1) Northwest Airlines applied mathematical models to determine which customers in its database were currently responsible for most of its profitability and which customers were not currently profitable but had similar characteristics to the most profitable customers. Northwest Airlines utilized _____ to identify these customers.
A. computer programming
B. data warehousing
C. customer relationships management
D. data mining
2) Minute Maid sees research as the fundamental first step in any business decision, and it created proprietary methods for conducting research. At what level of the hierarchy of business decision makers does Minute Maid operate?
A. Top tier
B. Middle tier
C. Base tier
D. Foundation tier
3) Which of the following questions is considered first when discussing a management dilemma?
A. How can management eliminate negative symptoms?
B. What does the manager need to know to choose the best alternative from the available sources of action?
C. What is the recommended course of action?
D. What symptoms cause management concern?
4) The goal of ethics in research is to _____.
A. ensure that no one is harmed
B. protect researchers from legal liability
C. identify what behavior is appropriate
D. ensure research sponsors fulfill their legal obligations
5) _____ occurs when the participants are told only part of the truth or when the truth is fully compromised.
C. Informed consent
6) The process of stating the basic dilemma and then developing other questions by progressively breaking down the original question into more specific ones is called the _____.
A. research question
B. management-research question hierarchy
C. management dilemma
D. management question
7) The fundamental weakness in the research process is _____.
A. incorrectly defining the research question
B. identifying a flawed sampling frame
C. misdefining the target population
D. failing to identify all relevant secondary information
8) Which type of management question asks what do we want to achieve?
A. Choice of purpose
B. Evaluation of solutions
9) In the Southeast, the potato chip market share held by the Lays brand is 46%. This is an example of _____.
A. a research question
B. a descriptive hypothesis
C. a relational hypothesis
D. an explanatory hypothesis
10) An increase in hours of television viewing leads to increases in the sales of snack foods. This is an example of a _____.
B. descriptive hypothesis
C. correlational hypothesis
D. causal hypothesis
11) To be categorized as a customer, an individual must have a history of shopping at the establishment at least twice before the start of the study with expenditures of more than $10. This is an example of _____.
A. a hypothetical construct
B. a conceptual scheme
C. an operational definition
D. a dictionary definition
12) James is entering data on client gender. Because the values entered reflect male or female, this variable is _____.
13) Which variable in an experiment is the variable expected to be affected by the manipulation?
A. Dependent variable
B. Extraneous variable
C. Moderating variable
D. Independent variable
14) Qualitative research seeks to _____ theory while quantitative research _____ it.
A. examine; interprets
B. build; tests
C. test; understands
D. apply; builds
15) Which of the following is true of quantitative research?
A. It uses a nonprobability sampling method
B. Results are generalizable
C. Data analysis is ongoing during the project
D. Sample sizes are generally small
16) The use of a control group in experimentation _____.
A. provides for the manipulation of the independent variable
B. serves as a comparison to assess the manipulation
C. minimizes the cost of experimentation
D. allows for discovery of the average effect of the independent variable in different situations
17) What is the first step in conducting an experiment?
A. Specify the level(s) of the treatment
B. Choose the experimental design
C. Control the experimental environment
D. Select relevant variables
18) Data originating from studies that are conducted by others and created for a purpose different from the purpose of the study for which the data are being reviewed are called _____ data
19) The goal of a formal study is to _____.
A. discover future research tasks
B. expand understanding of a topic
C. test hypotheses
D. provide insight
20) A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property.
21) What type of data is produced by simple category scales?
22) _____ is the extent to which a measurement tool actually measures what we wish to measure.
23) The list of elements in a population from which the sample is drawn is known as the _____.
A. sampling frame
B. population extent
D. sampling base
24) The process of ensuring the accuracy of data and their conversion from raw form into classified forms appropriate for analysis is called _____.
B. data entry
C. data preparation
D. data measurement
25) _____ involves assigning numbers or other symbols to answers so that the responses can be grouped into a limited number of categories
B. Data entry
26) The standard error of the estimate is a type of measure of _____.
A. central tendency
D. standard deviation
27) _____ are summary descriptors of variables of interest in the population
A. Sample statistics
B. Population parameters
C. Systematic estimates
D. Standard errors
28) The measure of deviation from the mean such that cases stretch toward one tail or the other is called _____.
29) Which of the research questions/hypotheses below is best answered using cross-tabulations?
A. What percentage of men and women prefer Brand A over Brand B?
B. What percentage of residents shop at the local grocery store?
C. Is brand loyalty related to brand image?
D. What happens to sales when prices drop?
30) If a difference is not caused only by random sampling fluctuations, it is said to have _____.
B. statistical significance
C. substantive significance
D. reasonable doubt
Here are answers collected from multiple final exams to help you get the highest grade
1) The term channel in communication means
A. the volume at which a message is received
B. the context of the communication
C. the process of changing thoughts into symbols
D. the medium through which a message travels from sender to receiver
2) In which of the following communication activities do people spend the greatest percent of their day?
3) A receiver’s response to a sender’s message is called
4) With this type of response, you analyze or teach the sender about the cause of his or her concern.
5) This happens when you receive, construct meaning from, and respond to the sender’s message.
6) When the receiver uses this response style, he clarifies or seeks more information.
7) Which of the following are the most common types of doubts people may have about a source?
A. Status and academic degree
B. Occupation and employer
C. Prominence in the field of study and experience
D. Expertise and accuracy
8) Which of the following is the most reliable source of information?
B. A blog
C. A book recommended by your instructor
D. Britannica Online®
9) Consider the following exchange: “How do I know God exists? How do you know he doesn’t?” Which fallacy does the second statement illustrate?
A. Perfectionist fallacy
B. Slippery slope
C. Misplacing the burden of proof
D. Inconsistency ad hominem
10) Stating someone has negative features and his claim is invalid is an example of which fallacy?
A. Ad hominem
B. Genetic fallacy
C. Straw man
D. False dilemma
11) Consider the following statement: “So what if the Senator accepted a little kickback money—most politicians are corrupt after all.” This is an example of which fallacy?
A. Argument from envy
B. Argument from tradition
C. Argument from common practice
D. Straw man
12) Consider the following statement: “Studies confirm what everyone already knows: Smaller class sizes make better learners.” This is an example of which fallacy?
A. Argument from common practice
B. Begging the question
D. Slippery slope
13) Audience analysis should occur at what point in the creation of a message?
A. Once feedback is received
B. Before the message is sent
C. Before the message is created
D. After selecting the channel
14) Behavior descriptions should meet which of the following criteria?
A. Present inferences about another’s motives.
B. Describe only observable behaviors.
C. Include terms such as “never, always, or constantly.”
D. Focus on more than one behavior.
15) An effective message should be
16) Which informal communication channel involves its own abbreviations to accommodate the limited number of characters available in any given message?
B. Text message
C. Voicemail message
D. Handwritten letters
17) Sound and light waves are an example of which part of the communication model?
18) In this channel of communication, messages are carried by sound and light waves.
C. Hard copy memos
19) A framework for putting all of your information together in a logical sequence is called
A. an introduction
B. a thesis
C. a central idea
D. an outline
20) Which verbal support breaks down complex processes or concepts into their component parts to ensure understanding?
21) What type of language is used when communicating with classmates, coworkers, family, and friends?
22) The connotation of words such as skinny or thin focuses on the
A. actual meaning
B. denotative meaning
C. emotional meaning
D. contextual meaning
23) If you try to persuade your classmates to donate canned goods for the hungry in your community, your topic is one of
24) Persuasive topics that attempt to show an audience that something is good, bad, right, or wrong are topics of
25) If you use only a few examples to represent the whole of the conclusion, you are committing this logical fallacy.
A. Either/or thinking
C. Faulty causation
D. Hasty generalization
26) What logical fallacy can occur when a speaker focuses on similarities and ignores significant differences?
B. Hasty generalization
C. Faulty comparison
27) When you display ethos in your persuasive presentation, you have
28) Developing cross-cultural competence includes which of the following?
A. Overcoming personal biases
B. Walking on eggs
C. Separating culture from communication
D. Using hot button words
29) An attempt to characterize causes of events to either personalities or external situations is called
B. selective attention
C. attribution error
D. halo effect
30) Groups that value higher power distance believe relationships are
D. relationship oriented
31) What is the belief that laws are justified if they prevent a person from harming him- or herself known as?
A. Offense principle
B. Legal moralism
C. Harm principle
D. Legal paternalism
32) What is the belief that correct moral principles are those accepted by the correct religion known as?
A. Religious absolutism
B. Virtue ethics
C. Religious relativism
D. Moral relativism
33) The practice of using a case that has already been decided as a guide when deciding new cases is referred to as
A. legal morality
B. legal paternalism
C. causation principle
D. appeal to precedent
1) This response style normally does not help unless the sender has asked for your advice.
2) This act is involuntary and happens automatically.
3) Which of the following is a category of reasonless advertising?
A. Logical ads
B. Functional ads
C. Promise ads
D. Endorsement ads
4) A claim is generally not considered credible if
A. it seems likely
B. the claimant is a disinterested party
C. the claimant is an interested party
D. it comes from a source assumed to be credible but who is not known to you
5) Providing only two choices when others are available defines which fallacy?
A. Ad hominem
B. Genetic fallacy
C. Straw man
D. False dilemma
6) Measurable or observable characteristics of your audience are called
7) Demographics include which of the following?
A. Ethnicity, gender, race
B. Attitudes, interests, values
C. Beliefs, feelings, likes
D. Values, morals, opinions
8) You want to discuss your performance review and possible raise with your boss. The most effective channel to do this would be
A. team meeting
B. text message
9) When are nonverbal messages sent?
A. After verbal messages
B. Only when you want
C. Before verbal messages
D. Only in combination with verbal messages
10) When using expert testimonials, speakers should do which of the following?
A. Always quote the expert’s exact words.
B. Share the expert’s credentials.
C. Use experts who have celebrity status.
D. Protect the identity of experts by not naming them.
11) When you use an expression like raining cats and dogs, you are using
A. contextual language
B. figurative language
C. denotative language
D. connotative language
12) Deliberately blaming individuals or groups for things they really did not do is called
13) A concept proposing that negative cultural assumptions about a group can create for its members a belief in those assumptions is called
A. an attribution error
B. a perceptual process
C. a halo effect
D. a stereotype threat
14) Utilitarianism is part of this perspective on moral reasoning.
B. Virtue ethics
D. Moral relativism
15) This preparation process involves looking at the characteristics of the receivers of the sender’s message.
A. Determining the message
B. Audience analysis
C. Channel evaluation
D. Receiver response analysis
16) Consider the following statement: “Morgan, you’re down to earth and I trust your judgment. That’s why I know I can count on you to back me up at the meeting this afternoon.” This is an example of which fallacy?
A. Argument from pity
B. Apple polishing
C. Slippery slope
D. Guilt trip
17) The individuals you are most likely to influence with your persuasive presentation are referred to as your
A. target audience
B. peer audience
C. general audience
D. leading audience
18) When you lead, instruct, challenge, or introduce your audience to act on or accept your solution, you are at which step of Monroe's Motivated Sequence?
B. Action or approval
19) A value judgment requires this type of assessment.
A. Worth or desirability
B. Monroe’s Value Sequence
20) Which communication method provides some of the benefits of face-to-face communication when all parties are not in the same location?
B. Instant messaging
21) Consider the following statement: "So what if the Senator accepted a little kickback money-most politicians are corrupt after all." This is an example of which fallacy?
A. Argument from envy
B. Argument from tradition
C. Argument from common practice
D. Straw man
22) The message refers to which of the following?
A. The context of the communication
B. Ideas, thoughts, and feelings being communicated.
C. The medium that carries the information
D. The receiver's response to the sender
23) An attempt to characterize causes of events to either personalities or external situations is called
B. halo effect
C. attribution error
D. selective attention
1.models are mathematical models of the master budget that can react to any set of assumption about sales, costs, and product mix.
A. Budgeting analysis
D. Financial planning
2.A sales forecast is
A. a prediction of sales under a given set of conditions
B. the same as a sales budget that will generate a desired level of sales
C. all of these answers are correct
D. the result of decisions to create conditions
3. A gives the expected sales under a given set of conditions
A. sales prediction
B. budget forecast
C. sales forecast
D. sales budget
4.Important factors considered by sales forecasters include all of the following except
5.A gives the expected sales under a given set of conditions.
C. sales forecast
6. need cost accounting systems.
A. Manufacturing firms and service organizations
B. Manufacturing firms and nonprofit organizations
C. Manufacturing firms, service organizations, and nonprofit organizations
D. Service organizations and nonprofit organizations
7. probably would not be used as a measure of activity in a flexible budget
A. Sales volume
B. Number of machine hours used
C. Number of hours worked by salespeople
D. Number of direct labor hours worked
8. are components of a master budget.
A. A continuous budget and a static budget
B. An operating budget and a financial budget
C. A strategic plan and an operating budget
D. A cash budget and an activity budget
9.The master budget quantifies targets for all of the following except .
D. cost driver activity
10.Costs are allocated for all the following purposes except to
A. determine inventory levels
B. obtain reimbursement
C. predict the economic effects of planning and control decisions
D. compute income and asset valuation
1) Which financial statement is used to determine cash generated from operations?
A. Income statement
B. Statement of operations
C. Statement of cash flows
D. Retained earnings statement
2) In terms of sequence, in what order must the four basic financial statements be prepared?
A. Balance sheet, income statement, statement of cash flows, and capital statement
B. Income statement, capital statement, statement of cash flows, and balance sheet
C. Balance sheet, capital statement, statement of cash flows, and income statement
D. Income statement, capital statement, balance sheet, and statement of cash flows
3. In classifying transactions, which of the following is true in regard to assets?
A. Normal balances and increases are debits
B. Normal balances and decreases are credits
C. Normal balances can either be debits or credits for assets
D. Normal balances are debits and increases can be debits or credits
4. An increase in an expense account must be
C. either debited or credited, depending on the circumstances
5. ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?
C. Correct ANSWER (Go with this Option)
6. In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has a
A. $600 credit balance
B. $1,400 debit balance
C. $800 debit balance
D. $800 credit balance
7. Which ledger contains control accounts?
A. Accounts receivable subsidiary ledger
B. General ledger
C. Accounts payable subsidiary ledger
D. General revenue and expense ledger
8. Smith is a customer of ABC Corporation. Smith typically purchases merchandise from ABC on account. Which ledger would ABC use to keep track of the details of Smith’s account?
B. Accounts receivable control ledger
C. General ledger
D. Accounts payable subsidiary ledger
9. Under the cash basis of accounting
A. revenue is recognized when services are performed
B. expenses are matched with the revenue that is produced
C. cash must be received before revenue is recognized
D. a promise to pay is sufficient to recognize revenue
10. Under the accrual basis of accounting
A. cash must be received before revenue is recognized
B. net income is calculated by matching cash outflows against cash inflows
C. events that change a company’s financial statements are recognized in the period they occur rather than in the period in which the cash is paid or received
D. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
11. The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is
A. debit Laundry Expense, $2,000; credit Laundry Expense $2,000
B. debit Laundry Expense, $4,500; credit Laundry Supplies Expense, $4,500
C. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000
D. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500
12. Greese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be
A. debit Office Supplies Expense, $1,100; credit Office Supplies, $1,100
B. debit Office Supplies, $2,900; credit Office Supplies Expense, $2,900
C. debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900
D. debit Office Supplies, $1,100; credit Office Supplies Expense, $1,100
13. An adjusted trial balance
A. is prepared after the financial statements are completed
B. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made
C. is a required financial statement under generally accepted accounting principles
D. cannot be used to prepare financial statements
14. Given the following adjusted trial balance:
Net income for the year is
15. Given the following adjusted trial balance, what will be the totals for the debit and credit columns of the post-closing trial balance?
16. 3.2.1 Given the following adjusted trial balance:
17. Net income is recorded on the work sheet under the
A. debit column of the adjusted trial balance and the credit column of retained earnings
B. debit column of the income statement and the credit column of the balance sheet
C. credit column of the adjusted trial balance and the debit column of retained earnings
D. credit column of the income statement and the debit column of the balance sheet
18. At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be
A. $900,000 and 65%
B. $1,300,000 and 35%
C. $900,000 and 35%
D. $1,300,000 and 65%
19. During the year, Sarah’s Pet Shop’s merchandise inventory decreased by $30,000. If the company’s cost of goods sold for the year was $450,000, purchases would have been
D. Insufficient data to determine
20. At the beginning of the year, Wildcat Athletic had an inventory of $200,000. During the year, the company purchased goods costing $700,000. If Wildcat Athletic reported ending inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be
A. $400,000 and 60%
B. $600,000 and 40%
C. $400,000 and 40%
D. $600,000 and 60%
21. The entry to record of sale of $900 with terms of 2/10, n/30 will include a
A. debit to Sales Discount for $18
B. debit to Sales Revenue for $882
C. credit to Accounts Receivable for $900
D. credit to Sales Revenue for $900
22.Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2012 are as follows:
An end of the month (1/31/2012), inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory?
