Question 1

In order to be useful to managers, management accounting reports:
A) Should be prepared according to the stated Institute of Management Accounting guidelines
B) Should be prepared according to Generally Accepted Accounting Principals
C) Should be prepared to meet the specific needs of decision makers
D) Should not be prepared prior to the end of a fiscal reporting period

Accepted Answer

There are no specific standards for preparing managerial accounting reports. They should be tailored to meet the needs of each individual organization.

Question 2

To compete on the basis of price, the seller must most carefully manage:
A) Service
B) Product development
C) Cost
D) Quality

Accepted Answer

Price competition depends on managing costs, including not only the initial selling price but the total cost of ownership throughout the life of the product.

Question 3

Most analysts prefer to concentrate their attention on basic EPS, rather than the diluted EPS, because it is more useful.

Accepted Answer

Most analysts prefer to concentrate their attention on diluted EPS versus basic EPS as the more important measure because it considers possible issuances of stock that may cause EPS to become smaller than basic EPS.

Question 4

Why might a company repurchase its own stock?
A) It feels that the market undervalues its shares
B) To offset dilutive effects of employee stock options
C) To increase the number of shares outstanding
D) A and B

Accepted Answer

Companies may repurchase stocks to send a 'signal' to the market that the stock is undervalued. The company may also repurchase shares to keep the outstanding shares constant in order to reduce the dilutive effect on earnings per share that may occur when employees exercise stock options. Treasury stock acquisitions decrease the number of shares outstanding.

Question 5

Following are selected stock transactions and information for Williams Materials, Inc. 
•Authorization for initial public offering of 200,000 shares of common stock with par value of $0.02 to be issued at $50 per share
•Authorization for 10,000 shares of preferred stock with par value of $160 and 10%.
•Issued shares equal outstanding at time of offering.
1. May 14 200,000 common shares sold at $50 per share
2. May 30 1,000 shares of preferred stock sold at par
3. November 11 $80,000 for payment of cash dividends 
A. Show the financial statement effects of the three equity transactions in the template.
  
B. How much was the per share cash dividend for common stock for the November 11 payment?

Accepted Answer

The answer of Following are selected stock transactions and information...

Question 6

Off-balance-sheet financing is the financing of investing activities where neither the accounts associated with the financing or investing are reported on the balance sheet.

Accepted Answer

Off-balance-sheet financing means that neither assets nor liabilities are reported on the balance sheet.

Question 7

Which type of lease is considered a form of off-balance-sheet financing?
A) Capital lease
B) Deferred tax lease
C) Operating lease
D) Variable interest lease

Accepted Answer

Under operating leases, neither the leased asset nor the lease liability appears on the lessee's balance sheet. Operating leases are a form of off-balance-sheet financing.

Quiz 4: Understanding the Importance of Management Accounting Reports and Off-Balance-Sheet Financing

In order to be useful to managers, management accounting reports:

To compete on the basis of price, the seller must most carefully manage:

Most analysts prefer to concentrate their attention on basic EPS, rather than the diluted EPS, because it is more useful.

Why might a company repurchase its own stock?

Off-balance-sheet financing is the financing of investing activities where neither the accounts associated with the financing or investing are reported on the balance sheet.

Which type of lease is considered a form of off-balance-sheet financing?