Peregrine Exam Study Questions

Peregrine Exam
Study online at https://quizlet.com/_7hl7tq
1. What is a general A general ledger account is an account or record used

ledger? to sort, store and summarize a company's transactions.
asset accounts such as Cash, Accounts Receivable,
Inventory, Investments, Land, and Equipment
liability accounts including Notes Payable, Accounts

Payable, Accrued Expenses Payable, and Customer
Deposits
stockholders' equity accounts such as Common Stock,

Retained Earnings, Treasury Stock, and Accumulated
Other Comprehensive Income
2. What is the differ- Accounts payable is a current liability account in which

ence between ac- a company records the amounts it owes to suppliers or
counts payable and vendors for goods or services that it received on credit.
accounts receiv-
able? Accounts receivable is a current asset account in which
a company records the amounts it has a right to collect
from customers who received goods or services on
credit.
3. What is the cost of The cost of goods sold is the cost of the products that a
goods sold? retailer, distributor, or manufacturer has sold.
4. What is owner's eq- Owner's equity is one of the three main sections of a
uity? sole proprietorship's balance sheet and one of the com-
ponents of the accounting equation: Assets = Liabilities
+ Owner's Equity.
5. What is principles Principles of accounting can also refer to the basic

of accounting? or fundamental accounting principles: cost principles,
matching principles, full disclosure principles, mate-
riality principles, going concern principles, economic
entity principles, and so on. In this context, princi-
ples of accounting refers to the broad underlying con-
cepts which guide accountants when preparing finan-
cial statements.
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Peregrine Exam
6. What is equity? Equity can indicate an ownership interest in a business,
such as stockholders' equity or owner's equity.
Equity can mean an owner's interest in a personal asset.
For example, the owner of a $200,000 house that has
a mortgage loan of $75,000 is said to have $125,000 of
equity in the house.
7. What is meant by Reconciling an account is likely to mean proving or

reconciling an ac- documenting that an account balance is correct.
count?
8. What is included In accounting, a company's cash includes the following:

in cash and cash currency and coins
equivalents? checks received from customers but not yet deposited
checking accounts
petty cash
Cash equivalents are short-term, highly liquid invest-

ments with a maturity date that was 3 months or less
at the time of purchase.
money market accounts
U.S. Treasury Bills
commercial paper
9. What is the differ- An implicit cost is present but it is not initially shown or
ence between an reported as a separate cost.
implicit cost and an
explicit cost? An explicit cost is a cost that is present and it is clearly
shown or reported as a separate cost.
10. What is the dif- Stocks, or shares of capital stock, represent an own-
ference between ership interest in a corporation. Every corporation has
stocks and bonds? common stock.
Bonds are a form of long-term debt in which the issuing
corporation promises to pay the principal amount at a
specified maturity date.
11. AN INCREASE TO Client Fees

WHICH OF THE
FOLLOWING AC-
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Peregrine Exam
COUNTS WILL IN-
CREASE OWNERS'
EQUITY?
12. IN TIMES OF LIFO (LIFO is the acronym for last-in, first-out, which is
RISING PRICES, a cost flow assumption often used by U.S. corporations
THE INVENTORY in moving costs from inventory to the cost of goods sold.
COST METHOD Example: Assume that a corporation uses LIFO and
THAT WILL YIELD has three units of a product in its inventory. Due to its
THE LOWEST NET supplier raising its prices, the corporation purchased the
INCOME IS: items at different costs and in the following sequence:
$40, $44, and $46. The corporation ships the oldest
item (the one purchased for $40) to a customer at a
selling price of $60. However, under the LIFO cost flow
assumption the company reports its cost of goods sold
at $46 (the latest cost) and reports a gross profit of $14.
(The costs of $40 and $44 remain in inventory.)
13. When a busi- classification

ness erroneously
records expenses
as assets, it has
violated the mea-
surement issue of
14. A dividend will Retained Earnings

reduce which of
the following ac-
counts?
15. Lying by omission withholding material facts.

