ona monthly, quarterly
Virginia Tech - ECON - 1001
Chapter 01 - Environment and Theoretical Structure of Financial AccountingChapter 01Environment and Theoretical Structure of Financial AccountingTrue / False Questions1. The primary function of financial accounting is to provide relevant financial inf
Virginia Tech - ECON - 1001
Chapter 02 - Review of the Accounting ProcessChapter 02Review of the Accounting ProcessTrue / False Questions1. Owners' equity can be expressed as assets minus liabilities.True False2. Debits increase asset accounts and decrease liability accounts.
Virginia Tech - ECON - 1001
Chapter 03 - The Balance Sheet and Financial DisclosuresChapter 03The Balance Sheet and Financial DisclosuresTrue / False Questions1. The balance sheet reports a company's financial position at a point in time.True False2. A company's market value i
Virginia Tech - ECON - 1001
Chapter 04 - The Income Statement and Statement of Cash FlowsChapter 04The Income Statement and Statement of Cash FlowsTrue / False Questions1. Income from continuing operations sometimes includes gains from nonoperating activities.True False2. Intr
Virginia Tech - ECON - 1001
ch5Student: _1.Revenue is not recognized under the realization principle unless the earnings process is complete orvirtually complete and there is reasonable certainty about collectibility of the asset received.True2.Under IFRS, revenue from produc
Virginia Tech - ECON - 1001
ch6Student: _1.Compound interest includes interest earned on interest.True2.When interest is compounded, the stated rate of interest exceeds the effective rate of interest.True3.FalseAn annuity consists of level principal payments plus interest
Virginia Tech - ECON - 1001
ch7Student: _1.Cash equivalents would include investments in marketable equity securities as long as management intendsto sell the securities in the next three months.True2.From a financial accounting perspective, the main purposes of a system of i
Virginia Tech - ECON - 1001
ch8Student: _1.Physical counts of inventory are never done with perpetual inventory systems.True2.The main difference between perpetual and periodic inventory systems is the timing of the allocation ofcosts between inventory and cost of goods sold.
Virginia Tech - ECON - 1001
ch9Student: _1.In determining lower-of-cost-or-market, market is the expected selling price under normal operations.True2.Net realizable value is selling price less costs of completion and disposal.True3.FalsePurchase returns and purchase discou
Virginia Tech - ECON - 1001
ch10Student: _1.Property, plant, and equipment and intangible assets are long-term, revenue producing assets.True2.Sales tax paid on equipment acquired for use in the business is not capitalized.True3.FalseThe fair value of the asset, debt or eq
Virginia Tech - ECON - 1001
ch11Student: _1.The three factors in cost allocation of a depreciable asset are service life, allocation base, and allocationmethod.True2.The physical life of a depreciable asset sets the lower limit of its service life.True3.FalseOne of the ad
Virginia Tech - ECON - 1001
ch12Student: _1.Securities classified as held to maturity could be reported as either current or long-term in a classifiedbalance sheet, depending upon their maturity dates.True2.All investments in debt securities whose fair values are not readily
Virginia Tech - ECON - 1001
ch13Student: _1.Some liabilities are not contractual obligations and may not be payable in cash.True2.Amounts withheld from employees in connection with payroll often represent liabilities to third parties.True3.FalseFor a loss contingency to be
Virginia Tech - ECON - 1001
ch14Student: _1.The specific provisions of a bond issue are described in a document called a bond indenture.True2.Periodic interest expense is the stated interest rate times the amount of debt outstanding during the period.True3.FalseAn implicit
Virginia Tech - ECON - 1001
ch15Student: _1.At the inception of a lease agreement, the company's debt to equity ratio and rate of return on assets areboth affected whether the lease is classified as a capital lease or as an operating lease.True2.Capital leases are agreements
Virginia Tech - ECON - 1001
ch16Student: _1.A temporary difference originates in one period and reverses, or turns around, in one or more later periods.True2.Expenditures currently deducted in the tax return but not included with expenses in the income statementuntil subseque
Virginia Tech - ECON - 1001
ch17Student: _1.The projected benefit obligation may be less reliable than the accumulated benefit obligation.True2.The amount of the vested benefit obligation is less than the projected benefit obligation and more than theaccumulated benefit oblig
Virginia Tech - ECON - 1001
ch18Student: _1.Mandatorily redeemable preferred stock is reported as a liability.True2.Noncash assets received as consideration for the issue of stock are always valued based on the fair value ofthe stock.True3.FalseDividends in arrears on cum
Virginia Tech - ECON - 1001
ch19Student: _1.GAAP requires using intrinsic value accounting for employee stock options.True2.If previous experience indicates that a material number of stock options will be forfeited before they vest,the fair value estimate of the options on th
Virginia Tech - ECON - 1001
ch20Student: _1.Most, but not all, changes in accounting principle are reported using the retrospective approach.True2.Prior years' financial statements are restated when the prospective approach is used.True3.FalseBoth changes in reporting enti
Virginia Tech - ECON - 1001
ch21Student: _1.Amounts held in cash equivalent investments must be reported separately from amounts held as cash in thestatement of cash flows.True2.If the direct method is used to report cash flows from operating activities in the body of the sta
Virginia Tech - ECON - 1001
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Virginia Tech - ECON - 1001
CHAPTER 13 PART 2-PROPERTY TRANSACTIONS: DETERMINATION OF GAIN OR LOSS,CHAPTER 13 PART2-PROPERTY TRANSACTIONS: DETERMINATION OFGAIN OR LOSS, BASIS CONSIDERATIONS, ANDNONTAXABLE EXCHANGESBASIS CONSIDERATIONS, AND NONTAXABLE EXCHANGES1. Louis sold his
Virginia Tech - ECON - 1001
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CHAPTER 24-MULTISTATE CORPORATE TAXATIONCHAPTER 24-MULTISTATE CORPORATE TAXATION1. Roughly one-fifth of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.True False2. Usually a business chooses a location where
Virginia Tech - ECON - 1001
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CHAPTER 28-INCOME TAXATION OF TRUSTS AND ESTATESCHAPTER 28-INCOME TAXATION OF TRUSTS AND ESTATES1. Trusts are created exclusively to reduce tax liabilities.True False2. A trust might be used by a newly elected politician.True False3. Like a partners
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