BUS475 FINAL EXAM - 100 Questions Answered

1) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: Income Statement Balance Sheet Dr. Cr. Dr. Cr. Totals $58,000 $48,000 $34,000 $44,000 Closing entries are necessary for __________. A. temporary accounts only B. permanent accounts only C. permanent or real accounts only D. both permanent and temporary accounts 2) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead? A. General corporate liability insurance B. Factory janitor C. The western division’s vice president’s salary D. Cost of landscaping the corporate office 3) Which list below best describes the major services performed by public accountants? A. Employee training, auditing, bookkeeping B. Bookkeeping, mergers, budgets C. Cost accounting, production scheduling, recruiting D. Auditing, taxation, management consulting 4) The conceptual framework developed by the Financial Accounting Standards Board __________. A. are rules that all accountants must follow B. was approved by a vote of all accountants C. is legally binding on all accountants D. is viewed as providing a constitution for setting accounting standards for financial reporting 5) In what situations will a static budget be most effective in evaluating a manager's effectiveness? A. The company has substantial variable costs. B. The company has substantial fixed costs. C. The company has no fixed costs. D. The planned activity levels match actual activity levels. 6) Which one of the following items is not generally used in preparing a statement of cash flows? A. Comparative balance sheets B. Adjusted trial balance C. Additional information D. Current income statement 7) These are selected account balances on December 31, 2008. Land (location of the corporation’s office building) $150,000 Land (held for future use) 225,000 Corporate Office Building 900,000 Inventory 300,000 Equipment 675,000 Office Furniture 150,000 Accumulated Depreciation 450,000 What is the net amount of property, plant, and equipment that will appear on the balance sheet? A. $1,425,000 B. $1,650,000 C. $2,400,000 D. $1,950,000 8) A well-designed activity-based costing system starts with __________. A. analyzing the activities performed to manufacture a product B. computing the activity-based overhead rate C. assigning manufacturing overhead costs for each activity cost pool to products D. identifying the activity-cost pools 9) The cost principle is the basis for preparing financial statements because it is __________. A. the most accurate measure of purchasing power B. relevant and objectively measured, and verifiable C. an international accounting standard D. a conservative value 10) Which one of the following is a product cost? A. Advertising costs B. Office salaries C. Sales person’s salaries D. Indirect labor 11) If a company reports a net loss, it __________. A. will not be able to make capital expenditures B. will not be able to pay cash dividends C. will not be able to get a loan D. may still have a net increase in cash 12) The primary purpose of the statement of cash flows is to __________. A. prove that revenues exceed expenses if there is a net income B. provide information about the investing and financing activities during a period C. facilitate banking relationships D. provide information about the cash receipts and cash payments during a period 13) The major reporting standard for management accounts is __________. A. the Sarbanes-Oxley Act of 2002 B. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management C. generally accepted accounting principles D. relevance to decisions 14) Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase? A. $28,000 B. $18,000 C. $6,000 D. $12,000
15) The price of a good that prevails in a world market is called the A. relative price. B. absolute price. C. world price. D. comparative price. 16) A country's consumption possibilities frontier can be outside its production possibilities frontier if __________. A. the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries B. the country’s technology is superior to the technologies of other countries C. the country imports more than it exports D. the country engages in trade 17) The general term for market structures that fall somewhere in-between monopoly and perfect competition is __________. A. monopolistically competitive markets B. imperfectly competitive markets C. incomplete markets D. oligopoly markets 18) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________. A. plus the cost of tuition, equals the opportunity cost of going to college B. should be counted only to the extent that they are more expensive at college than elsewhere C. should be counted in full, regardless of the costs of eating and sleeping elsewhere D. usually exceed the opportunity cost of going to college 19) A tax on an imported good is called a __________. A. trade tax B. tariff C. quota D. supply tax 20) Without trade, __________. A. interdependence is more extensive than it would be with trade B. a country's production possibilities frontier is also its consumption possibilities frontier C. a country is better off because it will have to learn to be self-sufficient without trade D. a country can still benefit from international specialization 21) Which of the following statements about GDP is correct? A. GDP increases if the total population increases. B. Money continuously flows from households to government and then back to households, and GDP measures this flow of money. C. GDP measures two things at once: the total income of everyone in the economy and the unemployment rate. D. GDP is to a nation’s economy as household income is to a household.
