ACCOUNTING

QUESTION 1

1.The following details have been extracted from the budget of a merchandising company.

Rent Expense $8,000 per month

Depreciation Expense $ 3,500 per month

Insurance Expense $1,250 per month

Miscellaneous Expense 2% of sales, paid as incurred

Commissions Expense 10% of sales

Salaries Expense $7,000 per month

 

Dec Jan Feb March

Sales $45,000 $50,000 $65,000 $80,000

 

Commission and salaries expenses are paid 50% in the month to which they relate and the balance in the next month.

Rent and miscellaneous expenses are paid as and when they occur. Insurance is prepaid at the beginning of the quarter. Calculate cash payments for the selling and administrative expenses for the first quarter of the next year.

$50,500

$75,000

$70,400

$62,750

1 points

QUESTION 2

1.June sales were $40,000 while projected sales for July and August were $50,000 and $60,000, respectively. Sales are 40% cash and 60% credit. All credit sales are collected in the month following the sale. Calculate expected collections for July.

 

$36,000

$54,000

$44,000

$50,000

1 points

QUESTION 3

1.Diemans Corp .has provided a part of its budget for the second quarter:

Apr May June

Cash collections $40,000 $45,000 $52,000

Cash payments:

Purchases of inventory 4,500 7,200 4,500

Operating expenses 7,900 5,600 9,000

Capital expenditures 0 20,000 4,600

 

 

The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the cash balance at the end of June.

$40,800

$85,700

$21,800

$26,500

1 points

QUESTION 4

1.Which of the following best describes the term sensitivity analysis?

 

It evaluates a company’s financial condition by doing financial statement analysis.

 

It is a testing technique to determine how results would differ if key assumptions are changed.

 

It is an evaluation of the accuracy of the assumptions.

 

It is an analysis of the emotional sensitivity of a company’s employees.

1 points

QUESTION 5

1.Farmerlands Inc. has budgeted sales for the months of September and October at $300,000 and $280,000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 50% are collected in the month of sale and 50% are collected in the following month. Calculate cash collections for the month of October.

$168,000

$288,000

$232,000

$290,000

1 points

QUESTION 6

1.Ch√Ętelain Company is preparing its budget for the third quarter. Cash balance on July 31 was $30,000. Assume there is no minimum balance of cash required and no borrowing is undertaken. Additional budgeted data is provided here:

 

 

Jul Aug Sep

Cash collections $50,000 $51,000 $52,000

Cash payments:

Purchases of inventory 20,000 19,000 18,000

Operating expenses 25,000 21,000 32,000

Capital expenditures 5,000 9,000 16,000

 

 

Calculate the balance of cash at the end of August.

$29,050

$32,000

$28,800

$19,100

1 points

QUESTION 7

1.McLeod Fries Inc. has budgeted sales for June and July at $680,000 and $720,000, respectively. Sales are 80% credit, of which 70% is collected in the month of sale and 30% is collected in the following month. What is the budgeted accounts receivable balance on July 31?

$ 225,320

$ 158,200

$ 200,500

$ 172,800

1 points

QUESTION 8

1.The cash budget and the budgeted financial statements are collectively known as the ________.

financial budget

master budget

operating budget

production budget

1 points

QUESTION 9

1.Gamma Corp. is preparing its budget for the first quarter of 2015. The following data is provided:

Inventory, Purchases and COGS Budget Jan Feb Mar

Cost of goods sold (a) $30,000 $28,500 $22,500

Desired ending inventory(b) 10,700 9,500 9,800

Total inventory required 40,700 38,000 32,300

less Beginning inventory -11,000 -10,700 -9,500

Purchases 29,700 27,300 22,800

(a) COGS = 75% of sales

(b) $5,000 + 20% of COGS for next month

 

 

The amount of Merchandise Inventory to be shown on the budgeted balance sheet at March 31 would be ________.

$9,500

$8,750

$10,700

$9,800

1 points

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