How Much Do You Know About Fortna Software?
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On what basis does Fortna record its accounting records
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Cash Basis
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Accrual Basis
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Back of the Envelope
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Clay Tablet
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Explore your knowledge of Fortna Software with this quiz focusing on accounting practices, contract terms, and cost management. Assess your understanding of accrual accounting, booking sales, contract types, and cost rates in a business context.
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- 2.
When a contract is signed by both parties, what following phrase is most accurate:
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The client is billed immediately for retention milestone The client is billed immediately for retention milestone
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Revenue is picked up equal to the down payment
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The Sale is considered "booked"
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Shared Savings are determined and reimbursed to the client.
Correct Answer
A. The Sale is considered "booked"Explanation
When a contract is signed by both parties, the sale is considered "booked". This means that the company can now recognize the revenue from the sale in their financial statements. It indicates that the transaction has been finalized and the company can start delivering the products or services agreed upon in the contract. This term is commonly used in sales and accounting to signify that the sale has been successfully closed and the company can begin fulfilling its obligations to the client.Rate this question:
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- 3.
Fortna has been awarded a project for a NTE $1.2M with the following terms - billable bi-weekly at Time and Expenses. This is an example of what type of contract?
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Fixed Price contract
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Support contract
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Installation contract
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Time and Expense contract
Correct Answer
A. Time and Expense contractExplanation
This is an example of a Time and Expense contract because the project is billable bi-weekly at Time and Expenses. In this type of contract, the client pays for the actual time spent on the project, as well as any expenses incurred. It is commonly used when the scope of work is uncertain or subject to change, as it allows for flexibility in billing based on the actual resources used.Rate this question:
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- 4.
Fortna's Standard Cost rates include which of the following?
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Direct Cost and Indirect Cost divided by 2080 hours
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Direct Cost divided by expected billable hours
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Direct Cost and Indirect Cost divided by expected billable hours
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Direct Cost, Indirect Cost and SG&A divided by expected billable hours.
Correct Answer
A. Direct Cost and Indirect Cost divided by expected billable hoursExplanation
The correct answer is "Direct Cost and Indirect Cost divided by expected billable hours." This means that Fortna's Standard Cost rates include both the direct and indirect costs, which are divided by the expected billable hours. This calculation allows for a more accurate determination of the cost rates for the company's services.Rate this question:
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- 5.
What is the most accurate description of the goal for the Fortna Standard Cost process?
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To have a net zero cost for a department at the end of the year.
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To properly bill the client for services rendered.
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To properly charge to projects all subcontract costs.
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To ensure that all categories of employees are charged using the same cost rate.
Correct Answer
A. To have a net zero cost for a department at the end of the year.Explanation
The most accurate description of the goal for the Fortna Standard Cost process is to have a net zero cost for a department at the end of the year. This means that the department's expenses and revenues should balance out, resulting in no overall cost or profit.Rate this question:
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- 6.
Which of the following statements is most accurate related to Nonchargeable Hours?
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The employee receives 1/2 credit on utilization for hours charged.
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The client is charged for these hours and the employee does not receive utilization credit.
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The client is not charged but the project is charged for the cost.
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The client is not charged for these hours; project not charged for the cost.
Correct Answer
A. The client is not charged for these hours; project not charged for the cost.Explanation
Nonchargeable hours refer to the hours that are not billed to the client. In this case, the correct answer states that the client is not charged for these hours, and the project is also not charged for the cost. This means that the nonchargeable hours do not impact the client's bill or the project's budget.Rate this question:
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- 7.
On MHS projects, cash flow should:
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Should always be considered when negotiating a new contract.
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Should always be cumulatively negative.
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Should be considered when calculating monthly actual revenue
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Should equal zero by the end of the project.
Correct Answer
A. Should always be considered when negotiating a new contract.Explanation
Cash flow should always be considered when negotiating a new contract because it is important to understand the financial implications of the project. By considering cash flow, the organization can assess whether they have enough funds to cover expenses and determine the profitability of the project. This information is crucial for making informed decisions during contract negotiations and ensuring the financial success of the project.Rate this question:
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- 8.
Fortna's Business Model calls for a target of:
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Revenue and gross profit growth equal to 30% annually
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Operating profit equal to 35% of gross profit
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Delivery department expenses to equal 25% of revenues.
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Gross profit to be 25% of revenues
Correct Answer
A. Gross profit to be 25% of revenuesExplanation
Fortna's Business Model aims to achieve a gross profit that is 25% of revenues. This means that the company aims to generate a profit that is 25% of the total revenue it generates. This is a key financial metric that indicates the efficiency and profitability of the company's operations. By setting a target of 25% gross profit, Fortna aims to ensure that its revenue generation is balanced with its cost of goods sold, allowing for sustainable growth and profitability.Rate this question:
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- 9.
The purpose of the Income Statement is:
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To present a point-in-time report of the company's financial condition
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To identify company performance on a cash basis
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Provide a summary of a company's financial transactions.
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Reflect a particular project's performance.
Correct Answer
A. Provide a summary of a company's financial transactions.Explanation
The purpose of the Income Statement is to provide a summary of a company's financial transactions. It is a financial statement that shows the revenues, expenses, and net income or loss of a company over a specific period of time. It helps in evaluating the profitability and financial performance of a company by showing the sources of revenue and the expenses incurred to generate that revenue. By analyzing the income statement, stakeholders can assess the company's ability to generate profits and manage its expenses effectively.Rate this question:
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- 10.
Which is the most accurate statement about the Quick Ratio?
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Used to quickly determine if a project's cash flow is positive.
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Is a statistic used to determine a company's ability to meet short-term obligations
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Is based on information found in the Income Statement.
