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Midterm Exam Essay1. (TCO 1) Suppose your company sold $25,000 in trade in to a customer for cash. How does this transaction impact the accounting equation? (Points 12) 2. (TCO 2) Suppose your company sold $50,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation? (Points 12) 3. (TCO 3) Rationalization is one of the components of the blind triangle. What types of rationalization could a person use to justify misconduct? How can a company hold dear itself from rationalization as a part of fraud? (Points 12) 4. (TCO 4) What is horizontal summary of financial tilts? How does horizontal abbreviation differ from vertical analysis? (Points 12)5. (TCO 3) Separation of duties is a key feature in an internal fudge system. Why is separation of duties such an important internal control? Give an example of separation of duties as an internal control. (Points 24) 6. (TCO 1) Describe the balance sheet. Why is this statement important to t he company, creditors, and investors? (Points 24) 7. (TCO 4) Name and describe one liquid state ratio. What does this ratio measure? What is the formula for this ratio? (Points 24)ACCT 301 Midterm Exam 21. (TCO 1) The retained earnings statement shows all of the next except which one? 2. (TCO 1) Managements views on the companys short debt paying ability, expansion financing, and results of operations be found in which of the following? 3. (TCO 4) For 2010, Fielder Corporation account net income of $30,000 net sales $400,000 and average share outstanding 6,000. There were no preferred bloodline dividends. What was the 2010 earnings per share? 4. (TCO 4) A useful measure of solvency is which of the following? 5. (TCO 2) Which pair of accounts follows the rules of debit and credit, in carnal knowledge to increases and decreases, in the same manner? 6. (TCO 2) The principle purpose of posting is which of the following? 7. (TCO 3) Joe is a warehouse custodian, and excessively maintains the accounting record of the inventory held at the warehouse. An assessment of this situationindicates8. (TCO 3) The following discipline was taken from Hurlbert caller cash budget for the calendar month of June 9. (TCO 11) Managerial accounting information does which of the following? 10. (TCO 11) Which one of the following is non a direct material? 11. (TCO 11) Sales commissions are classified as which of the following? 12. (TCO 11) Manufacturing costs accommodate which of the following? 13. (TCO 11) Neeley Manufacturing Company reported the following year-end information 14. (TCO 5) What effect do changes in body process accept on fixed costs per unit? 15. (TCO 5) Which one of the following is not an assumption of CVP analysis?ACCT 301 Midterm Exam 31. (TCO 5) A company has total fixed costs of $210,000 and a theatrical role border ratio of 30%. How more sales are necessary to break even? 2. (TCO 5) How much sales are required to earn a target income of $70,000 , if total fixed costs are $100,000 and the contribution margin ratio is 40%? 3. (TCO 6) For which one of the following budgeting aspects does the budget committee generally have the responsibility? 4. (TCO 6) Under what situation might a budget be most effective? 5. (TCO 6) How does long-range planning compare to a master budget? 6. (TCO 6) Which one of the following is a source of information used to prepare the budgeted income statement? 7. (TCO 7) When is a static budget most appropriate in evaluating a managers performance? 8. (TCO 7) Which type of center is the housekeeping department of a manufacturing company? 9. (TCO 7) For which of the following is an investment center manager responsible?10. (TCO 7) Merck Pharmaceuticals is evaluating its Vioxx division, an investment center. The division has a $45,000 controllable margin and $300,000 of sales. How much will Mercks average operating assets be when its return on investment is 10%? 11. (TCO 11) Financial and managerial acco unting are both concerned with the economic events of an enterprise. Similarities between financial and managerial accounting do exist, but they have a different focus. Briefly distinguish between financial and managerial accounting as they relate to (1) the primary users, (2) the type and frequency of reports, (3) the purpose of reports, and (4) the content of reports. 12. (TCO 4) are short-term creditors, long-term creditors, and stockholders primarily interested in the same characteristics of a company? Explain. 13. (TCO 5) In the month ofSeptember, Nixon Company sold 800 units of product. The average sales price was $30. During the month, fixed costs were $7,200 and variable costs were 60% of sales.