Vertical analysis is a technique that expresses each item in a financial statement:
•
in dollars and cents.
•
as a percent of the item in the previous year.
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starting with the highest value down to the lowest value.
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as a percent of a base amount.

Under the accrual basis of accounting:
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cash must be received before revenue is recognized.
•
net income is calculated by matching cash outflows against cash inflows.
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events that change a company’s financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
•
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.
The manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager’s bonus if FIFO is adopted instead of LIFO?
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$6,300
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$1,800
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$9,000
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$12,600
For both qualitative and quantitative data, what is the difference between the relative frequency and the percent frequency?
The percent frequency equals the relative frequency multiplied by 100
•
The relative frequency equals the percent frequency multiplied by 100.
•
As opposed to the relative frequency, the percent frequency is divided by the number of observations in the data set.
•
The percent frequency equals the relative frequency multiplied by 100
•
As opposed to the percent frequency, the relative frequency is divided by the number of observations in the data set.
5
In multiple regression, plot the residuals against ____ to detect changing variability.
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Collinear variables
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All explanatory variables
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The predicted values
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The response variable
6
What is an advantage of the correlation coefficient over the covariance?
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It falls between -1 and 1; and it is a unit free measure, therefore making it easier to interpret.
•
It falls between 0 and 1.
•
It is a unit-free measure, therefore making it easier to interpret.
•
It falls between -1 and 1.
7
__________involves ensuring proper strategic controls and organizational designs.
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Corporate-level strategy
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Business-level strategy
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Corporate governance
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Strategy implementation
8
Green, Inc. had 200,000 shares of common stock outstanding before a stock split occurred and 800,000 shares outstanding after the stock split. The stock split was:
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8-for-1
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2-for-8
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1-for-8
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4-for-1
9
A post-closing trial balance will show:
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zero balances for all accounts
•
only balance sheet accounts
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only income statement accounts
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zero balances for balance sheet accounts
10
Sarbanes Oxley applies to:
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U.S and international companies.
•
U.S. and Canadian companies but not other international companies.
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international companies but not U.S. companies.
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U.S companies but not international companies.
11
The acquisition of treasury stock by a corporation:
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decreases its total assets and total stockholders’ equity.
•
increases its total assets and total stockholders’ equity.
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has no effect on total assets and total stockholders’ equity.
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requires that a gain or loss be recognized on the income statement.
12
Trumpeting Trumpets has the following inventory data:

July 1:  Beginning inventory     30 units at $120
July 5:  Purchases                                180 units at $112
July 14: Sale        120 units
July 21: Purchases     90 units at $115
July 30: Sale      84 units

Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis?
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$23,088
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$11,022
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$10,992
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$23,118
13
A SWOT analysis is a framework for analyzing a firm’s environments. A SWOT is made up of
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Internal threats and weakness and external strengths and opportunities.
•
Internal environmental analysis of threats and weaknesses.
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External analysis of strengths and opportunities.
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Internal strengths and weaknesses; external threats and opportunities.
14
WellPoint Health Network states: WellPoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future. This is an example of a:
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Strategic objective
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Line manger’s individual goal
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Vague statement of direction
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Vision statement
15
Continuous monitoring, in the contemporary approach, is beneficial because _____________.
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organization response time is increased
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organizational flexibility is reduced
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It reduces time lags
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it increases the time it takes to detect changes in the competitive environment
16
Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally:
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debited to the Accumulated Depreciation account.
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expensed when incurred.
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capitalized as a part of the cost of the asset.
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not recorded until they become material in amount.
17
What is a difference between merchandising companies and service enterprises?
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Merchandising companies must prepare multiple-step income statements and service enterprises must prepare single-step income statements.
•
Cost of goods sold is an expense for service enterprises but not for merchandising companies.
•
The operations in merchandising companies and service enterprises are identical.
•
Merchandising companies generally have a longer operating cycle than service enterprises.
18
According to the text, the triple bottom line approach to corporate accounting includes three components:
•
financial, organizational, and psychological
•
financial, environmental, and customer
•
financial, organizational, and customer
•
financial, environmental, and social
19
The preparation of adjusting entries is:
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optional when financial statements are prepared.
•
needed to ensure that the expense recognition principle is followed.
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straightforward because the accounts that need adjustment will be out of balance
•
only required for accounts that do not have a normal balance.
20
In a simple linear regression model, if the plots on a scatter diagram lie on a straight line, what is the standard error of the estimate?
•
+1
•
Infinity
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-1
•
0
21
GAAP, compared to IFRS, tends to be more:
•
simple in disclosure requirements
•
principles-based
•
rules-based
•
simple in accounting requirements
22
The four key attributes of strategic management include the idea that:
•
Strategy must be focused on long-term objectives.
•
Strategy must be directed toward overall organizational goals and objectives.
•
Strategy must be focused on competitor strengths.
•
Strategy must be focused on one specific area of an organization.
23
Which of the following meets the requirements of a simple random sample?
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A population contains 10 members under the age of 25 and 20 members over the age of 25. The sample will include six males chosen at random, without regard to age.
•
A population contains 10 members under the age of 25 and 20 members over the age of 25. The sample will include six people who volunteer for the sample.
•
A population contains 10 members under the age of 25 and 20 members over the age of 25. The sample will include six people chosen at random, without regard to age.
•
A population contains 10 members under the age of 25 and 20 members over the age of 25. The sample will include two people chosen at random under the age of 25 and four people chosen at random over 25.
24
You work in marketing for a company that produces work boots. Quality control has sent you a memo detailing the length of time before the boots wear out under heavy use. They find that the boots wear out in an average of 208 days, but the exact amount of time varies, following a normal distribution with a standard deviation of 14 days. For an upcoming ad campaign, you need to know the percent of the pairs that last longer than six months-that is, 180 days. Use the empirical rule to approximate this percent.
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2.5%
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5%
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95%
•
97.5%
25
Is it possible for a data set to have no mode?
•
No, if the data set is nonempty, there is always a mode
•
Yes, if two observations occur twice
•
No, unless there is an odd number of observations
•
Yes, if there are no observations that occur more than once
26
Which of these statements regarding the industry life cycle is correct?
•
It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.
•
Part of the power of the market life cycle is its ability to serve as a short-run forecasting device.
•
Trends suggested by the market life cycle model are generally not reversible or repeatable.
•
It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.
27
The resource-based view (RBV) of the firm combines two perspectives:
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the industry and the competitive environment
•
the primary and support activities of the firm
•
the interrelationships among the primary activities of the firm and corporate management
•
the internal analysis of the firm and the external analysis of the industry and competitive environment
28
Which of the following can be represented by a discrete random variable?
•
The average distance achieved in a series of long jumps
•
The number of defective light bulbs in a sample of five
•
The time of a flight between Chicago and New York
•
The circumference of a randomly generated circle
29
The fraud triangle applies to:
•
U.S and international companies.
•
international companies but not U.S. companies.
•
U.S companies but not international companies.
•
U.S. and Canadian companies, but not other international companies.
30
Sampling is used heavily in manufacturing and service settings to ensure high-quality products. In which of the following areas would sampling be inappropriate?
•
Computer assembly
•
Cell phone manufacturing
•
Custom cabinet making
•
Technical support by phone
31
According to value-chain analysis, which of the following would be considered part of the general administration in a firm?
•
procurement
•
technology development
•
human resource management
•
information systems

32
Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of _______________.
•
using related diversification to achieve value by leveraging core competencies to achieve economies of scope
•
using related diversification to achieve value by integrating vertically in order to acquire market power
•
using related diversification to achieve value by pooling negotiating power to achieve market power
•
using related diversification to achieve value by integrating vertically in order to attain economies of scope
33
Which of the following can be represented by a continuous random variable?

