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Management accounting - Analyzing Financial Statements

Analyzing Financial Statements
Management's use of resources can best be evaluated by focusing on measures of:
A) liquidity.
B) activity.
C) leverage.
D) book value.

The inventory turnover calculation:
A) is wrong unless cost of goods sold is used in the numerator.
B) is wrong unless sales is used in the numerator.
C) is an alternative way of expressing the number of days' sales in inventory.
D) requires knowledge of the inventory cost flow assumption being used.

Managerial Accounting
The budgeting process that most likely creates an attitude supportive of achieving organization goals is:
A) top-down approach.
B) zero based approach.
C) proportionate increase approach.
D) participative approach.

The cash budget is especially important to a firm when:
A) there is not a lot of confidence in the sales forecast.
B) it has a relatively large amount of operating cash.
C) the P/E ratio has been trending downwards.
D) it may have to negotiate a short-term bank loan.

Once standard costs for products or services have been developed:
A) they must be updated monthly to be useful.
B) they can be used for more than planning and control purposes.
C) they need not be revised unless the product or service is modified.
D) performance reports must be issued if the standards are to be useful.

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Solution Summary

This posting provides solution to MCQs (objective type questions) on management accounting focused on financial statements