Deck 13: Management of Financial Resources

Question 1

Calculation of the current ratio would involve which two pieces of data?

A) Total assets and total liabilities.
B) Current assets and current liabilities.
C) Total revenue and total expenses.
D) Net profit and total sales.

Answer 1

B

Question 2

Ratios that are used to examine an establishment's ability to meet its long-term financial obligations are termed _____________ ratios.

A) liquidity
B) solvency
C) profitability
D) operating

Answer 2

B

Question 3

A pro forma income statement

A) displays revenues and expenses for the past month.
B) summarizes sales and expenditures for the previous year.
C) forecasts revenue and expenses for a future period.
D) is used to complete a common-size income statement.

Answer 3

C

Question 4

Jim had a beginning inventory of $5,500. During the month of April he purchased $4,000 of food and had an ending inventory of $3,800 at the end of the month. His sales for April were $8,750. What was his inventory turnover?

A) 1.2 times
B) 45.7%
C) 86:1
D) 1.88 turns

Question 5

Which of the following statements is true?

A) Total fixed costs do not vary with changes in sales volume.
B) Total fixed cost per unit do not vary with changes in sales volume.
C) Total variable costs do not vary with changes in sales volume.
D) Total costs do not vary with changes in sales volume.

Question 6

Cash, marketable securities, and accounts receivable are all categorized as _____________ on a balance sheet.

A) owner's equity
B) current liabilities
C) fixed assets
D) current assets

Question 7

Accumulated depreciation is applied to which balance sheet category?

A) current assets
B) fixed assets
C) current liabilities
D) long-term liabilities

Question 8

One difference between a for-profit and a not-for-profit organization is

A) a for-profit organization will budget for a profit each year and a not-for-profit will budget to break-even.
B) a for-profit organization will prepare an income statement and balance sheet each year, a not-for-profit will not prepare these statements.
C) a for-profit organization is not operated for anyone's personal gain, a not-for- profit operation is expected to provide a return for its investors.
D) excess revenue over expenses, in a for-profit organization can go to the organization's owners, in a not-for-profit organization this excess goes back into the organization.

Question 9

Sam Jones owns a local restaurant. He buys steaks from the restaurant to serve his family at home for dinner. Sam should record this sale in the restaurant's books because of the

A) business entity principle.
B) going-concern concept.
C) cost principle.
D) materiality principle.

Question 10

Sarah Michaels wants to evaluate her operation's efficiency by calculating the number of labor minutes per meal. Data from the previous week indicate that she served 7,500 meals. Her timecards indicated that employees worked a total of 625 hours for the week. What were labor minutes per meal for Sarah's operation?

A) .08
B) 5
C) 12
D) 15

Question 11

The menu pricing method that uses desired food cost percentage in determining the menu sales price is termed the _____________ pricing method.

A) factor
B) prime cost
C) actual
D) value

Question 12

A foodservice operation with a food cost of 40% has food costs that are equal to 40% of _____________.

A) total costs
B) labor costs
C) operating costs
D) revenue

Question 13

The _____________ says that a company who chooses to use the LIFO method for valuing their inventory must use that same method each year.

A) business entity concept
B) cost principle
C) consistency principle
D) materiality principle

Question 14

The financial statement that shows financial position at a point in time is the

A) income statement.
B) statement of change in financial position.
C) P&L statement.
D) balance sheet.

Question 15

The breakeven point is where

A) total assets equal total liabilities plus owner's equity.
B) total revenue equals total costs.
C) fixed cost equals variable cost.
D) total profit equals total costs.

Question 16

Typically the first step in the budget process is to compile the

A) expenditure budget.
B) sales budget.
C) capital expenditure budget.
D) pro forma income statement.

Question 17

The denominator used when calculating a common size income statement is

A) total assets.
B) total liabilities.
C) total sales.
D) total expenses.

Question 18

Perception of value

A) is what the manager believes should be charged for menu items.
B) is used by managers in determining the type of production equipment to purchase.
C) is a rating used by customers in choosing a new restaurant in which to dine.
D) is what customers believe a menu item is worth.

Question 19

Assets and liabilities are a part of which financial statement?

A) income statement
B) P&L statement
C) balance sheet
D) opening budget

Question 20

Having customers pay by the ounce for items purchased on sandwich or salad bars is an example of

A) actual cost pricing.
B) product marketing.
C) sociocultural factor planning.
D) pricing psychology.

Question 21

The actual cost menu pricing method incorporates fixed and variable costs and desired profit in determining the menu sales price.

Question 22

Cashiers who take cash from customers should be the ones to count cash drawers and reconcile with cash register receipts

Question 23

A high inventory turnover ratio indicates large amounts of money are tied up in inventory.

Question 24

The time value of money concept suggests that having a $1.00 in the future is worth more than having a $1.00 today.

Question 25

The fundamental accounting equation is assets = liabilities + owners equity.

Question 26

The breakeven point is the point at which _________ and _______ are equal.

Question 27

The formula to calculate food cost percentage is _____________.

Question 28

Which of the following costs is typically the highest in a foodservice operation?

A) food
B) labor
C) supplies
D) overhead

Question 29

A turkey sandwich has a food cost of $.75 and is sold for $2.25. If the manager wanted to achieve a 40% food cost, which of the following should occur?

A) The ingredients in the sandwich should be changed to reduce cost of the food in the sandwich
B) The price of the sandwich should be increased
C) The price of the sandwich should be decreased
D) Nothing, the food cost percentage is currently at 40%

Question 30

A comparison of ratios over several periods of time is termed trend analysis.

Question 31

The cost method of accounting differs from the accrual method in that expenses are recorded when they are incurred in the cost method and when they are paid in the accrual method.

Question 32

The pay back period is

A) the time period that is required to process invoices and pay for short-life items such as food.
B) considers the time value of money.
C) is calculated by dividing initial investment by expected yearly income or savings.
D) uses the table of discounted cash flows to determine yearly expected savings.

Question 33

The Net Present Value method for evaluating a capital budget request incorporates the time value of money concept.

Question 34

Improving the bottom line in an organization can occur either by increasing revenues or reducing costs

Question 35

A ______________ provides a visual way to quickly access financial performance.