involves intention-
ally
16. Conflicts of interest advance their own interests, those of the organization,
exist when employ- or those of some other group.
ees must choose
whether to
17.
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Peregrine Exam
Which of the follow- Free cash flow (FCF) is, essentially, the cash flow that
ing statements is is available for interest and dividends after the company
CORRECT? has made the investments in current and fixed assets
that are necessary to sustain ongoing operations.
18. A corporate bond 33.73%

currently yields
8.3%. Municipal
bonds with the
same risk, maturi-
ty, and liquidity cur-
rently yield 5.5%. At
what tax rate would
investors be indif-
ferent between the
two bonds?
19. When the costs of be the only firm able to pay the higher prices and con-
supplies increase tinue to earn average or above- average returns.
in an industry, the
low-cost leader
20. TQM is most help- integrated cost-leadership differentiation

ful to firms follow-
ing the ____ busi-
ness strategy.
21. All of the follow- Work itself

ing are considered
extrinsic motiva-
tors in Herzberg's
two-factor theory
EXCEPT:
22. Which of the follow- Acquired needs theory

ing is NOT one of
the process motiva-
tion theories?
23. Final good

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Peregrine Exam
An individual who
purchases a com-
puter later de-
cides to acquire a
new motherboard.
In terms of comput-
ing GDP, this new
motherboard would
be a(n)
24. The largest compo- consumption

nent of GDP is
25. In economics, firms Maximize profits

are assumed to
26. Holding everything when either price or quantity increase

else equal, total
revenue increases
27. Government tac- Expropriation

tics that include re-
moving incentives,
demanding a high-
er share of prof-
its and taxes, and
confiscating for-
eign assets are
known as:
28. "People of the Collusion

same trade seldom
meet together, even
for merriment and
diversion, but their
conversation often
ends in conspiracy
against the public."
This quote from
Adam Smith is re-
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Peregrine Exam
ferring to which of
the following busi-
ness relationship
terms:
29. ____ is a collec- Information

tion of facts orga-
nized so that they
have additional val-
ue beyond the val-
ue of the facts
themselves.
30. ____ is the simu- Virtual reality

lation of a real or
imagined environ-
ment that can be
experienced visual-
ly in three dimen-
sions.
31. The Federal the publication of a notice of proposed rulemaking.

Highway
Administration
uses
notice-and-com-
ment rulemaking.
This process
begins with
32. Kip opens an ac- No federal law

count at a Lotsa
Goodies Store, and
buys a digital mu-
sic player and oth-
er items, but makes
no payments on the
account. To collect
the debt, Mako, the
manager, contacts
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Peregrine Exam
Kip's parents. This
violates
33. The process of Strategic planning

setting major or-
ganization objec-
tives and devel-
oping plans to
achieve them is
called:
34. One way human strategy formulation process

resource planning
links to strategic
planning is by pro-
viding a set of in-
puts into the:
35. In the SERVQUAL The ability to convey trust and confidence

instrument for mea-
suring service
quality, the concept
of assurance is as-
sociated with
36. Which of the follow- The only performance standard is Zero Defects
ing is not one of W.
Edwards Deming's
14 points?
37. A leading force Global competition

currently driving
change at work is:
38. A questioning, critical thinking

probing attitude is
at the core of:
39. Which of the follow- It explains how marketing activities mesh with other
ing IS NOT a pur- functional areas
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Peregrine Exam
pose of a marketing
plan?
40. In the context Because top managers must decide whether the mar-
of marketing plan- keting plan is the best use for the organization's scarce
ning, why is it vital resources
that the marketing
plan be capable of
selling itself to top
management?
41. Sensitivity analysis changes in the values of the payoffs.