23. The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as
A. FIFO reserve
B. inventory reserve
C. LIFO reserve
D. periodic reserve
24. A consistent application of an inventory costing method enhances
25. The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $300 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?
26. A very small company would have the most difficulty in implementing which of the following internal control activities?
A. Separation of duties
B. Limited access to assets
C. Periodic independent verification
D. Sound personnel procedures
27. A system of internal control
A. is infallible
B. can be rendered ineffective by employee collusion
C. invariably will have costs exceeding benefits
D. is premised on the concept of absolute assurance
28. The custodian of a company asset should
A. have access to the accounting record for that asset
B. be someone outside the company
C. not have access to the accounting record for that asset
D. be an accountant
29. The Sarbanes Oxley Act (2002) applies to
A. U.S. companies but not international companies
B. international companies but not U.S. companies
C. U.S. and Canadian companies but not other international companies
D. U.S. and international companies
1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?
A. Bad Debts Expense 15000 Allowances for Doubtful Accounts 15000
B. Bad Debts Expense 12000 Allowances for Doubtful Accounts 12000
C. Bad Debts Expense $12,000 Accounts Receivable $12,000
D. Bad Debts Expense $15,000 Accounts Receivable $15,000
2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period?
3) Intangible assets
A. should be reported under the heading Property, Plant, and Equipment
B. should be reported as a separate classification on the balance sheet
C. should be reported as Current Assets on the balance sheet
D. are not reported on the balance sheet because they lack physical substance
4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that
A. must be generated internally
B. are depletable natural resources
C. do not have physical substance
D. have been exchanged at a gain
5) The book value of an asset is equal to the
A. asset’s market value less its historic cost
B. blue book value relied on by secondary markets
C. replacement cost of the asset
D. asset’s cost less accumulated depreciation
6) Gains on an exchange of plant assets that has commercial substance are
A. deducted from the cost of the new asset acquired
C. not possible
D. recognized immediately
7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
A. capital expenditures
B. expense expenditures
D. revenue expenditures
8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
C. ordinary repairs
9) When an interest-bearing note matures, the balance in the Notes Payable account is
A. less than the total amount repaid by the borrower
B. the difference between the maturity value of the note and the face value of the note
C. equal to the total amount repaid by the owner
D. greater than the total amount repaid by the owner
10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be
11) If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?
12) Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2012 balance sheet?
A. Long-term debt, $300,000
B. Long-term debt, $225,000
C. Long-term debt, $150,000; Long-term debt due within one year, $75,000
D. Long-term debt, $225,000; Long-term debt due within one year, $75,000
13) A corporation issued $600,000, 10%, 5-year bonds on January 1, 2011 for 648,666, which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is
14) When the effective-interest method of bond discount amortization is used
A. the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over the life of the bond
D. interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued
15) If a corporation has only one class of stock, it is referred to as
A. classless stock
B. preferred stock
C. solitary stock
D. common stock
16) Capital stock to which the charter has assigned a value per share is called
A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock
17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2011. What is the annual dividend on the preferred stock?
A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share
18) Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2011. There were no dividends declared in 2010. The board of directors declares and pays a $45,000 dividend in 2011. What is the amount of dividends received by the common stockholders in 2011?
19) When the selling price of treasury stock is greater than its cost, the company credits the difference to
A. Gain on Sale of Treasury Stock
B. Paid-in Capital from Treasury Stock
C. Paid-in Capital in Excess of Par Value
D. Treasury Stock
20) The purchase of treasury stock
A. decreases common stock authorized
B. decreases common stock issued
C. decreases common stock outstanding
D. has no effect on common stock outstanding
21) Marsh Company has other operating expenses of $240,000. There has been an increase in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Marsh's cash payments for operating expenses?
22) Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?
A. Operating activities section
B. Investing activities section
C. Financing activities section
D. Does not represent a cash flow
23) In performing a vertical analysis, the base for cost of goods sold is
A. total selling expenses
B. net sales
C. total revenues
D. total expenses
24) Blanco, Inc. has the following income statement (in millions):
Using vertical analysis, what percentage is assigned to Net Income?
25) Dawson Company issued 500 shares of no-par common stock for $4,500. Which of the following journal entries would be made if the stock has a stated value of $2 per share?
A. Cash $4,500 Common Stock 4,500
B. Cash $4,500 Common Stock 1,000 Paid-In Capital in Excess of Par 3,500
C. Cash $4,500 Common Stock 1,000 Paid-In Capital in Excess of Stated Value 3,500
D. Common Stock $4,500 Cash 4,500
26) Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a
A. credit to Paid-In Capital from Treasury Stock for $9,000
B. credit to Retained Earnings for $9,000
C. debit to Pain-In Capital from Treasury Stock for $45,000
D. debit to Retained Earnings for $45,000
27) Which of the following is a fundamental factor in having an effective, ethical corporate culture?
A. Efficient oversight by the company’s Board of Directors
B. Workplace ethics
C. Code of conduct
D. Ethics management programs
28) Two individuals at a retail store work the same cash register. You evaluate this situation as
A. a violation of establishment of responsibility
B. a violation of segregation of duties
C. supporting the establishment of responsibility
D. supporting internal independent verification
29) The Sarbanes-Oxley Act imposed which new penalty for executives?
C. Criminal prosecution for executives
D. Return of ill-gotten gains
30) The Sarbanes-Oxley Act requires that all publicly traded companies maintain a system of internal controls. Internal controls can be defined as a plan to
A. safeguard assets
B. monitor balance sheets
C. control liabilities
D. evaluate capital stock
Add to Cart
1) Which of the following is NOT considered cash for financial reporting purposes?
A. Coin, currency, and available funds
B. Money orders, certified checks, and personal checks
C. Petty cash funds and change funds
D. Postdated checks and I.O.U.'s
2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?
A. As assets but separately from other receivables.
B. As offsets to capital.
C. As trade notes and accounts receivable if they otherwise qualify as current assets.
D. By means of footnotes only.
3) Which of the following is considered cash?
A. Money market savings certificates
B. Certificates of deposit (CDs)
C. Postdated checks
D. Money market checking accounts
4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as
A. an item of "other expense" in the income statement
B. a deduction from accounts receivable in determining the net realizable value of accounts receivable
C. a deduction from sales in the income statement
D. sales discounts forfeited in the cost of goods sold section of the income statement
5) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because
A. the allowance for uncollectible accounts includes a discount element
B. the amount of the discount is NOT material
C. most short-term receivables are NOT interest-bearing
D. most receivables can be sold to a bank or factor
6) Which of the following methods of determining annual bad debt expense best achieves the matching concept?
A. Direct write-off
B. Percentage of average accounts receivable
C. Percentage of ending accounts receivable
D. Percentage of sales
7) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear
A. as an addition in the cost of goods sold section of the income statement and as a current asset on the balance sheet
B. only as an asset on the balance sheet
C. only in the cost of goods sold section of the income statement
D. as a deduction in the cost of goods sold section of the income statement and as a current asset on the balance sheet
8) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be
A. net income, current assets, and retained earnings were understated
B. net income, current assets, and retained earnings were overstated
C. net income was correct and current assets were understated
D. net income and current assets were overstated and current liabilities were understated
9. If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are
A. understatement, overstatement, no effect
B. overstatement, understatement, overstatement
C. overstatement, understatement, no effect
D. understatement, overstatement, overstatement
10) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?
A. Price trend cannot be determined from information given
B. Prices decreased
C. Prices remained unchanged
D. Prices increased
11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
A. Base stock
B. Average cost
C. First-in, first-out
D. Last-in, first-out
12) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for
A. costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory
B. manufacturing overhead costs for a product manufactured and sold in the same accounting period
C. costs which will NOT benefit any future period
D. costs from idle manufacturing capacity resulting from an unexpected plant shutdown
13) In no case can "market" in the lower-of-cost-or-market rule be more than
A. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses
B. estimated selling price in the ordinary course of business
C. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal
D. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin
14) When the direct method is used to record inventory at market
A. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold
B. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale
C. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline
D. only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements
15) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?
A. Income of the following year will be understated
B. The cost of sales of the following year will be understated
C. The current year's income is understated
D. The closing inventory of the current year is understated
16) The retail inventory method is based on the assumption that the
A. proportions of markups and markdowns to selling price are the same
B. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods
C. ratio of gross margin to sales is approximately the same each period
D. ratio of cost to retail changes at a constant rate
17) A major advantage of the retail inventory method is that it
A. provides a method for inventory control and facilitates determination of the periodic inventory for certain types of companies
B. provides reliable results in cases where the distribution of items in the inventory is different from that of items sold during the period
C. hides costs from competitors and customers
D. gives a more accurate statement of inventory costs than other methods
18) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported
A. on the income statement
B. as a valuation account to Inventory on the balance sheet
C. as a current liability
D. as an appropriation of retained earnings
19) The cost of land typically includes the purchase price and all of the following costs EXCEPT
A. assumption of any liens or mortgages on the property
B. grading, filling, draining, and clearing costs
C. street lights, sewers, and drainage systems cost
D. private driveways and parking lots
20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be
A. capitalized as part of the cost of the new hotel
B. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down
C. written off as an extraordinary loss in the year the hotel is torn down
D. capitalized as part of the cost of the land
21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
A. the intention of management for the property when the building was acquired
B. the length of time for which the building was held prior to its demolition
C. the significance of the cost allocated to the building in relation to the combined cost of the lot and building
D. the contemplated future use of the parking lot
22) The period of time during which interest must be capitalized ends when
A. the activities that are necessary to get the asset ready for its intended use have begun
B. no further interest cost is being incurred
C. the asset is substantially complete and ready for its intended use
D. the asset is abandoned, sold, or fully depreciated
23) Which of the following assets do NOT qualify for capitalization of interest costs incurred during construction of the assets?
A. Assets NOT currently undergoing the activities necessary to prepare them for their intended use
B. Assets intended for sale or lease that are produced as discrete projects
C. Assets under construction for an enterprise's own use
D. Assets financed through the issuance of long-term debt
24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to
A. that portion of average accumulated expenditures on which no interest cost was incurred
B. a cost of capital charge for stockholders' equity
C. the total interest cost actually incurred
D. that portion of total interest cost which would NOT have been incurred if expenditures for asset construction had NOT been made
25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will
A. be credited directly to the owner's capital account
B. effectively reduce the amount to be recorded as the cost of the new asset
C. be reported in the Other Revenues and Gains section of the income statement
D. effectively increase the amount to be recorded as the cost of the new asset
26) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the
A. market value of the stock
B. stated value of the stock
C. par value of the stock
D. book value of the stock
27) The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at
A. either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company
B. the fair value of the asset given up, and a gain but NOT a loss may be recognized
C. the fair value of the asset given up, and a gain or loss is recognized
D. the fair value of the asset received if it is equally reliable as the fair value of the asset given up
28) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
A. Partial recognition
B. Systematic and rational allocation
C. Associating cause and effect
D. Immediate recognition
29) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will
A. vary with production
B. vary with unit sales
C. be constant
D. vary with sales revenue
30) Which of the following most accurately reflects the concept of depreciation as used in accounting?
A. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets
B. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset
C. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred
D. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved
31) Prentice Company purchased a depreciable asset for $200,000. The estimated salvage value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
32) Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
33) Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?
34) Costs incurred internally to create intangibles are
B. expensed only if they have a limited life
C. capitalized if they have an indefinite life
D. expensed as incurred
35) Factors considered in determining an intangible asset’s useful life include all of the following EXCEPT
A. the expected use of the asset
B. the amortization method used
C. any legal or contractual provisions that may limit the useful life
D. any provisions for renewal or extension of the asset’s legal life
36) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be
A. charged off in the current period
B. amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product
C. amortized over the legal life of the purchased patent
D. added to factory overhead and allocated to production of the purchaser's product
37) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom’s market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?
38) Mining Company acquired a patent on an oil extraction technique on January 1, 2006 for $5,000,000. It was expected to have a 10 year life and no residual value. Mining uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $600,000 per year for the next eight years. The present value of these cash flows, discounted at Mining’s market interest rate, is $2,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?
39) General Products Company bought Special Products Division in 2006 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is $2,000,000 and it is carried on General Product’s books for a total of $1,700,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007?
40) The intangible asset goodwill may be
A. capitalized only when purchased
B. written off directly to retained earnings
C. capitalized either when purchased or created internally
D. capitalized only when created internally
41) The reason goodwill is sometimes referred to as a master valuation account is because
A. it represents the purchase price of a business that is about to be sold
B. it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value
C. it is the difference between the fair market value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business
D. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation
A. generated internally should NOT be capitalized unless it is measured by an individual independent of the enterprise involved
B. exists in any company that has earnings that differ from those of a competitor
C. is easily computed by assigning a value to the individual attributes that comprise its existence
D. represents a unique asset in that its value can be identified only with the business as a whole
43) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT
A. a general description of the financing arrangement
B. the number of financing institutions that refused to refinance the debt, if any
C. the terms of the new obligation incurred or to be incurred
D. the terms of any equity security issued or to be issued
44) Stock dividends distributable should be classified on the
A. income statement as an expense
B. balance sheet as an item of stockholders' equity
C. balance sheet as an asset
D. balance sheet as a liability
45) Which of the following items is a current liability?
A. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months
B. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue
C. Bonds due in three years
D. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months.
46) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
A. $400,000; $400,000
B. $140,000; $260,000
C. $400,000; $260,000
D. $260,000; $260,000
47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
A. $600,000; $600,000
B. $210,000; $390,000
C. $600,000; $390,000
D. $390,000; $390,000
48) A company buys an oil rig for $1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events?
A. Depreciation expense of $120,000
B. Depreciation expense of $100,000 and interest expense of $7,711
C. Depreciation expense of $100,000 and interest expense of $20,000
D. Depreciation expense of $107,710 and interest expense of $7,711
49) A contingency can be accrued when
A. it is certain that funds are available to settle the disputed amount
B. an asset may have been impaired
C. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability incurred
D. it is probable that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated
50) Mark Ward is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident:
A. recognition of a loss and creation of a liability for the value of the land
B. recognition of a loss only
C. creation of a liability only
D. disclosure in note form only
51) Which of the following contingencies need NOT be disclosed in the financial statements or the notes thereto?
A. Probable losses NOT reasonably estimable
B. Environmental liabilities that cannot be reasonably estimated
C. Guarantees of indebtedness of others
D. All of these must be disclosed
52) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the
A. bond indenture
B. bond debenture
C. registered bond
D. bond coupon
53) If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be
A. greater than if the straight-line method were used
B. greater than the amount of the interest payments
C. the same as if the straight-line method were used
D. less than if the straight-line method were used
54) Bonds that pay no interest unless the issuing company is profitable are called
A. collateral trust bonds
B. debenture bonds
C. revenue bonds
D. income bonds
55) Minimum lease payments may include a
A. penalty for failure to renew
B. bargain purchase option
C. guaranteed residual value
D. any of these
56) An essential element of a lease conveyance is that the
A. lessor conveys less than his or her total interest in the property
B. lessee provides a sinking fund equal to one year's lease payments
C. property that is the subject of the lease agreement must be held for sale by the lessor prior to the drafting of the lease agreement
D. term of the lease is substantially equal to the economic life of the leased property
57) While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that
A. [Answer Text]all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal
B. at the end of the lease the property usually can be purchased by the lessee
C. a lease reflects the purchase or sale of a quantifiable right to the use of property
D. during the life of the lease the lessee can effectively treat the property as if it were owned by the lessee
58) In the earlier years of a lease, from the lessee's perspective, the use of the
A. capital method will enable the lessee to report higher income, compared to the operating method.
B. capital method will cause debt to increase, compared to the operating method
C. operating method will cause income to decrease, compared to the capital method
D. operating method will cause debt to increase, compared to the capital method
59) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income
A. should be amortized over the period of the lease using the interest method
B. should be amortized over the period of the lease using the straight-line method
C. does NOT arise
D. should be recognized at the lease's expiration
60) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as
A. the amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease
B. the difference between the lease payments receivable and the fair market value of the leased property
C. the present value of minimum lease payments
D. the total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement
1) Two information systems that support the entire organization are
A. enterprise resource planning systems and dashboards
B. transaction processing systems and office automation systems
C. enterprise resource planning systems and transaction processing systems
D. expert systems and office automation systems
2) _______ is the direct use of information systems by employees in their work
A. Transaction processing systems
B. End-user computing
C. Decision support systems
D. Management information systems
3) ______ attempt to duplicate the work of human experts by applying reasoning capabilities
A. Expert systems
C. Business intelligence systems
D. Decision support systems
4) ______ issues involve who may obtain information and how much they should pay for this information
5) _____ issues involve collecting, storing, and disseminating information about individuals.
6) Your company’s computers have been taken over by an attacker and used to attack another organization’s information systems. Your problem is which of the following?
A. Poor security policies and procedures
B. Lack of due diligence
C. Downstream liability
D. Poor service-level agreements
7) You are the only person in your office to upgrade to Microsoft® Word 2010. Before you share documents with coworkers, you should do which of the following?
A. Print out a backup copy of documents
B. Run the Compatibility Checker
C. Burn all documents to CD
D. Create a document summary
8) Which of the following is detected by the contextual spelling checker?
