Questions for Chapter 3
What is the operating cycle?
The cash-to-cash cycle starting when a company receives goods to sell (or employees
work in a service firm) and ends when the customer pays cash to the business. Aka the
CASH AND RECEIVABLES
We begin our study of assets by looking at cash and receivablesthe two assets typically listed
first in a balance sheet. Internal control and classification in the balance sheet are key issues we address
1. In 2014, Charlotte Engineering entered into an agreement to construct an office building at a contract
price of $5,100,000. Construction data were as follows:
Estimated costs to
1.The records of McGarrett Corp. show the following information:
Purchased Machine B used in the factory for $450,000 on July 1, 2010. Machine B
has an estimated useful life of 12 years and a residual value of $30,000. McGarrett
For each item below, indicate whether a debit or a credit applies.
a. Increase in Art Fees Earned (Sales Revenue)
b. Decrease in Prepaid Rent
c. Decrease in Unearned Fees
d. Increase in Retained Earnings
e. Increase in Depreciation Expense, Buildings
Return on Assets: Net Income/Avg. total assets
How much the firm earned for each dollar of investment
Net profit margin: Net income/Net sales
How much of every dollar is profit
Asset turnover ratio: Net sales/Avg. total assets
How many sale dollars the co
Questions for Chapter 11
1. How can we use the contribution margin (CM) approach to find the break-even point?
Fixed Expenses/ Contribution of each unit= BE point in units
Fixed Expenses/Contribution margin ratio*= BE point in sales dollars
Questions for Chapter 8
1. What is managerial accounting and how is it different from financial accounting?
It is the process of identifying, measuring, analyzing and interpreting information in pursuit
of the organizations goals. They work sid
A Review of the Accounting Cycle
Identify and explain the basic steps in the accounting process (accounting cycle).
Analyze business documents,
Post to ledger accounts,
Prepare a trial balance