BUS 475 Final Exam 3
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.
$58,000 $48,000 $34,000 $44,000
The net income (or loss) for the period is __________.
A. $10,000 income
B. $48,000 income
C. not determinable
D. $10,000 loss
2) 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
3) Balance sheet accounts are considered to be __________.
A. nominal accounts
B. permanent accounts
C. temporary stockholders’ accounts
D. capital accounts
4) What is value chain management best defined as?
A. All activities associated with providing a product or service
B. The incremental value of costs associated with hiring a new production floor leader
C. A large chain that keeps the machines from falling on the production floor
D. Management decisions that affect how quickly the production run occurs
5) The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. prove that revenues exceed expenses if there is a net income
C. provide information about the investing and financing activities during a period
D. provide information about the cash receipts and cash payments during a period
6) In what situations will a static budget be most effective in evaluating a manager’s effectiveness?
A. The company has substantial fixed costs.
B. The company has substantial variable costs.
C. The planned activity levels match actual activity levels.
D. The company has no fixed costs.
7) Which one of the following is a product cost?
A. Office salaries
B. Indirect labor
C. Advertising costs
D. Sales person’s salaries
8) These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
9) Of the following companies, which one would not likely employ the specific identification method for inventory costing?
A. Hardware store
B. Farm implement dealership
C. Music store specializing in organ sales
D. Antique shop
10) 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. may still have a net increase in cash
D. will not be able to get a loan
11) 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?
12) The cost principle requires that when assets are acquired, they be recorded at __________.
A. list price
B. exchange price paid
C. selling price
D. appraisal value
13) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Additional information
B. Comparative balance sheets
C. Current income statement
D. Adjusted trial balance
14) Managerial accounting __________.
A. is concerned with costing products
B. is governed by generally accepted accounting principles
C. pertains to the entity as a whole and is highly aggregated
D. places emphasis on special-purpose information
15) A logical starting point from which the study of international trade begins is __________.
A. the principle of comparative advantage
B. the principle of absolute advantage
C. the recognition that not all markets are competitive
D. the recognition that government intervention in markets sometimes enhances the economic welfare of the society
16) Without trade, __________.
A. interdependence is more extensive than it would be with trade
B. a country is better off because it will have to learn to be self-sufficient without trade
C. a country’s production possibilities frontier is also its consumption possibilities frontier
D. a country can still benefit from international specialization
17) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms’ production levels as given. Then in equilibrium the output effect __________.
A. must dominate the price effect.
B. must be smaller than the price effect.
C. must balance with the price effect.
D. can be larger or smaller than the price effect.
18) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.
A. form various degrees of cartels
B. compete rather than cooperate with each other
C. cooperate rather than compete with each other
D. collude with each other
19) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.
A. double the quantity supplied
B. less than quantity supplied
C. greater than quantity supplied
D. equal to quantity supplied
20) If a price ceiling is a binding constraint on the market, __________.
A. the equilibrium price must be below the price ceiling.
B. the equilibrium price must be above the price ceiling.
C. the forces of supply and demand must be in equilibrium.
D. it will have no effect on supply or demand.
21) A tax on an imported good is called a __________.
A. trade tax
C. supply tax
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. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle
C. changes in output created by the monetary rule the Fed must follow
D. the fact that about every four years some politician advocates greater government control of the Fed
23) Real GDP __________.
A. evaluates current production at the prices that prevailed in some specific year in the past.
B. is not a valid measure of the economy’s performance, since prices change from year to year.
C. is a measure of the value of goods only; it excludes the value of services.
D. evaluates current production at current prices.
24) The model of short-run economic fluctuations focuses on the price level and __________.
C.the neutrality of money.
D.All of the above are correct.
25) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.
a. supplied for the purpose of selling assets domestically.
b. supplied for the purpose of buying assets abroad.
c. demanded for the purpose of buying U.S. net exports of goods and services.
d. demanded for the purpose of importing foreign goods and services.
26) The open-economy macroeconomic model examines the determination of __________.
a. output growth rate and the real interest rate.
b. unemployment and the exchange rate
c. output growth rate and the inflation rate.
d. the trade balance and the exchange rate.