22) The political business cycle refers to __________.
A. the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected B. changes in output created by the monetary rule the Fed must follow C. the fact that about every four years some politician advocates greater government control of the Fed D. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle
23) The open-economy macroeconomic model examines the determination of __________.
A. unemployment and the exchange rate B. the trade balance and the exchange rate C. the output growth rate and the real interest rate D. the output growth rate and the inflation rate
24) The model of short-run economic fluctuations focuses on the price level and __________.
A. economic growth B. Net GDP C. real GDP D. the neutrality of money
25) Which of the following statements about GDP is correct?
A. Nominal GDP values production at constant prices, whereas real GDP values production at current prices. B. Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production. C. Nominal GDP values production at current prices, whereas real GDP values production at constant prices. D. Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
26) Real GDP __________.
A. evaluates current production at the prices that prevailed in some specific year in the past. B. is a measure of the value of goods only; it excludes the value of services. C. evaluates current production at current prices. D. is not a valid measure of the economy's performance, since prices change from year to year.
27) The balance of payment account is made up of:
A. an import account and an export account. B. a monetary account and a fiscal account. C. a current account and a financial and capital account. D. an investment account and a consumption account.
28) Which of the following best describes a mental image of a possible and desirable future state of the organization? A. Horizontal communication B. Vision C. Mission D. Vertical communication E. Leadership 29) Which of these refers to the practices aimed at discovering and harnessing an organization's intellectual resources? A. Effectiveness B. Knowledge management C. Collaboration D. Competitiveness E. Innovation 30) As related to managing of human resources, diversity refers to: A. Differences in retention strategies (such as training, hiring, incentives, etc) B. Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.) C. Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.) D. Differences in pay methods (such as hourly, salaried, overtime, hazard-pay, commissioned, etc.) E. Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.) 31) When a company establishes technology leadership by pioneering unique products or services that command premium prices, it has benefited from a: A. Differentiation strategy B. High-price strategy C. High-cost strategy D. Diversification strategy E. Low-cost strategy 32) Teams that operate separately from the regular work structure and exist temporarily are known as: A. Transnational teams B. Parallel teams C. Management teams D. Self-managed teams E. Self-designing teams 33) Which of these represent skills that managers need? A. Interpersonal, quantitative, and professional B. Technical, interpersonal & communication and conceptual & decision making C. Interpersonal & communication, conceptual & decision making and professional D. Conceptual & decision making, professional and technical E. Professional, technical and interpersonal & communication 34) Having individuals actually do the job they are applying for as a test to see if they can do it is __________. A. an approach with high face validity B. a formal means of screening candidates C. an approach with low reliability D. an approach with high reliability E. an informal means of screening candidates 35) A manager's ability to stimulate people to be high performers is referred to as: A. Organizing B. Staffing C. Planning D. Controlling E. Leading 36) The most dominant areas in the global economy include: A. North America, Mexico and Asia B. Western Europe, Asia and Africa C. North America, Western Europe and Asia D. North America, Asia and Africa E. North America, South America and Western Europe 37) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n): A. Large corporation B. Online Business C. Multinational corporation D. Entrepreneurship venture E. Small business 38) __________ is the process of working with people and resources to accomplish organizational goals. A. Management B. Supervising C. Planning D. Decision making E. Controlling 39) Building a dynamic organization is another way of describing which function of management? A. Controlling B. Organizing C. Planning D. Leading E. Staffing 40) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States. A. $2; about 25 B. About $2; about 15 C. Less than $1; about 15 D. Less than $1; about 25 E. Less than $1; about 40 41) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by: A. Mass-producing products that have an established market niche B. Producing an imitation of the new technology that utilizes lower-quality and lower-cost materials C. Making subtle changes to the product, thereby avoiding patent restrictions D. Learning from the leader thereby avoiding the costs and risks of technology leadership E. Technology followers are not successful at low-cost strategies
42) Use the following table to answer question: P(M A) is approximately _____. A. .25 B. .125 C. .625 D. .50 43) Which of the following statements is true? A. If A and B are independent events, the P(B) = P(A) P(B). B. If event (A) occurs, then its complement (A') will also occur. C. The probability of A and its complement (A') will always sum to one. D. The sum of two mutually exclusive events is one. 44) Use the following table to answer question: Are Service provider and county independent events? A. Insufficient information to determine B. Yes C. No 45) Use the following table to answer question: P(S | W) is approximately _____. A. .58 B. .12 C. .30 D. .40 46) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income. Which outcomes would be likely in a bivariate regression on 45 randomly chosen U.S. cities in 2005 with Y = number of robberies in each city (thousands of robberies) and X = size of police force in each city (thousands of police)? A. No correlation. B. Autocorrelation. C. Positive slope (due to city size). D. High R2 (due to city size). 47) Thirty patients are selected from a filing cabinet containing 812 patient folders by choosing every 27th patient folder. Which sampling method is this? A. Cluster sample B. Simple random sample C. Stratified sample D. Systematic sample
48) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess's break even point?