A. Duplicate words
B. Irregular capitalization
C. Use of their when you should use there
D. Improper use of commas and other punctuation
9) If your cursor is near the bottom of a page and you want to display the next paragraph you type at the top of a new page, you should use which of the following?
D. Page Layout, Breaks, Line Numbers
10) Your ______ is the collection of traceable data that is captured when you use various information technologies such as credit cards or the Internet
A. data profile
B. data shadow
C. database file
D. database record
11) No alphabetic characters in a social security number field is an example of
A. data isolation
B. data consistency
C. data integrity
D. data redundancy
12) In a database, the primary key field is used to
A. specify an entity
B. uniquely identify an attribute
C. identify duplicated data
D. uniquely identify a record
13) Search engines and metasearch engines are examples of which network application?
D. Web services
14) ______ portals coordinate content within relatively narrow organizational and partners’ communities
15) Workflow, groupware, and telepresence systems are examples of which network application?
C. Web services
16) Which type of e-commerce does an organization provide information and services to its workers?
17) _______ auctions are the most common auction model for large purchases.
18) ______ collect data from many points over an extended space.
A. Bluetooth® networks
B. Ultra-wideband networks
C. Wireless sensor networks
D. Wi-Fi networks
19) Which type of satellite has the largest footprint?
A. Low earth orbit
C. Medium earth orbit
D. Equatorial orbit
20) Which of the following is the most appropriate wireless networking standard for creating personal area networks?
B. Cellular radio
21) If cell D15 contains the formula =$C$5*D15, what is the D15 in the formula?
A. Mixed reference
B. Absolute reference
C. Circular reference
D. Range name
22) What should you do if you see a column of pound signs (###) instead of values or results of formulas?
A. Increase the zoom percentage
B. Delete the column
C. Adjust the row height
D. Increase the column width
23) ______ feasibility determines if the project is an acceptable financial risk and if the organization can afford the expense and time needed to complete the project
24) In the traditional systems development life cycle, users
A. have no input
B. are important only in the testing phases of the project
C. are important only in the maintenance phase of the project
D. are limited to providing information requirements
25) To create a Microsoft® PowerPoint® presentation based on an installed template, click the
A. File tab, and then click New
B. File tab, and then click Open
C. Insert tab, and then select Add Template
D. Design tab, and then select New
26) Which of the following demotes a bullet point from the first level to the second level in Outline view in Microsoft® PowerPoint®?
C. Decrease List Level
27) ________ connects parts of the intranets of different organizations and allows secure communications among business partners
A. A global network
B. An intranet
C. An extranet
D. The Internet
28) ______ is a system with universally accepted standards for storing, retrieving, formatting, and displaying information via a client/server architecture
B. World Wide Web
29) A process that allows users to place information in multiple, overlapping associations is called
C. a Wiki
30) ________ are websites that provide collections of content from all over the World Wide Web
B. Social networks
D. Really simple syndications
1) The Federal Trade Commission is an example of
A. a branch of the U.S. Supreme Court
B. a temporary commission created by executive order that has become permanent
C. a corporation subsidized by the federal government
D. a federal agency created by the federal government
2) The doctrine of stare decisis concerns
A. using constitutional law to render a decision
B. staring at the facts of a case for a long time to make sure the correct decision is made.
C. making sure to do adequate research before making a legal decision
D. following precedents so that legal principles announced in a case are used to determine later cases
3) When statutes are passed only after considerable study, debate, and public input, this is an example of which function of the law?
A. Keeping the peace
B. Facilitating orderly change
C. Shaping moral standards
D. Maintaining the status quo
4) Marion owns a dress shop, where she personally makes all the dresses she sells. Marion sees a beautiful dress at a designer shop and buys it. She examines the dress carefully, so she can design a dress pattern to duplicate it. She duplicates the dress exactly, and sews the dress in several sizes to sell in her store for a lower price. Then she returns the dress to the store where she bought it for a full refund. Has Marion acted ethically?
A. Yes, because she is competition is fair in a capitalist society
B. No, Marion is undercutting the designer shop with merchandise that is deceptively similar.
C. No, because she is asking a lower price for her dress
D. Yes, the store was not hurt because the designer store’s customers would not go to her store anyway.
5) The Federal False Claims Act is also known as
A. The Statute of Frauds
B. The Whistleblower Statute
C. The Statute of Limitations
D. The Sarbanes-Oxley Act
6) Which of the following is correct with regard to the relationship between law and ethics?
A. Lawful conduct is always ethical conduct.
B. The law may not permit something that would be ethically wrong.
C. Although much of law is based on ethical standards, not all ethical standards have been enacted as law.
D. The rule of law and the golden rule of ethics demand the same response.
7) A defendant fails to answer a civil lawsuit, what is likely to happen?
A. The court will dismiss the case.
B. The court will grant a default judgment against the defendant.
C. The court will order that the defendant go to jail until he or she agrees to answer.
D. A court will contact the defendant and ask him to answer the lawsuit.
8) A court can enter a judgment notwithstanding the verdict when the following has happened?
A. The judge’s personal opinion is that the jury made the wrong decision.
B. The court finds that the jury acted out of a bias or after jury misconduct.
C. The jury was sequestered.
D. A jury could not reach an agreement on what the verdict would be.
9) If a defendant files a motion for summary judgment in a civil case, what is the defendant saying?
A. That the case is ready to go to the jury
B. That the court has no jurisdiction to decide the case
C. That even if what the plaintiff says is true, there is no basis for judgment against the defendant
D. That the plaintiff’s claims are false
10) Carlos is an investment broker, operating as a sole proprietor. William is his employee. Juanita, a new client, gives William $1,000,000 in cash to invest for her, and William gives her a receipt. Instead of investing the money, William takes the $1,000,000 and leaves the country. Carlos learns of the transaction for the first time when Juanita appears at the office a month later to discuss the allocation of her investments, and shows him the receipt signed by William. Juanita is upset to learn that Carlos does not have her money, and tells him she is going to sue. What will be the outcome of Juanita’s suit against Carlos?
A. Juanita will recover a judgment against Carlos for the entire amount.
B. Juanita will recover a judgment against Carlos for half the missing money.
C. Juanita will lose the case because she cannot find William to serve him with a lawsuit.
D. Juanita will lose the case because was not informed of the transaction.
11) Monica owed Bob $500, which was more than a year overdue. Bob got drunk at a party and told everyone that Monica had owed him $500 for over a year. Can Monica recover from Bob for defamation?
A. Yes, because Bob communicated the statement to third persons
B. No, because Bob was telling the truth
C. No, because Bob had been drinking
D. Yes, because Bob abused his conditional privilege
12) Damages intended to punish a defendant and deter the defendant and others from engaging in the same tortious conduct in the future are called
A. punitive damages
B. retribution damages
C. nominal damages
D. penalty damages
13) Pete and Vicky make the following agreement. Pete promises he will go into a store and buy something for $5 and pay for it with a $100 bill on which he has written “Happy Birthday Vicky!” Vicky promises that after Pete collects his change and leaves the store, she will go into the same store and buy something that costs $5 and pay with a $10 bill. When the clerk attempts to give her change for $10, Vicky will claim that the $100 bill that is in the cash register was money she just got for her birthday, and will demand change from a $100 bill. Then Pete and Vicky will split the extra money they think Vicky will receive in change. Is this a valid contract?
A. This is a voidable contract because Vicky can change her mind.
B. This is a void contract, because the parties agreed to commit fraud.
C. This is not an enforceable contract because the agreement is not in writing.
D. This is a valid contract. There was a promise in exchange for a promise, and both parties got what they wanted.
14) Which of the following best describes how e-mail contracts are viewed under the law?
A. E-mail contracts are valid so long as both parties sign a written copy printed out from the e-mail.
B. E-mail contract are valid only for contract less than $500.
C. E-mail contracts are generally treated similarly to contracts negotiated by other means.
D. E-mail contracts for goods can be valid, but not email contracts for services.
15) Ray and Nikki are in fifth grade together. Ray gets a new skateboard for his birthday and offers to sell Nikki his old one for $15. Nikki pays the money, and Ray gives her the old skateboard. Is this a valid contract?
A. This is a voidable contract because the parties to the contract were minors.
B. This is a void contract because the parties to the contract were minors.restraint of trade.
C. This is an unenforceable contract because Ray and Nikki can not file a lawsuit.
D. This is a valid contract. There was a fair consideration paid for the skateboard, and both parties got what they wanted.
16) A retailer ordered some inventory by phone from a manufacturer. The order was for 1,000 machines from the manufacturer’s inventory at $300 each. The manufacturer sent the retailer a fax a few moments later detailing the order. The retailer looked at the fax and was satisfied that it stated the terms of the contract, but never responded in any way. When the goods were delivered on time a month later, the retailer refused to accept them, asserting that the contract was unenforceable.
A. The contract is unenforceable because the retailer has not signed it in writing.
B. No writing is needed because of one of the exceptions to the Statute of Frauds.
C. The contract is enforceable because it would be unconscionable not to enforce it.
D. The contract is enforceable under the written confirmation rule.
17) Ted’s Gifts and Sweets enters into a written contract with Bannon Candies to supply Ted’s with 60 dozen boxes of coconut clusters each month for sale to the public. The agreement contained an integration clause. Before the first delivery under the contract, Ted and his warehouse manager called Debbie, the Bannon’s account representative, to request that the candies be delivered in special Valentine boxes. Debbie told Ted, “Don’t worry, I’ll tell the shipping department to take care of that.” When the candies were delivered, they were in standard cardboard boxes. Ted called Bannon and threatened to sue for breach of contract. Will Ted prevail in his suit?
A. No, Ted should have written a letter to change the type of boxes in the contract.
B. Yes, Ted made a valid modification to the parties’ original agreement.
C. Yes, Ted will prevail because he has a witness to the telephone call.
D. No, Ted will not prevail because his attempt to modify the agreement was not effective.
18) In February, Bradley stole a motorcycle from John’s driveway, and then sold it to a motorcycle parts dealer as a source of used motorcycle parts. In March, Jean bought the motorcycle from the parts dealer. In May, the police came to Jean and advised her that the motorcycle she bought had been stolen. According to the Uniform Commercial Code, must Jean give the motorcycle back to John?
A. No, because Jean is a good faith purchaser for value
B. Yes, because it was stolen and John did not intend for it to be sold to her
C. Yes, because John filed a police report
D. No, because it was John’s fault for leaving the motorcycle in his driveway
19) Melinda owns a rental property. She deeds the property to her son Jack, by warranty deed. Ten years later she sells the property to Brenda, her neighbor, and signs a quitclaim deed to the property in favor of Brenda. Who owns the property?
A. Jack owns the property.
B. Jack and Brenda each own half the property.
C. Brenda owns the property.
D. Melinda still owns the property, because neither deed was effective.
20) Jane and Bill are married. They purchase a house and lot as tenants by the entirety. Then Jane is killed in a car accident. Her will leaves everything to her sister, Ruth. What will happen to Jane’s interest in the property?
A. Ruth will own the property with Bill as joint tenants.
B. Ruth will own the property with Bill as tenants by the entirety.
C. Bill will be the sole owner of the property.
D. Bill will have to buy out Ruth’s interest in the property.
21) Mary and George are a husband and wife who reside in a community property state. For 30 years, George has been the sole provider while Mary cared for the children and home. George dies, leaving a will that leaves his estate to their three children, now adults. How is the ownership of the house affected?
A. Mary owns half interest in the house, and the adult children own the other half.
B. Mary owns the entire house, as the community survivor.
C. Mary and the adult children become tenant in the entirety.
D. Mary and the adult children each own a quarter interest in the house.
22) Which is true of a limited partnership?
A. The liability of all owners is unlimited.
B. The liability of all owners is limited to the amount of their contribution to the business.
C. At least one of the partners must be a general partner with unlimited personal liability.
D. A partnership is limited to doing business in the state of incorporation.
23) Which of the following is true when a general partnership is converted to an LLC?
A. The conversion can be made retroactive for up to two years.
B. The property must be sold to a third party who then immediately sells it to the LLC.
C. The profit and loss sharing terms must remain the same as they were in the partnership.
D. The members will retain unlimited personal liability for obligations incurred while the business was a partnership.
24) Which of the following is true of a limited liability company?
A. Limited liability companies have limited duration.
B. Limited liability companies are managed by members or managers.
C. Documents do not have to be filed with the state to create one.
D. Limited liability companies are automatically taxed like corporations.
25) If a creditor is owed money by an insolvent corporation, its best bet to collect is to try to
A. persuade a court that the corporation is inadequately capitalized, in hopes the court will lift the corporate veil
B. persuade a court that the corporation has hidden assets against which the creditor may levy
C. force the corporation to raise its prices to increase income
D. force the corporation to refinance its debts
26) Fred wants to start an adult daycare business, but is worried about potential liability. He hires an attorney to incorporate his business, but does not want to keep paying the attorney, so he dismisses the attorney as soon as the incorporation is accomplished. What else must Fred do to make sure he holds on to his protection from personal liability?
A. He must buy malpractice insurance.
B. He must maintain the corporate formalities and records.
C. He must post a disclaimer, advising persons who visit the property that the management is not responsible for injuries to guests.
D. He must hire an independent contractor to take over the care of the patients.
27) Rita is the sole shareholder of an auto repair shop that is incorporated. She is at work one day when her sister comes in and tells her she needs $100 for schoolbooks. Rita looks in her wallet, and seeing that it contains no money, opens the cash register and takes out $100, which she hands to her sister. The sister looks worried, but Rita tells her, “Don’t worry; I take money out of the cash register all the time for my personal expenses. It’s my business, so I can take money out whenever I want.” Her customer, who is waiting to pick up his car, tells Rita that she is risking the piercing of the corporate veil. Is the customer correct?
A. Yes, Rita is not the board of directors.
B. No, Rita is the only shareholder and can do what she wants.
C. No, the customer is wrong.
D. Yes, Rita is co-mingling personal assets with corporate assets.
28) Rover Corporation is a regular corporation that has not elected S corporation status. In 1992, Rover earned $100,000; in 1993, Rover distributes $50,000 to its shareholders. Which of the following best describes the tax consequences to rover and its shareholders?
A. Rover is taxed on $100,000 in 1992; the shareholders are not subject to tax.
B. The shareholders are taxed on $100,000 in 1992; Rover is not subject to tax.
C. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1992.
D. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1993.
29) What types of business can be converted to an LLC?
A. General partnerships and limited partnerships only
B. General partnerships only
C. Corporations and limited partnerships only
D. Corporations, general partnerships, and limited partnerships
30) A particular issue of stock carries a stated dividend rate of 8 %; that if this dividend is not paid during a particular year, it will be paid in a subsequent year before common stock dividends are paid; and that upon liquidation of the corporation, the owner will receive $300 per share before the common stockholders get anything. This stock is
A. preferred stock
B. noncumulative preferred stock with a liquidation preference
C. common stock
D. cumulative preferred stock with a liquidation preference
31) Which of the following people is protected from employment discrimination on the basis of age?
A. A 50-year-old person who wants a job as an accountant
B. A 10-year-old person who wants a job as a bartender
C. A 90-year-old person who wants a job as an airline pilot
D. A 30-year-old person who wants a job as a waitress
32) What is the primary purpose of the Occupational Safety and Health Act?
A. Its purpose is to reduce the application of industry standards to workplace conditions.
B. Its purpose is to promote the provision of healthcare benefits by employers having more than 15 employees.
C. Its purpose is to protect the safety of workers and the safety of those who purchase the employer’s products or services.
D. Its purpose is to compel employers to provide a work environment that is free from recognized hazards that could cause death or serious injury.
33) Which of the following rejected applicants may have a valid claim for discriminatory hiring practices?
A. A Catholic school did not hire a teacher because he was not Catholic.
B. A university did not hire a 22-year-old woman to be a director of faculty because she was too young.
C. A public health service did not hire a registered nurse because his shaking hands prevented him from administering injections.
D. A trucking company did not hire a truck driver because she was pregnant.
34) What is generally the effect when an exception to the employment at will doctrine applies?
A. There is some sort of limitation on at least one party’s ability to terminate the employment relationship.
B. Employees can be prohibited from quitting a job.
C. The employer is required to hire a certain employee.
D. The Fair Labor Standards Act will set the terms, such as pay, for the employment relationship.
35) Company employee handbooks have been found to amount to a(n) ______________ exception to the employment at will doctrine.
D. public policy
36) Which of the following employers have been expressly excluded from Title VII?
A. State and local governments
B. Indian tribes
C. Labor unions
D. Most federal agencies
37) The Biosafety Protocol provides as follows:
A. Medical waste must be safely disposed.
B. Employees must wash hands when preparing food.
C. Genetically engineered food must state that it may contain modifications.
D. Vaccinations must contain live virus.
38) In general, trademark protection is granted based on whether the trademark is
A. the original creation of the trademark registrant
C. novel and useful
D. understandable to the general public
39) The law gives the consumer what protection from aggressive tactics of door-to-door salespersons?
