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Financial and Managerial Accounting: Budgeting, Forecasting, and Capital Investment Analysis

An assignment covering budgeting, forecasting, and capital investment.

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    Financial and Managerial Accounting: Budgeting, Forecasting, and Capital Investment Analysis 1. (TCO 1) Which one of the following is not a benefit of budgeting? (Points : 5) It facilitates the coordination of activities. It provides definite objectives for evaluating performance. It provides assurance that the company will achieve its objectives. It provides early warning signs of potential threats. Question 2. 2. (TCO 2) “Groupthink” is a primary disadvantage of which qualitative forecasting method? (Points : 5) Executive opinions Sales force polling Delphi method Consumer surveys Question 3. 3. (TCO 3) Which of the following statements regarding the t - statistic is true? (Points : 5) The t - statistic cannot be negative. The t - statistic measures how many standard errors the coefficient is away from the independent variable . The higher the t - value, the more confidence we have in the coefficient. Low t - values indicate high reliability. Question 4. 4. (TCO 4) Marketing expenses typically increase in proportion to _____. (Points : 5) number of customer orders. advertising dollars. sales dollars. salespersons’ salaries. Question 5. 5. (TCO 5) Which of the following is true when ranking proposals using zero - base budgeting? (Points : 5) Nonfunded packages should not be ranked.

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    Adjustments are not allowed once the ranking is complete. Due to changing circumstances, a low - priority item may later become a high - priority item. Decision packages are ranked in order of increasing benefit. Question 6. 6. (TCO 6) A disadvantage of the payback period technique is that it _____. (Points : 5) ignores obsolescence factors ignores the cost of an investment is complicated to use ignores the time value of money Question 7. 7. (TCO 6) All of the following statements about the accounting rate of return method are correct except that it _____. (Points : 5) considers the profitability of a capital expenditure ignores the salvage value of an investment does not consider the time value of money uses income data rather than cash flow data Question 8. 8. (TCO 6) A project that cost $80,000 with a useful life of 5 years is being considered. Straight - line depreciation is being used and salvage value is $5,000. The project will generate annual cash inflows of $21,375. The accounting rate of return is _____. (Points : 5) 26.7% 45.5% 7.8% 18.74% Question 9. 9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10 - year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____. (Points : 5) 5 years 6 years 7 years 8 years

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