BUS X100 Practice Questions for Test 3

Which of the following is NOT a characteristic of an effective team: -Accountability -Structure -Goals -Purpose -Groupthink -Functional conflict and dissent -All of these are characteristics of an effective team

Group conflict and dissent: -Should be encouraged as it can lead to more 'optimal' solutions -Should be encouraged as it will encourage 'social loafing' -Should be discouraged as it may lead others in the group to raise additional issues -Should be discouraged as it can only lead disruption and chaos in a group -Is always a sign of a poorly performing group

From the Corporate Culture Model by Deal & Kennedy, which type of corporate culture values & beliefs is MOST conducive to high performance teamwork? -Process culture -Bet your company culture -Work Hard; Play Hard -Tough Guy -All of the above

Which term best describes when the Team's goals and the Organization's goals are in alignment: -Group Motivation-Hygiene Theory -Groupthink -Group Cohesiveness -Group Charter -Vroom's Expectancy Theory

'Social loafing' in groups: -Can be reduced by not highlighting contributions by individual group members -Is good as it helps avoid disruptive behavior -Can be decreased by increasing group size -Is bad when individuals put forth less effort when working in a group versus working alone -Helps to improve group cohesiveness

Team effectiveness is generally improved by: -Selecting team members who have similar skills and similar interests -Requiring the team to follow strict rules and guidelines -Having a clear charter and mission for the team when the team is established -Increasing the number of team members -Discouraging any and all controversy of opinions among group members

According to the Thomas Kilman Conflict Model, the "competing" style is best described by which of the following statements? -I feel that differences are not always worth worrying about. -I tell her my ideas and ask her for hers. -I show him the logic and benefits of my position. -I try not to hurt others' feelings. -I propose a middle ground.

Which of the following is NOT a role the team leader plays? -Administrator -Facilitator -Disciplarian -Coach -Dictator

To be efficient and effective, Teams should: -Avoid written agendas and minutes as they just take up more time -Not meet unless necessary if the objective can be met without meeting as a group -Avoid structure and formalities as they impede creativity -Meet often and on a set schedule -Practice all of the above

Which of the following is NOT an advantage of group decision making: -Groupthink which helps improve the decision making process -Group is less likely to fall victim to cognitive biases -Increases the probability that a decision will be implemented successfully -Group decision making is usually superior to individual decision making -All of these are an advantage of group decision making

Another name for the statement of financial position is the: -income statement. -statement of owners' equity. -earnings statement. -statement of changes. -balance sheet.

Revenues - cost of goods sold - expenses = net income characterizes which financial statement? -Balance sheet -Statement of retained earnings -Statement of cash flows -Statement of financial position -Income statement

All of the following are sections of the income statement for a business except: -cost of goods sold. -liabilities. -revenues. -operating expenses. -net income or loss.

The resources owned by David's Spa and Salon total $148,000. The total amount of debt that it owes to others is $87,000. Which of the following about David's Spa and Salon is true? -Owners' equity is $87,000. -Owners' equity is $61,000. -Liabilities are $148,000. -Liabilities are $61,000. -The firm has more owners' equity than liabilities.

The purpose of an audit is to ensure that financial statements have been prepared according to: -the particular company's standards. -the industry's standards. -generally accepted accounting principles. -international accounting standards. -the standards of certified public accountants.

An audit is: -performed by the firm's private bookkeepers. -not necessary if the firm used generally accepted bookkeeping procedures. -required by many bankers and lenders who are trying to validate a firm's accounting statements. -a waste of the firm's resources. -a guarantee that a firm hasn't "cooked" the books.

When Beatrice Beatlebottom attended the orientation for new employees in the accounting department at Joy Manufacturing company, she was told that the primary users of the managerial accounting information are -government agencies. -lenders. -suppliers. -managers. -all of these are users of managerial accounting information.

If the assets of Martin's Pet Store are $107,000 and the owners' equity is $75,000, which of the following is a true statement? -The owners' investment equals $182,000. -The current assets are worth $32,000. -The new income for the period is $32,000. -The long-term liabilities are $75,000. -The liabilities are $32,000.

The _____ created the IFRS, accounting standards used in more than 100 countries. -Generally Accepted Accounting Principles -International Accounting Standards Boards -Financial Accounting Standards Board -Certified Public Accountant -Security and Exchange Commission

If total liabilities were subtracted from total assets, the residual value would be: -revenues. -owners' equity. -net income. -working capital. -expenses.

