PEREGRINE UPDATED FINALS EXAMS ALL
QUESTIONS AND ANSWERS SURE A+
✔✔AN INCREASE TO WHICH OF THE FOLLOWING ACCOUNTS WILL INCREASE
OWNERS' EQUITY? - ✔✔Client Fees
✔✔IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL
YIELD THE LOWEST NET INCOME IS: - ✔✔LIFO (LIFO is the acronym for last-in, first-
out, which is a cost flow assumption often used by U.S. corporations in moving costs
from inventory to the cost of goods sold.
Example: Assume that a corporation uses LIFO and has three units of a product in its
inventory. Due to its supplier raising its prices, the corporation purchased the items at
different costs and in the following sequence: $40, $44, and $46. The corporation ships
the oldest item (the one purchased for $40) to a customer at a selling price of $60.
However, under the LIFO cost flow assumption the company reports its cost of goods
sold at $46 (the latest cost) and reports a gross profit of $14. (The costs of $40 and $44
remain in inventory.)
✔✔When a business erroneously records expenses as assets, it has violated the
measurement issue of - ✔✔classification
✔✔A dividend will reduce which of the following accounts? - ✔✔Retained Earnings
, ✔✔Lying by omission involves intentionally - ✔✔withholding material facts.
✔✔Conflicts of interest exist when employees must choose whether to - ✔✔advance
their own interests, those of the organization, or those of some other group.
✔✔Which of the following statements is CORRECT? - ✔✔Free cash flow (FCF) is,
essentially, the cash flow that is available for interest and dividends after the company
has made the investments in current and fixed assets that are necessary to sustain
ongoing operations.
✔✔A corporate bond currently yields 8.3%. Municipal bonds with the same risk,
maturity, and liquidity currently yield 5.5%. At what tax rate would investors be
indifferent between the two bonds? - ✔✔33.73%
✔✔When the costs of supplies increase in an industry, the low-cost leader - ✔✔be the
only firm able to pay the higher prices and continue to earn average or above- average
returns.
✔✔TQM is most helpful to firms following the ____ business strategy. - ✔✔integrated
cost-leadership differentiation
✔✔All of the following are considered extrinsic motivators in Herzberg's two-factor
theory EXCEPT: - ✔✔Work itself
✔✔Which of the following is NOT one of the process motivation theories? - ✔✔Acquired
needs theory
✔✔An individual who purchases a computer later decides to acquire a new
motherboard. In terms of computing GDP, this new motherboard would be a(n) -
✔✔Final good
✔✔The largest component of GDP is - ✔✔consumption
✔✔In economics, firms are assumed to - ✔✔Maximize profits
✔✔Holding everything else equal, total revenue increases - ✔✔when either price or
quantity increase
✔✔Government tactics that include removing incentives, demanding a higher share of
profits and taxes, and confiscating foreign assets are known as: - ✔✔Expropriation
✔✔"People of the same trade seldom meet together, even for merriment and diversion,
but their conversation often ends in conspiracy against the public." This quote from
QUESTIONS AND ANSWERS SURE A+
✔✔AN INCREASE TO WHICH OF THE FOLLOWING ACCOUNTS WILL INCREASE
OWNERS' EQUITY? - ✔✔Client Fees
✔✔IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL
YIELD THE LOWEST NET INCOME IS: - ✔✔LIFO (LIFO is the acronym for last-in, first-
out, which is a cost flow assumption often used by U.S. corporations in moving costs
from inventory to the cost of goods sold.
Example: Assume that a corporation uses LIFO and has three units of a product in its
inventory. Due to its supplier raising its prices, the corporation purchased the items at
different costs and in the following sequence: $40, $44, and $46. The corporation ships
the oldest item (the one purchased for $40) to a customer at a selling price of $60.
However, under the LIFO cost flow assumption the company reports its cost of goods
sold at $46 (the latest cost) and reports a gross profit of $14. (The costs of $40 and $44
remain in inventory.)
✔✔When a business erroneously records expenses as assets, it has violated the
measurement issue of - ✔✔classification
✔✔A dividend will reduce which of the following accounts? - ✔✔Retained Earnings
, ✔✔Lying by omission involves intentionally - ✔✔withholding material facts.
✔✔Conflicts of interest exist when employees must choose whether to - ✔✔advance
their own interests, those of the organization, or those of some other group.
✔✔Which of the following statements is CORRECT? - ✔✔Free cash flow (FCF) is,
essentially, the cash flow that is available for interest and dividends after the company
has made the investments in current and fixed assets that are necessary to sustain
ongoing operations.
✔✔A corporate bond currently yields 8.3%. Municipal bonds with the same risk,
maturity, and liquidity currently yield 5.5%. At what tax rate would investors be
indifferent between the two bonds? - ✔✔33.73%
✔✔When the costs of supplies increase in an industry, the low-cost leader - ✔✔be the
only firm able to pay the higher prices and continue to earn average or above- average
returns.
✔✔TQM is most helpful to firms following the ____ business strategy. - ✔✔integrated
cost-leadership differentiation
✔✔All of the following are considered extrinsic motivators in Herzberg's two-factor
theory EXCEPT: - ✔✔Work itself
✔✔Which of the following is NOT one of the process motivation theories? - ✔✔Acquired
needs theory
✔✔An individual who purchases a computer later decides to acquire a new
motherboard. In terms of computing GDP, this new motherboard would be a(n) -
✔✔Final good
✔✔The largest component of GDP is - ✔✔consumption
✔✔In economics, firms are assumed to - ✔✔Maximize profits
✔✔Holding everything else equal, total revenue increases - ✔✔when either price or
quantity increase
✔✔Government tactics that include removing incentives, demanding a higher share of
profits and taxes, and confiscating foreign assets are known as: - ✔✔Expropriation
✔✔"People of the same trade seldom meet together, even for merriment and diversion,
but their conversation often ends in conspiracy against the public." This quote from