A. 2,133 units B. 4,600 units C. $25,600 D. 6,200 units
49) Which one of the following statements concerning production and staffing plans is best?
A. Aggregation can be performed along three dimensions: product families, labor, and time. B. A master production schedule is a projected statement of income, costs, and profits. C. A staffing plan is the intermediate link between the business plan and the master production schedule. D. Production plans are based primarily on information from the master production plan.
50) Which one of the following statements concerning production and staffing plans is best?
A. When production and staffing plans are made, aggregation can be performed only along two dimensions: products and time. B. Production and staffing plans specify production rates, workforce levels, and inventory holdings, but do not account for capacity limitations because they are aggregated. C. Production and staffing plans attempt to achieve several objectives, all of which must be consistent with one another. D. The impact of production and staffing plans cuts across several functional areas of the firm.
51) Multinational corporations __________.
A. are U.S. companies that trade their securities on the exchanges in other countries B. are required to use international accounting standards C. are U.S. companies that sell goods and services in other countries D. are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries
52) Which is not a tool of statistical quality control?
A. Attribute control chart B. Fishbone diagram C. Pareto chart D. Deming chart
53) Fundamental points about network computing in organizations include all of the following except: A. Networks have had limited impact on organizational productivity B. Computers constantly exchange data C. Computer data exchange provides significant advantages to organizations D. Networks can be of any size, from small to enormous E. Networks support new ways of doing business 54) The cost of an asset and its fair market value are __________. A. the same on the date of acquisition B. never the same C. the same when the asset is sold D. irrelevant when the asset is used by the business in its operations 55) When your purchases are swiped over the bar-code reader at the point-of-sale terminals at Wal-Mart, a _____ records the data. A. transaction processing system B. enterprise resource planning system C. functional area information system D. dashboard E. office automation system 56) Which of the following is not a source for external data? A. commercial databases B. satellites C. corporate databases D. sensors E. government reports 57) Which of the following statements is correct? A. An individual’s right to privacy is absolute B. Advances in information technologies have not affected individual privacy C. It is difficult to determine and enforce privacy regulations D. An individual’s right to privacy supersedes the needs of society E. The Internet has increased individuals’ privacy
58) The management cockpit best exemplifies which type of system?
A. Decision support system B. Functional area information system C. Expert system D. Digital dashboard E. Group decision support system
59) Information-based industries are most susceptible to which one of Porter’s five forces?
A. bargaining power of suppliers B. rivalry among existing firms in an industry C. bargaining power of customers D. threat of substitute products
60) International Game Technology’s new ERP system produced all of the following benefits except:
A. The company gained flexibility in manufacturing products B. Integrated the company’s business functions C. Company was able to maintain its original business processes D. ERP system connected the company’s global operations E. Operations employees were able to access manufacturing process details at their workstations
61) Which of the following is not a reason that managers need IT support?
A. Need to access remote information sources B. Number of alternatives are decreasing C. Decisions must typically be made under time pressure D. Decisions are becoming more complex E. Decision makers are often in different locations
62) Which of the following are not provided by digital dashboards?
A. Key performance indicators B. Drill down C. Transaction processing D. Status access E. Exception reporting
63) Which of the following best represents operating income?