Cash, marketable securities, notes receivable, and merchandise inventory are examples of: -overhead costs. -fixed assets -current assets. -expenses. -acid-test assets.

All of the following are current assets except: -prepaid insurance. -accounts receivable. -office equipment. -marketable securities. -cash.

The statement of cash flows for a business offers information on all of the following except: -expenses during a particular accounting period. -a company's financing needs. -available cash to pay dividends to stockholders. -decisions about the evaluation of a company's future investments. -available cash to pay a company's bills.

Which of the following best describes the organization of a statement of cash flows? -Payments - receipts = cash -Revenues - expenses = net income -Cash in, cash out -Assets = liabilities + stockholders' equity -Operating, investing, and financing cash flows

If a company has $50,000 of assets, which of the following could be true? -The company has more owners' equity than assets. -It has $30,000 in liabilities and $80,000 in owners' equity. -The company has fewer assets than liabilities. -It has $23,000 in owners' equity and $27,000 in liabilities. -It has $50,000 in stockholders' equity and $100,000 in liabilities.

All of the following are acceptable ways of stating the accounting equation except: -assets = shareholders' equity + liabilities. -assets - liabilities = owners' equity. -owners' equity - liabilities = assets. -assets = liabilities + owners' equity. -owners' equity = assets - liabilities.

If the liabilities of a business are $85,000 and the owners' equity is $110,000, which of the following is a true statement? -Assets equal $110,000. -Assets equal $85,000. -Assets equal $195,000. -Assets equal $25,000. -It is impossible to determine the value of the assets.

Which section of the statement of cash flows would show Wendy's payments for food ingredients and wages paid to employees? -Business cash flows -Cash flows from financing activities -Cash flows from operating activities -Cash flows from investing activities -Non-business-related cash flows

Which of the following presents assets in the correct balance sheet order? -Buildings, prepaid expenses, inventory, equipment -Cash, land, accounts receivable, equipment -Accounts receivable, buildings, inventory, land -Marketable securities, equipment, prepaid insurance, inventory -Cash, inventory, equipment

Revenues - cost of goods sold - expenses = net income characterizes which financial statement? -Statement of cash flows -Statement of retained earnings -Statement of financial position -Income statement -Balance sheet

For the previous year, Sambino's Italian Restaurant had a total of $320,000 in expenses and $295,000 in revenues, Sambino's -had a net income of $325,000 for the year. -had a net loss of $25,000 for the year. -lost $25,000 in revenues. -acquired an additional $295,000 in assets. -increased its stockholders' equity by $25,000.

Chase invests $5,000 of his own money in the new auto detailing business. He then obtains a loan and builds a small workshop in his backyard for $10,000. At this point assets are ______, liabilities are_______, and owners' equity is __________. -$10,000; $5,000; $15,000 -$15,000; $10,000; $5,000 -$5,000; $0; $5,000 -$15,000; $10,000; $0 -$10,000; $5,000; $5,000

Since furniture and store equipment for Rosalind's Boutique will be held or used for a period longer than one year, they are considered: -fixed assets. -owner's equities. -revenues. -current assets. -prepaid expenses.

If the liabilities of a business are $85,000, and the owners' equity is $110,000 which of the following is a correct statement? -Assets equal $25,000. -Assets equal $195,000. -It is impossible to determine the value of the assets. -Assets equal $110,000. -Assets equal $85,000.

Winshare Art Company has issued only common stock. Currently it has 10,000 shares outstanding. The value of the stock is shown as $20 per share. In addition, $100,000 of Winshare's earnings have been reinvested in the business since it was founded. What is Winshare's total owners' equity. -$300,000 -$200,000 -$100,000 -$2,000,000 -$100,020

Using a loan from his parents, Eric starts his own landscaping business by purchasing a lawn mower, weed eater, and a used truck for transporting the equipment. When recording his transaction for his new business, -assets increase and liabilities decrease. -owners' equity increases and assets increase. -liabilities increase and owners equity decreases. -assets increase and liabilities increase. -assets remain the same and liabilities increase.

