# 47. True or False: The balance sheet and income statement together provide detailed information...

## Question:

47. True or False: The balance sheet and income statement together provide detailed information about where business gets its cash and how that cash is spent.

48. Carlisle Clinic, a not-for-profit organization, began 2016 with an equity balance of $1,000,000. Assuming Carlisle Clinic reported net income of$200,000 for the year ended December 31, 2015, and had no other adjustments to equity during 2015, what was Carlisle Clinic?s equity balance as of December 31, 2014?

a. $800,000 b.$1,200,000

c. $200,000 d.$1,000,000

e. Can't tell with the information provided

56. Smith Pharmaceuticals is trying to estimate the breakeven volume of sales on a newly developed drug. Which of the following would be expected to reduce the number of pills Smith would need to sell to breakeven (i.e., which would result in a lower breakeven volume) assuming everything else remains the same?

a. An increase in total fixed costs

b. A decrease in the selling price per pill

c. An increase in the variable cost per pill

d. An increase in the unit (per pill) contribution margin

e. An increase in allocated overhead (indirect) costs

57. Assume the local children?s hospital implements an outpatient asthma intervention to improve the health outcomes of children with asthma. As a result, the hospital sees a dramatic reduction in the number of inpatient admissions for children with asthma, but very little change in the total cost of operating the hospital. Which of the following statements describes the most likely reason for the lack of cost savings?

a. The hospital's cost structure primarily consists of variable costs.

b. The hospital's cost structure primarily consists of fixed costs.

c. The hospital's cost structure consists of an equal mix of variable and fixed costs.

d. The hospital reduced its capacity (i.e., downsized) following the drop in admissions.

e. The hospital has a very high variable cost per admission

## Managerial Accounting

Managerial accounting is a branch of accounting that analyzes, recording, and reporting information that is intended and catering to the corporation's internal stakeholders, primarily the top and middle management.

## Answer and Explanation:

47. False It is the cash flow statement is the financial report detailing the cash movements.

48. The correct answer is a. \$800,000 As the income was earned in 2015 only and at the beginning of 2016, the equity is 1,000,000 hence deduct the 200,000 net income from the total equity balance.

56. The correct answer is d. An increase in the unit (per pill) contribution margin A higher contribution margin will lead to lower break-even in units.

57. The correct answer is b. The hospital's cost structure primarily consists of fixed costs. Although the inpatient admission decreases, fixed costs will remain the same whether there is or no patient admissions.