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CPCE EXAM > ACCOUNTING > Flashcards

ACCOUNTING Flashcards

1
Q

What are ASSETS?

A

things of value that are owned by a business

provide a future economic benefit

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2
Q

What are LIABILITIES?

A

Present a future obligation

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3
Q

In regards to assets vs. liabilities, what is an indicator of a successful business?

A

Higher proportion of assets to liabilities – indicates a higher degree of liquidity

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4
Q

What is the OWNER’S EQUITY equation?

A

ASSETS - LIABILITIES = OWNER’S EQUITY

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5
Q

What is the STATEMENT OF CASH FLOWS?

A

Financial report that shows a company’s sources + uses of cash during one accounting period.

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6
Q

What is a financial report that shows a company’s sources + uses of cash during one accounting period?

A

Statement of Cash Flow

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7
Q

In regards to accounting, what provides a future economic benefit?

A

Asset

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8
Q

In regards to accounting, what presents a future obligation?

A

Liability

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9
Q

To calculate OWNER’S EQUITY, what do you subtract from Assets?

A

Liabilities

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10
Q

What shows a company’s operational results (performance)?

A

Income Statement

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11
Q

What is an INCOME STATEMENT?

A

Financial report that shows a company’s operation results or performance.

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12
Q

Name 2 accounting methods.

A

Accrual + Cash Basis

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13
Q

Name 4 inventory valuation methods

A

FIFO, LIFO, Specific Valuation + Weighted Average

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14
Q

What is ACCRUAL ACCOUNTING?

A

Recording of expenses when incurred + income / sales revenue when earned regardless of the dates they occurred.

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15
Q

What type of accounting method is the most accurate representation of the financial results + financial position of the company?

A

Accrual Accounting

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16
Q

What is CASH BASIS ACCOUNTING?

A

Recording of cash when received + expenses when cash has been paid out.

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17
Q

What is the simplest accounting method?

A

Cash Basis (used mainly by small businesses with no inventory)

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18
Q

Name 2 different inventory methods to track the quantity of goods on hand.

A

Periodic + Perpetual

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19
Q

What is the PERIODIC INVENTORY SYSTEM?

A

Occasional physical count of the inventory to determine the ending inventory balance + COS.

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20
Q

Which inventory system occasionally physically counts the inventory to determine the ending inventory?

A

Periodic

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21
Q

What is the PERPETUAL INVENTORY SYSTEM?

A

Continuously updating inventory as it occurs + allows for the daily running balance of inventory available

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22
Q

Which is more “sophisticated” inventory system – perpetual or periodic?

A

Perpetual

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23
Q

Which inventory system ALWAYS has a COS entry?

A

Perpetual

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24
Q

_____ + _____ = GA

A

Beginning Inventory (BI) + Purchases (P)

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25
Q

BI + P = _____

A

Goods Available (GA)

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26
Q

In regards to the Periodic inventory method, what is BI?

A

Beginning Inventory (BI)

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27
Q

In regards to the Periodic inventory method, what is P?

A

Purchases (P)

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28
Q

In regards to the Periodic inventory method, what is GA?

A

Goods Available (GA)

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29
Q

_____ - _____ = CS

A

Goods Available (GA) - Ending Inventory (EI)

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30
Q

GA - EI = _____

A

Cost of Sales (CS)

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31
Q

In regards to the Periodic inventory method, what is EI?

A

Ending Inventory (EI)

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32
Q

In regards to the Periodic inventory method, what is CS?

A

Cost of Sales (CS)

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33
Q

GA - ____ = CS

A

Ending Inventory (EI)

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34
Q

____ - EI = CS

A

Goods Available (GA)

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35
Q

____ + P = GA

A

Beginning Inventory (BI)

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36
Q

BI + ____ = GA

A

Purchases (P)

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37
Q

In which inventory method / system does this equation belong?

BI + P = GA

A

Periodic

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38
Q

In which inventory method / system does this equation belong?

GA - EI = CS

A

Periodic

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39
Q

During an inflationary period, which method of inventory will result in the HIGHEST cost of food sold?

A

LIFO

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40
Q

During an inflationary period, which method of inventory will result in the LOWEST cost of food sold?

A

FIFO

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41
Q

What is LIFO?

A

Last In First Out (LIFO) — the last items received are sold first

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42
Q

What is FIFO?

A

First In First Out (FIFO) — the first items received are sold first

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43
Q

Name 4 Inventory Valuation methods.