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Is a statistic used to determine a company's ability to meet long-term obligations
Correct Answer
A. Is a statistic used to determine a company's ability to meet short-term obligationsExplanation
The Quick Ratio is a statistic used to determine a company's ability to meet short-term obligations. It measures a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory. By comparing a company's quick assets (cash, marketable securities, and accounts receivable) to its current liabilities, the Quick Ratio provides insight into the company's liquidity and its ability to cover short-term obligations.Rate this question:
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- 11.
Which following statement is most accurate about fixed price contracts?
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A detailed estimate of total direct costs is developed by the Estimating Dept.
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Billing and Revenue occur at the same time.
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The Estimating Department does not routinely obtain supplier quotes for high cost components.
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Revenue is recognized equally each month over the life of the project.
Correct Answer
A. A detailed estimate of total direct costs is developed by the Estimating Dept.Explanation
Fixed price contracts involve a detailed estimate of total direct costs being developed by the Estimating Department. This means that the department carefully calculates and determines the overall costs that will be incurred in executing the project. This estimate is crucial in setting the fixed price for the contract and ensuring that it covers all the necessary expenses.Rate this question:
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- 12.
Which if the following statement about Fortna Cash Management is accurate?
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Fortna maintains less than 50% of annual net income in the firm.
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Consulting projects are normally cash neutral.
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The Burn Rate of cash is used in developing a cash flow projection.
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Billings need to be prompt and collections need to be monitored.
Correct Answer
A. Billings need to be prompt and collections need to be monitored.Explanation
The statement that "Billings need to be prompt and collections need to be monitored" is accurate because it highlights the importance of timely invoicing and tracking of payments in Fortna Cash Management. This ensures that the company receives its revenue in a timely manner and can effectively manage its cash flow.Rate this question:
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- 13.
When Invoices are paid by the client, they are said to be:
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Billed
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Retained
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Recognized
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Collected
Correct Answer
A. CollectedExplanation
When invoices are paid by the client, they are considered collected. This means that the client has made the payment and the amount owed has been received by the company.Rate this question:
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- 14.
On a Time and Expense project:
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Travel Expenses are billed at Fortna's actual cost.
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Travel Expenses are billed at Fortna's standard rate.
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A contract never includes a cap.
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Revenue is "recognized" at cost.
Correct Answer
A. Travel Expenses are billed at Fortna's actual cost.Explanation
The correct answer is "Travel Expenses are billed at Fortna's actual cost." This means that Fortna will bill the client for the exact amount they spent on travel expenses, without any markup or additional charges. This ensures transparency and accuracy in billing.Rate this question:
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- 15.
Billable hours are:
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Charged to the client, not charged to the project, employee receives utilization credit
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Not charged to the client, charged to the project, employee receives no utilization credit
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Charged to the client, charged to the project, employee receives no utilization credit
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Charged to the client, charged to the project, employee receives utilization credit
Correct Answer
A. Charged to the client, charged to the project, employee receives utilization creditExplanation
Billable hours refer to the hours that a client is charged for by the company. In this case, the correct answer states that billable hours are charged to the client and also charged to the project. This means that the client is responsible for paying for the hours worked on the project. Additionally, the employee receives utilization credit, which means that their time spent on the project is recognized and accounted for.Rate this question:
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- 16.
On consulting projects, Fortna's policy is to discourage monthly billing.
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True
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False
Correct Answer
A. TrueExplanation
Fortna's policy is to discourage monthly billing. This means that they do not prefer or encourage billing on a monthly basis for their consulting projects. The reasoning behind this policy is not provided, but it could be because monthly billing may lead to a longer project duration and potential delays in payment. Alternatively, Fortna may prefer to bill based on milestones or project completion to ensure timely and accurate compensation for their services.Rate this question:
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- 17.
Company level forecasts are useful in tracking historical performance.
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True
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False
Correct Answer
A. FalseExplanation
Company level forecasts are not useful in tracking historical performance because forecasts are projections of future performance, not reflections of past performance. Historical performance is typically tracked through the analysis of actual financial statements and other historical data. Forecasts, on the other hand, are forward-looking estimates that are based on assumptions and expectations for the future. Therefore, the statement is false.Rate this question:
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- 18.
Experience tells us:
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Our industry leads the economic indicators.
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Our industry lags the economic indicators.
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Our industry determines the economic indicators.
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Our industry does not need to consider economic indicators.
Correct Answer
A. Our industry lags the economic indicators.Explanation
The explanation for the correct answer "Our industry lags the economic indicators" is that experience has shown that our industry tends to follow or trail behind the economic indicators. This means that changes in the overall economy are typically reflected in our industry after a certain time lag.Rate this question:
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- 19.
Fortna's services work consumes cash during periods of growth.
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True
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False
Correct Answer
A. TrueExplanation
Fortna's services work consumes cash during periods of growth because during periods of growth, the company may need to invest in additional resources, such as hiring more employees or purchasing new equipment, to meet the increased demand for their services. These investments require cash outflows, which can temporarily reduce the company's available cash balance.Rate this question:
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- 20.
Project variances are useful to:
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Understand the differences between budgets and actual performance.
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Determine the resources charged to a project.
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Track each project by cost category.
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Calculate standard rates.
Correct Answer
A. Understand the differences between budgets and actual performance.Explanation
Project variances are useful to understand the differences between budgets and actual performance. Variances help in identifying the deviations between the planned budget and the actual expenses or outcomes of a project. By analyzing these variances, project managers can gain insights into the reasons behind the discrepancies and take corrective actions if necessary. This information is crucial for effective project management and decision-making, as it allows for better control over project costs and performance.Rate this question:
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Current Version
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Feb 21, 2024Quiz Edited by
ProProfs Editorial Team -
Aug 18, 2011Quiz Created by
FortnaTests
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