A. The customer may keep the product without paying for it.
B. The customer may file a police report.
C. The customer may rescind the transaction within 3 days.
D. The customer may send the product back for a refund within 30 days.
40) Peter has a bus company, and hires drivers to drive his buses. He does not take any taxes out of their paychecks. The bus drivers have to drive the buses according to a particular schedule, and must follow a certain route, and follow the driving rules that are listed in the Driver’s Manual that Peter has provided. What is the employment status of the drivers?
A. They are employees.
B. They are partially disclosed agents.
C. They are independent contractors.
D. They are principals.
41) William owns his own business, performing document delivery for various clients. He is driving in his delivery van, taking some important documents to the courthouse for an attorney’s office, when he makes a wrong turn and causes an accident, damaging Ruth’s car. May Ruth recover a judgment against the attorney’s office?
A. No, because William was on a dual-purpose mission
B. No, because William is an independent contractor
C. Yes, because William was on an errand for the attorney at the time he caused the accident
D. Yes, because the attorney has more money than William, so Ruth will be able to collect
42) Patricia owns a Mexican restaurant, famous for home-made tortillas. The tortillas are made by several women, who make the tortillas in their homes and sell them to the restaurant. Some of the women have been making tortillas for Patricia for years, while others have just started. Patricia pays for the tortillas by the dozen. What is the nature of the employment relationship between the women and Patricia?
A. The women are part-time employees of the restaurant.
B. The women are agents of the restaurant.
C. The women are employees of the restaurant.
D. The women are independent contractors.
Over 100 Questions and Answers to help get the best grade.
1) A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools
2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service
C. have substantial authoritative support
D. are proven theories of accounting
3) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
The net income (or loss) for the period is __________.
A. not determinable
B. $10,000 loss
C. $10,000 income
D. $48,000 income
4) These are selected account balances on December 31, 2008.
Land (location of the corporation's office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 900,000
Office Furniture 150,000
Accumulated Depreciation 450,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
5) The first step in activity-based costing is to __________.
A. identify the cost driver that has a strong correlation to the activity cost pool
B. assign manufacturing overhead costs for each activity cost pool to products
C. identify and classify the major activities involved in the manufacture of specific products
D. compute the activity-based overhead rate per cost driver
6) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point?
A. 2,133 units
B. 4,600 units
C. 6,200 units
7) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?
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
9) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:
Totals $58,000 $48,000 $34,000 $44,000
Closing entries are necessary for __________.
A. permanent or real accounts only
B. permanent accounts only
C. both permanent and temporary accounts
D. temporary accounts only
10) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?
A. The western division’s vice president’s salary
B. Factory janitor
C. Cost of landscaping the corporate office
D. General corporate liability insurance
11) The cost of an asset and its fair market value are __________.
A. the same on the date of acquisition
B. never the same
C. the same when the asset is sold
D. irrelevant when the asset is used by the business in its operations
12) One of Astro Company's activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers?
13) The cost principle is the basis for preparing financial statements because it is __________.
A. the most accurate measure of purchasing power
B. a conservative value
C. relevant and objectively measured, and verifiable
D. an international accounting standard
14) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Additional information
B. Adjusted trial balance
C. Comparative balance sheets
D. Current income statement
15) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.
A. cooperate rather than compete with each other
B. collude with each other
C. form various degrees of cartels
D. compete rather than cooperate with each other
16) 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. can be larger or smaller than the price effect
B. must dominate the price effect
C. must be smaller than the price effect
D. must balance with the price effect
17) The price of a good that prevails in a world market is called the
A. world price.
B. absolute price.
C. relative price.
D. comparative price.
18) A country's consumption possibilities frontier can be outside its production possibilities frontier if __________.
A. the country imports more than it exports
B. the country’s technology is superior to the technologies of other countries
C. the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries
D. the country engages in trade
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 binding price ceiling were imposed in the computer market, __________.
A. the quality of computers would increase
B. the supply of computers would decrease
C. the demand for computers would increase
D. a shortage of computers would develop
21) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________.
A. plus the cost of tuition, equals the opportunity cost of going to college
B. should be counted only to the extent that they are more expensive at college than elsewhere
C. should be counted in full, regardless of the costs of eating and sleeping elsewhere
D. usually exceed the opportunity cost of going to college
22) 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. demanded for the purpose of importing foreign goods and services
B. supplied for the purpose of buying assets abroad
C. supplied for the purpose of selling assets domestically
D. demanded for the purpose of buying U.S. net exports of goods and services
23) The part of the balance of payments account that records the amount of foreign currency the government buys or sells is the:
A. balance of trade.
B. financial and capital account.
C. current account.
D. government financial account.
24) The balance of payment account is made up of:
A. a monetary account and a fiscal account.
B. an import account and an export account.
C. a current account and a financial and capital account.
D. an investment account and a consumption account.
25) The model of aggregate demand and aggregate supply explains the relationship between __________.
A. real GDP and the price level
B. unemployment and output
C. the price and quantity of a particular good
D. wages and employment
26) The open-economy macroeconomic model includes __________.
A. neither the market for loanable funds or the market for foreign-currency exchange
B. only the market for foreign-currency exchange
C. only the market for loanable funds
D. both the market for loanable funds and the market for foreign-currency exchange
27) The principal lag for monetary policy __________.
A. is the time it takes for policy to change spending. The principal lag for fiscal policy is the time it takes to implement it
B. is the time it takes to implement policy. The principal lag for fiscal policy is the time it takes for policy to change spending
C. and fiscal policy is the time it takes for policy to change spending
D. and fiscal policy is the time it takes to implement policy
28) Which of the following best describes a mental image of a possible and desirable future state of the organization?
A. Horizontal communication
B. Vertical communication
29) Sebastian Stabilio just joined a team of people from throughout his organization whose primary task is to recommend valuable uses for the scrap generated in the manufacturing process. The team meets twice per week; otherwise members work within the usual organizational structure. The team, not permanent, which Sebastian has joined, would be considered a:
A. Parallel team
B. Project team
C. Working group
D. Work team
E. Project group
30) An invisible barrier that makes it difficult for certain groups, such as minorities and women, to move beyond a certain level in the organizational hierarchy is referred to as the:
A. Glass floor
B. Job enlargement concept
C. Glass ceiling
D. Black box theory
E. Job enrichment theory
31) 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:
A. Managerial ethics
32) Which of the following has proven to be a particularly good predictor for jobs that require cognitive complexity?
A. behavioral assessment
B. aptitude tests
C. integrity evaluations
D. intelligence tests
E. work sampling
33) To be competitive in a global economy, Europeans must increase their level of:
A. Financial subsidy
B. Philanthropic contributions
D. Population density
E. Espionage activity
34) Teams that operate separately from the regular work structure and exist temporarily are known as:
A. Transnational teams
B. Management teams
C. Self-managed teams
D. Self-designing teams
E. Parallel teams
35) A manager's ability to stimulate people to be high performers is referred to as:
36) The best way for an employer to find out if a potential employee can do a job is by __________.
A. using a performance simulation test
B. using the interview process
C. administering an IQ test
D. having them spend a day in the office
E. using a written test
37) 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. All entrepreneurs need venture capital in order to get started
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. Entrepreneurs are their own bosses and completely independent
38) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.
A. Less than $1; about 40
B. Less than $1; about 15
C. $2; about 25
D. Less than $1; about 25
E. About $2; about 15
39) 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
40) __________ is the process of working with people and resources to accomplish organizational goals.
C. Decision making
41) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:
E. Goal Coordination
42) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income.
Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.
A. increase by 428
B. decrease by 50
C. increase by 500
D. increase by 50
43) Sampling error can be reduced by __________.
A. none of the these affect sampling error
B. increasing the sample size
C. decreasing the sample size
D. utilizing simple random samples
44) Use the following table to answer question:
P(M A) is approximately _____.
45) Use the following table to answer question:
Are Service provider and county independent events?
A. Insufficient information to determine
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) Jolly Blue Giant Health Insurance (JBGHI) is concerned about rising lab test costs and would like to know what proportion of the positive lab tests for prostate cancer are actually proven correct through subsequent biopsy. JBGHI demands a sample large enough to ensure an error of ± 2% with 90% confidence. What is the necessary sample size?
48) Which one of the following statements concerning production and staffing plans is best?
A. The impact of production and staffing plans cuts across several functional areas of the firm.
B. Production and staffing plans specify production rates, workforce levels, and inventory holdings, but do not account for capacity limitations because they are aggregated.
C. Production and staffing plans attempt to achieve several objectives, all of which must be consistent with one another.
D. When production and staffing plans are made, aggregation can be performed only along two dimensions: products and time.
49) Likely reasons for inaccurate control limits would include which of the following?
A. Process variation was not zero, as expected.
B. The engineers were underpaid for their work.
C. The engineering parameter for variance is unknown.
D. There was insufficient preliminary sampling.
50) The one-worker, multiple machines approach functions as:
A. a way to create uniform workstation loads.
B. a production bottleneck.
C. a one-person production line.
D. a poka-yoke device.
51) In an activity-on-node [AON] network, the nodes represent ____________, whereas the arcs represent ____________.
A. precedence relationships; time
B. activities; precedence relationships
C. activities; time
D. events; activities
52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
A. you would lose $80 if one of your workers missed an entire 8 hour shift.
B. you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.
C. the next worker that offers to work an extra 8 hours should receive at least $80.
D. you would be willing pay up to $60 for someone to work another 6 hours.
53) The force behind globalization in _____ was the amount of muscle, horsepower, wind power, or steam power that a country could deploy.
A. None of these
B. Globalization 2.0
C. Globalization 1.0
D. Globalization 3.0
54) In the _____ phase of the decision making process, managers test potential solutions “on paper.”
55) A set of programs that enable the hardware to process data is _____.
56) What is _____ is not necessarily _____.
A. Ethical, legal
B. Unethical, illegal
C. Ethical, illegal
D. Unethical, legal
E. Illegal, unethical
57) The Global, Web-Based Platform enables individuals to do which of the following?
A. all of these are true
B. produce and sell goods and services
C. exchange knowledge
D. access information, services, and entertainment
E. connect, compute, communicate, collaborate, and compete everywhere and all the time
58) The management cockpit best exemplifies which type of system?
A. Group decision support system
B. Functional area information system
C. Digital dashboard
D. Expert system
E. Decision support system
59) _____ is the acquisition and efficient use of resources in accomplishing organizational goals.
C. Strategic planning
D. Management control
E. Operational control
60) International Game Technology’s new ERP system produced all of the following benefits except:
A. Operations employees were able to access manufacturing process details at their workstations
B. The company gained flexibility in manufacturing products
C. ERP system connected the company’s global operations
D. Company was able to maintain its original business processes
E. Integrated the company’s business functions
61) Which of the following are not provided by digital dashboards?
A. Exception reporting
B. Key performance indicators
C. Status access
D. Transaction processing
E. Drill down
62) _____ provides users with a view of what is happening, where _____ addresses why it is happening.
A. Multidimensional data analysis, data mining
B. Multidimensional data analysis, neural networks
C. Data mining, expert system
D. Data mining, multidimensional data analysis
E. Multidimensional data analysis, structured query language
63) An increase in future value can be caused by an increase in the __________.
A. dividends paid
B. rate of return
C. original amount invested
D. starting value
E. annual interest rate and number of compounding periods
64) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows:
Cost of debt 8%
Cost of preferred stock 12%
Cost of common stock 16%
Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?
65) Disadvantages of using current liabilities as opposed to long-term debt include:
A. certainty of interest costs
B. greater risk of illiquidity, and uncertainty of interest costs
C. decreased risk of liquidity
D. uncertainty of future liabilities
E. higher cash flow exposure
66) Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%, and the risk-free rate is 5%. According to CAPM, what is the required return on this stock?
67) Dublin International Corporation’s marginal tax rate is 40%. It can issue three-year bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs. Determine the approximate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.
68) Forward rates are quoted:
A. on financial statements
B. in direct form and at a premium or discount
C. by the FDIC
D. in an indirect form
69) Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?
70) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?
A. The project’s IRR would have to be less that the firm’s discount rate.
B. In all cases, investing in this project would be better than investing in a project that has an NPV of $850,000.
C. Under all conditions, the project’s payback would be less than the profitability index.
D. The project would add value to the firm.
71) According to the hedging principle, permanent assets should be financed with _____ liabilities.
72) Exchange rate risk:
A. doesn’t affect trades made in US Dollars.
B. arises from the fact that the spot exchange rate on a future date is a random variable.
C. applies only to certain types of domestic businesses.
D. has been phased out due to recent international legislation.
73) The common stockholders are most concerned with:
A. the spread between the return generated on new investments and the investor’s required rate of return.
B. the percentage of profits retained.
C. the size of the firm’s beginning earnings per share.
D. the risk of the investment.
74) 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.
75) You hold a portfolio with the following securities:
Security Percent of Portfolio Beta Return
X Corporation 20% 1.35 14%
Y Corporation 35% .95 10%
Z Corporation 45% .75 8%
Compute the expected return and beta for the portfolio.
A. 9.9%, .94
B. 10.67%, 1.02
C. 9.9%, 1.02
D. 34.4%, .94
76) Economists' economic-buyer theory assumes that __________.
A. consumers only want the cheapest price
B. buyers logically compare choices in order to maximize their satisfaction
C. demographic data are very useful for predicting consumer behavior
D. consumers should purchase only low-priced products
E. consumers always make rational decisions
77) 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. the economic-buyer theory
B. reference groups
E. competitive advantage
78) The three basic tasks of ALL managers, according to the text, are:
A. planning, implementation, and control.
B. marketing, production, and finance.
C. planning, staffing, and evaluating.
D. execution, feedback, and control.
E. hiring, training, and compensating.
79) A cluster analysis of the "toothpaste market" would probably show that:
A. most consumers are concerned about cost.
B. most consumers are mainly concerned about brightness of teeth.
C. the broad product-market can be served effectively with one marketing mix.
D. factors such as taste, price, and "sex appeal" are not important.
E. different market segments seek different product benefits.
80) "Marketing strategy planning" means:
A. selecting a target market and developing a marketing strategy.
B. finding attractive opportunities and selecting a target market.
C. finding attractive opportunities and developing profitable marketing strategies.
D. selecting an attractive target market.
E. selecting an attractive marketing mix.
81) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:
A. market planning.
B. marketing strategy planning.
C. marketing programming.
D. management by objective.
E. strategic (management) planning.
82) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:
83) The economists' view of buyers:
A. None of these are true
B. assumes that they always buy the lowest-price alternative.
C. is based on the idea that consumers value time and select the first alternative they learn about.
D. puts a great deal of emphasis on differences in buying behavior related to individual differences among consumers.
E. emphasizes psychological variables rather than social influences.
84) __________ 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
85) When evaluating macro-marketing:
A. one must consider the society’s role in the marketing system.
B. one must determine how efficiently the society's resources are used.
C. the best approach is to consider the profit generated by individual firms within the overall system.
D. the evaluation is necessarily subjective.
E. one must consider each individual firm's role in the marketing system.
A. not important if you have a good product.
B. reflects existing social values in the short run--while reinforcing these values in the long run.
C. turns consumers into puppets.
D. creates materialistic values which did not exist before.
E. is only propaganda.
87) Clustering techniques applied to segmenting markets __________.
A. doesn’t apply to demographic data
B. eliminate the need for marketing managers to specify in advance what dimensions might be relevant for grouping consumers
C. remove the need for managerial judgment
D. usually require computers to group people based on data from market research
E. is time consuming and expensive
88) Product disparagement differs from defamation of a nonpublic figure in that:
A. Intent is only required in a disparagement case.
B. Publication to a third party is required in the defamation case, but not in the disparagement case.
C. Publication to a third party is required in the disparagement case, but not in the defamation case.
D. Intent is required for the disparagement case, but not in the defamation case.
E. Intent is required for the defamation case, but not in the disparagement case.
89) Mary arrived at work one day, and her boss said to her, “That’s the ugliest dress I have ever seen. Because you wore that to work today, you are fired.” Assuming that Mary is an at-will employee, which of the following is true?
A. Mary can be fired only if it is in the best interest of the employer.
B. If none of the exceptions to the at-will rule apply, Mary can be fired.
C. If Mary has the will to work, she cannot be fired without cause.
D. Mary can be fired for any reason.
90) Which of the following is correct about interpretive rules?
A. Interpretive rules are not subject to judicial review.
B. All federal administrative agencies have implied power to make interpretive rules.
C. They must be accompanied by substantive rules.
D. They do not establish new law.
E. They require public notice and participation to create.
91) In responding to a constitutional challenge to the Computer Decency Act, the U.S. Supreme Court ruled that:
A. The Internet was similar to television and that restrictions similar to those on television programming were appropriate.
B. The Act was unconstitutional because its provisions were too vague to define.
C. Obscene materials could not be available between 6:00 a.m. and 10:00 p.m. local time.
D. Computers and the Internet were not covered by the free speech provisions of the U.S. Constitution because they did not exist when the Constitution was drafted.
E. The Act was constitutional because obscene speech receives no protection.
92) In a criminal proceeding, what is the difference between an indictment and an information?
