Random Accounting Short Answer Questions

1. Identify and explain the primary differences between fixed and flexible budgets.

2. Describe at least five benefits of budgeting.

 

3. Identify and explain the four building blocks of financial statement analysis.

 

4. What is a bond? Identify and discuss the different types of bonds. 

5. Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems. 

6.

Describe what happens to the net income of a company under each of the following assumptions: (a) Sales volume is less than break-even sales. (b) Sales volume is greater than break-even sales. (c) Sales volume is equal to the break-even point. 

7. Based on the following information provided about a company’s operations, calculate its cost of goods purchased and its cash paid for merchandise.

8.

What is one advantage and one disadvantage of using the accounting rate of return to evaluate investment alternatives? 

9. A retail store has three departments, A, B, and C, each of which has four full-time employees. The store does general advertising that benefits all departments. Advertising expense totaled $90,000 for the current year, and departmental sales were: 

A. 356,250

B. 641,250

C. 427,500

How much advertising expense should be allocated to each department? 

10. A manufacturing company uses an overhead allocation rate based on direct labor cost. The company’s Goods in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of $3,000. What is the company’s overhead application rate? 

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