The cash that Coca-Cola receives from providing customers with Coke and other soft drinks and juices would appear in the _____ section of the statement of cash flows. -financing -business -receiving -operating -investing

Julian Chan and Sam Jones each invested $10,000 in cash to start a business. Prior to their investment, the firm had no assets, liabilities, or owners' equity. Which one of the following is an example of the results of this transaction? -Cash is increased by $20,000, and owners' equity is increased by $20,000. -Liabilities are increased by $10,000, owners' equity is increased by $10,000, and cash is increased by $10,000. -Owners' equity is increased by $10,000, and cash is increased by $10,000. -Liabilities are increased by $10,000, and owners' equity is increased by $10,000. -Cash is increased by $5,000, and owners' equity is increased by $5,000.

During the year Comer, Inc., had $200,000 in goods available for sale. At the end of the accounting period it had an ending inventory of $40,000. The cost of goods sold by Comer was therefore -$200,000. -$160,000. -$40,000. -$20,000. -$10,000.

Entreprenuerial LLC is a small private consulting company that uses cash accounting. For 2003, Entrepreneurial LLC has billed clients $100,000 but has only received $90,000 in cash payments. Entrepreneurial LLC has incurred expenses of $50,000 but only paid $45,000 at the end of the year. What is Entrepreneurial LLC's net income on a cash basis? -$90,000 -$55,000 -$50,000 -$45,000 -$40,000

High risk, high yield corporate bonds: -usually carry an 'A' bond rating by Moudy's. -have yields the same as bank CD's of the same maturity. -are also known as 'junk' bonds. -are more risky than the same company's stock. -are good investments for risk-averse conservative investors.

Laura keeps only $250,000 combined in her savings and checking accounts at Union Bank because she knows that: -any more will not earn additional interest. -this is the maximum allowed under federal law. -her bank prohibits her from depositing more. -her fees will be significantly higher if more money is deposited. -this is the maximum amount insured per depositor.

Which of the following is considered the most important advantage of online banking for financial institutions? -Increased security -Lower cost of technology assistance for customers -Increased numbers of personnel -Larger numbers of technology-capable customers -Lower cost of processing large numbers of transactions

Which of the following will increase an investor's risk? -Purchasing a T-bill from the sale of common stock. -Buying a 'BB' rated bond with cash from a bank savings account. -Buying a bank's certificate of deposit with the proceeds from the sale of Conseco's junk bonds. -Purchasing a bank CD from the sale of soy bean futures. -None of the responses will increase an investor's risk.

Federal Savings Bank of Columbia is a for-profit organization that accepts deposits from all its customers, provides them with services, and makes loans. This is a(n): -investment banking firm. -savings and loan association. -credit union. -brokerage firm. -commercial bank.

Which of the following would most likely be considered the safest investment? -A BB rated corporate bond -Debentures of Conseco -A U.S. Treasury Bill -Common stock of Marsh Supermarkets -Preferred stock of Eli Lilly

Which of the following methods does the Federal Reserve System not use to control the money supply and the economy? -Buys government securities and bonds -Increases the reserve requirement -Increases the discount rate -Lends money to private businesses -Sells government securities and bonds

The economy in the United States has been lagging and is in danger of falling into a recession or even a depression. Based on historical actions, which of the following is the Fed most likely to do as a primary means to control the economy? -Lower the reserve requirement. -Raise the discount rate. -Buy government securities. -Lower the prime rate. -Sell government securities.

You have at least 30 years until your retirement. Which of the following investments is most likely to give you the highest return on your retirement investment? -Keeping Cash Under Your Mattress -U.S. Treasury Bills. -U.S. Government Bonds. -Portfolio of Large U.S. Company Stocks -Portfolio of Small U.S. Company Stocks

During the recent economic crisis, the Fed took several important steps to attempt to minimize the effects of the crisis for both businesses and individuals. Which of the following was not a step that the Fed took during this time? -Expanded its network of district banks to 18 -Provided liquidity -Supported troubled financial markets -Supported important financial institutions -Conducted stress tests for major banks

Earnings per share, return on sales, and return on equity are all examples of: -leverage ratios. -liquidity ratios. -turnover ratios. -profitability ratios. -sales ratios.

A high debt to owner's equity ratio -reduces the risk for lenders. -will increase as debts are paid off. -will increase the owner's investment. -makes borrowing money from lenders difficult. -All of the above are true.

