1) The uniform law, issued in 1984 by the Committee on Corporate Laws of the American Bar Association, that regulates the formation, operation, and termination of corporations is
A. The Model Business Corporation Act
B. The Uniform Commercial Code
C. The Revised Model Business Commercial Code
D. The Standard Incorporation Act
2) Which of the following statements is true?
A. The exchange of stock for services rendered is not a taxable transaction.
B. The repeal of Sec. 351 would result in more existing businesses being incorporated.
C. Section 351 was enacted to allow taxpayers to incorporate without incurring adverse tax consequences.
D. Section 351 is an example of a negative aspect of the corporate form of business organization.
3) Which of the following statements is true?
A. Formation of a partnership requires legal documentation.
B. An individual engaged in the active conduct of a business must elect not to be taxed as a partnership.
C. If two people (or business entities) work together to carry on any business or financial operation with the intention of making a profit and sharing that profit as co-owners, a partnership exists for federal income tax purposes.
D. The partnership form of business creates double-taxation because individual partners are taxed, and the partnership is also taxed as a separate legal entity.
4) What effect would a decrease in interest rates by the Federal Reserve most likely have in the nation's manufacturing sector, all other factors remaining constant?
A. An increase in both production and employment
B. A decrease in both production and employment
C. An increase in production but a decrease in employment
D. A decrease in production, but an increase in employment
5) A table that shows the relationship between the price of a good and the quantity demanded of that good is called
A. a price-quantity table
B. a complementary table
C. a demand schedule
D. an equilibrium schedule
6) If policymakers increase aggregate demand, the price level
A. falls, but unemployment rises
B. and unemployment fall
C. and unemployment rise
D. rises, but unemployment falls
7) Which table would show the largest factor for an interest rate of 8% for five periods?
A. Future value of an ordinary annuity of 1
B. Present value of an ordinary annuity of 1
C. Future value of an annuity due of 1
D. Present value of an annuity due of 1
8) Financial service
A. is concerned with the duties of the financial manager
B. involves the design and delivery of advice and financial products
C. provides guidelines for the efficient operation of the business
D. handles accounting activities related to data processing
9) As the interest rate increases for any given period, the future value interest factor will
A. decrease
B. increase
C. remain unchanged
D. move toward 1
10) The specific cost of each source of long-term financing is based on ________ and ________ costs.
A. before-tax; historical
B. after-tax; historical
C. before-tax; book value
D. after-tax; current
11) At the operating break-even point, ________ equals zero.
A. sales revenue
B. fixed operating costs
C. variable operating costs
D. earnings before interest and taxes
12) Justifying expenditures for new technologies is especially difficult because
A. you do not know how many jobs will be affected
B. expenses are often recurring and are difficult to estimate
C. many benefits are intangible and are not easily known or measured
D. justifying a new technology is no different from any other capital budgeting problem
13) The hardware of a computer system includes the computer itself and other devices that help the computer perform its tasks. These other devices are commonly also called
A. helper equipment
B. peripheral equipment
C. secondary equipment
D. accessory equipment
14) Software that enables businesses and government agencies to transmit and manipulate financial data on an organization-wide basis best describes
A. communication software
B. CAD software
C. enterprise resource planning (ERP) software
D. programming software
15) A simple diagram that shows estimated completion times versus actual completion times for the various activities in a systems implementation project
A. an E-R diagram
B. a PERT chart
C. a Gantt chart
D. a Data flow diagram
16) What would be the best explanation for the absence of complete information on computer crime?
a Abuse is handled as an internal matter
b Hesitant disclosure of abuse due to embarrassment
c Documentation of abuses hasn't caught up with actual abuses
d Most computer crime is not caught
17) Which of the following processes would be accounted for using a job order cost system?
A.
Milk pasteurization
B.
Town home production
C.
Textbook production
D.
Canned spinach production
18) In traditional costing systems, overhead is generally applied based on
A.
direct labor
B.
machine hours
C.
direct material dollars
D.
units of production
19) If standard costs are incorporated into the accounting system
A.
it may simplify the costing of inventories and reduce clerical costs
B.
it can eliminate the need for the budgeting process
C.
the accounting system will produce information which is less relevant than the historical cost accounting system
D.
approval of the stockholders is required
20) Generally accepted accounting principles are
A.
income tax regulations of the Internal Revenue Service.
B.
standards that indicate how to report economic events.
C.
theories that are based on physical laws of the universe.
D.
principles that have been proven correct by academic researchers.
21) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?
A.