considers
42. A population char- A parameter

acteristic, such as a
population mean, is
called
43. OPERATING Income Statement

STATEMENT IS
ANOTHER NAME
FOR WHICH OF
THE FOLLOWING?
44. PURCHASES RE- CONTRA-COST ACCOUNTS

TURNS AND AL-
LOWANCES AND
PURCHASE DIS-
COUNTS ARE
CLASSIFIED AS
WHICH OF THE
FOLLOWING ON
THE INCOME
STATEMENT?
45. THE LAST STEP TOTAL THE INCOME STATEMENT AND BALANCE
IN PREPARING A SHEET ITEMS TO COMPUTE NET INCOME (LOSS)
WORKSHEET IS
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Peregrine Exam
WHICH OF THE
FOLLOWING?
46. Mission Statement A MISSION STATEMENT DEFINES THE COMPA-

vs Vision NY'S BUSINESS, ITS OBJECTIVES AND ITS AP-
PROACH TO REACH THOSE OBJECTIVES. A VISION
STATEMENT DESCRIBES THE DESIRED FUTURE
POSITION OF THE COMPANY. ELEMENTS OF MIS-
SION AND VISION STATEMENTS ARE OFTEN COM-
BINED TO PROVIDE A STATEMENT OF THE COMPA-
NY'S PURPOSES, GOALS AND VALUES. HOWEVER,
SOMETIMES THE TWO TERMS ARE USED INTER-
CHANGEABLY.
47. Corporation Struc- A BOARD OF DIRECTORS; OFFICERS; EMPLOY-

ture EES; SHAREHOLDERS/OWNERS
AN INTERNAL CONFIGURATION OF THE FUNC-
TIONAL AREAS OF A BUSINESS
48. CORPORATE GOV- IT ESSENTIALLY INVOLVES BALANCING THE IN-

ERNANCE TERESTS OF A COMPANY'S MANY STAKEHOLD-
ERS, SUCH AS SHAREHOLDERS, MANAGEMENT,
CUSTOMERS, SUPPLIERS, FINANCIERS, GOVERN-
MENT AND THE COMMUNITY
IT ENCOMPASSES PRACTICALLY EVERY SPHERE

OF MANAGEMENT, FROM ACTION PLANS AND
INTERNAL CONTROLS TO PERFORMANCE MEA-
SUREMENT AND CORPORATE DISCLOSURE.
49. GDP Calculation THE FORMULA FOR GDP IS: GDP = C + I + G +

(EX -IM), WHERE "C" EQUALS SPENDING BY CON-
SUMERS, "I" EQUALS INVESTMENT BY BUSINESS-
ES, "G" EQUALS GOVERNMENT SPENDING AND
"(EX -IM)" EQUALS NET EXPORTS, THAT IS, THE
VALUE OF EXPORTSMINUSIMPORTS.
50. GROSS DOMESTIC IS ONE OF THE PRIMARY INDICATORS USED TO

PRODUCT (GDP) GAUGE THE HEALTH OF A COUNTRY'S ECONOMY.
IT REPRESENTS THE TOTAL DOLLAR VALUE OF
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Peregrine Exam
ALL GOODS AND SERVICES PRODUCED OVER A
SPECIFIC TIME PERIOD, OFTEN REFERRED TO AS
THE SIZE OF THE ECONOMY
ANALYSIS: GDP GROWTH RATE IS THE GROWTH

IN GDP FROM QUARTER TO QUARTER.GDP PER
CAPITA MEASURES GDP PER PERSON AND IS A
GREAT WAY TO COMPARE GDP DATA BETWEEN
VARIOUS COUNTRIES.
51. Inflation IS DEFINED AS A SUSTAINED INCREASE IN THE

GENERAL LEVEL OF PRICES FOR GOODS AND
SERVICES IN A COUNTY, AND IS MEASURED AS
AN ANNUAL PERCENTAGE CHANGE. UNDER CON-
DITIONS OF INFLATION, THE PRICES OF THINGS
RISE OVER TIME.
52. Recession IS A SIGNIFICANT DECLINE IN ECONOMIC AC-

