Multiple Choice Answers

The legislative branch of government is made up of:
A. appointed officials.
B. elected representatives.
C. equal numbers of all political parties.
D. community leaders.

Interpretation and determination of violations of the law is the function of:
A. the legislative branch of a government.
B. the judicial branch of a government.
C. the executive branch of a government.
D. none of the three branches of government.

The designation not elected by the voters in the Consumer Protection Agency is the:
A. president.
B. governor.
C. mayor.
D. secretary.

The agencies outside the executive branch that are headed by groups or individuals are created by the:
A. Congress.
B. Senate.
C. President.
D. judicial branch.

The branch of the government that frequently delegates to administrative agencies some of their lawmaking authority is the:
A. legislative.
B. executive.
C. state judiciary.
D. federal judiciary.

The Sarbanes-Oxley statute established a board to oversee accounting practices in:
A. the United States.
B. the Netherlands.
C. the United Kingdom.
D. Australia.

Frequently, persons with knowledge of computers access the credit card numbers of consumers who have made purchases on the Internet and use these credit card numbers without authorization. This act constitutes the crime of:
A. identity theft.
B. credit card fraud.
C. false pretense.
D. credit card perjury.

The tort of slander does NOT require a(n):
A. indirect defamatory statement.
B. direct defamatory statement.
C. drawing, picture, or cartoon.
D. direct attack.

In conducting business, a firm and its owners have the right not to be subjected to:
A. politically correct statements.
B. truthful statements.
C. false and malicious statements.
D. acts of negligence.

The branch of the government that frequently delegates to administrative agencies some of their lawmaking authority is the:
A. legislative.
B. executive.
C. state judiciary.
D. federal judiciary.

The determinations reached at a hearing conducted by an administrative agency:
A. cannot be appealed through the regular court system.
B. can be appealed through the alternative dispute resolution system.
C. can be appealed through the regular court system.
D. can be appealed only through in-house dispute resolution system.

If the person accused of defamation had a special privilege in making the defamatory statement, such as an attorney in a court proceedings, who accuses a witness of lying, the defamed person:
A. cannot recover damages.
B. can recover damages.
C. can file a suit of defamation.
D. can make defamatory statement against attorney

The Time Value of Money Principle says to __________. A. look for profitable opportunities to lease (or rent) an asset, rather than borrow and buy it. B. look for profitable opportunities to arrange project financing or limit partnership financing for an asset you wish to purchase. C. recognize that the cancellation option in a lease is valuable to the lessee. D. use discounted cash flow analysis to compare the costs and benefits of leasing, relative to the alternative of borrowing and buying.

The wholesale price for Captain John’s is $1.70 per loaf, and the variable cost of production is $0.80 per loaf. What is the contribution margin? A. $2.50 B. $1.70 C. $0.90 D. cannot tell

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 is expecting that expansion will allow them to sell an additional 4.5 million loaves in the next five years. What additional revenues minus expenses will be generated from expansion? A. $1,012,500 B. $1,000,500 C. $912,500 D. $1,102,000

The wholesale price for Captain John’s is $3.00 per loaf. One million loaves will be sold in the next year. What is the contribution margin? A. $3,000,000 B. $3,000,000 minus fixed costs C. $3.00 D. cannot tell

Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is ___________. A. caught up in a bear market. B. overvalued. C. undervalued. D. being sold by insiders.

Pursuing valuable ideas is the best way __________. A. to restrain your spending. B. to get yourself in trouble. C. to achieve extraordinary returns. D. to avoid risk.

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. all of these

__________ says to forecast the firm’s cash flows, and analyze the incremental cash flows of alternative decisions. A. The Principle of Incremental Benefits B. The Time Value of Money Principle C. The Signaling Principle D. The Principle of Risk-Return Trade-Off

___________ says to use both bottom-up and top-down processes to increase the chance of uncovering valuable ideas. A. The Principle of Two-Sided Transactions B. The Principle of Comparative Advantage C. The Behavioral Principle D. The Principle of Valuabl Ideas

__________ says to use common industry practices as a good starting place for the planning process. A. The Principle of Self-Interested Behavior B. The Principle of Valuable Ideas C. The Principle of Incremental Benefits D. The Behavioral Principle