A firm can raise ___________ through the sale of ownership in the firm. -debt capital -venture capital -speculative capital -equity capital -liquidity

The firm's use of debt to increase the return on owner's equity: -Increases the number of shares outstanding -Reduces the return on owner's equity -Reduces the firm's riskiness to shareholders -Increases the firm's riskiness to shareholders -Increases the firm's operating profit

Retained earnings are -all the earnings of the corporation. -profits before taxes. -profits after taxes. -undistributed profits. -total owners' equity.

With regard to the ongoing expense of long-term corporate financing, which of the following would be the LEAST expensive? -Long-term loans -Corporate bonds -Debenture bonds -Common stock -Trade credit

The use of borrowed funds rather than equity capital to increase the return on owner's equity is called: -management leverage. -financial planning. -return on leverage. -investment management. -financial leverage.

Which of the following is not a characteristic of short-term financing? -It must be repaid within three years. -It is easier to obtain than long-term financing. -There is less risk of nonpayment to the lender. -The amounts are usually smaller than amounts obtained through long-term sources. -There is a close working relationship between borrower and lender.

In regards to cash flow, a firm should ideally have: -enough money coming into the firm to cover the expenses in that period. -more cash flowing out than in, since this represents growth. -to use short-term financing only two to three times a year. -a constant need for short-term financing. -most of its cash going to its customers.

The _____ ratio is based on the principle that a high-risk investment should generate higher financial returns for a business and more conservative decisions often generate lesser returns. -return on owners' equity -risk-return -earnings -investment-to-equity -quick return

During the recent economic crisis, many companies found that it was: -accessible and easy to acquire and use many of the traditional sources of short- and long-term financing that they were accustomed to. -easy to shift their methods of financing from one traditional method to another. -an opportune time to acquire long-term loans and build their current inventory. -increasingly difficult to acquire and use many of the traditional sources of financing that they were accustomed to. -increasingly easy to sell stock for the first time to the general public.

Wiseman Bookstores has an accounts receivable turnover of 6. This means that -one-sixth of the company's assets are financed by creditors. -the company sells and replaces its merchandise inventory six times each year. -the company collects its accounts receivable about every sixty days. -the company's sales figure is six times its accounts receivable figure. -the company had $6 in assets for every $1 of current liabilities.

Mirror Emporium's sole owner, Fred Martin, is happy about his $100,000 profit. However, while he knows that the firm is profitable, he wants to know how effectively his investment is being used when compared to its other investments. What computation would you recommend? -Current ratio -Return on owners' equity -Return on sales -Dividends -Activity ratios

An important measure of a firm's ability to pay its current liabilities quickly is the -acid-test ratio. -calculation of cost of goods sold. -earnings per share. -return on sales ratio. -debt-to-equity ratio.

A debt to owners' equity ratio of 48% means: -It will make borrowing additional money from lenders more difficult. -It will make borrowing additional money from lenders easier. -A very high level of financial leverage and risk to investors. -A very low level of financial leverage and risk to investors. -Nothing since Grimm says a number by itself is meaningless.

Inventory requires considerable investment for most manufacturers, wholesalers, and retailers. This problem is complicated by the fact that most goods are manufactured four to nine months before they are actually sold to consumers. Manufacturers that engage in this type of speculative production often need short-term financing to do all of the following except: -buy materials. -pay wages. -pay rent. -buy equipment. -buy supplies.

Which of the following statements is true? -Financial leverage should not be considered when a firm borrows money. -Under the right circumstances, the use of borrowed money can improve a firm's return on owners' equity -There is no good reason for a firm to borrow money when it has cash to finance expansion. -The use of borrowed money always reduces a firm's return on owners' equity. -Return on owners' equity is not an important financial calculation.

The primary sources of funds available to a business include all of the following except: -debt capital. -sales of assets. -government grants. -sales revenue. -equity capital.

A firm had gross profits from sales in the amount of $180,000; operating expenses of $90,000; and federal income taxes of $20,000. What was the firm's net income after taxes? -$10,000 -$20,000 -$70,000 -$90,000 -$200,000

As the accountant for Marston Retail Stores, you must calculate the current ratio for the firm's last accounting period. The firm's current assets were $120,000, its fixed assets were $240,000, its current liabilities were $80,000, and its long-term liabilities were $60,000. Given these facts, what is the firm's current ratio? -4 -1.5 -3 -2 -1