TIVITY THAT GOES ON FOR MORE THAN A FEW
MONTHS. IT IS VISIBLE IN INDUSTRIAL PRODUC-
TION, EMPLOYMENT, REAL INCOME AND WHOLE-
SALE-RETAIL TRADE.
53. International Trade IS THE EXCHANGE OF CAPITAL, GOODS, AND SER-

VICES ACROSS INTERNATIONAL BORDERS OR
TERRITORIES. IN MOST COUNTRIES, SUCH TRADE
REPRESENTS A SIGNIFICANT SHARE OF GROSS
DOMESTIC PRODUCT (GDP).
54. MICROECONOMIC ARE PATTERNS OF MOVEMENTS OR CHANGES

TRENDS IN ECONOMIC FACTORS SUCH AS CONSUMER,
HOUSEHOLD, OR FIRMS' INCOME, SAVINGS, DEBT,
AND EXPENDITURE.
55. MICROECONOMIC ATTEMPTS TO EXPLAIN THE BEHAVIOR OF INDI-

ANALYSIS VIDUALS AND ORGANIZATIONS IN A GIVEN ECON-
OMY.
FUNCTIONS THROUGH MODELING AND BY EM-

PHASIZING INTERESTS.
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Peregrine Exam
56. Accounting Profit IS THE MONETARY COSTS A FIRM PAYS OUT AND
THE REVENUE A FIRM RECEIVES.
TOTAL MONETARY - REVENUE TOTAL COSTS.
57. Economic Profit IS THE MONETARY COSTS AND OPPORTUNITY

COSTS A FIRM PAYS AND THE REVENUE A FIRM
RECEIVES.
TOTAL REVENUE-(EXPLICIT COSTS + IMPLICIT

COSTS).
58. LAW OF SUPPLY THAT THE QUANTITY OF A GOOD SUPPLIED (I.E.,

THE AMOUNT OWNERS OR PRODUCERS OFFER
FOR SALE) RISES AS THE MARKET PRICE RISES,
AND FALLS AS THE PRICE FALLS.
59. Law of Demand SAYS THAT THE QUANTITY OF A GOOD DEMANDED

FALLS AS THE PRICE RISES, AND VICE VERSA.
60. Government tac- advance their own interests, those of the organization,
tics that include re- or those of some other group.
moving incentives
61. A suit for negli- Actual harm

gence must prove
four elements: duty
of care, breach
of duty, proximate
cause and
62. Financial Regula- is a form of regulation or supervision, which subjects

tion financial institutions to certain requirements, restrictions
and guidelines, aiming to maintain the integrity of the
financial system. This may be handled by either a gov-
ernment or non-government organization.
63. THE FTC'S BU- STOPS UNFAIR, DECEPTIVE AND FRAUDULENT

REAU OF CON- BUSINESS PRACTICES BY COLLECTING COM-
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Peregrine Exam
SUMER PROTEC- PLAINTS AND CONDUCTING INVESTIGATIONS, SU-
TION ING COMPANIES AND PEOPLE THAT BREAK THE
LAW, DEVELOPING RULES TO MAINTAIN A FAIR
MARKETPLACE, AND EDUCATING CONSUMERS
AND BUSINESSES ABOUT THEIR RIGHTS AND RE-
SPONSIBILITIES.
64. 6 BASIC RIGHTS right to safety, right to be informed, right to choose,

OF CONSUMERS right to be heard, right to consumer education, right to
courteous service
65. Corporate culture (1) the ways the organization conducts its business,
is shown treats its employees, customers, and the wider com-
munity, (2) the extent to which freedom is allowed in
decision making, developing new ideas, and personal
expression, (3) how power and information flow through
its hierarchy, and (4) how committed employees are to-
wards collective objectives. It affects the organization's
productivity and performance, and provides guidelines
on customer care and service, product quality and safe-
ty, attendance and punctuality, and concern for the en-
vironment.
Source
66. 5 Functions of HRM 1. Recruitment and Selection 2. Orientation 3. Main-

taining good working conditions 4. Managing employee
relations 5. Training and Development
67. Individual and Interaction of complex intra- and inter-personal forces