•
The number of customers who visit a department store between 10:00 a.m. and 11:00 a.m. on Mondays
•
The number of students who will get financial assistance in a group of 50 randomly selected students
•
The number of typos found on a randomly selected page of this test bank
•
The average temperature in Tampa, Florida, during the month of July
34
Which of the following requirements about internal controls were enacted under the Sarbanes Oxley Act:
•
Companies must assess the functionality of internal controls only when a violation occurs.
•
Internal auditors replace independent outside auditors when evaluating the level of internal control.
•
Independent outside auditors must eliminate redundant internal controls.
•
Companies must develop sound internal controls over financial reporting.
35
International Financial Reporting Standards (IFRS):
•
requires that receivables with different characteristics should be reported separately.
•
implies that receivables with different characteristics should be reported as one un-segregated amount.
•
implies that receivables with different characteristics should be reported separately.
•
requires that receivables with different characteristics should be reported as one un-segregated amount.
36
Which of the following is not a current liability on December 31, 2014?
•
A lawsuit judgment to be decided on January 10, 2015
•
A Note Payable due December 31, 2015
•
An Accounts Payable due January 31, 2015
•
Accrued salaries payable from 2014
37
Interest may be included in the acquisition cost of a plant asset:
•
if it is a part of a lump-sum purchase.
•
if the asset acquisition is financed by a long-term note payable.
•
if the asset is purchased on credit.
•
during the construction period of a self-constructed asset.
38
On March 1st, Candy, Inc. had supplies on hand of $1,500. During the month, Candy purchased supplies of $2,900 and used supplies of $2,800.  The March 31st balance sheet should report what balance in their supplies account?
•
$2,800
•
$2,900
•
$1,500
•
$1,600
39
Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is:
•
the idea that businesses are responsible to maintain a healthy social climate for their employees
•
the expectation that business will strive to improve the overall welfare of society
•
the idea that organizations are solely responsible to local citizens
•
the fact that court costs could impact the financial bottom line
40
Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company’s checkbook for subsequent misappropriation of funds?
•
Tracing any debit memorandums from the bank to the company’s records
•
A review of the cash budget
•
An accounting policies manual
•
The use of pre-numbered checks
41
Cost allocation of an intangible asset is referred to as:
•
accretion
•
depreciation
•
capitalization
•
amortization
42
The owner of a company has recently decided to raise the salary of one employee, who was already making the highest salary, by 20%. Which of the following is(are) expected to be affected by this raise?
•
Median only
•
Mean only
•
Mean and median only
•
Mean, median, and mode
43
The acquisition of treasury stock by a corporation:
•
requires that a gain or loss be recognized on the income statement.
•
decreases its total assets and total stockholders’ equity.
•
has no effect on total assets and total stockholders’ equity.
•
increases its total assets and total stockholders’ equity.
44
Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, accounts receivable collected would be classified on the statement of cash flows.
•
Operating activities section.
•
Financing activities section.
•
Does not represent a cash flow.
•
Investing activities section.
45
Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of _______________.
•
using related diversification to achieve value by leveraging core competencies to achieve economies of scope
•
using related diversification to achieve value by integrating vertically in order to attain economies of scope
•
using related diversification to achieve value by integrating vertically in order to acquire market power
•
using related diversification to achieve value by pooling negotiating power to achieve market power
46
When collection is made on Accounts Receivable,
•
total assets will decrease.
•
total assets will remain the same.
•
total assets will increase.
•
stockholders equity will increase.
47
An analyst believes the probability that U.S. stock returns exceed long-term corporate bond returns over a 5-year period is based on personal assessment. This type of probability is best characterized as a(n) ____________.
•
Empirical probability
•
A priori probability
•
Subjective probability
•
Objectivity probability
48
If a corporation issued $8,000,000 in bonds which pay 5% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?
•
$280,000
•
$400,000
•
$4,000,000
•
$120,000

question49
Which trial balance will consist of the greatest number of accounts?
•
Post-closing trial balance
•
Adjusted trial balance
•
Trial balance
•
Balance
50
Which financial statement would best indicate whether the company relies on debt or stockholders’ equity to finance its assets?
•
Balance sheet
•
Income statement
•
Retained earnings statement
•
Statement of cash flows