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HMGT 322 Final Quiz

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Question 1 (5 points)

Which of the following is NOT considered an advantage of organizing as a C corporation:

Question 1 options:

	Easy to transfer ownership through shares of stock
	Owners have limited liability
	Less costly and less time consuming to set-up relative to other forms of organization
	Unlimited life of company that continues in existence after original owners die or leave the company.

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Question 2 (5 points)

Which of the following statements is FALSE regarding not-for-profit entities:

Question 2 options:

	Cannot pay dividends and all earnings must be retained in the business
	Classified certain assets as being restricted which are managed through fund accounting
	Not-for-profit firms have no stakeholders and are controlled by a board of trustees
	They have greater access to capital markets relative to for-profit providers

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Question 3 (5 points)

Which of the following is FALSE regarding capitated payment third-party arrangements:

Question 3 options:

	Under a profit (CVP) analysis, there is no direct linkage between volume of services provided and revenues
	Providers have an incentive to reduce costs and reduce utilization
	Providers have an incentive to set higher charge rates to increase revenues
	Revenue associated with capitated contracts is often called premium revenue rather than patient service revenue

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Question 4 (5 points)

Which of the following is a FALSE statement regarding accrual accounting?

Question 4 options:

	The revenue recognition principle requires the revenue to be recognized in the period when they are realized and earned. This is the period in which the service is rendered.
	An advantage is that there are no complex accounting rules and it is closely aligned to accounting for tax purposes
	The economic event that creates the financial transaction, rather than the transaction itself, provides the basis for the accounting entry.
	Implementation of the matching principle dealing with expenses creates a problem with long-lived assets such as buildings and equipment.

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Question 5 (5 points)

Which of the following is NOT considered an expense on the income statement?

Question 5 options:

	Depreciation
	Notes payable
	Provision for Bad Debts
	Salaries and benefits

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Question 6 (5 points)

Which of the following asset is least liquid?

Question 6 options:

	Cash
	Fixed assets (property and equipment)
	Short-term securities
	Accounts receivable

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Question 7 (5 points)

In allocating costs, which of the following is NOT considered an advantage with respect to “Double Apportionment?”

Question 7 options:

	It is simple to do and does not require a computer to calculate
	It fixes the problems with direct and step-down apportionment
	Takes into account the costs of revenue departments doing work for other revenue departments
	Considering value, or accuracy over cost, it is the most practical method of cost allocation

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Question 8 (5 points)

Which of the following is a FALSE statement characterizing managerial accounting?

Question 8 options:

	Focuses on subunits of an entity for internal decision-making
	Is forward-looking
	Cost accounting is a subset of managerial accounting
	Involves identifying, measuring, recording, and communicating in dollar terms the economic events and status of an organization.

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Question 9 (5 points)

Which of the following is the CORRECT definition of the statistics budget which is considered the cornerstone of the budget process?

Question 9 options:

	Combines volume and reimbursement data to develop revenue forecasts
	Focuses on costs of providing services including labor and non-labor components
	Specifies the patient volume and resource assumptions used in other budgets
	Combination of the revenue and expense budget

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Question 10 (5 points)

Which of the following is a FALSE statement concerning variance analysis?

Question 10 options:

	Assists managers identify the factors that cause realized profits to be different from expected profits.
	To be most useful, it examines the difference between the actual, flexible, and static budget.
	Essential to the managerial control process.
	Represents the number of years necessary for cash flow to recover the original investment.

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Question 11 (5 points)

Which of the following is NOT part of an operational plan?

Question 11 options:

	Working capital management plan
	Strategic plan
	Long-term plan
	Managerial Accounting Plan

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Question 12 (5 points)

Indicate where the event "paid income taxes" would appear, if at all, on the statement of cash flows.

Question 12 options:

	Operating activities section
	Investing activities section
	Financing activities section
	Does not represent a cash flow

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Question 13 (5 points)

Net income results when:

Question 13 options:

	Assets > Liabilities
	Revenues = Expenses
	Revenues > Expenses
	Revenues < Expenses

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Question 14 (5 points)

Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting.

Question 14 options:

	Long-term debt
	Accounts payable
	Retained earnings
	Common stock

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Question 15 (5 points)

The category that is generally considered to be the best measure of a company's ability to continue as a "going concern" is:

Question 15 options:

	Cash flows from operating activities
	Cash flows from investing activities
	Cash flow from financing activities
	Usually different from year to year

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Question 16 (5 points)

The breakeven point occurs when:

Question 16 options:

	Sales equal total variable costs
	Contribution margin equals total varible costs
	Contribution margin equals total fixed costs
	Sales equal total fixed costs

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Question 17 (5 points)

Financial statements are the major means of communicating accounting information to interested parties:

Question 17 options:

	True
	False

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Question 18 (5 points)

In theory, capital budgeting decisions should depend solely on forecasted cash flows and the opportunity cost of capital. The decision criterion should not be affected by managers' tastes, choice of accounting method, or the profitability of other independent projects.

Question 18 options:

	True
	False

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Question 19 (5 points)

The cost of capital used in capital budgeting should reflect the average cost of various sources of investor-supplied funds a firm uses to acquire assets.

Question 19 options:

	True
	False

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Question 20 (5 points)

The internal rate of return is the discount rate that equates the present value of the cash outflows (or costs) with the present value of cash inflows.

Question 20 options:

	True
	False

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