27) The balance of payment account is made up of:
A. an import account and an export account.
B. an investment account and a consumption account.
C. a monetary account and a fiscal account.
D. a current account and a financial and capital account.
28) To be competitive in a global economy, Europeans must increase their level of:
B. Population density
C. Philanthropic contributions
D. Espionage activity
29) Which of these refers to the practices aimed at discovering and harnessing an organization’s intellectual resources?
A. Knowledge management
30) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by:
A. Producing an imitation of the new technology that utilizes lower-quality and lower-cost materials
B. Technology followers are not successful at low-cost strategies
C. Mass-producing products that have an established market niche
D. Learning from the leader thereby avoiding the costs and risks of technology leadership
31) The best way for an employer to find out if a potential employee can do a job is by __________.
A. using a written test
B. using the interview process
C. having them spend a day in the office
D. using a performance simulation test
32) A manager’s ability to stimulate people to be high performers is referred to as:
33) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:
B. Six Sigma Quality
D. ISO 9000
E. Total quality integration
34) The pursuit of lucrative opportunities by enterprising individuals is called:
D. Business incubating
35) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:
A. Interpersonal/communication skills
B. Diagnostic skills
C. Professional skills
36) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
A. Interpersonal and communication
B. Conceptual and decision
37) As related to managing of human resources, diversity refers to:
A. Differences in recruiting methods (such as newspapers, schools, flyers, magazines, agencies, etc.)
B. Differences in demographics (such as age, race, gender, disability status, lifestyle, veteran status, educational level, etc.)
C. Differences in retention strategies (such as training, hiring, incentives, etc)
D. Differences in employee benefit plans (such as pensions, insurance, vacations, memberships, etc.)
38) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:
39) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?
A. Entrepreneurs are their own bosses and completely independent
B. Anyone can start a business
C. Successful entrepreneurs take very careful, calculated risks
D. Money should not be considered a start-up ingredient
E. All entrepreneurs need venture capital in order to get started
40) Which of these represent skills that managers need?
A. Technical, interpersonal & communication and conceptual & decision making
B. Professional, technical and interpersonal & communication
C. Conceptual & decision making, professional and technical
D. Interpersonal, quantitative, and professional
E. Interpersonal & communication, conceptual & decision making and professional
41) The basic components of an effective sexual harassment policy include the following EXCEPT:
A. To act immediately when employees complain of sexual harassment
B. To establish a formal complaint procedure
C. To develop an organization wide policy on sexual harassment
D. To establish a means for ongoing training
E. To establish a performance appraisal system
42) Which of the following statements is true?
A. The sum of two mutually exclusive events is one.
B. If event (A) occurs, then its complement (A’) will also occur.
C. If A and B are independent events, the P(B) = P(A) P(B).
D. The probability of A and its complement (A’) will always sum to one.
43) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours.
In a left-tailed test at = .05 we would __________.
A comfortably reject the claim.
B comfortably accept the claim.
C feel uncomfortable with either decision (too close).
D switch to alpha of 0.01 for a more powerful test.
44) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year intended to specialize in family practice. What is the width of a 90% confidence interval for the proportion that plan to specialize in family practice?
A. ± .00329
B. ± .04472
C. ± .08765
D. ± .07357
45) Use the following table to answer question:
P(S | W) is approximately _____.
46) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.
For this sample, which measure of central tendency is least representative of the “typical” student?
47) In a right-tail test, a statistician came up with a z test statistic of 1.469. What is the p-value?
48) In lean systems, if a defective product is found, which of the following is generally NOT done?
A. The defective unit is passed on to the next workstation.
B. The defective unit is returned to the worker responsible for creating the defect.
C. The production line is made aware of the problem without stopping the line.
D. The production line is stopped.
49) A computer analysis reveals that the best-fitting trend model is Yt = 4.12 e 0.987 t. The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for the last six years. The R2 is 0.8571.
Which conclusion is not correct?
A. The stock’s true intrinsic value is $4.12.
B. The absolute annual growth (in dollars per share) is increasing.
C. At the end of year 3 the stock price would be nearly $80.
D. Few investments could match the astounding growth rate.
50) In statistical process control a p-chart could __________.
A. measure the number of defects per sample unit
B. measure the fraction of conforming parts in a sample
C. use the student’s distribution
D. have more than one characteristics
51) Which one of the following statements concerning production and staffing plans is best?