A. An indictment requires proof beyond a reasonable doubt, but an information does not.
B. A grand jury issues an indictment, but does not issue an information.
C. Guilt or innocence is determined in an indictment, but not in an information.
D. The defendant is charged with a crime in an indictment, but not in an information.
93) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman?
A. Corporate social audit.
B. Corporate citizenship.
C. Stakeholder interest.
D. Maximizing profits.
E. Moral minimum.
94) If a minor wishes to be bound to a contract after becoming an adult, she must:
A. Bring an action to verify the contract.
B. Give back the goods or services received as a minor.
C. Disaffirm the contract.
D. Ratify the contract.
95) Which of the following statements is true regarding the relationship of law and ethics?
A. Depending on the circumstances, the law can require a higher, lower, or the same standard of conduct as ethics demands.
B. The legal requirements will almost always be the same as the ethical requirement because the law is based on the ethical standards.
C. In some cases ethics will require a higher standard of conduct than the law, but never vice versa.
D. In some cases the law will require a higher standard of conduct than ethics, but never vice versa.
96) Information which comes to the knowledge of an agent is:
A. Will result in termination of the agency arrangement if it is not communicated to the principal.
B. Required to be communicated to the principal in all circumstances.
C. Is imputed to the principal.
D. Can be disclosed to the principal only with the third party’s consent.
97) 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.
98) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.
A. Great Britain, Paraguay
B. Canada, Venezuela
C. Canada, Mexico
D. Mexico, Canada
E. Mexico, Venezuela
99) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?
100) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.
A. Less than $1; about 40
B. Less than $1; about 15
C. About $2; about 15
D. Less than $1; about 25
E. $2; about 25
1) Susan Rojas is applying for a position in the marketing department of a local corporation. Although Greg Ellis is the director of this department, Susan has been instructed to send her resume and other documents to Jeff Cohen, manager of the human resources department. Jeff screens all applications before sending those of qualified candidates on to appropriate department heads. Jeff is
A. the primary audience
B. a gatekeeper
C. a watchdog
D. an auxiliary audience
2) An oral message is preferable to a written one when you want to:
A. present many specific details
B. minimize undesirable emotions
C. resolve conflicts and build consensus
D. present extensive and complex data
3) A written business request is answered positively and promptly on the first try. This is an example of a high level of
4) For which of the following business messages would it be appropriate to approach the subject indirectly by leading up to the main point rather than presenting it first?
A. You are e-mailing a copy of a sales report to a colleague who had asked for it
B. You are asking a subordinate to complete an entry that he had overlooked on his expense report
C. You are complying with an information request sent to you by the county business license department
D. You are letting your staff know that there will be significant downsizing in your department in the upcoming year
5) A subordinate comes to you because he is upset with the way he is treated by coworkers. A good first response would be to
A. Tell him to solve his own problems
B. Tell him about your problems with the same people
C. Acknowledge his feelings
D. Give him some advice on how to handle the situation
6) Which of the following would be the BEST way to refuse a customer's request?
A. "Though your warranty expired in June, as a Dave's Club Card customer you are eligible for a 10% discount on all repairs."
B. "If it were up to me I'd repair your washing machine free since your warranty expired just last month, but my boss won't allow it."
C. "Please understand that it is impossible for us to do free repairs for all customers."
D. "You claim that your washing machine is under warranty, but our records show that it expired last month."
7) Crystal agreed to serve on a company’s advisory board and now has to contact them to say she cannot attend a scheduled meeting where she was to be one of several key speakers. What should she do?
A. Let the company know she cannot not attend and that they will have to make arrangements for another speaker
B. Ask the company to cancel the meeting
C. Offer to send a knowledgeable colleague in her place
D. Resign from the advisory board before the meeting date
8) When you are writing subject lines for negative messages to peers and subordinates,
A. put the topic, but not your action on it, in the subject line.
B. put the topic, including your action on it, in the subject line
C. do not include the topic in the subject line
D. describe how the problem happened
9) Which of the following is a negative subject line?
A. “Reduction of Travel Benefits”
B. “Change in Personal Leave Policy”
C. “Improving On-Time Performance”
D. “Results of Customer Service Survey”
10) You are a technical writer in a large company who is working on a training manual to help new users learn the company's computer system. Employees will use your manual in training seminars taught by your company's trainers. The manual will also serve as an on-the-job reference later. Both of the system analysts who designed the computer system and the trainers will comment on your draft. The trainers would be classified as what kind of audience for your manual?
11) Which audience has political, social, or economic power; pays close attention to the transaction between you and the primary audience; and may base future actions on its evaluation of your message?
A. Auxiliary audience
B. Watchdog audience
D. Secondary audience
12) Which of the following groups would be considered an internal audience for a company?
A. Managers in the company’s Human Resources Department
B. Stockholders who have invested in the company
C. State and local agencies that conduct annual health and safety inspections at the company
D. Three large customers that represent 85% of the company’s annual sales
13) If you are speaking with someone who nods while you are speaking and then brings up points of disagreement when you are finished, it is likely that your listener
A. nods for no reason at all
B. wants to mislead you
C. agreed with you until the last point you made in the argument
D. was nodding to show that he or she was listening, but was not necessarily agreeing
14) Which of the following audiences would receive an internal document?
A. Your best customers
B. The human resources director
C. The job candidate you wish to hire
D. The CPA who is auditing your company's books
15) Business communication practices in the United States place importance on the written word, and this indicates that our culture
A. has low-context preferences
B. has high-context preferences
C. is polychromic
D. is monochromic
16) It can be helpful for managers working overseas to have a basic understanding of the religion observed by workers in that company because
A. then the manager knows when to buy gifts for his or her employees
B. a superior should always seem knowledgeable to his or her employee
C. an ordinary business day in the United States may be a holiday in another country
D. most international companies insist that managers adopt all the customs of the host country
17) The informational dimension of group interaction looks at
A. who will do what
B. the problem, data, and possible solutions
C. promoting friendliness
D. establishing group loyalty
18) The interpersonal dimension of group interaction focuses on:
19) Positive roles and actions of individuals that help the group achieve its task goals include
A. recognizing the contributions of members
B. disagreeing with everything that is proposed
C. restating major points, pulling ideas together, and summarizing decisions
D. showing group members that they have been heard and that their ideas are being taken seriously
20) Which of the following will help make your business writing easy to read?
A. business jargon
B. parallel structure
D. consistent sentence length for all sentences
21) Which of the following sentences that begin a letter is appropriate for contemporary business communication?
A. “Enclosed please find the application forms you requested.”
B. “Pursuant to you request, we are forwarding you the application forms you requested.”
C. “Here are the application forms you requested.”
D. “Your application forms have been enclosed herewith.”
22) Lauren has confirmed flight information, printed directions from the Internet, and spoken with the human resources department to clarify specific details. She will include this information in a letter to a job candidate she is inviting for an interview. What part of the writing process does this activity represent?
23) Ben chooses a pattern of organization before he begins a letter. What part of the writing process does this activity represent?
B. Getting feedback
24) A sales brochure includes photos and clipart that is strategically placed within the marketing piece. This is an example of which level of communications professor Charles Kostelnick’s levels of communication design?
25) Which of the following would be the BEST place to put your most important visual in a newsletter?
A. In the center of the page to indicate that the image is central to the newsletter
B. In the bottom left of the page to emphasize material that appears in the top half
C. Parallel to two or more smaller visuals to create balance
D. In the top left of the page because the top is a position of emphasis
26) Which of the following would be considered illegal if done by an employer?
A. Monitor employee’s telephone calls
B. Monitor employee’s internet activities done on company time
C. Monitor communications using company-issued devices such as cell phones
D. Prohibiting an employee from blogging about the company via his or her own computer at home
27) In a bad-news message to subordinates, why is it a good idea to ask readers to suggest solutions to the problem?
A. So you will have someone to share the blame with if you are unable to solve the problem
B. So your subordinates will not blame you for the problem
C. To stall for time, so you can think of a solution on your own
D. Because workers who help make a decision are more likely to accept the consequences
28) In a bad-news message to a superior, you should describe what led to the problem
A. so your superior can see that the problem is not your fault
B. to show that the problem is really your boss's fault because you have not been given adequate resources
C. so he or she will have adequate information to determine if the solution you are going to propose is appropriate
D. to pad the message so it does not upset the superior too much
29) You must explain to a group of employees the different pension funds they can now choose. You expect the group to have many questions because many of them will be retiring within 10 years and want to maximize their retirement income. You should probably
A. send them each a written package of material and ask them to call if they have questions
B. give an oral presentation with lots of visuals
C. send them a package of self-explanatory written material and cover different material at the presentation
D. give them written material to look at ahead of time and go over that material as part of your presentation
30) Which of the following purposes of an oral presentation is specific in its purpose?
A. “This presentation will cover budget issues.”
B. “This presentation will show that some departments are not managing their budgets properly.”
C. “This presentation will explain how to forecast materials needs, estimate costs, and prepare a comprehensive cost budget.”
D. “This presentation will explain the budgeting process since it is so important to the success of the company.”
1. the largest source of household income is in the U.S. is obtained
a. stock dividends
b. wages and salaries
c. interest earnings
d. rental income
2.the market where business sell goods and services to households and the government is called
a. goods market
b. factor market
c. capital market
d. money market
3.real gross domestic product is best defined as
a. the market value of intermediate goods and services produced in an economy including exports
b. all goods and services produced in an economy, stated in prices in a given year and multiplied by quantity
c. the market value of all final goods and services produced in an economy stated in the prices of a given year
d. the market value of goods and services produced in an economy stated in current year prices
4. underemployment includes
a. who work off the books to avoid paying taxes
b. who are working part time or not using all their skills at a fulltime job
c. who are tired of looking for a job soo they quit looking but still want one
d. whose skills are not in demand anymore
5.the bureau of economic analysis is responsible for whicj of the following
a. setting interest rates
b. managing the money supply
c. calculating the US gross domestic product
d. paying unemployment benefits
6.the federal reserve provides which of the following data
a. federal funds rate
b. stock price of GE
c. bond yields of corporation
d. debt to GDP of Ireland
7. Consider if the government instituted a 10% income tax surcharge. In terms of the AS/AD model this change should have
a. shifted the AD curve to the left
b. shifted the AD curve to the right
c. made the AD curve flatter
d. made the AD curve steeper
8.if the depreciation of a country’s currency increases it aggregate expenditures by 20, the AD curve will
a. shift right by more than 20
b. shift right by less than 20
c. shift right by exactly 20
d. not shift at all
9. Aggregate demand management policies are designed most directly to
a. minimize unemployment
b. minimize inflation
c. control the aggregate level of spending in the economy
d. prevent budget deficits or surpluses
10.suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model
a. an increase in government spending
b. an increase in taxes
c. a reduction in government spending
d. no change in taxes or government spending.
According to Keynes, market economies
A. never experience significant declines in aggregate demand
B. quickly recover after they experience a significant decline in aggregate demand
C. may recover slowly after they experience a significant decline in aggregate demand
D. are constantly experiencing significant declines in aggregate demand
12) The laissez-faire policy prescription to eliminate unemployment was to
A. eliminate labor unions and government policies that hold real wages too high
B. strengthen unions and government regulations protecting unions and workers
C. increase real wages so that people are encouraged to work
D. have government guarantee jobs for everyone
13) In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it
A. increases both nominal and real income
B. increases real income but not nominal income
C. increases nominal income but not real income
D. doesn't increase real or nominal income
14) The Federal funds rate
A. is always slightly higher than the discount rate
B. can never be close to zero
C. may sometimes have to be targeted at zero
D. is an intermediate target
15) What tool of monetary policy will the Federal Reserve use to increase the federal funds rate from 1% to 1.25%?
A. Open-market operations
B. The discount rate
C. A change in reserve requirements
D. Margin requirements
16) If the Federal Reserve increases the required reserves, financial institutions will likely lend out
A. more than before, increasing the money supply
B. less than before, decreasing the money supply
C. more than before, decreasing the money supply
D. less than before, increasing the money supply
17) Suppose the money multiplier in the U.S. is 3. Suppose further that if the Federal Reserve changes the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should
A. reduce the discount rate by 3 percentage points
B. reduce the discount rate by 10 percentage points
C. raise the discount rate by 3 percentage points
D. raise the discount rate by 10 percentage points
18) If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent. This policy would most likely
A. increase both the money multiplier and the money supply
B. increase the money multiplier but decrease the money supply
C. decrease the money multiplier but increase the money supply
D. decrease both the money multiplier and the money supply
19) A country can have a trade deficit as long as it can
A. purchase foreign assets
B. make loans to other countries
C. borrow from or sell assets to foreigners
D. produce more than it consumes.
20) A weaker dollar
A. raises inflation and contracts the economy.
B. reduces inflation and contracts the economy
C. raises inflation and expands the economy
D. reduces inflation and expands the economy
n the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because
A. the country eventually will consume more and produce less
B. the country eventually will sell all its financial assets to foreigners
C. the domestic currency will appreciate
D. the country eventually has to produce more than it consumes in order to pay foreigners their profits
22) Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy tends to
A. decrease the exchange rate and increase the trade deficit
B. increase the exchange rate and increase the trade deficit
C. decrease the exchange rate and decrease the trade deficit
D. increase the exchange rate and decrease the trade deficit
23) The balance of trade measures the
A. difference between the value of imports and exports
B. share of U.S. imports coming from various regions of the world
C. share of U.S. exports going to various regions of the world
D. exchange rate needed to make imports equal exports
24) When a country runs a trade deficit, it does so by:
A. borrowing from foreign countries or selling assets to them.
B. borrowing from foreign countries or buying assets from them.
C. lending to foreign countries or selling assets to them.
D. lending to foreign countries or buying assets from them.
25) Expansionary fiscal policy tends to
A. raise U.S. income, increase U.S. imports, and increase the trade deficit
B. raise U.S. income, increase U.S. imports, and lower the trade deficit
C. lower U.S. income, reduce U.S. imports, and increase the trade deficit
D. lower U.S. income, reduce U.S. imports, and lower the trade deficit
26) In considering the net effect of expansionary fiscal policy on the trade deficit, the
A. income effect offsets the price effect
B. price effect offsets the income effect
C. income and price effects work in the same direction, so the trade deficit is decreased
D. income and price effects work in the same direction, so the trade deficit is increased
27) If U.S. interest rates fall relative to Japanese interest rates and Japanese inflation falls relative to U.S. inflation, then the
A. dollar will lose value in terms of yen
B. dollar will gain value in terms of yen
C. dollar's value will not change in terms of yen
D. change in the dollar's value cannot be determined
28) Expansionary monetary policy tends to
A. lower the U.S. interest rate and increase the U.S. exchange rate
B. lower the U.S. interest rate and decrease the U.S. exchange rate
C. increase the U.S. interest rate and decrease the U.S. exchange rate
D. increase the U.S. interest rate and increase the U.S. exchange rate
29) The U.S. has limits on Chinese textile imports. Such limits are an example of
A. a tariff
B. a quota
C. a regulatory trade restriction
D. an embargo
30) Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of
C. voluntary restrictions
D. regulatory trade restrictions
1.) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:
A. will be greater than $5.
B. will also be $5.
C. will be less than $5.
D. may be either greater or less than $5.
2.) A firm that is motivated by self interest should:
A. always use large amounts of cheap inputs and small amounts of expensive inputs in producing its output.
B. hire each input so the productivity of each is equal at the margin.
C. always use large amounts of the most productive inputs and small amounts of the least productive inputs in producing its output.
D. employ the combination of resources that will produce the profit-maximizing output at the minimum cost.
3.) If price is above the equilibrium level, competition among sellers to reduce the resulting:
A. shortage will increase quantity demanded and decrease quantity supplied.
B. surplus will increase quantity demanded and decrease quantity supplied.
C. surplus will decrease quantity demanded and increase quantity supplied.
D. shortage will decrease quantity demanded and increase quantity supplied.
4.) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to:
A. lower their price and increase their quantity supplied.
B. raise their price and reduce their quantity supplied.
C. lower their price and reduce their quantity supplied.
D. raise their price and increase their quantity supplied.
5.) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement:
A. constitutes an exception to the law of supply in that they suggest a downward sloping supply curve.
B. suggests that the supply of DVD players has increased.
C. constitutes an exception to the law of demand in that they suggest an upward sloping demand curve.
D. suggests that the demand for DVD players has increased
6.) In a market economy the distribution of output will be determined primarily by:
A. a social consensus as to what distribution of income is most equitable.
B. consumer needs and preferences.
C. government regulations that provide a minimum income for all.
D. the quantities and prices of the resources that households supply.
7.) In a competitive market economy firms will select the least-cost production technique because:
A. "dollar voting" by consumers mandates such a choice.
B. such choices will result in the full employment of available resources.
C. this will prevent new firms from entering the industry.
D. to do so will maximize the firms' profits.
8.) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus:
A. no inference can be made as to the elasticity of demand for peanuts.
B. the demand for peanuts is elastic.
C. the demand curve for peanuts has shifted to the right.
D. the demand for peanuts is inelastic.
9.) If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use:
A. less labor as a consequence of the output effect.
B. more labor as a consequence of the output effect.
C. less labor as a consequence of the substitution effect.
D. more labor as a consequence of the substitution effect.
10.) In which of the following industries are economies of scale exhausted at relatively low levels of output?