A. Income from capital gains B. Income after financing activities C. Earnings before interest and taxes D. Income from discontinued operations
64) Which of the following is most consistent with the hedging principle in working capital management?
A. Fixed assets should be financed with short-term notes payable. B. Inventory should be financed with preferred stock. C. Accounts receivable should be financed with short-term lines of credit. D. Borrow on a floating rate basis to finance investments in permanent assets.
65) Exchange rate risk:
A. has been phased out due to recent international legislation. B. arises from the fact that the spot exchange rate on a future date is a random variable. C. applies only to certain types of domestic businesses. D. doesn’t affect trades made in US Dollars.
66) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)
A. $900 B. $490 C. $570 D. -$150
67) At 8% compounded annually, how long will it take $750 to double?
A. 6.5 years B. 9 years C. 48 months D. 12 years
68) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
A. overvalued. B. a good buy. C. undervalued. D. at equilibrium.
69) The rate that a subsidiary or parent of the multinational corporation charges other divisions of the firm for its products is called
A. Forward price B. Transaction price C. Transfer price D. Exchange price
70) . Lever Brothers has a debt ratio (debt to assets) of 60%. Management is wondering if its current capital structure is too aggressive. Lever Brothers’s present EBIT is $3 million, and profits available to common shareholders are $1,440,000, with 228,571 shares of common stock outstanding. If the firm were to instead have a debt ratio of 20%, reduced interest expense would cause profits available to stockholders to increase to $1,680,000, but 457,143 common shares would be outstanding. What is the difference in EPS at a debt ratio of 20% versus 60%?
A. $-1.76 B. $-2.63 C. $-3.14 D. $-4.37
71) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.
A. more, more B. less, more C. more, less D. less, less
72) Mortgage bonds:
A. are a type of debenture. B. usually pay little or no interest. C. are secured by a lien on real property. D. can only be issued by financial institutions.
73) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share. If the stock is currently selling for $21.25 per share, what is the expected rate of return on this stock?
A. 8.0% B. 36.13% C. 12.5% D. 13.6%
74) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
A. Under all conditions, the project’s payback would be less than the profitability index. B. In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000. C. The project would add value to the firm. D. The project’s IRR would have to be less that the firm’s discount rate.
75) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
A. 7% B. 6% C. 5% D. 8%
	76) "Positioning":
	A. is useful for combining but not for segmenting. B. applies to new products--but not existing products. C. helps strategy planners see how customers view competitors' offerings. D. eliminates the need for judgment in strategy planning. E. is concerned with obtaining the best shelf space in retail outlets.
	77) Good marketing strategy planners know that:
	A. the terms "mass marketing" and "mass marketer" mean basically the same thing. B. firms like Nabisco and Wal-Mart are too large to aim at clearly defined target markets. C. target marketing does not limit one to small market segments. D. target markets cannot be large and spread out. E. mass marketing is often very desirable and effective.
	78) In an effort to increase its total sales, Champion has started exporting its spark plugs for use by several German auto producers. Champion is pursuing a _____ opportunity.
	A. mass marketing B. diversification C. market penetration D. market development E. product development
	79) The three basic tasks of ALL managers, according to the text, are:
	A. planning, staffing, and evaluating. B. hiring, training, and compensating. C. marketing, production, and finance. D. planning, implementation, and control. E. execution, feedback, and control.
	80) Analysis of demographic dimensions:
	A. is the most important step to successful segmentation. B. can be used along with analysis of other dimensions to identify attractive target markets. C. considers income and sex, but not age. D. only considers age. E. is the most effective way to identify unmet consumer needs.
	81) The basic objective of the U.S. market-directed economic system is to:
	A. minimize inflation. B. achieve an annual growth rate of at least 10 percent. C. satisfy consumer needs as they--the consumers--see them. D. make the most efficient use of the country's resources. E. provide each person with an equal share of the economic output.
	82) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
	A. management by objective. B. strategic (management) planning. C. marketing programming. D. market planning. E. marketing strategy planning.