An increase to finished goods
B.
A decrease to applied overhead
C.
A decrease to work in process inventory
D.
An increase to cost of goods sold
22) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,
A.
incremental revenues are $2 per unit
B.
incremental costs are $1 per unit
C.
net relevant costs are $1 per unit
D.
differential costs are $2 per unit
23) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?
A.
$18,000
B.
$28,000
C.
$12,000
D.
$6,000
24)
Kershaw Bookstore had 600 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows:
Date Purchases Sales
Jan. 14 450 @ $28
17 300 @ $20
25 300 @ $22
29 300 @ $32
Kershaw does not maintain perpetual inventory records. According to a physical count, 450 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is:
A.
$1,200.
B.
$8,100.
C.
$9,300.
D.
$9,600.
25) The process of formally recording or incorporating an item in the financial statements of an entity is
A.
allocation
B.
articulation.
C.
realization.
D.
recognition.
26) The primary purpose of the statement of cash flows is to provide information
A.
about the operating, investing, and financing activities of an entity during a period.
B.
that is useful in assessing cash flow prospects.
C.
about the cash receipts and cash payments of an entity during a period.
D.
about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.
27) Which of the following is considered cash?
A.
Travel Advances
B.
Money market checking accounts
C.
Money market savings certificates
D.
Postdated checks
28) 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. Assuming there is no beginning liability balance, what is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
A.
$600,000; $600,000
B.
$600,000; $390,000
C.
$390,000; $390,000
D.
$210,000; $390,000
29) Which of the following is a debt security?
A.
Convertible bonds
B.
Certificate of deposit
C.
Loans receivable
D.
US treasury bill
30)
The balance in Newsprint Corp.'s foreign exchange loss account was $10,000 on December 31, 2008, before any necessary year-end adjustment relating to the following:
(1) Newsprint had a $15,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 2008.
(2) Newsprint had an account payable to an unrelated foreign supplier, payable in the supplier's local currency unit (LCU) on January 15, 2009. The U.S. dollar–equivalent of the payable was $50,000 on the December 1, 2008, invoice date and $53,000 on December 31, 2008.
In Newsprint's 2008 consolidated income statement, what amount should be included as foreign exchange loss in computing net income, if the LCU is the functional currency and the translation method is appropriate?
A. $28,000
B. $13,000
C. $25,000
D. $8,000
A. The Model Business Corporation Act
B. The Uniform Commercial Code
C. The Revised Model Business Commercial Code
D. The Standard Incorporation Act
2) Which of the following statements is true?
A. The exchange of stock for services rendered is not a taxable transaction.
B. The repeal of Sec. 351 would result in more existing businesses being incorporated.
C. Section 351 was enacted to allow taxpayers to incorporate without incurring adverse tax consequences.
D. Section 351 is an example of a negative aspect of the corporate form of business organization.
3) Which of the following statements is true?
A. Formation of a partnership requires legal documentation.
B. An individual engaged in the active conduct of a business must elect not to be taxed as a partnership.
C. If two people (or business entities) work together to carry on any business or financial operation with the intention of making a profit and sharing that profit as co-owners, a partnership exists for federal income tax purposes.
D. The partnership form of business creates double-taxation because individual partners are taxed, and the partnership is also taxed as a separate legal entity.
4) What effect would a decrease in interest rates by the Federal Reserve most likely have in the nation's manufacturing sector, all other factors remaining constant?
A. An increase in both production and employment
B. A decrease in both production and employment
C. An increase in production but a decrease in employment
D. A decrease in production, but an increase in employment
5) A table that shows the relationship between the price of a good and the quantity demanded of that good is called
A. a price-quantity table
B. a complementary table
C. a demand schedule
D. an equilibrium schedule
6) If policymakers increase aggregate demand, the price level
A. falls, but unemployment rises
B. and unemployment fall
C. and unemployment rise
D. rises, but unemployment falls
7) Which table would show the largest factor for an interest rate of 8% for five periods?
A. Future value of an ordinary annuity of 1
B. Present value of an ordinary annuity of 1
C. Future value of an annuity due of 1
D. Present value of an annuity due of 1
8) Financial service
A. is concerned with the duties of the financial manager
B. involves the design and delivery of advice and financial products
C. provides guidelines for the efficient operation of the business
D. handles accounting activities related to data processing
9) As the interest rate increases for any given period, the future value interest factor will
A. decrease
B. increase
C. remain unchanged
D. move toward 1
10) The specific cost of each source of long-term financing is based on ________ and ________ costs.