Group Dynamics operating in a group which determine its character, de-
velopment, and long-term survival.
Field of study concerned with determination of laws

underlying group behavior.
68. Population Sam- is the process of taking a subset of subjects that is rep-
pling resentative of the entire population. The sample must
have sufficient size to warrant statistical analysis.
69. TYPE I ERROR

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IS THE REJECTION OF A TRUE NULL HYPOTHESIS
(ALSO KNOWN AS A "FALSE POSITIVE" FINDING)
70. TYPE II ERROR IS FAILING TO REJECT A FALSE NULL HYPOTHESIS

(ALSO KNOWN AS A "FALSE NEGATIVE" FINDING)
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acct final
Study online at https://quizlet.com/_pdf05
1. T/F: According to the UCC, a computer purchased by a False

CPA for use in her office will be classified as inventory.
2. T/F: Willton Bros. obtains from Marbowe Manufactur- False

ing a line of credit of $25,000, of which Willton initially
uses $12,000 for purchase of inventory. Marbowe may
only have a security interest in the inventory that
covers the initial $12,000 advance
3. T/F: Article 9 of the UCC is flexible, simple, and it True

allows a variety of forms of secured financing
4. T/F: Article 9 of the UCC applies to a security interest False

without consent that arises by operation of law, such
as a mechanic's lien
5. T/F: Under Article 9 of the UCC, "value" may include True

past consideration such as an antecedent debt
6. T/F: Perfection" is required in order for the secured False

party to enforce rights against the debtor
7. T/F: The most common method of perfecting a se- True

curity interest under Article 9 is filing a completed
financing statement.
8. T/F: Hank's tractor is collateral for a loan and Hank False

moves to the next county. In most states, the security
instrument must be re-filed in the proper county or it
will render the security interest ineffective.
9. T/F: The UCC defines a debtor's "rights in collateral" False

in Article 9.
10. T/F: Temporary 20-day automatic perfection of a nego- False

tiable instrument would prevent any future holder of
the instrument from taking priority
11. T/F: A security interest is ineffective against the true

debtor until it "attaches."
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acct final
12. T/F: A buyer in the ordinary course of business takes True

collateral (other than farm products) free of any secu-
rity interest created by the buyer's seller, even if the
security interest is perfected and the buyer knows of
its existence
13. T/F: If the debtor is in default and the secured party False
wants to repossess the collateral in order to sell it, he
must get a court order to do so
14. T/F: If Sharpe Finance Co. has a secured interest in True

Jeff's car and Jeff is in default, in most states, Sharpe
may take the car from in front of Jeff's house without
getting a court order.
15. T/F: Mary financed her TV at the bank, but is now delin- False
quent on her payments. The bank holds a security
interest in the TV. In most states, when Mary is not
at home and without her knowledge, bank personnel
may enter Mary's home to repossess the TV
16. T/F: A PMSI is created in goods when a seller retains True

a security interest in the goods sold on credit by a
security agreement.
17. T/F: A debtor need not sign the financing statement. True
18. T/F: Attachment must occur in order to make a securi- True

ty interest enforceable against the debtor and against
third parties
19. T/F: First Finance Company filed its financing state- False
ment for a purchase money security interest in Don-
ald's lawn tractor on March 1. Donald purchased the
lawn tractor on February 21. If Donald files for bank-
ruptcy on February 28, the trustee will have priority
because the bankruptcy petition is filed before the
creditor perfects
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acct final
20. T/F: A bankruptcy trustee may invalidate a granting of True
a security interest from the debtor if it was made on
the date of or within 90 days before the filing of the
bankruptcy petition
21. T/F: A car buyer in the ordinary course of business False

will take free and clear of a security interest created
by any person who owned the automobile prior to the
dealer.
22. T/F: Article 9 of the UCC governs financing transac- False

