BUSINESS MAJOR FIELD TEST QUESTIONS AND ANSWERS GRADED A;(FULL TEST BANK)

BUSINESS MAJOR FIELD TEST QUESTIONS AND ANSWERS GRADED A;(FULL TEST BANK) Accounting: What costs should be considered when making non-routine decisions? (3) Ans- The price of material, Factory overhead costs, and the price of labor Accounting: Total product/ units produced and sold equals?? Ans- Product Cost per Unit Accounting: What is a general explanation of what the contribution margin is? Ans- The difference between variable costs subtracted from sales Accounting: In a continuous budget plan how many months are generally planned? Ans- 12 months Accounting: Which of the following is not one of the weaknesses of standard costing Ans- It makes accounting for price increases more accurate Accounting: What are the potential ways to find the price of what a produced products should cost? (3) Ans- Product cost concept, total cost concept, and variable cost concept Accounting: Which report is the connecting link between the income statement and the balance sheet? Ans- Cash flow statement The net cash flow from operating activities normally differs from the amount of net income for the period. Ans- True Accounting: Expense accounts would have a balance on which side? Ans- Left side Accounting: A profit-making business operating as a separated legal entity and in which ownership is divided into shares of stock is known as a... Ans- Corporation Accounting: A debt may slightly Ans- Increase in an asset account Accounting: What would be classified as a current asset on the balance sheet Ans- Accounts receivable Accounting: What are the elements of internal control? (3) Ans- Control environment, monitoring, and control procedures. True or False: A cash distribution of earnings by a corporation to its stockholders is called a CASH DIVIDEND. The 3 conditions that a corporation must meet to pay a cash dividend are: sufficient retained earnings, sufficient cash, and formal action by the board of directors. Ans- True Accounting: Factors in computing depreciation are? Ans- Initial cost + residual value = depreciable Accounting: The statement of cash flows reports a firm's major cash inflows and outflows for a period. It provides useful information about a company's ability to do the following?? Ans- Meet its financial obligations, generate cash from operations, and maintain and expand its operating capacity Accounting: True or False: Notes receivables are amounts that customers owe for which a formal, written instrument of credit has been issued. If longer than a year it is considered an investment. Ans- True Accounting: The excess of current assets of a business over its current liabilities is called? Ans- Working capital Accounting: What 2 categories are considered under period costs? Ans- selling expenses and administrative expenses Accounting: The effect of a difference in the number of units sold, assuming no charge in unit sales price or unit cost is... Ans- Quantity factor Accounting: A cost that will not be affected by later decisions is termed an Ans- Sunk Cost Accounting: The unfavorable volume variance may be due to all but the following facts... Ans- Unexpected increases in the cost of utilities Accounting: What budget allows for adjustments in activity levels? Ans- Flexible budget Accounting: A budget that summarizes future plans for the acquisition of fixed assets is the... Ans- Capital expenditures budget Accounting: What are the standard framework of guidelines for financial accounting used in any given jurisdiction, also known as accounting standards?? Ans- GAAP Economics: What occurs when the price level rises? Ans- People need to hold more money, so interest rates rise, making firms borrow and invest less Economics: The federal government enacted regulation in the 1960's requiring people to wear seatbelt in their cars. All of the following resulted from this regulation, EXCEPT: Ans- Fewer pedestrians were killed in car accidents. Economics: Which of the following is true regarding the production possibilities frontier model of the economy? Ans- Any point along the PPF represents an efficient level of production. Economics: If the price in a market happens to be above equilibrium, there will be a _____ in the market, and the price will tend to _____. Ans- Surplus, drop Economics: The price elasticity of demand tends to be more elastic... Ans- At points further up and to the left along the demand curve Economics: If a tax imposed on a good and the incidence of the tax ends up falling more heavily on the buyers than on the sellers, this will be because... Ans- Demand is less elastic than supply for that good Economics: If the quantity traded in a market is less than the equilibrium quantity... Ans- The value to consumers for additional units is greater than the cost to sellers of producing those units. Economics: A given tax will cause a bigger deadweight loss if demand and supply are... Ans- Elastic Economics: What is a statement is true regarding international trade? Ans- For the importing country, the gains from international trade outweigh the losses. Economics: What statement is true regarding the revenues of a firm? Ans- The marginal revenue and the average revenue are equal to the price Economics: Suppose the price of fish increases, so households now buy less fish and more chicken. This will cause the... Ans- CPI to measure more inflation than there really is Economics: The unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called? Ans- Frictional