A

LIFO, FIFO, Specific Valuation + Weighted Average

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44
Q

In regards to Inventory Valuation methods, which are cost layering methods used to value of COGS + EI?

A

LIFO + FIFO

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45
Q

When the FIFO inventory control method is used, the process requires that ____.

A. the actual cost of each item is recorded
B. the first item received is sold
C. inventory is continually updated
D. newest or last items are sold

A

B. the first item received is sold

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46
Q

When the LIFO inventory control method is used, the process requires that ____.

A. the actual cost of each item is recorded
B. inventory is continually updated
C. newest or last items are sold
D. the last received is sold

A

D. the last received is sold

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47
Q

Leslie’s Catering had $10,000 and $12,000 of food inventory at the beginning + end of the year, respectively. Food purchases during the year totaled $240,000 + $3,000 was spent internally on such uses as employee meals. What was the cost of food sold for this operation?

A. $242,000
B. $239,000
C. $235,000
D. $245,000

A

C. $235,000

10,000 (BI) + 240,000 (P) = 250,000 (GA)

250,000 (GA) - 3,000 (EXPENSES) - 247,000

247,000 (GA) - 12,000 (EI) = 235,000 (CS)

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48
Q

List 3 things that can affect the control of inventory for sale.

A
  • -shortages + overages
  • -costs
  • -pilferage
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49
Q

List 3 things that can adjust the cost of sales.

A
  • -internal expenses
  • -employee meals
  • -promotional
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50
Q

What is the BREAKEVEN POINT?

A

Sales volume when a business earns exactly NO MONEY. (revenue = expenses)

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51
Q

In regards to the BREAKEVEN POINT, what is FC?

A

Fixed Costs (FC)

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52
Q

In regards to the BREAKEVEN POINT, what is VC?

A

Variable Costs (VC)

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53
Q

In regards to the BREAKEVEN POINT, what is USP?

A

Unit Selling Price (USP)

54
Q

USP - VC = ____

A

Fixed Costs (FC)

55
Q

____ - VC = FC

A

Unit Selling Price (USP)

56
Q

USP - ____ = FC

A

Variable Costs (VC)

57
Q

What is a FIXED COST (FC)?

A

A cost that does not increase or decrease in conjunction with any activities = specific dollar amount.

58
Q

What is a cost that does not increase or decrease in conjunction with any activities?

A

Fixed Cost (FC)

59
Q

What is a VARIABLE COST (VC)?

A

A cost that varies in relation to either production volume or the amount of services provided = percentage of revenue

60
Q

What is a cost that varies in relation to either production volume or the amount of services provided?

A

Variable Cost (VC)

61
Q

What type of cost tends to be incurred on a REGULAR basis?

A

Fixed Cost (FC)

62
Q

What is also known as period costs?

A

Fixed Cost (FC)

63
Q

A company with LOW FIXED COST (FC) generally has a ____ variable cost per unit.

A

HIGH

64
Q

A company with HIGH FIXED COST (FC) generally has a ____ variable cost per unit.

A

LOW

65
Q

Which type of cost will decrease the most on a per unit basis as sales increase?

A. mixed
B. variable
C. fixed
D. food

A

C. fixed

66
Q

____ X ____ = total VC

A

total # of units produced X variable cost per unit = total VC

67
Q

____ X variable cost per unit = total VC

A

total # of units produced

68
Q

total # of units produced X ____ = total VC

A

variable cost per unit

69
Q

The profits earned by your business are 20% of the revenue generated by sales. Poor scheduling has resulted in $200 of unnecessary costs. How much must your operation generate in additional sales to pay for the extra $200 in labor costs?

A. $200
B. $400
C. $800
D. $1,000

A

D. $1,000

70
Q

FC / (USP - VC) = _____

A

Breakeven Point (BEP)

71
Q

____ / (USP - VC) = BEP

A

Fixed Costs (FC)

72
Q

FC / ( ____ - VC) = BEP

A

Unit Selling Price (USP)

73
Q

FC / (USP - ____ ) = BEP

A

Variable Costs (VC)

74
Q

Lunchtime Express has a contract to provide lunches at $5.25 per meal. If its fixed costs are $3,000 per week and its variable costs are $2.25 per meal, how many lunches must be sold in order to break even?

