ACCT 3310 FINAL EXAM - QUESTIONS
WITH ANSWERS VERIFIED 100%
CORRECT
A measure of the managers ability to control expenses and increase revenues in order
to improve profitability is - ✔✔return on sales
A measure of a managers ability to produced increased sales from a given level of investment
is - ✔✔asset turnover
The historical cost an asset less accumulated depreciation is - ✔✔net book value
Replacement cost of a division's assets will most probably be greater than -
✔✔liquidation value of the asset
the estimated cost to replace assets at the current level of service and functionality is -
✔✔replacement cost
the estimated price that could be received for the sale of divisional assets is referred to as
- ✔✔liquidation value
a dollar amount equal too the operating income of a business unit less a charge for the level
of investment in the unit is - ✔✔residual income
ROI, though widely used, is subject to which limitation - ✔✔ROI may motivate managers
to take suboptimal decisions from the standpoint of the org as a whole
,what established an arms length price by using the sales price of similar products made
by unrelated firms - ✔✔comparable-price method
what transfer pricing alternative is based on determining an appropriate markup, where the
markup is based on gross profits of unrelated firms selling similar product - ✔✔resale
price method
What determines transfer pricing based on the sellers cost plus a gross profit percentage
determined by comparison of sales of the seller to those of unrelated parties - ✔✔cost
plus method
ROI is a term often used to express income earned on capital invested in a business unit. a
division's ROI would increase if - ✔✔sales remained the same and expenses were reduced
by the same dollar amount that total assets increased
RI - ✔✔the operating income of an investment center, less the imputed interest on
the invested capital used by the center
RI may be a better measure for performance evaluations of an investment center than ROI
because - ✔✔desirable investment decisions will not be discouraged by high rate of
return divisions
Given a competitive outside market for identical intermediate goods, what is the best transfer
price, assuming all relevant info is available - ✔✔market price o the intermediate good
transfer prices based on actual costs of the selling divisions opposed to standard costs -
✔✔often fail to provide the selling division with an incentive to control costs
the primary limitation of a all cost transfer pricing system is that - ✔✔the supplying and
purchasing divisions are more likely to make decisions that are inconsistent with the goals of
the organization as a whole
, in the context of transfer pricing, dual pricing - ✔✔is the simultaneous use of two or
more transfer pricing methods
Expropriation occurs when the government in which a foreign company's investment assets
are located - ✔✔takes ownership and control of those assets
One advantage of the ROI metric is that - ✔✔it can be compared to interest rates and
to rates or return on alternative investments
A full-owned subsidiary of a multinational company reports its ROI periodically throughout
the year, this unit of the company, for performance evaluation purposes, is likely to be
considered an - ✔✔investment center
A primary goal of transfer pricing is to - ✔✔motivate decision-makers to act in the
best interests of the organization
the greatest advantage go using a negotiated transfer price is - ✔✔this may be the
most practical approach when conflicts exist between selling and buying divisions
The most likely result of using a negotiated transfer price is that - ✔✔the end result
might reflect the relative bargaining skills of negotiating managers
a segment of an organization is referred to as an investment center id it has -
✔✔authority to make decisions affecting the major determinants of profit, including
power to choose its market sand sources of supply and signify control over the amount of
invested capital
A company earning a profit can increase its ROI by - ✔✔increasing sales revenues
and operating expenses by the same percentage
WITH ANSWERS VERIFIED 100%
CORRECT
A measure of the managers ability to control expenses and increase revenues in order
to improve profitability is - ✔✔return on sales
A measure of a managers ability to produced increased sales from a given level of investment
is - ✔✔asset turnover
The historical cost an asset less accumulated depreciation is - ✔✔net book value
Replacement cost of a division's assets will most probably be greater than -
✔✔liquidation value of the asset
the estimated cost to replace assets at the current level of service and functionality is -
✔✔replacement cost
the estimated price that could be received for the sale of divisional assets is referred to as
- ✔✔liquidation value
a dollar amount equal too the operating income of a business unit less a charge for the level
of investment in the unit is - ✔✔residual income
ROI, though widely used, is subject to which limitation - ✔✔ROI may motivate managers
to take suboptimal decisions from the standpoint of the org as a whole
,what established an arms length price by using the sales price of similar products made
by unrelated firms - ✔✔comparable-price method
what transfer pricing alternative is based on determining an appropriate markup, where the
markup is based on gross profits of unrelated firms selling similar product - ✔✔resale
price method
What determines transfer pricing based on the sellers cost plus a gross profit percentage
determined by comparison of sales of the seller to those of unrelated parties - ✔✔cost
plus method
ROI is a term often used to express income earned on capital invested in a business unit. a
division's ROI would increase if - ✔✔sales remained the same and expenses were reduced
by the same dollar amount that total assets increased
RI - ✔✔the operating income of an investment center, less the imputed interest on
the invested capital used by the center
RI may be a better measure for performance evaluations of an investment center than ROI
because - ✔✔desirable investment decisions will not be discouraged by high rate of
return divisions
Given a competitive outside market for identical intermediate goods, what is the best transfer
price, assuming all relevant info is available - ✔✔market price o the intermediate good
transfer prices based on actual costs of the selling divisions opposed to standard costs -
✔✔often fail to provide the selling division with an incentive to control costs
the primary limitation of a all cost transfer pricing system is that - ✔✔the supplying and
purchasing divisions are more likely to make decisions that are inconsistent with the goals of
the organization as a whole
, in the context of transfer pricing, dual pricing - ✔✔is the simultaneous use of two or
more transfer pricing methods
Expropriation occurs when the government in which a foreign company's investment assets
are located - ✔✔takes ownership and control of those assets
One advantage of the ROI metric is that - ✔✔it can be compared to interest rates and
to rates or return on alternative investments
A full-owned subsidiary of a multinational company reports its ROI periodically throughout
the year, this unit of the company, for performance evaluation purposes, is likely to be
considered an - ✔✔investment center
A primary goal of transfer pricing is to - ✔✔motivate decision-makers to act in the
best interests of the organization
the greatest advantage go using a negotiated transfer price is - ✔✔this may be the
most practical approach when conflicts exist between selling and buying divisions
The most likely result of using a negotiated transfer price is that - ✔✔the end result
might reflect the relative bargaining skills of negotiating managers
a segment of an organization is referred to as an investment center id it has -
✔✔authority to make decisions affecting the major determinants of profit, including
power to choose its market sand sources of supply and signify control over the amount of
invested capital
A company earning a profit can increase its ROI by - ✔✔increasing sales revenues
and operating expenses by the same percentage