unemployment Economics: What occurs when the Fed reduces the reserve requirement? Ans- The money multiplier gets bigger Economics: In a housing bust what would an economist expect the price of homes to do? Ans- Make prices go down because of excess supply Economics: What does balance of payment (BOP) mean? Ans- The method countries use to monitor all international monetary transactions at a specific period of time. Economics: What is an example events would decrease the supply of money? Ans- The banks increasing their amount of excess reserve Economics: What is money? Ans- A store of value and a medium of exchange Economics: What market types describes most modern economics? Ans- Mixed economy Economics: Rational people make decisions on the margins. Which statement would NOT result in a purchase of the product being analyzed Ans- MC > MB Economics: How does the federal reserve control the money supply? Ans- Prints more as needed Economics: Tariffs generate tax revenue for the firms that hold an import license Ans- False Economics: What 2 terms are used to describe the aggregate supply curve and how it is shaped? Ans- Long run and short run Economics: If the price of a good is artificially set below the equilibrium price, what does this create? Ans- Shortage of goods. Economics: What is the name of unwanted side effects of the production of goods? Ans- Negative externality Economics: The gains from specialization and trade are based on comparative advantage Ans- True Finance: The more frequent the compounding, the higher the future value, other things being equal Ans- True Finance: For a given amount, the lower the discount rate, the less the present value Ans- False Finance: Under which of the following conditions will a future value calculated with simple interest exceed a future value calculated with compound interest at the same rate? Ans- This is not possible with positive interest rates Finance: A level stream of cash payments that continues indefinitely is known as a perpetuity; one that continues for a limited number of years is called an annuity. What type of statement is this? Ans- Regarding present and future values of streams of cash payments Finance: The decision rule for net present value is to Ans- Accept all projects with positive net present values Finance: One comes reason for issuing 2 distinct classes of common stock is to Ans- restrict voting privileges from some shareholders Finance: Treasury bills have a beta of zero? Ans- True Finance: As the coupon rate of a bond increases, the bonds' Ans- interest payments increase Finance: If a stock's P/E ratio is 13.5 at a time when earning $3 per year, what is the stock's current price? Ans- $40.50 (13.5 * 3) Finance: What are the 3 service/ product provided to corporations by financial markets and institutions? Ans- Valuation of the company, financing, and contracts to manage risk Finance: Cost of capital is the return investors could expect Ans- True Finance: A firm's mixture of long term financing and equity financing is called... Ans- Capital structure Finance: The weighted average cost of capital is adjusted for tax savings Ans- True Finance: If there is a total of $800 on the balance sheet and long term bonds account for $200, what is the weighted percentage that the long term bonds hold? Ans- 25% (200/800= .25 *100) Finance: Financial statement analysis is assuming relationships between the items of the balance sheet and the profit and loss account Ans- True Finance: You've been saving up to buy the Godot Company. The total cost will be $10 million. You currently have about $2.3 million. If you can earn 5% on your money, how long will you wait? Ans- 20 million Finance: What is an example of perpetuity? Ans- $10,000 annual payments from a trust fund forever Law: It requires proof of breach of a statutory or common-law duty. is an example of? Ans- Tort of negligence Law: What is not true when it regards a seller's rights to reduce legal liability in the sale on non-comsusmer goods? Ans- The seller can disclaim all implied warranties by simply stating that there are no implied warranties. Law: The establishment clause holds that Ans- The government cannot pass laws that promote religion or show preference for one religion over another. Law: If an injured party entered into an activity with knowledge that it may be dangerous and voluntarily assumed that risk, which defense to the tort of negligence might be asserted? Ans- Assumption of risk Law: In order to assert a design defect, a plaintiff might be able to show that a reasonable alternative design was available and that the defendant's failure to adopt the alternative design rendered the product unreasonably dangerous. Ans- True Law: The Sherman act protect consumers from? Ans- Trade and commerce against unlawful restraints and monopolies Law: Violations of OSHA can result in (3) Ans- criminal penalties, fines, and termination Law: Fair debt collection practices protect consumers from Ans- being harassed Law: Violations of the clean water act can result in (3) Ans- Criminal charges, cleaning up the polluted area, and fines Law: What are the requirements of all contracts (4) Ans- Consideration, legality, capacity, and agreement Law: What is the type of damage that would be used to recognize wrong doing when no monetary loss is shown? Ans- Punitive Law: A partner in an LLC can be held liable for the debts of the LLC? Ans- False ....................................................................