A. before-tax; historical
B. after-tax; historical
C. before-tax; book value
D. after-tax; current
11) At the operating break-even point, ________ equals zero.
A. sales revenue
B. fixed operating costs
C. variable operating costs
D. earnings before interest and taxes
12) Justifying expenditures for new technologies is especially difficult because
A. you do not know how many jobs will be affected
B. expenses are often recurring and are difficult to estimate
C. many benefits are intangible and are not easily known or measured
D. justifying a new technology is no different from any other capital budgeting problem
13) The hardware of a computer system includes the computer itself and other devices that help the computer perform its tasks. These other devices are commonly also called
A. helper equipment
B. peripheral equipment
C. secondary equipment
D. accessory equipment
14) Software that enables businesses and government agencies to transmit and manipulate financial data on an organization-wide basis best describes
A. communication software
B. CAD software
C. enterprise resource planning (ERP) software
D. programming software
15) A simple diagram that shows estimated completion times versus actual completion times for the various activities in a systems implementation project
A. an E-R diagram
B. a PERT chart
C. a Gantt chart
D. a Data flow diagram
16) What would be the best explanation for the absence of complete information on computer crime?
a Abuse is handled as an internal matter
b Hesitant disclosure of abuse due to embarrassment
c Documentation of abuses hasn't caught up with actual abuses
d Most computer crime is not caught
17) Which of the following processes would be accounted for using a job order cost system?
A.
Milk pasteurization
B.
Town home production
C.
Textbook production
D.
Canned spinach production
18) In traditional costing systems, overhead is generally applied based on
A.
direct labor
B.
machine hours
C.
direct material dollars
D.
units of production
19) If standard costs are incorporated into the accounting system
A.
it may simplify the costing of inventories and reduce clerical costs
B.
it can eliminate the need for the budgeting process
C.
the accounting system will produce information which is less relevant than the historical cost accounting system
D.
approval of the stockholders is required
20) Generally accepted accounting principles are
A.
income tax regulations of the Internal Revenue Service.
B.
standards that indicate how to report economic events.
C.
theories that are based on physical laws of the universe.
D.
principles that have been proven correct by academic researchers.
21) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?
A.
An increase to finished goods
B.
A decrease to applied overhead
C.
A decrease to work in process inventory
D.
An increase to cost of goods sold
22) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,
A.
incremental revenues are $2 per unit
B.
incremental costs are $1 per unit
C.
net relevant costs are $1 per unit
D.
differential costs are $2 per unit
23) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?
A.
$18,000
B.
$28,000
C.
$12,000
D.
$6,000
24)
Kershaw Bookstore had 600 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows:
Date Purchases Sales
Jan. 14 450 @ $28
17 300 @ $20
25 300 @ $22
29 300 @ $32
Kershaw does not maintain perpetual inventory records. According to a physical count, 450 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is:
A.
$1,200.
B.
$8,100.
C.
$9,300.
D.
$9,600.
25) The process of formally recording or incorporating an item in the financial statements of an entity is
A.
allocation
B.
articulation.
C.
realization.
D.
recognition.
26) The primary purpose of the statement of cash flows is to provide information
A.
about the operating, investing, and financing activities of an entity during a period.
B.
that is useful in assessing cash flow prospects.
C.
about the cash receipts and cash payments of an entity during a period.
D.
about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.
27) Which of the following is considered cash?
A.
Travel Advances
B.
Money market checking accounts
C.
Money market savings certificates
D.
Postdated checks
28) 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. Assuming there is no beginning liability balance, what is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?
A.
$600,000; $600,000
B.
$600,000; $390,000
C.
$390,000; $390,000
D.
$210,000; $390,000
29) Which of the following is a debt security?
A.
Convertible bonds
B.
Certificate of deposit
C.
Loans receivable
D.
US treasury bill
30)
The balance in Newsprint Corp.'s foreign exchange loss account was $10,000 on December 31, 2008, before any necessary year-end adjustment relating to the following:
(1) Newsprint had a $15,000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31, 2008.
(2) Newsprint had an account payable to an unrelated foreign supplier, payable in the supplier's local currency unit (LCU) on January 15, 2009. The U.S. dollar–equivalent of the payable was $50,000 on the December 1, 2008, invoice date and $53,000 on December 31, 2008.
In Newsprint's 2008 consolidated income statement, what amount should be included as foreign exchange loss in computing net income, if the LCU is the functional currency and the translation method is appropriate?
A. $28,000
B. $13,000
C. $25,000
D. $8,000
