ACC 312 Study Guide - Midterm Guide: Hospitality Management Studies, Financial Statement, Business Cycle

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1 Dec 2017

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The hospitality business cycle: an accounting period is the time frame included in the financial transaction summaries prepared by a business. The sale of these products creates cash or accounts receivables owned by the business. The money resulting from these sales is then used to buy additional products or, if profits are generated, some of it may be retained by the business. The dollars that remain after all expenses have been paid represent your profit. All stakeholders who are affected by a (cid:271)usi(cid:374)ess"s p(cid:396)ofita(cid:271)ility (cid:449)ill (cid:272)a(cid:396)e g(cid:396)eatly a(cid:271)out the effe(cid:272)tive operation of a hospitality business. Owners: the owners of a business typically have the greatest interest in its success. Investors: investors supply funds to restaurants and hotels to earn money on their investment. Return on investment (roi) is simply a ratio of the money made compared to the money invested. = roi: this ratio of earnings achieved to investment is critical to determining investment quality.

Related Questions

Question 1

In recent years, the large CPA firms have performed a highvolume of consulting services for many of their audit clients. Thishas become a highly controversial issue, because it is allegedthat:

	a.	The CPAs are not competent to perform these services.
	b.	The potential of earning large revenues from audit clientsimpairs auditor independence.
	c.	CPA firms are inclined to "cut corners" on the audits becausethey are devoting the bulk of their time to consulting.
	d.	CPA firms are engaged in unfair competition with consultingfirms.

Question 2

An auditor's report states: "...we do not express an opinion."This constitutes what type of opinion?

	a.	Qualified.
	b.	Adverse.
	c.	Unqualified.
	d.	Disclaimer.

Question 3

Which statement is NOT true?

	a.	The FASB is a federal regulatory agency.
	b.	The FASB encourages comments on exposure drafts from interestedthird parties.
	c.	To date, the FASB has issued over 100 authoritativepronouncements.
	d.	Pronouncements of GAAP-establishing bodies preceding the FASBwere widely criticized for lacking a theoretical basis.

Question 4

Third parties are NOT entitled to place any reliance upon a CPAin the case of what type of engagement?

	a.	Compilation.
	b.	Compliance audit.
	c.	Attestation.
	d.	Review.

Question 5

Which statement best reflects the business entity concept?

	a.	It is assumed that the entity will continue in businessindefinitely.
	b.	The financial results of legally separate entities should not becombined.
	c.	The business is viewed as an entity separate from theowners.
	d.	Entities should report their results of operations annually.

Question 6

Which principle determines the fiscal period in which an expenseshould be recorded?

	1.	Realization.
	2.	Matching.
	3.	Fiscal period
	4.	Conservatism.

Question 7

Form 10-Qis used for:

	a.	Annual reporting to the SEC.
	b.	Quarterly reporting to the SEC.
	c.	Reporting of special events to the SEC.
	d.	Determination of standards to be followed in reporting to theSEC.

Question 8

Which of the following attributes is the primary argument forthe historical cost principle?

	a.	Predictive value.
	b.	Relevance.
	c.	Understandability.
	d.	Verifiability.

Question 9

The standard, unqualified audit report of a public company:

	a.	Is addressed to the SEC.
	b.	Covers the financial statements but not the footnotes.
	c.	States that the financial statements are fairly presented inaccordance with GAAP.
	d.	More than one of the above is correct.
	e.	None of the above are correct.

Question 10

The most frequent cause of audit failure in audits of publiccompanies is:

	a.	Incompetence or improper supervision of audit staff.
	b.	Cleverly concealed employee frauds.
	c.	Unwillingness of the partner in charge to compel the client tocorrect misleading financial statements.
	d.	Bribery of key audit personnel by the audit client.

Question 11

In most audits, the greatest concern faced by the auditor is therisk of:

	a.	Clerical errors not detected by the client's system of internalcontrol.
	b.	Incompetence and carelessness of audit staff.
	c.	Management fraud.
	d.	Employee irregularities.

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QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

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Use the following to answer questions 26-27:

On October 12, 2006, Livingston Corporation invested $500,000 inshort-term available-for-sale marketable securities. The marketvalue of this investment was $530,000 at December 31, 2006, but hadslipped to $525,000 by December 31, 2007.

26. Refer to the above data. Infinancial statements prepared on December 31, 2006, LivingstonCorporation reports:

A) The asset Investments in Marketable Securities at $500,000 withfootnote disclosure of the market value of $530,000.

B) The asset Investments in Marketable Securities at$530,000, and a $30,000 Unrealized Holding Gain included in totalstockholders' equity.

