Multiple Choice Answers

1. One reason for international investment is that
raw materials are typically cheaper in other countries than in the U.S.
doing business in foreign countries is simpler than in the U.S.
the economies of many countries are growing faster than that of the U.S.
price-earnings (P/E) ratios are higher in foreign countries
2. Which of the four basic financial statements adds net income and subtracts dividends to arrive at its key data element at the end of each period?
Balance Statement
Income Statement
Retained Earnings Statement
Statement of Cash Flows
3. Which of the following financial instruments entails the most risk and potentially the highest returns for investors?
Preferred stock
Common stock
Debt with a maturity of less than 1 year
4. Under the percentage of receivables method, the allowance for a doubtful accounts balance will occasionally have a debit balance due to write-offs that occur during the year, which exceed the previous provisions for bad debts. In such cases, what must a company do to this account?
Make an adjusting entry by subtracting the debit balance from the required balance.
Allow the debit balance to carry over to future periods.
Create a second allowance for doubtful accounts balance with a credit balance.
Make an adjusting entry by adding the debit balance to the required balance.
5. In what situations are notes payable used in lieu of accounts payable?
To create better credit, incur liability over a shorter time frame, and acquire additional financing for different lines of business
To give the lender formal proof of the obligation, for collection of debt purposes, and to require the borrower to pay interest
Because other financing is not available, to facilitate business relationship with other companies, and to improve goodwill
To provide short-term financing, for collection of debt purposes, and to pay off the debt quicker
6. The DMAIC (define, measure, analyze, improve, control) process is relevant to
Six Sigma
strategic matrix analysis
balanced scorecard
7. The Oviedo Thespians are planning to present performances of their Florida Revue on two consecutive nights in January. It will cost them $5,000 per night for theater rental, event insurance, and professional musicians. The theater will also take 10% of gross ticket sales. How many tickets must they sell at $10.00 per ticket to break even?
1,223 tickets
There is not enough information.
1,112 tickets
1000 tickets
8.Organizational requirements to support and sustain differentiation activities include which of the following:
structured organization and responsibilities
tradition of closeness to key customers
incentives based on meeting strict, quantitative targets
frequent, detailed control reports
9. Internal control is used in a business to enhance the accuracy and reliability of its accounting records and to
protect investments by the public
safeguard its assets
create a system of audit review
analyze financial statements
10. Which of the following will decrease the nominal deficit?
An increase in interest rates
An increase in the debt
An increase in taxes
An increase in government expenditures
11. To arrive at net cash provided by operating activities, the statement of cash flows prepared by the indirect method starts with net income and then adds or deducts various items. In making this calculation, the following items are added to net income under the indirect method:
Depreciation expense, gain on the sale of plant assets, and increase in current liability account
Patent amortization expense, increase in current asset account, and decease in current asset account
Gain on the sale of plant asset, increate in current asset account, and decrease in current liability account
Depletion expense, loss on the sale of plant assets, and patent amortization expense
12. Penn Corp. acquired a truck to haul widgets between its manufacturing facility and its sales offices. Penn acquired the truck for $55,000. Penn sold the truck years later for $15,000. Before the year of the sale, Penn had depreciated the asset by $32,000. Penn depreciated the truck by another $2,000 during the year it was sold. Does Penn record gain or loss on the sale and how much?
Loss of $17,000
Loss of $19,000
Gain of $6,000
Gain of $8,000
13. The main reason that vertical marketing systems are becoming more common is that
it is easy for multiple firms to coordinate a single marketing mix for a common target market
firms recognize that coordination among channel members can increase sales for each channel member
firms increasingly understand that competition among channel members is profitable
firms realize that working independently has advantages for channel members
14. A __________ is an articulation of a simple criterion or characterization of what the leader sees the company must become to establish and sustain global leadership.
leader’s vision
leader’s principle
strategic intent