A. A staffing plan is the intermediate link between the business plan and the master production schedule.
B. A master production schedule is a projected statement of income, costs, and profits.
C. Aggregation can be performed along three dimensions: product families, labor, and time.
D. Production plans are based primarily on information from the master production plan.
52) Which one of the following statements about managerial inputs to production and staffing plans is best?
A. Finance provides labor and machine standards.
B. Human resources provide the training capacity and labor-market conditions.
C. Marketing provides the schedule of sales associates..
D. Materials provide the current staffing level.
53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
A. digital, e-commerce
B. physical, digital
C. e-commerce, digital
D. physical, financial
54) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.
B. business environment
55) 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
56) In the _____ phase of the decision making process, managers test potential solutions “on paper.”
57) Which of the following is NOT an advantage of the buy option for acquiring IS applications?
A. few types of off-the-shelf software are available, thus limiting confusion
B. company will know what it is getting
C. saves money
D. saves time
58) Which of the following is not a reason that managers need IT support?
A. Decisions are becoming more complex
B. Decision makers are often in different locations
C. Decisions must typically be made under time pressure
D. Need to access remote information sources
E. Number of alternatives are decreasing
59) _____ is a process that helps organizations identify, select, organize, disseminate, transfer, and apply expertise that are part of the organization’s memory and typically reside inside the organization in an unstructured manner.
B. knowledge management
C. decision support
D. online analytical processing
E. data mining
60) Information-based industries are most susceptible to which one of Porter’s five forces?
A. bargaining power of suppliers
B. threat of substitute products
C. rivalry among existing firms in an industry
D. bargaining power of customers
61) _____ is the acquisition and efficient use of resources in accomplishing organizational goals.
C. Strategic planning
D. Management control
E. Operational control
62) _____ is the efficient and effective execution of specific tasks.
A. Management control
B. Strategic planning
D. Operational control
63) Disadvantages of using current liabilities as opposed to long-term debt include:
A. uncertainty of future liabilities
B. greater risk of illiquidity, and uncertainty of interest costs
C. decreased risk of liquidity
D. higher cash flow exposure
64) Bondholders have a priority claim on assets ahead of:
B. common and preferred stockholders.
65) Which of the following best represents operating income?
A. Earnings before interest and taxes
B. Income from discontinued operations
C. Income after financing activities
D. Income from capital gains
66) 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.
67) PepsiCo calculates unlevered betas for each peer group in order to:
A. eliminate competitive factors.
B. eliminate judgment factors.
C. eliminate different financial risks.
D. eliminate different business risks
68) 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, less
B. more, more
C. less, more
D. less, less
69) The common stockholders are most concerned with:
A. the size of the firm’s beginning earnings per share.
B. the spread between the return generated on new investments and the investor’s required rate of return.
C. the percentage of profits retained.
D. the risk of the investment.
70) An increase in future value can be caused by an increase in the __________.
A. starting value
B. annual interest rate and number of compounding periods
C. rate of return
D. original amount invested
E. dividends paid
71) 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.)
72) 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?
73) Exchange rate risk:
A. applies only to certain types of domestic businesses.
B. has been phased out due to recent international legislation.
C. doesn’t affect trades made in US Dollars.
D. arises from the fact that the spot exchange rate on a future date is a random variable.
74) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:
B. a good buy.
C. at equilibrium.
75) Which of the following best represents the stream of income that is available to common stockholders?
A. Operating profit
B. Gross profit
C. Net profit after tax and after preferred dividend payments
D. Earnings before interest and taxes
76) The statement, “Of course people will buy our product–each of its features is better than the competition,” most closely reflects which consumer behavior concept?
A. reference groups
B. competitive advantage
C. the economic-buyer theory
77) A firm’s “marketing mix” decision areas would NOT include:
78) Clustering techniques applied to segmenting markets __________.
A. eliminate the need for marketing managers to specify in advance what dimensions might be relevant for grouping consumers
B. remove the need for managerial judgment
C. usually require computers to group people based on data from market research
D. doesn’t apply to demographic data
E. is time consuming and expensive
79) The “four Ps” of a marketing mix are:
A. Production, Personnel, Price, and Physical Distribution
B. Promotion, Production, Price, and People
C. Potential customers, Product, Price, and Personal Selling
D. Product, Price, Promotion, and Profit
E. Product, Place, Promotion, and Price
80) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. marketing programming.