tions involving security interests in real property
23. T/F: The Code's classifications of collateral according False

to nature are: (a) goods; (b) tangibles; and (c) dispens-
able paper
24. T/F: A security interest in consumer goods is always False

automatically perfected upon attachment
25. T/F: Possession is available as a means of perfect- False

ing a security interest in accounts and letter-of-credit
rights.
26. T/F: In states which have adopted certificate of title False

statutes for automobiles, trailers, mobile homes, and
boats, perfection of a security interest must include
both filing of a financing statement and notation on
the certificate of title
27. T/F: A creditor will have to exhaust all the possible True
legal procedures to try to collect from the principal
debtor before he can collect from a conditional guar-
antor of collection
28. T/F: A primary reason for requiring a surety is to True

reduce the creditor's risk of loss
29. True
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acct final
T/F: The right of exoneration allows the surety to re-
quire the principal debtor to pay his obligation to the
creditor.
30. T/F: Payment of the debt or performance of the oblig- True

ation discharges both the principal debtor and the
surety.
31. T/F: A purchaser of a house who buys the property True

"subject to" the mortgage is not personally liable for
the mortgage, nor is he a surety for the mortgage
obligation.
32. T/F: The principal debtor's lack of capacity due to his False
status as a minor may be used by the surety to avoid
payment of the obligation
33. T/F: The promise of a surety is binding even without False

consideration
34. A surety may set off his claims against the creditor if True
the creditor is solvent.
35. T/F: The surety does not have the right of contribution False
from cosureties.
36. T/F: Upon the surety's payment of the principal False

debtor's entire obligation, the surety gets no rights.
37. T/F: The creditor's rights against the principal debtor True
are determined by the contract between them.
38. T/F: If the main purpose of the promisor (surety) is to True

obtain an economic benefit that he did not previously
enjoy, the promise is not within the statute of frauds.
39. T/F: A security interest in electronic chattel paper is False

perfected by automatic perfection
40. d. equipment.
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acct final
Bill owns and operates a farm and a farm machinery
dealership. Under the Code, a new tractor that Bill
uses on his farm is classified as:
a. farm products.
b. inventory.
c. consumer goods.
d. equipment.
41. Which of the following is true? a. A security

a. A security agreement may create or provide for a agreement may
security interest in property that the debtor presently create or provide
does not own or have rights to. for a security in-
b. Obligations covered by a security agreement may terest in proper-
not include future advances. ty that the debtor
c. Federal regulation allows a credit seller or lender presently does not
to obtain a nonpossessory security interest in a con- own or have rights
sumer's household goods, such as furniture, appli- to.
ances, and clothing, whether as a purchase money
security interest or otherwise.
d. Encryption of a record cannot serve as a debtor's
authentication of a security agreement.
42. "Attachment" occurs when a secured party gives val- c. the debtor
ue, the debtor has acquired rights in the collateral, and secured par-
and: ty have an agree-
a. the debtor has completed his obligation to pay. ment.
b. the collateral is delivered to the borrower.
c. the debtor and secured party have an agreement.
d. Both (a) and (b), are correct.
43. When Mark bought new office furniture on credit, c. Mark's name
Bartin's Office Supply Co. filed a financing statement. and an indication
What would be required on the financing statement? of what collateral
a. The trade name of Mark's business. is covered by the
b. Mark's signature. agreement.
c. Mark's name and an indication of what collateral is
covered by the agreement.
d. All of the above.
44. d. All of the above.