C) The asset Investments in Marketable Securities at$530,000, and a $30,000 gain recognized in the incomestatement.

D) The asset Investments in Marketable Securities at $500,000, anda $30,000 Unrealized Holding Gain included in total stockholders'equity.

27. Refer to the above data. Assuming Livingston does not sell thisinvestment; financial statements prepared at December 31, 2007,report:

A) Investments in Marketable Securities of $500,000, reduced by a$30,000 Unrealized Holding Gain on Investments, in the assetsection of the balance sheet.

B) The asset Investments in Marketable Securities of$500,000 in the balance sheet, and a $25,000 Unrealized HoldingLoss on Investments in the income statement.

C) The asset Investments in Marketable Securities of$525,000, and a $5,000 Unrealized Holding Loss deducted from totalstockholders' equity.

D) Investment in Marketable Securities of $525,000 in the assetsection of the balance sheet, with a $25,000 Unrealized HoldingGain on Investments included in the stockholders' equitysection.

28. Anasset which costs $7,200 and has accumulated depreciation of $1,800is sold for $4,500. What amount will be recognized when the assetis sold?

A) A gain of $900

B) A loss of $900

C) A loss of $2,700

D) A gain of $2,700

29. Coca-Cola's famous name printed in distinctive typeface is anexample of:

A) A trademark.

B) A patent.

C) A copyright.

D) Goodwill.

30. CarlsonImports sold a depreciable plant asset for cash of $35,000. Theaccumulated depreciation amounted to $70,000, and a loss of $5,000was recognized on the sale. Under these circumstances, the originalcost of the asset must have been:

A) $65,000.

B) $75,000.

C) $100,000.

D) $110,000.

31. Tivoli Instrumentation solda depreciable asset for cash of $100,000. The original cost of theasset was $400,000. Tivoli recognized a gain of $15,000 on thesale. What was the amount of accumulated depreciation on the assetat the time of its sale?

A) $315,000.

B) $85,000.

C) $385,000.

D) $300,000.

32. Machinery acquired new on January 1 at a cost of $50,000 wasestimated to have a useful life of 10 years and a residual salvagevalue of $20,000. Straight-line depreciation was used. On January1, following six full years of use of the machinery, managementdecided that the estimate of useful life had been too long and thatthe machinery would have to be retired after two more years, thatis, at the end of the eighth year of service. Under this revisedestimate, the depreciation expense for the seventh year of usewould be:

A) $6,000.

B) $8,000.

C) $11,000.

D) $12,000.

33. The ability of a partner toenter into a contract on behalf of all partners is called

a. voluntary agency.

b. mutualagency.

c. unlimitedliability.

d. voluntaryassociation.

34. Which of the following doesnot result in dissolution of a partnership?

a. Admissionof a new partner

b. Sale ofpartnership assets

c. Death of apartner

e. Bankruptcyof a partner

35. Jerry and Rose have agreed toform a partnership. Accordingly Rose will invest $40,000 worth ofequipment which has a note payable of $15, 000 which thepartnership assumes, and Jerry will invest $40,000 in cash. TheRoseâs capital account balance will be.

A. $40,000

B. $25,000

C. $15,000

D. $80,000

36. One method of distributing income and losses is to give eachpartner a stated

ratio of the total income or loss.There are two partners Jerry & Rose, each making an equalcontribution to the firm (50/50). However the partnership agreementstates that distributions would be made 60% and 40% respectively.Jerry and Rose are partners of the firm which had a net income$100,000. Therefore Jerryâs share of income is:

A. $50,000

B. $40,000

C. $100,000

D. $60,000

37. After March, 2004 international standards required thatgoodwill

A) Be capitalized and amortized over 20 years or less.

B) Be capitalized and amortized over 40 years or less.

C) Be capitalized and reviewed annually and its value should beadjusted if impaired.

D) Be expensed immediately.

38. Manufacturing overhead isbest described as:

A) All manufacturing costs other than direct materials and directlabor.

B) All period costs associated with manufacturingoperations.

C) Indirect materials and indirect labor.

D) All operating expenses other than selling expenses and generaland administrative expenses.

39. Which of the followingcosts would not be considered part of the manufacturing overhead ofa furniture manufacturer?

A) The cost of compliance with federal factory safetyregulations.

B) Depreciation expense on factory equipment.

C) The cost of grease used to lubricate factoryequipment.

D) The cost of wood used in furniture construction.

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ACC 312 Study Guide - Midterm Guide: Hospitality Management Studies, Financial Statement, Business Cycle

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