BUSI 320 FINAL EXAM Questions and Answers Verified
Solutions Latest Update
Question 1.
(T/F) An increase in sales and/or profits means there is also an increase in cash on
the balance sheet.
True Contribution Margin Sales - Variable Costs Which of the following is an inflow
of cash?
a. The retirement of the firm's bonds
b. The purchase of a new factory
c. Funds spent in normal business operations
d. The sale of the firm's bonds D A Corporation is...
a. owned by stockholders who enjoy the privilege of limited liability
b. easily divisible between owners
c. a separate legal entity with perpetual life
d. all of these D Preferred stock dividends ______ earnings available to common
stockholders.
a. not enough information to tell
b. do not effect
c. increase
d. decrease
Decrease An increase of $100,000 in inventory would result in..
a. decrease in marketable securities
b. decrease in net cash flow
c. increase in bonds payable
d. increase in net cash flow B
The key initial element in developing a pro forma income statement
is a. a sales forecast
b. a collections schedule
c. a cash budget
d. an income statement A The residual income of the firm belongs to
a. common stockholders
b. preferred stockholders
c. creditors
d. bondholders Common stockholders Credit swaps are:
a. Securities with a maturity of less than 1 year b.the result of a leveling off or
slowing down of price
increases
c. market trades in previously issued securities
d. an insurance product designed to protect financial institutions from customers
who default on their loans
Correct Answer: D
Question 2.
In financial statements, the number of units shown in cost of goods sold as
compared to
the number of the units actually produced
, a. can be either higher or lower
b. is the same
c. is higher
d. is lower A Breakeven Point formula Fixed Costs/(Sales - Variable Costs) (T/F) The
APR is generally
lower than the stated rate by the bank. False
(T/F) In paying off a mortgage loan, the amount of the periodic payment that goes
toward the reduction of principal increases over the life of the mortgage.
Correct Answer: True
Question 3.
A dollar today is worth more than a dollar to be received in the future because
a. risk of nonpayment in the future
b. the dollar can be invested today and earn interest
c. inflation will reduce purchasing power of a future dollar
d. it can be discounted back to a higher interest rate
B All of the following are examples of carrying costs except:
a. insurance premiums
b. interest expense
c. warehouse space
d. shipping costs Shipping Costs The extent to which inventory financing may be
used depends on
a. marketability of pledged good
b. price stability of goods
c. perishability of goods
d. all of these D
When actual sales are greater than forecasted sales
a. inventory will decline
b. production schedules might have to be revised upward
c. accounts receivable will rise d. all of these
Correct Answer: D
Question 4.
A "normal" term structure of interest rates would depict
a. short term rates higher than long term rates
b. no general relationship between short and long term rates
c. intermediate rates (1-5 years) lower than both short term and long term
rates d. long term rates higher than short term rates
Correct Answer: D
Question 5.
Which of the following securities represents an unsecured promissory note issued
by a
corporation?
a. commercial paper
b. certificates of deposit
Solutions Latest Update
Question 1.
(T/F) An increase in sales and/or profits means there is also an increase in cash on
the balance sheet.
True Contribution Margin Sales - Variable Costs Which of the following is an inflow
of cash?
a. The retirement of the firm's bonds
b. The purchase of a new factory
c. Funds spent in normal business operations
d. The sale of the firm's bonds D A Corporation is...
a. owned by stockholders who enjoy the privilege of limited liability
b. easily divisible between owners
c. a separate legal entity with perpetual life
d. all of these D Preferred stock dividends ______ earnings available to common
stockholders.
a. not enough information to tell
b. do not effect
c. increase
d. decrease
Decrease An increase of $100,000 in inventory would result in..
a. decrease in marketable securities
b. decrease in net cash flow
c. increase in bonds payable
d. increase in net cash flow B
The key initial element in developing a pro forma income statement
is a. a sales forecast
b. a collections schedule
c. a cash budget
d. an income statement A The residual income of the firm belongs to
a. common stockholders
b. preferred stockholders
c. creditors
d. bondholders Common stockholders Credit swaps are:
a. Securities with a maturity of less than 1 year b.the result of a leveling off or
slowing down of price
increases
c. market trades in previously issued securities
d. an insurance product designed to protect financial institutions from customers
who default on their loans
Correct Answer: D
Question 2.
In financial statements, the number of units shown in cost of goods sold as
compared to
the number of the units actually produced
, a. can be either higher or lower
b. is the same
c. is higher
d. is lower A Breakeven Point formula Fixed Costs/(Sales - Variable Costs) (T/F) The
APR is generally
lower than the stated rate by the bank. False
(T/F) In paying off a mortgage loan, the amount of the periodic payment that goes
toward the reduction of principal increases over the life of the mortgage.
Correct Answer: True
Question 3.
A dollar today is worth more than a dollar to be received in the future because
a. risk of nonpayment in the future
b. the dollar can be invested today and earn interest
c. inflation will reduce purchasing power of a future dollar
d. it can be discounted back to a higher interest rate
B All of the following are examples of carrying costs except:
a. insurance premiums
b. interest expense
c. warehouse space
d. shipping costs Shipping Costs The extent to which inventory financing may be
used depends on
a. marketability of pledged good
b. price stability of goods
c. perishability of goods
d. all of these D
When actual sales are greater than forecasted sales
a. inventory will decline
b. production schedules might have to be revised upward
c. accounts receivable will rise d. all of these
Correct Answer: D
Question 4.
A "normal" term structure of interest rates would depict
a. short term rates higher than long term rates
b. no general relationship between short and long term rates
c. intermediate rates (1-5 years) lower than both short term and long term
rates d. long term rates higher than short term rates
Correct Answer: D
Question 5.
Which of the following securities represents an unsecured promissory note issued
by a
corporation?
a. commercial paper
b. certificates of deposit