A. newspaper printing
B. automobile manufacturing
C. concrete mixing
D. aircraft production
11.) If a firm decides to produce no output in the short run, its costs will be:
B. its fixed plus its variable costs.
C. its fixed costs.
D. its marginal costs.
12.) Which of the following represents a long-run adjustment?
A. a supermarket hires four additional clerks
B. unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants
C. a steel manufacturer cuts back on its purchases of coke and iron ore
D. a farmer uses an extra dose of fertilizer on his corn crop
13.) Paying an above-equilibrium wage rate might reduce unit labor costs by:
A. increasing the supply of labor.
B. increasing the cost to workers of being fired for shirking.
C. increasing voluntary worker turnover.
D. permitting the firm to attract lower-quality labor.
14.) A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is:
15.) Price exceeds marginal revenue for the pure monopolist because the:
A. demand curve lies below the marginal revenue curve.
B. demand curve is downsloping.
C. monopolist produces a smaller output than would a purely competitive firm.
D. law of diminishing returns is inapplicable.
16.) Oligopoly is difficult to analyze primarily because:
A. neither allocative nor productive efficiency is achieved.
B. the price and output decisions of any one firm depend on the reactions of its rivals.
C. output may be either homogenous or differentiated.
D. the number of firms is too large to make collusion understandable.
17.) A competitive firm will maximize profits at that output at which:
A. the difference between marginal revenue and price is at a maximum.
B. total revenue and total cost are equal.
C. price exceeds average total cost by the largest amount.
D. total revenue exceeds total cost by the greatest amount.
18.) Nonprice competition refers to:
A. reductions in production costs that are not reflected in price reductions.
B. price increases by a firm that are ignored by its rivals.
C. advertising, product promotion, and changes in the real or perceived characteristics of a product.
D. competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts.
19.) Advertising can impede economic efficiency when it:
A. increases consumer awareness of substitute products.
B. enables firms to achieve substantial economies of scale.
C. reduces brand loyalty.
D. increases entry barriers.
20.) Which of the following is not a possible source of natural monopoly?
A. rent-seeking behavior
B. greater use of specialized inputs
C. simultaneous consumption
D. large-scale network effects
21.) Suppose that an industry is characterized by a few firms and price leadership. We would expect that:
A. marginal revenue would exceed marginal cost.
B. price would exceed both marginal cost and average total cost.
C. price would equal average total cost.
D. price would equal marginal cost.
22.) When economists view technological change as internal to the economy, they mean that it:
A. arises mainly from government subsidies.
B. arises deliberately from the profit motive and competition.
C. occurs accidentally.
D. occurs randomly.
23.) Firm X develops a new product and gets a head start in its production. Other firms try to produce a similar product but discover they have higher average total costs than the existing firm. This situation illustrates:
A. spillover costs.
C. diminishing marginal returns.
D. diseconomies of scale.
24.) In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:
A. average cost.
B. average variable cost.
C. marginal revenue.
D. average total cost.
25.) If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium:
A. price level would necessarily rise.
B. price level would necessarily fall.
C. output would fall.
D. output would rise.
26.) Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
A. expenditures curve will shift downward.
B. supply curve will shift leftward.
C. supply curve will shift rightward.
D. demand curve will shift leftward.
27.) Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should:
A. reduce taxes by $200 billion.
B. reduce taxes by $50 billion.
C. increase government expenditures by $50 billion.
D. increase government expenditures by $100 billion.
28.) Expansionary fiscal policy is so named because it:
A. is designed to expand real GDP.
B. involves an expansion of the nation's money supply.
C. is aimed at achieving greater price stability.
D. necessarily expands the size of government.
29.) Stabilizing a nation's price level and the purchasing power of its money can be achieved:
A. with neither fiscal nor monetary policy.
B. only with fiscal policy.
C. with both fiscal and monetary policy.
D. only with monetary policy.
30.) Suppose that US prices rise 4 percent over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?
A. The dollar will be revalued.
B. The dollar should depreciate.
C. The peso should depreciate.
D. The peso should appreciate.
1) The goal of the firm should be
A. maximization of profits
B. maximization of shareholder wealth
C. maximization of consumer satisfaction
D. maximization of sales
2) An example of a primary market transaction is
A. a new issue of common stock by AT&T
B. a sale of some outstanding common stock of AT&T
C. AT&T repurchasing its own stock from a stockholder
D. one stockholder selling shares of common stock to another individual
3) According to the agency problem, _________ represent the principals of a corporation.
4) Which of the following is a principle of basic financial management?
A. Risk/return tradeoff
C. Stock warrants
D. Profit is king
5) Another name for the acid test ratio is the
A. current ratio
B. quick ratio
C. inventory turnover ratio
D. average collection period
6) The accounting rate of return on stockholders’ investments is measured by
A. return on assets
B. return on equity
C. operating income return on investment
D. realized rate of inflation
7) If you are an investor, which of the following would you prefer?
A. Earnings on funds invested compound annually
B. Earnings on funds invested compound daily
C. Earnings on funds invested would compound monthly
D. Earnings on funds invested would compound quarterly
8) The primary purpose of a cash budget is to
A. determine the level of investment in current and fixed assets
B. determine accounts payable
C. provide a detailed plan of future cash flows
D. determine the estimated income tax for the year
9) Which of the following is a non-cash expense?
A. Depreciation expenses
B. Interest expense
C. Packaging costs
D. Administrative salaries
10) The break-even model enables the manager of a firm to
A. calculate the minimum price of common stock for certain situations
B. set appropriate equilibrium thresholds
C. determine the quantity of output that must be sold to cover all operating costs
D. determine the optimal amount of debt financing to use
11) A zero-coupon bond
A. pays no interest
B. pays interest at a rate less than the market rate
C. is a junk bond
D. is sold at a deep discount at less than the par value
12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?
13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
14) The present value of a single future sum
A. increases as the number of discount periods increase
B. is generally larger than the future sum
C. depends upon the number of discount periods
D. increases as the discount rate increases
15) Which of the following is considered to be a spontaneous source of financing?
A. Operating leases
B. Accounts receivable
D. Accounts payable
16) Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.
Initial outlay = $450
Year 1 = $325
Year 2 = $65
Year 3 = $100
A. 3.43 years
B. 3.17 years
C. 2.88 years
D. 2.6 years
17) For the NPV criteria, a project is acceptable if the NPV is __________, while for the profitability index, a project is acceptable if the profitability index is __________.
A. less than zero, greater than the required return
B. greater than zero, greater than one
C. greater than one, greater than zero
D. greater than zero, less than one
18) Which of the following is considered to be a deficiency of the IRR?
A. It fails to properly rank capital projects.
B. It could produce more than one rate of return.
C. It fails to utilize the time value of money.
D. It is not useful in accounting for risk in capital budgeting.
19) The firm should accept independent projects if
A. the payback is less than the IRR
B. the profitability index is greater than 1.0
C. the IRR is positive
D. the NPV is greater than the discounted payback
20) The most expensive source of capital is
A. preferred stock
B. new common stock
D. retained earnings
21) The cost associated with each additional dollar of financing for investment projects is
A. the incremental return
B. the marginal cost of capital
C. risk-free rate
22) The XYZ Company is planning a $50 million expansion. The expansion is to be financed by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of return on equity is 14%. If the company is in the 40% tax bracket, what is the marginal cost of capital?
23) Shawhan Supply plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a 40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?
24) Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering if its current capital structure is too conservative. Lever Brothers’ present EBIT is $3 million, and profits available to common shareholders are $1,560,000, with 342,857 shares of common stock outstanding. If the firm were to instead have a debt ratio of 60%, additional interest expense would cause profits available to stockholders to decline to $1,440,000, but only 228,571 common shares would be outstanding. What is the difference in EPS at a debt ratio of 60% versus 40%?
25) Zybeck Corp. projects operating income of $4 million next year. The firm’s income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no preferred stock, and no debt. The firm is considering two alternatives to finance a new product: (a) the issuance of $6 million of 10% bonds, or (b) the issuance of 60,000 new shares of common stock. If Zybeck issues common stock this year, what will be the projected EPS next year?
26) _________ risk is generally considered only a paper gain or loss.
27) Capital markets in foreign countries
A. offer lower returns than those obtainable in the domestic capital markets
B. provide international diversification
C. in general are becoming less integrated due to the widespread availability of interest rate and currency swaps
D. have been getting smaller in the past decade
28) Buying and selling in more than one market to make a riskless profit is called
A. profit maximization
C. international trading
D. an efficient market
29) What keeps foreign exchange quotes in two different countries in line with each other?
A. Cross rates
B. Forward rates
D. Spot rates
30) One reason for international investment is to reduce
A. portfolio risk
B. price-earnings (P/E) ratios
C. advantages in a foreign country
D. exchange rate risk
1. Companies can eliminate all risk if they implement enough qualitative and quantitative risk techniques. 1_
2. If the beta of Stock A is 1.4, this indicates that the stock is risky in comparison to every stock available.
3. Futures and forwards are both contractual agreements where an exchange of assets occurs on a specific date in the future. __
4. A variance of 6.2% means that the expected value of the variable will fall within + or – 6.2%, two-thirds of the time.
5. Intellectual property does not include market share.
6. Firm specific risk is considered nonsystematic and diversifiable.
7. Reinsurers are used by insurance companies to earn additional income by accepting some risk in return for a share of the reinsurance premium.
8. Risk management may follow a top-down approach, originating at the corporate level, consolidated at the strategic business level, and implemented at the project level.
9. Exposure to business risk may be reduced by portfolio diversification.
10. A risk adverse person will pay up to the expected claim costs for insurance premiums.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
(3 points each)
11. The following are potential benefits of loss control, except:
A) repair or replacement of damaged property
B) extra costs to maintain operations following a loss
C) income losses due to destruction of property
D) cost to expand an operation
12. The following elements of a firm’s financial statement should be considered when considering retention levels, except for:
A) current assets B) stock price
C) retained earnings D) cash flows
13. Risk management is an essential part of the project and business planning cycle which requires which of the following:
A) requires acceptance that uncertainty exists
B) generates a “unstructured” response to risk in terms of alternative plans, solutions, and contingencies
C) requires less strategy and more imagination and ingenuity
D) generates the idea that all risk should be avoided, regardless of cost
14. Which of the following is not a purpose of risk identification?
A) to identify which markets the company should expand into in order to increase market share
B) to identify and capture the most significant stakeholders
C) to stabilize the groundwork by providing all the necessary information to conduct analysis
D) it identify the inherent risks in a project or service
15. Which of the follow is not a benefit of risk management?
B) clarity of information and historical data
C) increase costs
D) increase shareholder wealth
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Please provide any back-up of your calculations on a separate sheet of paper so that partial credit can be assigned. You may provide either a Word document or an Excel spreadsheet.
(10 points each)
16. Given the following probability distribution of returns for a specific investment, what is the expected return?
A) 0% B) 9.0% C) 10.5% D) 11.5%
17. A new production plant is estimated to generate revenues annually of $100,000. The taxes on the land are 4,000 per year. The expense of making the widgets is $2,000 per month based on past experience. Due to efficiency, this was reduced 10%. The depreciation of the plant is 50,000 per year. Assuming a corporate tax rate of 40%, what is the net income annually for the plant? __
A) $13,040 B) $13,200 C) $14,640 D) $26,520
PROBLEMS. Write your answer in your answer sheet and show your work so partial credit can be assigned.
18. You own $1,000 USD and the US dollar rate on the Euro is 0.795 Euro/USD. The Euro rate is given in the table below.
A. Are arbitrage profits possible? What is the gain (loss) in dollars? (5 points)
B. Set up an arbitrage scheme with your capital. (10 points)
19. You are considering a security with the following possible rates of return:
A. Calculate the expected rate of return. (5 points)
B. Calculate the standard deviation of the returns. (5 points)
Calculate the standard deviation which is a statistical measure of variability. It is the root mean square deviation of the values from their arithmetic mean.
C. Calculate CAPM and use it to make your decision, should the security be purchased? Use the information calculated above. Assume a required market return of 10%, a risk free rate of 5% and a beta of 1.3. (5 points)
Required Discount Rate
Year 1 Cash inflows
Year 2 Cash inflows
Year 3 Cash inflows
Year 4 Cash inflows
A. Calculate the cash flow for each project. Which of the following projects should be pursued, assuming that a company wants to maximize its cash flow? (10 points)
B. What are some other risk measurement techniques that could be beneficial in determining if this project should be pursued? (5 points)
1) Which of the following statements is true?
A. A security is a claim issued by a firm that pays owners interest, not dividends
B. A call option analyzes conflicts of interest and behavior in a principal-agent relationship
C. An agent-manager can never make bad decisions
D. The difference between the value of one action and the value of the best alternative is called an opportunity cost
2) Book value, or net book value, refers to
A. the statement of a firm’s financial position at one point in time, including its assets and the claims on those assets by creditors and owners
B. the price for which something could be bought or sold in a reasonable length of time, where reasonable length of time is defined in terms of the item’s liquidity
C. an agent-manager never making bad decisions
D. the net of assets less liabilities shown in the accounting statements
3) Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true?
A. The current yield was less than 9% when the bond was first issued
B. The current yield was greater than 9% when the bond was first issued
C. The market value of the bond is more than $1,000
D. The market value of the bond is less than $1,000
4) If the yield to maturity for a bond is less than the bond's coupon rate, the market value of the bond is __________
A. greater than the par value
B. less than the par value
C. equal to the par value
D. cannot tell
5) For investors, the proper measure of a stock's risk is its __________
A. nondiversifiable risk
B. specific risk
C. nonsystematic risk
6) A company’s beta is -1.5. If the overall stock market decreases by 5%, what is the expected change in the firm's stock price?
A. Share price decreases by 5%
B. Share price decreases by 6.5%
C. Share price increases by 7.5%
D. Share price decreases by 7.5%
7) Which of these investments would you expect to have the highest rate of return for the next 20 years?
A. U.S. Treasury bills
B. Long-term corporate bonds
C. Intermediate-term U.S. government bonds
D. Money market funds
8) Dimensions of risk include __________
A. uncertainty about the future outcome
B. the certainty of a negative outcome
C. the impossibility of the same return
D. uncertainty about yesterday’s outcome
9) One problem with using negative values for the proportion invested in the riskless asset to represent a borrowed amount is that the implied borrowing rate of interest is the same as the __________.
A. prime rate of interest
B. current rate of interest
C. lending rate of interest
D. nominal rate of interest
10) If you were willing to bet that the overall stock market was heading up on a sustained basis, it would be logical to invest in
A. high beta stocks
B. low beta stocks
C. stocks with large amounts of unique risk
D. stocks that plot below the security market line
11) Stony Products has an inventory conversion period (ICP) of about 70 days. The receivables collection period (RCP) is 30 days. The payables deferral period (PDP) is about 40 days. What is Stony's cash conversion cycle (CCC)?
A. 100 days
B. 60 days
C. 140 days
D. 70 days
12) The main source of short-term operating capital is _________
A. trade credit
B. bank loans
D. sale of treasury stock
13) An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?
A. Each stock in the portfolio has its own beta
B. Selling any stock in this portfolio will lower the beta of the portfolio
C. An investor cannot change the risk of this portfolio by her choice about personal leverage
D. Each stock in the portfolio will have a beta greater than 1
14) An all-equity-financed firm would __________.
A. not pay any income taxes, because interest would exactly offset its taxable income
B. pay corporate income taxes, because it would have interest expense
C. not pay corporate income taxes, because it would have no interest expense
D. pay corporate income taxes if its taxable income is positive
15) If a firm wants to lower its weighted average cost of capital (WACC), one way to do so would be to
A. sell more common shares
B. sell more bonds
C. pay a cash dividend
D. issue a stock dividend
16) Boeing® is a world leader in commercial aircraft. In the face of competition, Boeing® often faces a critical __________ decision: whether to develop a new generation of passenger aircraft
A. present value
C. capital budgeting
17) Ideas for capital budgeting projects come from all levels within an organization. The bottom-up process results in ideas moving __________ through the organization
D. any way
18) Which of the following statements is true?
A. A mutually exclusive project can be chosen independently of other projects
B. When undertaking one project prevents investing in another project, and vice versa, the projects have a positive payback
C. A conventional project has an initial cash outflow followed by one or more expected future cash inflows
D. Whenever projects are independent and conventional, the internal rate of return (IRR) and net present value (NPV) methods will disagree
19) In practice, the __________ rule is the preferred criteria to accept or reject a capital investment project
B. profitability index
20) The Jerome Inc. western regional branch has been looking to install a new distribution center. The analysts have run the numbers on the distribution center costs and annual inflow from the investment. The project will cost $5 million at the beginning of the first year. The project will generate $1 million in earnings before interest and taxes at the end of each year. Jerome is in the 35% tax bracket and annual depreciation equates to $500,000 per year. The distribution center’s end of the fifth year’s salvage equals its book value, or $2,500,000. Compute the project’s NPV, assuming Jerome's WACC equals 12%.