	83) When evaluating macro-marketing:
	A. one must determine how efficiently the society's resources are used. B. the evaluation is necessarily subjective. C. one must consider each individual firm's role in the marketing system. D. one must consider the society’s role in the marketing system. E. the best approach is to consider the profit generated by individual firms within the overall system.
	84) In comparison to the buying of final consumers, the purchasing of organizational buyers:
	A. leans basically toward economy, quality, and dependability. B. is strictly economic and not at all emotional. C. is even less predictable. D. is always emotional. E. is always based on competitive bids from multiple suppliers.
	85) When one considers the strategy decisions organized by the four Ps, branding is related to packaging as:
	A. store location is to sales force selection. B. branding is to pricing. C. personal selling is to mass selling. D. pricing is to promotion. E. production is to marketing.
	86) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
	A. marketing strategy planning. B. management by objective. C. strategic (management) planning. D. market planning. E. marketing programming.
	87) When looking at demographic dimensions, marketers should:
	A. recognize that demographics can be very useful for estimating the market potential of possible target markets. B. know that it is illegal to segment markets based on membership in some racial or ethnic group. C. understand that ethnic groups are generally homogeneous within. D. always consider external influences. E. know that demographics are especially helpful in explaining why specific people buy specific brands.
	88) Which of the following receives at least some protection under the U.S. Constitution? A. Both obscene speech and offensive speech B. Obscene speech C. Offensive speech D. Neither obscene speech nor offensive speech 89) Which article of the United States Constitution deals with the judicial power of the federal government? A. Article I. B. Article III. C. Article IV. D. Article V. E. Article II. 90) Which of the following activities by an administrative agency requires public notice and participation? A. Substantive rule making only. B. Substantive rule making and statements of policy only. C. Statements of policy only. D. Substantive rule making, interpretive rule making, and statements of policy. E. Substantive rule making and interpretive rule making only. 91) Which of the following is correct about interpretive rules? A. They do not establish new law. B. They must be accompanied by substantive rules. C. All federal administrative agencies have implied power to make interpretive rules. D. Interpretive rules are not subject to judicial review. E. They require public notice and participation to create. 92) What type of commercial speech did the U.S. Supreme Court say was protected in the Greater New Orleans Broadcasting Association, Inc. v. United States case? A. Information on gambling and lotteries. B. Information about child pornography. C. Obscene speech. D. Information on how to build a bomb.
	93) A professional corporation is one that: A. Is formed with the assistance of a lawyer. B. Is typically used as a form of doing business by doctors and lawyers. C. Has been in existence long enough to reasonably assure that it will be profitable in the near future. D. Does not have shareholders. 94) What makes a publicly held corporation different from a public corporation? A. A publicly held corporation must have a charitable purpose, but a public corporation need not have a charitable purpose. B. They are two terms that have the same meaning. C. A publicly held corporation has many shareholders rather than being a corporation owned by a governmental entity. D. A publicly held corporation is entitled to limited liability, but a public corporation is not. 95) Generally, which of the following statements relating to contractual capacity is correct? A. People with no competence make voidable contracts. B. People who have been adjudicated insane make voidable contracts. C. People with limited competence make void contracts. D. Persons with full competence make enforceable contracts. E. Minors make void contracts. 96) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman? A. Stakeholder interest. B. Corporate social audit. C. Moral minimum. D. Maximizing profits. E. Corporate citizenship. 97) If a minor wishes to be bound to a contract after becoming an adult, she must: A. Give back the goods or services received as a minor. B. Bring an action to verify the contract. C. Ratify the contract. D. Disaffirm the contract.
	98) The Statute of Frauds requires that certain types of contracts:
	A. Be in writing in order to be valid. B. Be in writing in order to be enforceable. C. Contain a promise for an act. D. Have two or more attorneys present at the signing of a written contract.
	99) If a contract is silent about assignment and delegation, which of the following is generally true?
	A. The rights can be assigned and the duties can be delegated. B. The rights can be assigned and the duties can be delegated, but neither can occur without the other also occurring. C. The rights can be assigned, but the duties cannot be delegated. D. The rights cannot be assigned, but the duties can be delegated.
	100) A computer retailer sells some computer games to a minor. This contract is:
	A. Unenforceable. B. Voidable C. Void D. Enforceable

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