B. strategic (management) planning.
C. management by objective.
D. marketing strategy planning.
81) The economists’ view of buyers:
A. emphasizes psychological variables rather than social influences.
B. assumes that they always buy the lowest-price alternative.
C. None of these are true
D. puts a great deal of emphasis on differences in buying behavior related to individual differences among consumers.
E. is based on the idea that consumers value time and select the first alternative they learn about.
82) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.
A. Customer relationship management (CRM)
B. Market scanning
D. Brand familiarity
E. Market segmentation
83) In comparison to the buying of final consumers, the purchasing of organizational buyers:
A. is always based on competitive bids from multiple suppliers.
B. is always emotional.
C. is strictly economic and not at all emotional.
D. leans basically toward economy, quality, and dependability.
84) Regarding organizational buying, the people who have the power to select or approve the supplier–especially for larger purchases–are called:
85) An Australian wine producer, facing declining sales at home, set up a new channel of distribution to sell wine in the United States. This seems to be an effort at:
B. market penetration.
C. product development.
D. market development.
86) The three basic tasks of ALL managers, according to the text, are:
A. planning, staffing, and evaluating.
B. marketing, production, and finance.
C. execution, feedback, and control.
D. hiring, training, and compensating.
E. planning, implementation, and control.
87) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. marketing programming.
B. strategic (management) planning.
C. management by objective.
D. marketing strategy planning.
88) Which of the following is correct about interpretive rules?
A. Interpretive rules are not subject to judicial review.
B. They do not establish new law.
C. All federal administrative agencies have implied power to make interpretive rules.
D. They require public notice and participation to create.
E. They must be accompanied by substantive rules.
89) To be guilty of monopolization, the defendant must:
A. Must be part of a conspiracy, combination, or contract.
B. Be a US company.
C. Have been previously convicted.
D. Possess monopoly power and have obtained the monopoly power by some improper act or be abusing the monopoly power.
E. Have obtained the monopoly power from the government.
90) The tort of intentional interference with contractual relations requires the following except:
A. Third-party knowledge of this contract.
B. A valid, enforceable contract between the contracting parties.
C. A new contract involving the third party who induced the breach.
D. Third-party inducement to breach the contract.
91) The tort of palming off involves:
A. Failing to credit another for that other person’s legal accomplishments.
B. Representing one’s own goods to be those of a competitor.
C. Making false statements about the goods of another.
D. Knowingly selling goods that are defective.
92) Which of the following is correct about litigating commercial disputes?
A. Commercial disputes, because of their specialized nature, are first heard at the appellate court level.
B. Nearly all states have specialized trial courts that hear commercial disputes.
C. Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business.
D. A few states have established specialized trial courts for commercial disputes.
93) An agent’s duty of notification can best be described as a duty to:
A) notify any third parties that the agent is acting as an agent
B) notify any third parties as to the identity of the principal
C) notify the principal about any material information that the agent learns relative to the subject matter of the agency
D) notify the principal in a reasonable period of time in advance of terminating the agency arrangement
94) Which of the following statements is true regarding the relationship of law and ethics?
A. In some cases the law will require a higher standard of conduct than ethics, but never vice versa.
B. Depending on the circumstances, the law can require a higher, lower, or the same standard of conduct as ethics demands.
C. The legal requirements will almost always be the same as the ethical requirement because the law is based on the ethical standards.
D. In some cases ethics will require a higher standard of conduct than the law, but never vice versa.
95) Which of the following is true about “proof of claims?”
A. They can generally be filed any time within one year of the filing of the bankruptcy petition.
B. They must be field by both secured and unsecured creditors in order for the creditor to receive a distribution from the bankruptcy estate.
C. They need not be filed by secured creditors whose security covers the amount of their debt.
D. They are never used by secured creditors.
96) An agent’s obligation to perform in accordance with the terms of the agency arrangement is the agent’s duty of:
97) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman?
A. Corporate social audit
B. Moral minimum
C. Stakeholder interest
D. Corporate citizenship
E. Maximizing profits
98) Which country does the text describe as becoming the largest producer and consumer of many of the world’s goods?
99) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.
A. About $2; about 15
B. $2; about 25
C. Less than $1; about 40
D. Less than $1; about 25
E. Less than $1; about 15
100) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States’ second largest trading partner.
A. Canada, Mexico
B. Mexico, Venezuela
C. Canada, Venezuela
D. Mexico, Canada