21) The __________ method breaks down when evaluating projects in which the sign of the cash flow changes
22) Studies show systematic differences in capital structures across industries. These are due primarily to differences in __________
A. a firm’s inventory turnover ratio
B. the ability of assets to support borrowing
C. accounting practices
D. management’s attitude toward what other industries are doing
23) Capital structure decisions refer to the
A. dividend yield of the firm’s stock
B. blend of equity and debt used by the firm
C. capital gains available on the firm’s stock
D. maturity date for the firm’s securities
24) Which of the following statements concerning preferred stock is true?
A. Preferred stockholders have a prior claim on the income and assets of the firm, as compared to the claims of lenders
B. Preferred stock dividends per share are normally increased as the earnings of the firm increase
C. Preferred dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems
D. Preferred stockholders are the ultimate owners of the firm
25) Mortgage bonds are __________
A. secured by a lien on the issuer’s general assets
B. secured by the lien on the issuer’s specific, real assets
C. usually secured by assets such as common shares of one of the issuer’s subsidiaries
D. a form of unsecured debt
26) __________ says to calculate the net advantage of leasing based on the incremental after-tax benefits that leasing will provide
A. The capital market efficiency
B. The options principle
C. The principle of comparative advantage
D. The principle of incremental benefits
27) From the lessee’s viewpoint, the relevant discount rate for evaluating a lease versus buy decision is the __________
A. cost of issuing new common stock
B. pretax cost of issuing debt
C. after-tax cost of issuing debt
D. lessor’s cost of debt
28) The wholesale price for Captain John’s is $0.612 per loaf, and the variable cost of production is $0.387 per loaf. Captain John’s expects that expansion will allow them to sell an additional 4.5 million loaves in the next 5 years. What additional revenues minus expenses will be generated from expansion?
29) Which of the following statements is true?
A. Soft capital rationing refers to the rationing imposed externally by limited funds for borrowing from outside sources
B. Hard capital rationing refers to the rationing imposed internally by the firm
C. A post audit is a set of procedures for evaluating a capital budgeting decision after the fact
D. Few firms will engage in capital rationing
30) In efficient markets, as in the United States, market prices are not expected to be __________
C. followed by many analysts
D. incorporate all information
) Distrust, disrespect, and animosity pertain to which component of indirect costs associated with mismanaged organizational stress?
A. Quality of work relations
B. Participation and membership
C. Performance on the job
D. Communication breakdowns
2) Inventory shrinkages and accidents pertain to which component of direct costs associated with mismanaged organizational stress?
A. Employee conflict
B. Performance on the job
C. Loss of vitality
3) Thousands of equal-pay lawsuits have been filed, predominantly by ___________ since the Equal Pay Act of 1963 was passed
B. African Americans
C. the elderly
D. Americans with disabilities
4) What term refers to those actions appropriate to overcome the effects of past or present policies, practices, or other barriers to equal employment opportunity?
D. Affirmative action
5) In the employment context, _______________ can be viewed broadly as giving an unfair advantage or disadvantage to the members of a particular group in comparison with the members of other groups
C. seniority system
D. race norming
6) Thousands of equal-pay suits have been filed, predominantly by ___________ since the Equal Pay Act of 1963 was passed
7) Which of the following observations is correct?
A. Diversity is problem focused, and affirmative action is opportunity focused
B. Diversity is government initiated, and affirmative action is voluntary
C. Diversity is proactive, and affirmative action is reactive
D. Diversity is quantitative, and affirmative action is qualitative
8) Which of the following would you associate with managing diversity?
A. Government initiated
B. Assumes integration
C. Internally focused
9) "To be the world's best quick-service restaurant" is an example of what?
A. Organizational charter
B. Standard operating procedure
C. Code of ethics
D. Vision statement
10) _________ is a job analysis method that lists tasks or behaviors and involves workers rating each task or behavior in terms of whether or not it is performed. If the task is performed, workers also rate the frequency, importance, level of difficulty, and relationship to overall performance
A. Job performance
B. Structured questionnaires
D. Critical incidents
11) Recruitment begins by specifying _____, which are the typical results of job analysis and workforce planning activities
A. human resource requirements
B. strategic imperatives
C. succession plans
D. affirmative action candidates
12) The step following recruitment is _____, which is basically a rapid, rough selection process
A. an orientation
B. an initial screening
C. a suspension
D. a workforce plan
13) During the _____ stage, it is most important to select the managers who can develop stable management systems to preserve the gains achieved during the embryonic stage
14) Increasing an individual's employability outside the company simultaneously increases his or her job security and desire to stay with the current employer. What is this known as?
A. Training paradox
B. Pygmalion effect
C. Distributed practice
D. Massed practice
15) Which is a characteristic of the most effective training practices?
A. Training starts at the bottom of the organization
B. Training is part of the corporate culture
C. Training is evaluated by checking participant reactions
D. Little time is spent assessing training needs
16) Which analysis is helpful in determining the special needs of a particular group, such as older workers, women, or managers at different levels?
17) Providing adequate resources to get a job done right and on time, and paying careful attention to selecting employees, are parts of
A. employee welfare
B. grievance management
C. performance appraisal
D. performance facilitation
18) This can be thought of as a compass that indicates a person's actual direction as well as a person's desired direction.
A. Management by objectives
B. Forced distribution
C. Central tendency
D. Performance management
19) What would you call a meeting that is typically done once a year to identify and discuss job-relevant strengths and weaknesses of individuals or work teams?
A. performance appraisal
B. performance facilitation
C. performance encouragement
D. performance standard
20) When managing careers, what should organizations do?
A. Plan for shorter employment relationships
B. Focus primarily on employee needs and aspirations
C. Allow employees to structure work assignments
D. Focus on and recognize career stages that employees go through
21) A sequence of positions occupied by a person during the course of a lifetime is characteristic of what type of career?
22) In the new world of career management, the primary goal is to provide which of the following for employees?
A. Rising aspirations
B. Executive ranking
C. Psychological success
D. Time off when they need it
23) At a broad level, _____ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions
A. a competency-based pay system
B. an employee stock ownership plan
C. an organizational reward system
D. a merit-pay method
24) This benefit, tied mostly to profitability and promising better job security, but not guaranteeing it, is at the center of the evolving bonus system
A. Contribution-based pay
B. Competency-based pay
C. Skill-based pay
D. Flexible pay
25) Financial rewards include direct payments plus indirect payments in the form of what?
A. Individual equity
B. Corporate compensation
C. Spot awards
D. Employee benefits
26) Which law offers full coverage for retirees, dependent survivors, and disabled persons insured by 40 quarters of payroll taxes on their past earnings or earnings of heads of households?
A. Federal Unemployment Tax Act
B. Social Security Act
C. Workers' compensation
D. Employee Retirement Income Security Act
27) Plans are known as _____ when the employees share in the cost of the premiums
D. peer participating
28) Which type of justice refers to the quality of interpersonal treatment that employees receive in their everyday work?
29) Procedural justice affects citizenship behaviors by influencing employees' perceptions of _____, the extent to which the organization values employees’ general contributions and cares for their well being.
A. due process
B. management accessibility
C. indirect compensation
D. organizational support
30) When companies discover they can communicate better with their customers through employees who are similar to their customers, those companies then realize they have increased their _____ diversity.
1) Which of the following does not result in a decision rendered by the hearing officer?
D. Using expert evaluators
2) Jurisprudence is defined as
A. adjudication of law suits
B. the enactment of laws by a government body
C. the science and philosophy of law
D. the duties and obligations owed by a citizen
3) The state of Kansas has enacted a new law requiring all commercial trucks driving on Kansas roads to have special mud flaps installed. These mud flaps have been proven to make driving in the rain significantly safer due to reduced mist created by trucks driving in the rain, although data regarding accidents and injuries has not yet been determined. Any truck entering Kansas must have these flaps installed or will be subject to a significant fine and delay. The cost for purchase and installation of these flaps is $1,000 per truck. In short, trucks must have these flaps or go around the state. This Kansas law
A. is valid because it only applies to Kansas roads and such a law is entirely intrastate
B. is valid because Kansas's right to protect its citizens under its police powers will override any outside challenges to this law
C. is invalid because this law is intended to regulate interstate commerce, an enumerated federal power
D. is invalid because although on its face it's an intrastate law, this statute will have a significant economic effect on interstate commerce causing an undue burden
4) The power of preemption is derived from
A. the power of judicial review
B. the Commerce Clause
C. the Necessary and Proper Clause
D. the Supremacy Clause
5) What is the main problem with international courts?
A. Finding judges who understand the complexities of international law
B. Creating a body of law that reflects multiple legal systems
C. Enforcing a ruling on sovereign nations is difficult
D. Lack of recognition from the U.N. and WTO
6) Under the U.S. legal system, subject to some exceptions, costs of litigation regarding both the plaintiff and defendant
A. are all paid by the loser
B. are all paid by the winner
C. are paid for by each side with the plaintiff and defendant paying for their own legal costs
D. are totaled by the court and then for fairness, split in half with each side paying an equal amount
7) Generally, torts law is governed by
A. state statutory law
B. state common law
C. federal statutory law
D. constitutional law
8) Assumption of risk is a defense to
9) The three stripes on Adidas clothing represents a
B. trade dress
C. trade secret
10) The color or shape of an item, if distinctive, is a
11) Cybersquatting describes the practice of
A. registering multiple domain names and then selling them back to companies at inflated prices
B. hacking into a company's website to install a virus or Trojan horse designed to steal information but allow the site to continue operation
C. using mechanical devises to access a company's website multiple times to the point that traffic to the site is slowed or blocked
D. hacking into a company's website to install a virus designed to cause the company's website to totally cease operation
12) The Digital Millennium Copyright Act (1998) provided each of the following protections EXCEPT
A. manufacturers of CD-Writers were required to pay 2% of their sales into a fund to be distributed to copyright holders because the CD-Writers could easily copy music and other copyrighted works
B. civil and criminal penalties were established for those who sell or manufacture products or services that circumvent antipiracy software
C. restrictions were placed on analog recorders and camcorders that lack antipiracy features
D. ISPs were relieved of liability for copyright infringement by their users as long as the ISP had no knowledge of the infringement
13) When Maria comes home from work, she finds that her yard has been mowed and trimmed. An hour later, a man comes to her door to collect payment for the yard work. Maria refuses to pay him because she has never seen him before nor had she hired him to do the work. Which of the following is accurate?
A. This is an implied, unilateral contract, so she must pay.
B. Maria has received unjust enrichment so a quasi contract is formed, so she must pay.
C. The court would make Maria pay the reasonable cost of the work to be fair to both parties.
D. Maria would not have to pay anything.
14) Where a promise can only be accepted by the performance of the person to whom it is offered is an example of a/an
A. bilateral contract
B. unilateral contract
C. implied contract
D. quasi contract
15) Each of the following is a discharge by mutual consent EXCEPT
A. accord and satisfaction
D. frustration of purpose
16) Harry sees an AK-47 automatic assault rifle in a gun shop window. He inquires about the price and is told that it is $2,500. Harry signs a contract promising to pay the $2,500 on Friday, taking possession of the rifle when payment is made. On Thursday, a law is enacted making the ownership, sale, or possession of an automatic rifle illegal. This contract
A. automatically terminates due to impossibility
B. automatically terminates due to impracticability
C. automatically terminates due to frustration of purpose
D. is enforceable and not affected by the new law because it was entered into before the law took effect
17) Which of the following is rarely awarded in contracts cases?
A. Consequential damages
B. Compensatory damages
C. Punitive damages
D. Liquidated damages
18) Which of the following is classified as an equitable remedy?
19) Which of the following would not be considered tangible?
A. A car
C. The right of ownership
D. The pen or pencil you are using
20) With regard to consideration in a sales contract, the UCC differs from the common law in that
A. consideration in a sales contract may be modified without additional consideration
B. consideration exchanged must be equal or very closely equal in sales contracts
C. consideration is not required in sales contracts
D. consideration in a sales contract may be modified as long as additional consideration is provided
21) The UCC will permit an incomplete or slightly ambiguous contract to be enforced using each of the following criteria EXCEPT
A. past commercial conduct
B. industry standards or norms
C. judicial input of any terms necessary to maintain fairness
D. correspondence or verbal exchanges between the parties
22) Two merchant companies have entered into a contract for the sale of goods but have had no prior dealings, which would establish a course of conduct between them. The UCC will allow gap fillers to apply to their contract regarding missing terms in each of the following situations EXCEPT
A. they have failed to specify when payment for the goods is to be made
B. they have failed to specify where delivery of the goods is to be made
C. they have failed to specify the quality or grade of the goods to be delivered
D. they have failed to specify the price of the goods to be delivered
23) When a buyer rejects nonconforming goods and purchases the appropriate goods from a different seller, this is an example of which of the following:
B. Specific Performance
C. Lawsuit for Money Damages
D. Revoking Acceptance
24) Which of these is not a requirement for disclaiming a warranty?
A. Statutory authorization
B. A conspicuous writing
C. Explaining why the warranty is being disclaimed
D. Including the word merchantability if merchantability is to be disclaimed
25) "What if everyone took these same actions" is a question sometimes called the
A. universalization approach
B. utilitarian approach
C. functionality approach
D. morality approach
26) The utilitarian approach to moral philosophy was founded by
A. Jeremy Bentham
B. Immanuel Kant
D. Kenneth Lay
27) Stan is an investment manager. He has received money from various investors with a promise of very high returns on their investments. The invested money is not supplying enough capital in order to pay the returns promised, so he has started using new investor's money to pay older investors. By advertising and by word of mouth, people are anxious to invest with Stan because of the money being paid, and with the influx of new investors, he is able to continue operating. Stan is
A. operating an insider trading operation
C. guilty of conspiracy to defraud
D. operating a Ponzi scheme
28) Ben is the manager of a branch of a large bank. He has regularly taken money from customer's accounts for his own use and changed the bank records to cover his actions. Ben is guilty of
A. a conspiracy
B. a Ponzi scheme
29) The Sarbanes-Oxley Act (2002) imposed stricter regulations on how corporations do business through regulations in each of the following areas EXCEPT
A. tax compliance
B. financial reporting
C. corporate governance
30) Joan is the CFO of Para Corp. and is a year from retirement. In order to guarantee herself a very substantial bonus and to boost her retirement package, she knowingly certifies false financial reports making the company appear to be much more profitable than it really is. She further takes steps to assure that the financial report was not reviewed through internal controls maintained by Para Corp. Under the provisions of the Sarbanes-Oxley Act (2002), if her fraud is NOT part of a larger scheme, what criminal penalties are possible for Joan?
A. $1 million in fines and up to 10 years in prison
B. $2 million in fines and up to 12 years in prison
C. $5 million in fines and up to 15 years in prison
D. $10 million in fines and up to 20 years in prison
1) Which of the following is a distinguishing feature of a common law legal system?
A. Requiring guilt be proven beyond a reasonable doubt
B. The sole source of law is a comprehensive civil code
C. An appeal process
D. The making of law by the judges and the following of precedent
2) Which best describes the types of agency authority held by officers of a corporation?
A. Vicarious authority
B. Express and obvious authority
C. Implied and apparent authority only
D. Express, implied, and apparent authority
3) If an LLC fails to follow formalities such as keeping minutes of meetings, which of the following is true?
A. Only the managers of a manager-managed LLC will lose limited liability.
B. All members will lose their limited liability.
C. This failure will not result in imposing personal liability on any member.
D. Only the parties responsible for the failure will lose limited liability.
4) Martha started a flower shop as a sole proprietor. After 1 year, she was forced to close the shop because business was so bad. At that time, the business assets totaled $50,000, but the business liabilities totaled $125,000. Which of the following statements is true?
A. Martha is personally liable for the additional $75,000.
B. Martha’s business creditors can collect only the $50,000 of business assets.
C. Martha’s business creditors can collect only the $50,000 now, but if Martha ever goes into business again, they can get the assets of the new business.
D. Once Martha terminates the sole proprietorship, the business creditors cannot even get the $50,000
5) Partners of a general partnership
A. are protected from litigation against the partnership by statute
B. are liable for the obligations of the partnership only to the extent of their capital contributions
C. do not have to pay taxes on the profits of the partnership that are distributed to them
D. are liable for all the obligations of their partnership
6) Which of the following forms of alternative dispute resolution allows both parties to see the strengths and weaknesses of both sides of the case through the presentation of evidence?
A. Negotiated settlement
7) A ___________ is a court-appointed party who conducts a private trial and renders a judgment
C. judicial referee
8) What is a form of alternative dispute resolution that is often used when the parties involved do not want to face one another?
9) Which of the following is true regarding mediation?
A. A mediator often meets with both parties at the same time
B. A settlement agreement is never reached with a mediator.
C. A mediator does not make a decision or award
D. If a settlement agreement is not reached in mediation, then the parties hire a new mediator
10) There are no accountants on the board of the Oriole Corporation, a privately held corporation. The board routinely relies on a Certified Public Accountant (CPA) to explain the financial situation of the corporation. The board does not do an independent analysis of the CPA’s report. In these circumstances, the board is
A. violating a duty of loyalty
B. violating a duty to exercise due care
C. violating the business judgment rule
D. not violating any duty
11) Self-dealing by a director of a corporation can best be described as
A. A breach of a director's duty of notification
B. A breach of a director’s duty of care
C. A breach of the Business Judgment Rule
D. There was no breach of duty
12) Which of the following is likely to be a breach of a corporate officer’s or director’s duty of care?