A. 595
B. 855
C. 1,000
D. 1,333

A

C. 1,000

3,000 / (5.25-2.25)

75
Q

COST OF SALES

sales revenue item* / total sales revenue = _____

  • price item
  • cost of sales food
  • cost of sales beverage
A

% of total sales revenue

76
Q

COST OF SALES

____* / total sales revenue = % of total sales revenue

  • price item
  • cost of sales food
  • cost of sales beverage
A

sales revenue item

  • price item
  • cost of sales food
  • cost of sales beverage
77
Q

COST OF SALES

sales revenue item* / _____ = % of total sales revenue

  • price item
  • cost of sales food
  • cost of sales beverage
A

total sales revenue

78
Q

The forecasted yearly sales for Sue’s Catering are $800,000. Profit requirements for the year total $90,000 and non-food expenses (including labor) have been estimated at $410,000. Assuming forecasts are accurate, what would the budgeted food cost percentage be in order to ensure that profit requirements are minimally met?

A. 10-12%
B. 24-26%
C. 36-38%
D. 45-47%

A

C. 36-38%

800,000 - 410,000 = 390,000 - 90,000 = 300,000

300,000 / 800,000 = 37.5%

79
Q

The owner of Papa’s Catering is demanding a year end net income of $80,000. Assuming a tax rate of 35% what will pre-tax income have to equal to satisfy the owner’s demands?

A. $108,000
B. $115,824
C. $123,077
D. $132,000

A

C. $123,077

80,000 / .65 = 123,077

80
Q

Most organizations in the hospitality industry (hotels, motels, resorts, restaurants + clubs) use the _____ appropriate to their particular segment of the industry

A

Uniform System of Accounts

81
Q

Which system was designed for classifying, organizing + presenting financial information so that uniformity prevailed + comparison of financial data among hotels was possible.

A

Uniform System of Accounts

82
Q

What is an advantage of the UNIFORM SYSTEM OF ACCOUNTS?

A

Information can be collected on a regional or national basis from similar organizations within the hospitality basis.

83
Q

Examples of ASSETS for an off-premise caterer?

A
  • -cash
  • -accounts receivable
  • -food + other types of inventory
  • -prepaid expenses
  • -fixed assets (land, buildings, vehicles, etc.)
84
Q

What are EXPENSES?

A

Outflow of assets consumed to generate sales revenue

85
Q

In regards to OWNER’S EQUITY, equity _____ if revenues exceed expenses (R > E).

A

increases

86
Q

In regards to OWNER’S EQUITY, equity _____ if revenues are less than expenses (R < E).

A

decreases

87
Q

Examples of LIABILITIES?

A
  • -accounts payable
  • -accrued expenses (unpaid wages/salaries, payroll tax, etc.)
  • -income tax payable
  • -deposits + credit balances (advanced deposits that have not been earned)
88
Q

Examples of OWNERSHIP EQUITY?

A
  • -capital stocks
  • -paid-in capital, excess of par (also known as capital surplus)
  • -retained earnings
  • -dividents payable
89
Q

What are the 3 types of ownership?

A

Sole Proprietorship, Partnership + Corporation

90
Q

What is a business entity that may use the titles of proprietor’s capital, proprietorship, equity, proprietorship net worth or owner’s equity?

A

Sole Proprietorship

91
Q

What is a SOLE PROPRIETORSHIP?

A

A business entity that may use the titles of proprietor’s capital, proprietorship, equity, proprietorship net worth or owner’s equity.

92
Q

What is an unincorporated business owned by two or more individuals?

A

Partnership

93
Q

What is a PARTNERSHIP?

A

An unincorporated business owned by two or more individuals.

94
Q

What is an incorporated, artificial person who protects individual investors (stockholders) from personal liability + continues its existence through easy transfer of stock?

A

Corporation

95
Q

What is a CORPORATION?

A

An incorporated, artificial person who protects individual investors (stockholders) from personal liability + continues its existence through easy transfer of stock.

96
Q

What is the purpose of a BALANCE SHEET?

A

To provide a specific point in time a picture of the financial condition of a business entity relative to its assets, liabilities + ownership equity.

97
Q

What provides a SNAPSHOT of the company’s financial position in time?

A

Balance Sheet

98
Q

What are the components of a BALANCE SHEET?

A

Assets, Liabilities + Ownership Equity?

99
Q

What is the purpose of an INCOME STATEMENT?

A

To show economic results of profit motivated operations of a business over a specific operating period.

100
Q

When you think about the ____, think about the information that reveals a company’s performance.

A

Income Statement

101
Q

An INCOME STATEMENT, depicts a company’s ____ OR ____.

