Reference no: EM13983611

1. The journal entry to pay a cash dividend is to:

debit Dividends Payable; credit Cash.

debit Retained Earnings; credit Cash.

debit Dividends Payable; credit Retained Earnings.

debit Retained Earnings; credit Dividends Payable.

2. When a stock dividend was declared above par, the excess was ignored and only the par value was used. This error would cause:

the period's end assets to be overstated.

the period's end liabilities to be overstated.

the period's end stockholders' equity to be overstated.

None of the above.

3. Which of the following is not a direct departmental expense in a sales department?

Sales salaries

Delivery expense for related items

Advertising for the sales department

All are direct departmental expenses.

4. If direct labor for the month is $30,000, overhead is applied based on direct labor, annual overhead is estimated to be $500,000, and annual direct labor is estimated to be $800,000, what is the entry to apply overhead to production?

Debit Work-in-Process Inventory $18,750; credit Payroll $18,750

Debit Overhead-Applied $18,750; credit Work-in-Process Inventory $18,750

Debit Work-in-Process Inventory $18,750; credit Overhead-Applied $18,750

Debit Work-in-Process Inventory $30,000; credit Overhead-Applied $30,000

5. Interest expense was $10,000, income tax expense $20,000, and net income after taxes is $60,000. The number of times interest was earned is:

nine times.

eight times.

seven times.

six times.

6. Tricia and Jennifer formed a partnership. Tricia invested $10,000 in cash, and Jennifer invested $5,000 in cash, equipment valued at $6,000, and $1,000 accounts payable. The proper entry to record this is:.

debit Cash 15,000; debit Equipment 6,000; credit Accounts Payable $1,000; credit Tricia's Capital $10,000; credit Jennifer's Capital $10,000.

debit Cash 15,000; debit Equipment 6,000; debit Accounts Payable $1,000; credit Tricia's Capital $10,000; credit Jennifer's Capital $10,000.

debit Cash $15,000; debit Equipment $6,000; credit Tricia's Capital $10,000; credit Jennifer's Capital $10,000.

debit Cash $15,000; debit Equipment $6,000; credit Tricia's Capital $10,000; credit Jennifer's Capital $11,000.

7. Which would not go into the operating activities section of a statement of cash flows using the direct method?

Depreciation expense

Payment for dividends

Selling of plant, property, and equipment

All of the above.

8. Which of the following is true of a partnership?

Actions of one partner are binding on all the other partners.

Each partner is individually liable for partnership debts.

All of the owners always share income and losses equally.

Both A and B.

9. The Overhead-Control account is used for the:

application of overhead to production, and it has a debit balance.

accumulation of all actual overhead costs, and it has a credit balance.

application of overhead to production, and it has a credit balance.

accumulation of all actual overhead costs, and it has a debit balance

10. What inventories are included in determining total manufacturing costs?

Beginning and ending finished goods

Beginning and ending raw materials

Beginning and ending work-in-process

None of the above.

11. ______ addresses the question of where we raise money to finance our business activities.

Capital budgeting

Capital structure

Working capital management

Accounts receivable management

12. The annual report of a company is :

printed and mailed to owners and the SEC.

not available online.

not mailed to owners but only to the SEC.

always available online in more details.

13. ___ is simply the interest earned in subsequent periods on the interest earned in prior periods.

Quoted interest

Anticipated interest

Simple interest

Compound interest

14. The interest rate banks charge to their best customers is the ________ rate.

variable

prime

discount

federal funds

15. Curtis Equipment Inc., $1,000 par value, 15% annual coupon bonds, have 6 years remaining to maturity and are currently selling for $938.45. What is the firm's yield to maturity for these bonds?

0.15

0.167

0.1666

0.1547

16. Whenever a new product competes against a company's already existing products and reduces the sales of those products, ________ occur.
erosion costs

opportunity costs

sunk costs

working capital costs

17. Your firm has preferred stock outstanding that pays a current dividend of $2.00 per year and has a current price of $21.50. Currently, preferred stock makes up approximately 15% of your firm's long-term financing. What is the market required rate of return on your firm's preferred stock?

0.087

0.09

0.093

0.15

18. As we go from home operations to international operations, we can potentially receive a ________ , but we can also see our ________ increase.
diversification benefit; systematic risk

diversification disadvantage; total risk

diversification disadvantage; systematic risk

diversification benefit; total risk

19. Rogers' Rotors has debt with a market value of $250,000, preferred stock with a market value of $50,000, and common stock with a market value of $750,000. If debt has a cost of 7%, preferred stock a cost of 9%, common stock a cost of 13%, and the firm has a tax rate of 30%, what is the WACC?

0.0864

0.0912

0.0933

0.1088

20. When a company is in financial difficulty and cannot fully pay all of its creditors, the first lenders to be paid are the :
stockholders.

sinking fund holders.

junior debtholders.

senior debtholders.

21. According to the principle of diminishing returns, if the number of workers is increased beyond the point of diminishing returns, then the additional worker:

increases total output by the same amount as previous workers.

increases total output by more than the amount of previous workers.

increases total output by less than the amount of previous workers.

decreases total output.

22. The marginal principle implies that an individual should produce or consume where:

marginal benefit exceeds marginal cost.

marginal benefit is less than marginal cost.

marginal benefit equals marginal cost.

total benefit equals total cost.

23. When the price of apples goes up:

The demand for apples will decrease, ceteris paribus.

The demand for apples will increase, ceteris paribus.

The quantity of apples demanded will decrease, ceteris paribus.

The quantity of apples demanded will increase, ceteris paribus

24. The quantity supplied of hot dogs is 200 at the unit price of $3.50. Suppose the price elasticity of supply by the initial value method is 2, and you would like to induce sellers to increase the quantity of hot dogs supplied to 220. Then new price must be:

$1.50.

$2.00.

$2.50.

$3.00.

25. The self-interest model of government:

suggests that government officials are selfish.

explains why there are limits on government taxation and spending.

shows why some government projects take place even if the costs exceed the benefits.

All of the above.

26. The economic approach to air pollution is to:

use command and control.

internalize the external cost with a pollution tax.

use marketable pollution permits.

create a subsidy for cars.

27. When a person's expressed valuation of a product is affected by the numbers in her head, this is an important implication of :
mental accounting.

the decoy effect.

bundling.

the anchoring effect.

28. What is the most likely reason that milk sold in convenience stores is more expensive than milk sold in grocery stores?

Convenience stores sell milk in smaller packages, so the per-gallon packaging costs are higher.

Grocery stores buy in bulk, while convenience stores buy milk in smaller quantities.

People who buy milk at convenience stores tend to have less elastic demand for milk.

Convenience store owners are greedier than grocery store owners.

29. In 1995, the United States threatened to impose 100% tariffs on __________ from __________ if it didn't loosen its protectionist policies.

luxury cars; Japan

auto parts; Japan

brandies; France

light trucks; Germany

30. Suppose the nation of Alphonia was charged with dumping lawnmowers in the nation of Omegalon. The charge of dumping lawnmowers in the Omegalon market means that Alphonia was accused of:

selling faulty lawnmowers in Omegalon.

selling lawnmowers below cost or below domestic prices.

selling counterfeit-branded lawnmowers in Omegalon.

discarding lawnmowers that would not sell in their home country.