A. Failing to anticipate a precipitous drop in consumer demand of the company’s product
B. Failing to make a reasonable investigation of relevant facts
C. Failing to predict the unexpected startup of a new competitor
D. Failing to foresee a sudden rise in the interest rate
13) In what ways may officers and directors be protected by the corporation from liability for actions taken as an officer or director?
A. The officer or director must purchase personal liability insurance to cover such losses.
B. Have the corporation purchase liability insurance and indemnify the officers and directors
C. Officers and directors cannot be protected from liability
D. Officers and directors are automatically protected from liability by virtue of corporate
14) If a plaintiff voluntarily participates in a risky activity that results in injury, what is the most likely defense to a claim that the plaintiff assumed the risk?
A. Contributory negligence
B. Defendant was negligent per se
C. Defendant assumed the risk under the “danger invites rescue” doctrine
D. Comparative negligence
15) Mark is the treasurer of Sky-Hi Tech Corporation and, as such, he is responsible for protecting the assets of the corporation. One of Mark’s subordinates, Jill, is in charge of reconciling the monthly corporate bank statements. Over a period of several months, Jill embezzled a large amount of money from Sky-Hi Tech, covering up the theft using her bank reconciliations. If Mark had adequately supervised Jill, she could not have embezzled this money. Mark’s actions (or inactions) constitute a breach of his duty of
A. due care
D. good business judgment
16) Barry buys a new sports car. The car sits low to the ground and because of the styling, visibility to the rear is limited. About a month after Barry buys the car, he backs over his pet poodle as he is leaving for work. In his strict liability suit against the car manufacturer, Barry will
A. win because driving a sports car is an inherently dangerous activity
B. win on the basis of design defect
C. win on the basis of packaging defect because the car could have been packaged in a differently styled body
D. lose because he assumed the risk of backing up in a car when he could not see to the rear
17) If a judge rules that a party lost its case because of the Statute of Frauds, the judge has essentially stated which of the following?
A. The losing party purposely deceived the other party about a material fact.
B. The losing party will not be allowed to introduce evidence to contradict a written agreement
C. The losing party cannot enforce an oral contract that should have been in writing
D. The losing party was found by the court to have lied, and therefore will lose the case
18) What does the parol evidence rule do?
A. It limits the ability of parties to written contracts from introducing certain evidence related to the contract.
B. It sets the rules for admissibility of evidence relating to releasing a criminal from a prison term
C. It sets the general rules for the admissibility of evidence in criminal actions
D. It determines which contracts are required to be in writing
19) ABC LLC and XYZ Corp. entered into a contract whereby ABC is to supply XYZ with widgets. After receiving the first shipment of widgets, XYZ finds that the widgets, while meeting the physical standards specified in the contract, do not perform as XYZ anticipated. The contract is silent as to performance specifications, but XYZ suspects that ABC knew that it was manufacturing and supplying widgets that would not perform according to industry standard. XYZ initiates a lawsuit against ABC, alleging that ABC knowingly supplied defective widgets. What process will XYZ use to help it develop its case against ABC?
B. Motion for summary judgment
20) Under the Employee Retirement Income Security Act (ERISA), an employee’s benefits must vest
A. within 10 years
B. by the time of the employee’s retirement
C. in total within 5 years or gradually within 7 years
D. only as provided in the pension plan
21) Which of the following statutes provides that it is legal for employees to organize a union?
A. The Norris-LaGuardia Act
B. The National Labor Relations Act
C. The Labor-Management Relations Act
D. The Worker Adjustment and Retraining Notification Act
22) William was a factory worker at the Spruce Industries plant. When management found out that William is gay, he was fired. The plant’s action is
A. not prohibited under federal law
B. a violation of Title VII
C. a violation of the Equal Pay Act
D. a violation of the Americans with Disabilities Act
23) Janet is manager of a bank. She has all the qualifications to be promoted to bank manager. In fact, she is better qualified than any of the men being considered for the position. However, the owner of the bank believes that bank customers will not accept a woman as bank manager, so the owner promotes one of the males. The owner’s actions would best be described as what?
A. Quid pro quo
B. Hostile work environment
C. Gender discrimination
D. Pregnancy discrimination
24) Which one of the following statutes allows a prevailing party to recover attorney’s fees in an action against the government for an action of an agency?
A. The Freedom of Information Act
B. The Government Compensation Act
C. The Administrative Procedure Act
D. The Equal Access to Justice Act
25) Which of the following would prevent someone from acquiring land by adverse possession?
A. The person never had to fight the original owner to remain on the land
B. The person lived on the land secretly so that the original owner would not find out he or she was there
C. The person lived on the land without the original owner’s permission
D. The person was the only person who lived on the land in question
26) Which of the following would be classified as tangible personal property, as opposed to other property categories, such as fixtures or intangible property?
A. A freestanding desk
B. Built-in cabinets in an office
C. A copyright to a literary work
D. A field of corn
27) As the CEO of a high tech company, you become aware that your chief competitor is working on a new computer program that will revolutionize your industry. You know that if you can find out several key functions about the new product, your own programmers will be able to duplicate the function of the program without actually copying its code. Which of the following actions can you ethically take?
A. Paying the garbage company to deliver the competitor’s garbage to you
B. Hiring a former employee of the competitor and paying her a bonus to tell you the competitor’s secrets
C. Hiring a researcher to review all available information about the competitor, including patents, types and names of employees hired, reports by the competitor, including all SEC filings
D. Hacking into the competitor's computer systems to find out what you need
28) From a practical perspective, what are some of the elements of Sarbanes-Oxley?
A. Ensuring transparency, accountability and internal controls
B. Ensuring companies are profitable
C. Ensuring that CEOs do not make more than 10 times the lowest paid employee
D. Ensuring that large shareholders do not have board representation
29) Under Title IX of the Sarbanes-Oxley Act, the penalty for someone who certifies “any statements as set forth in subsections (a) and (b) of this section knowing that the periodic report accompanying the statement does not comport . . .” is
A. no more than $1,000,000.00 or imprisoned no more than 10 years, or both
B. no more than $500,000.00 or imprisoned no more than 6 months, or both
C. no more than $2,000,000.00 or imprisoned no more than 3 years, or both
D. no more than $5,000,000.00 or imprisoned no more than 20 years, or both
30) Which is prohibited under the Sarbanes-Oxley Act?
A. High salaries for corporate executives
B. Using an independent accounting firm for audit purposes
C. Public companies making personal loans to their directors and executives
D. Directors and executives attending board meetings on a regular basis
1) Which of the following is best defined as a consciously coordinated social unit, composed of two or more people, which functions on a relatively continuous basis to achieve a common goal or set of goals?
2) Over the past 2 decades, business schools have added required courses on organizational design to many of their curricula. Why have they done this?
A. Managers no longer need technical skills in subjects such as economics and accounting to succeed.
B. Managers need to understand human behavior if they are to be effective.
C. These skills enable managers to effectively lead human resources departments.
D. A manager with good interpersonal skills can help create a pleasant workplace.
3) Robert Katz identified three essential skills that managers must have to reach their goals. What are these skills?
A. Technical, decisional, and interpersonal
B. Technical, human, and conceptual
C. Interpersonal, informational, and decisional
D. Human, informational, and communication
4) __________ is a field of study that investigates the effect that individuals, groups, and structures have on behavior within organizations for the purpose of applying such knowledge toward improving an organization’s effectiveness.
A. Corporate tactics
B. Human resources management
C. Organizational behavior
D. Corporate strategy
5) What do the fundamental consistencies underlying the behavior of all individuals enable researchers to do?
A. Observe human behavior.
B. Research human behavior.
C. Predict human behavior.
D. Detect human behavior.
6) Which of the following is a generic term that covers a broad range of feelings that people experience?
D. Emotional labor
7) What term is used for intense feelings that are directed at someone or something?
8) If personality characteristics were completely dictated by __________, they would be fixed at birth and no amount of experience could alter them.
A. job satisfaction
D. situational factors
9) Which of the following are classifications on the Myers-Briggs Type Indicator?
A. Extroverted, intuitive, judging, independent
B. Extroverted, sensing, judging, thinking
C. Extroverted, judging, independent, feeling
D. Sensing, perceiving, dependent, feeling
10) Maria is dissatisfied with the way that her manager treats her. She has quit her job and found a new position with another firm. How has she expressed her dissatisfaction?
11) You quietly continue to do your work when you know things will not improve. This is what type of response to dissatisfaction?
12) A group
A. generates positive synergy through coordinated effort
B. generates greater outputs with no increase in inputs
C. is two or more individuals interacting and interdependent
D. engages in collective work that requires joint effort
13) __________ results in a level of performance that is greater than the sum of the individual input.
14) What happens in the second stage of Tuckman's five stage model of group development?
A. Close relationships are developed.
B. The group demonstrates cohesiveness.
C. Intragroup conflict often occurs.
D. Groups disband.
15) Zach is devout and very active in his church. He is also a very dedicated employee. His manager offers him a promotion, but the new role will require him to work Sundays. Zach would like the promotion, but realizes that it would force him to miss some church activities. It is likely that Zach is experiencing which of the following:
A. Role conflict
B. Role expectation
C. Role perception
D. Role identity
16) Which role focuses on bringing about order and consistency by drawing up formal plans?
C. Task structure
D. Initiating structure
17) Which statement regarding leadership is true?
A. Formal rights enable managers to lead effectively.
B. All managers are leaders.
C. All leaders are hierarchically superior to followers.
D. Nonsanctioned leadership is as important as or more important than formal influence.
18) What are three situational criteria identified in the Fiedler model?
A. Charisma, influence, and leader-member relations
B. Leader-member relations, task structure, and position power
C. Task structure, leadership ability, and group conflict
D. Emotional intelligence, group orientation, and employee status
19) The reconceptualization of the contingency model by Garcia and Fiedler is called __________ theory.
B. cognitive resource
D. cognitive dissonance
20) Which path-goal leadership style leads to greater satisfaction when tasks are ambiguous or stressful?
21) According the Path-Goal Theory, what leader is friendly and shows concern for the needs of followers?
A. Achievement-oriented leader
B. Laissez-faire leader
C. Participative leader
D. Supportive leader
22) Phrases such as “more cultural diversity,” “many new entrants with inadequate skills,” and “increase in aging workers” are all examples of what force for change?
B. World politics
C. Nature of the work force
23) What is a goal of planned change?
A. To change the forces of change
B. To alter the agents of change
C. To change employees’ responsibilities
D. To improve the ability to adapt to the environment
24) Using covert influence to overcome resistance to change is called what?
25) If individuals resisting change are included in making change decisions in an attempt to gain their support, what is this approach is called?
26) Which of the following is a characteristic of organizational control?
A. Formality orientation
B. Decision orientation
C. Team orientation
D. Managerial orientation
27) What term describes the key characteristic of organizational control that addresses the degree to which employees are expected to exhibit precision?
B. attention to detail
28) Power is
A. a means for leaders to achieve goals
B. defined by leaders' hopes and aspirations
C. a goal in and of itself
D. not an influence on leaders' goals
29) Leaders achieve goals, and power is
A. defined by leaders’ hopes and aspirations
B. a means of achieving goals
D. a strong influence on leaders’ goal
30) The most important aspect of power is probably that it _____.
A. is needed to get things done in an organization
B. is a function of dependency
C. tends to corrupt people
D. is counterproductive
1) __________ is a multidisciplinary field devoted to understanding individual and group behavior, interpersonal processes, and organizational dynamics.
A. Organizational behavior
C. Performance management
D. Workgroup analysis
2) What is organizational culture?
A. The predominant cultural background represented by the organization's members
B. How an organization appears to external and internal stakeholders
C. The shared beliefs, actions, and values within an organization
D. The way an organization operates within the geographic region
3) Three important levels of cultural analysis in organizations are
A. implicit culture, shared values, and common experiences
B. shared objectives, shared values, and shared mission
C. observable culture, shared values, and common assumptions
D. explicit culture, implicit culture, and common assumptions
4) In the context of the three important levels of cultural analysis in organizations, the level referred to as __________ can play a critical part in linking people together and can provide a powerful motivational mechanism for members of the culture.
A. shared values
B. observable culture
D. common assumptions
5) Henry Mintzberg identified a set of roles that managers perform. These roles are grouped into which of the following three categories?
A. Interpersonal, strategic, and decisional
B. Strategic, informational, and political
C. Interpersonal, informational, and decisional
D. Supervisory, authoritarian, and decisional
6) A person who is a __________ assumes a unique responsibility for work that is accomplished largely through the efforts of other people.
A. team member
B. human resources director
C. change agent
D. manager or team leader
7) The difficulties with cross-cultural communication are perhaps most obvious with respect to
A. geographic differences
B. language differences
C. religious differences
D. lifestyle differences
8) __________ is often accompanied by an unwillingness to understand alternative points of view and to take the values they represent seriously.
9) Groups and teams are not the same thing because of differences in goals, synergy, accountability and skills. A work team is characterized by
A. sharing information as a goal
B. random and varied skills
C. individual and mutual accountability
D. neutral synergy
10) Four contextual factors are most significantly related to team performance and whether or not they are successful. They are adequate resources, leadership and structure, performance evaluation and reward systems, and
A. abilities of members
B. size of teams
C. climate of trust
D. diversity of members
11) Groups generally pass through a predictable sequence in their evolution. The five-stage group-development model describes which stage as being characterized by a great deal of uncertainty about the group’s purpose, structure, and leadership?
12) Which of the following distinguishes a team from a group?
A. Members are accountable to one another.
B. Members are assigned to one person: the leader.
C. Members do not have a clear stable culture and conflict is frequent.
D. Members may accomplish their goals.
13) Ken is being cooperative but unassertive with his employees during a conflict situation. He tries to smooth over their differences but it only produces a false sense of harmony among them. Ken is using which conflict management style?
14) The conflict management style of __________ involves being both cooperative and assertive. This style is characterized by trying to fully satisfy everyone’s concerns by working through differences and finding and solving problems so that everyone gains.
15) Which of the following is the correct order of Maslow’s theoretical hierarchal needs from the lowest (lower-order need) to the highest (higher-order need) level?
A. Safety, social, physiological, esteem, and self-actualization
B. Social, esteem, self-actualization, physiological, and safety
C. Physiological, safety, social, esteem, and self-actualization
D. Physiological, social, safety, self-actualization, and esteem
16) In the context of motivation, persistence refers to
A. the length of time a person sticks with a given action
B. the amount of effort a person puts forth
C. an individual’s choice when presented with a number of possible alternatives
D. the different needs that an individual is trying to satisfy
17) In the context of motivation, intensity refers to
C. the different needs that an individual is trying to satisfy
D. the consequences of an individual’s behavior
18) Compared to other types of teams, __________ teams tend to have more difficulty learning to work with each other and solving problems in the early stages of team development.
19) __________ implies that characteristics such as age or the date that someone joins a specific work team or organization should help us to predict turnover.
A. Allocation of roles
B. Social loafing
D. Organizational demography
20) __________ factors that could potentially cause stress include things such as economic or political uncertainty and technological change.
21) __________ stressors are stressors that keep you from achieving your goals, such as red tape, organizational politics, or confusion over responsibilities.
22) If a worker is placed on a difficult project and they experience eustress, one likely result would include
A. job burnout
C. greater diligence
D. a successful project
23) __________ is often used in combination with horizontal leadership.
A. Power negotiation
B. Organizational goal setting
C. Shared leadership
D. Individual leadership
24) Often self-leadership activities are divided into these three broad categories:
A. behavior focused, natural reward, and constructive thought pattern strategies
B. cognitive, behavior, and emotional strategies
C. focus, ambiguous, and unfocused strategies
D. bottom-up, top-down, and middle strategies
25) Directives falling within the zone of indifference are
A. subjected to slight scrutiny
D. subjected to severe scrutiny
26) Milgram designed experiments to determine the extent to which people
A. learn from personal failures
B. obey the commands of an authority figure
C. are willing to use coercive power to gain influence
D. are willing to learn new things as a means of gaining expert power
27) The essence of power is
A. personal desire
B. a distinguished reputation
C. control over the behavior of others
D. having a Machiavellian personality
28) The development of a cohesive, high-performing team can be aided by
A. individual performance evaluations and incentives
B. ensuring that new information is kept to a minimum
C. system modifications that reinforce team effort and commitment
D. allowing the team to develop their own values and purpose
29) One of the foremost trends in management involves using __________ to streamline operations and reduce staff in order to lower costs and raise productivity.
A. reengineering techniques
B. just-in-time inventory control
C. information technology
D. total quality management
30) The obvious organizational design response to uncertainty and volatility is to opt for a more __________ form.
1.) A mental image of a possible and desirable future state of the organization is a(n)
A. strategic plan
B. operational plan
2.) Legitimate power is described as power that exists through
A. control over punishments
B. control over rewards
C. the authority to tell others what to do
D. having expertise