A

profit or loss

102
Q

Most hospitality operations are ____, and the income statement needs to show the operating results _________ as well as for _______.

A

departmentalized

department by department

the operation as whole

103
Q

What shows departmental revenue MINUS its direct costs to arrive at income BEFORE tax?

A

Departmental Contributory Income

104
Q

What is Departmental Contributory Income?

A

Shows departmental revenue MINUS its direct costs to arrive at income BEFORE tax?

105
Q

What shows the company sources + uses of cash one given accounting period?

A

Statement of Cash Flows

106
Q

What does the Statement of Cash Flows show?

A

The company sources + uses of cash in one given accounting period.

107
Q

What is Sales Revenue?

A

An inflow of assets received in exchange for goods or services provided.

108
Q

What is an inflow of assets received in exchange for goods or services perovided?

A

Sales Revenue

109
Q

What is the sale of goods + services?

A

Non-operating revenues not directly related to the primary purpose of the business.

110
Q

What are non-operating revenues not directly related to the primary purpose of the business.

A

Sale of Goods + Services

111
Q

Which Inventory Valuation Method is normally used only for high-cost items, such as high-cost wines + expensive cuts of meats?

A

Specific Identification / Valuations Method

112
Q

The Specific Identification / Valuation Method records the ____ cost of each item.

ACTUAL or ESTIMATED?

A

actual

113
Q

Which Inventory Valuation Method should be used during INFLATIONARY periods?

A

LIFO

114
Q

Which Inventory Valuation Method is relative to inventory items that do not expire / not perishable?

A

LIFO

115
Q

What is the WEIGHTED AVERAGE COST METHOD?

A

Calculates a weighted average for each item of inventory available for sale.

116
Q

Which Inventory Valuation Method calculates inventory via a weighted average for each item of inventory?

A

Weighted Average Cost Method

117
Q

Which Inventory Valuation Method generally produces a higher net income when cost prices are increasing + a lower net income when cost prices are declining?

A

FIFO

118
Q

Which Inventory Valuation Method is the preferred method used for food inventories?

A

FIFO

119
Q

What are CONTROLLING COSTS?

A

A daily function of all successful caterers in which they operate with their eyes wide open always looking for waste + inefficiency.

120
Q

What is a PRIME COST?

A

The combined cost of food + payroll.

food cost vs. labor
high vs. low
(low vs. high) = opposite to offset!

121
Q

What are INTERDEPARTMENTAL and INTERDIVISIONAL TRANSFERS?

A

Charging other outlets for food costs.

EX: concierge (food) –> being charged to room

122
Q

What are 3 Adjustments to Cost of Sales - Food?

A
  • -interdepartmental + interdivisional transfers
  • -employee meals
  • -promotional expense
123
Q

Where can a COMPARATIVE HORIZONTAL ANALYSIS be found?

A

Balance Sheet OR Income Statement

124
Q

What does a COMPARATIVE HORIZONTAL ANALYSIS require?

A

Two consecutive periods of information.

125
Q

What does a COMMON SIZE VERTICAL ANALYSIS require?

A

Only one period of financial data.

“comparing apples to apples, i.e., month to month”

126
Q

Which of the following would NOT be found on a BALANCE SHEET under the assets column?

A. deposits + credit balances
B. beverage inventory
C. dividends
D. credit card receivable

A

A. deposits + credit balances

127
Q

Which of the following is considered a LIABILITY?

A. cancellation fee from a holiday party
B. retained earnings
C. deposit for a wedding
D. a broken Hobart food processor

A

C. deposit for a wedding

128
Q

Which of the following financial reports shows a company’s sources + uses of cash during one accounting period?

A. balance sheet
B. income statement
C. statement of retained earnings
D. statement of cash flows

A

D. statement of cash flows

balance sheet = “snap shot”
income statement = “performance”

129
Q

Which of the following statements shows a company’s operational results (performance)?

A. statement of retained earnings
B. income statement
C. statement of cash flows
D. balance sheet

A

B. income statement

balance sheet = “snap shot”
statement of cash flows = “cash”

130
Q

When the FIFO inventory control method is used, the process requires that ____.

A. newest or last items are sold
B. inventory is continually updated
C. the first item received is sold
D. the actual cost of each item is recorded

A

C. the first item received is sold

131
Q

During an inflationary period, which method of inventory will result in the highest cost of food?

A. LIFO
B. weighted average
C. FIFO
D. regression cost

A

A. LIFO

CPCE EXAM (1 decks)

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