Exam One

Question 1

highlights major activities that impact cash flows and overall cash balance

Answer 1

statement of cash flows

Question 2

equation for COGS

Answer 2

beginning inventory+purchases-end inventory

Question 3

activities that generate cash flow related to revenue and expense transactions that affect net income, receive dividends

Answer 3

operating activities

Question 4

activities that generate cash flows related to acquiring or disposing of PP&E and long-term investments

Answer 4

investing activities

Question 5

activities that generate cash flows related to borrowing from and repaying principal to creditors, selling or repurchasing shared of common stock, paying dividends

Answer 5

financing activities

Question 6

income statement is reconstructed on a cash basis from top to bottom, cash receipts and cash disbursements

Answer 6

direct method

Question 7

income statement has net income adjusted to a cash basis, removes items from net income that do not affect cash flow

Answer 7

indirect method

Question 8

three steps of indirect method

Answer 8

1. add depreciation expense back
2. add/subtract changes in current assets and liabilities
3. adjust for gains and losses

Question 9

how to find dividends from retained earnings

Answer 9

beginning retained earnings+net income-dividends=ending retained earnings

Question 10

what to do with gains

Answer 10

subtract them

Question 11

what to do with losses

Answer 11

add them back

Question 12

current assets move in what way

Answer 12

opposite of their account

Question 13

current liabilities move in what way

Answer 13

same way as their account

Question 14

last three lines of statement of cash flows

Answer 14

net change in cash/cash equivalents
beginning cash
end cash

Question 15

what must the last three lines of the statement of cash flows match with

Answer 15

balance sheet

Question 16

book value equation

Answer 16

cost-accumulated depreciation

Question 17

PP&E equation

Answer 17

beginning balance+purchases-sale of PP&E=ending balance

Question 18

accumulated depreciation equation

Answer 18

beginning balance-depreciation from sale+current depreciation=ending balance

Question 19

provides accounting information to managers to use within the organization

Answer 19

managerial accounting

Question 20

traditional income statement

Answer 20

sales
-COGS
=gross margin
-operating expenses
=net income

Question 21

what does cost by function mean

Answer 21

product or period costs

Question 22

another name for COGS

Answer 22

product costs

Question 23

another name for operating expenses

Answer 23

period costs/selling and administrative expenses

Question 24

product costs include

Answer 24

direct materials, direct labor, manufacturing costs

Question 25

materials that can be traced directly to a product

Answer 25

direct materials

Question 26

labor that can be traced directly to the making of a product

Answer 26

direct labor

Question 27

what is included in manufacturing overhead

Answer 27

indirect costs

Question 28

work that cannot be traced to the making of a product but is involved in the factory

Answer 28

indirect labor

Question 29

materials that are integral to making a product but cannot be traced directly to it

Answer 29

indirect materials

Question 30

conversion cost equation

Answer 30

direct labor+manufacturing overhead

Question 31

prime cost equation

Answer 31

direct materials+direct labor

Question 32

costs associated with general management and not a product

Answer 32

administrative cost

Question 33

costs to secure customer orders and get products to customers

Answer 33

selling cost

Question 34

income statement format that organizes cost by behavior

Answer 34

contribution approach

Question 35

contribution approach income statement

Answer 35

sales
-variable costs
=contribution margin
-fixed costs
=net income

Question 36

how a cost reacts to changes in the level of activity

Answer 36

cost behavior

Question 37

organizational investments with a multiyear planning horizon that can’t be reduced at all without making fundamental changes

Answer 37

committed fixed cost

Question 38

cost arising from annual decisions by management to spend on certain fixed cost items

Answer 38

discretionary fixed cost

Question 39

contains both variable and fixed cost elements

Answer 39

mixed cost

Question 40

mixed cost equation

Answer 40

Y=a+bX

Question 41

range of activity within which the assumption is that cost behavior is linear

Answer 41

relevant range

Question 42

increase in cost from one alternative to another

Answer 42

incremental cost

Question 43

what are two names for product costs?

Answer 43

inventoriable cost and manufacturing cost

Question 44

potential benefit that is given up when one alternative is selected over another

Answer 44

opportunity cost

Question 45

cost that has already been incurred and that cannot be changed by any decision made now or in the future

Answer 45

sunk cost

Question 46

amount remaining from sales revenue after all variable expenses have been deducted

Answer 46

contribution margin

Question 47

what are the three classes of inventory?

Answer 47

raw materials, work in process, finished goods

Question 48

goods that go into final product (direct and indirect)

Answer 48

raw materials

Question 49

products partially completed that cannot be sold yet

Answer 49

work in process

Question 50

products that have been finished but not sold

Answer 50

finished goods

Question 51

cost by function

Answer 51

product and period costs