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acct final
Which of the following is a type of collateral involving
rights evidenced by indispensable paper?
a. A certificated security.
b. An uncertificated security.
c. A security entitlement.
45. Automatic perfection means that: a. no financing

a. no financing statement need be filed. statement need be
b. no agreement need be made between the debtor filed.
and the secured party.
c. no value need be advanced.
46. A tangible or electronic record that evidences both a d. chattel paper.

monetary interest and security interest in or a lease
of specific goods is known as:
a. a negotiable instrument.
b. a document of title.
c. a promissory note.
d. chattel paper.
47. Jill owns and operates a donut shop. Under the Code, d. inventory.
the flour, sugar, and other goods used by Jill to make
donuts are classified as:
a. farm products.
b. fixtures.
c. consumer goods.
d. inventory.
48. Dr. Wells purchased a refrigerator for use in storing b. equipment.

medications at his office. The refrigerator will be clas-
sified as:
a. consumer goods.
b. equipment.
c. a fixture.
d. inventory.
49. What term is used to describe the creation of a secu- a. Attachment.

rity interest that is enforceable against the debtor?
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acct final
a. Attachment.
b. Pledge.
c. Perfection.
d. Lien.
50. The types of indispensable paper include: d. All of the above.

a. chattel paper.
b. instruments.
c. documents.
e. None of the above.
51. The right of a surety who has paid the creditor to be c. reimbursement.
repaid by the principal debtor is:
a. exoneration.
b. subrogation.
c. reimbursement.
d. None of the above.
52. Two or more sureties bound for the same debt of a b. cosureties.
principal debtor are known as:
a. absolute sureties.
b. cosureties.
c. conditional guarantors of collection.
d. co-creditors.
53. An undertaking by a surety to protect an employer b. fidelity bond.

against the dishonesty of an employee is a(n):
a. performance bond.
b. fidelity bond.
c. judicial bond.
d. official bond.
54. A bond, which guarantees the performance of the c. performance

terms of a contract, is a(n): bond.
a. judicial bond.
b. official bond.
c. performance bond.
d. fidelity bond.
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acct final
55. A defense that can only be asserted by the principal c. personal de-
debtor is called a: fense.
a. real defense.
b. subrogated defense.
c. personal defense.
d. joint defense.
56. If the surety is a(n) ___________, then the creditor may a. absolute surety
hold the surety liable as soon as the principal debtor
defaults.
a. absolute surety
b. conditional surety
c. subrogee
d. mortgagee
57. Upon paying the principal debtor's entire obligation, b. subrogated to

the surety is __________ the rights of the creditor.
a. subject to
b. subrogated to
c. exonerated by
d. set off by
58. A security interest: c. may arise in fix-

a. is an interest only in personal property to secure tures under UCC
payment or performance of an obligation. Article 9.
b. is effective against third parties, but not the debtor,
when it "attaches."
c. may arise in fixtures under UCC Article 9.
d. in fixtures, even if perfected, will not have priority
over a mortgage in the real property to which the
goods are attached.
59. Bill lends Harvey $500 and the loan is secured by d. Both (b) and (c).
Harvey's furniture. If Bill files a financing statement
on January 30, 2008 how long will it be effective?
a. Until July 30, 2008.
b. Until January 30, 2013.
c. Until January 30, 2018, if a continuation statement
is filed.
d. Both (b) and (c).
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acct final
60. Under Article 9 of the UCC, a pledge is: a. the delivery of

a. the delivery of personal property to a creditor as personal property
security for the payment of a debt. to a creditor as se-
b. a requirement that the secured party and the debtor curity for the pay-
agree to certain collateral. ment of a debt.
c. an equipment transfer before a forced sale.
d. a form of indispensable paper.
61. Under the Code, collateral is classified according to: a. its nature and
a. its nature and use. use.
b. the fundamental rights of the secured party.
c. the fundamental rights of the debtor.
d. None of the above.
62. A field warehouse, under Article 9 of the UCC, is: d. All of the above.
a. one kind of a pledge.
b. a common arrangement for financing inventory.
c. an agreement that allows the debtor access to the
pledged goods and simultaneously gives the secured
party control over the pledged property.
e. None of the above.
63. Every consensual secured transaction involves: e. Both (a) and (c).
a. a debtor, a secured party, and collateral.
b. value and a surety.
c. a security agreement and a security interest.
e. Both (a) and (c).
64. "Value" is defined as including: d. All of the above.

a. consideration under contract law.
b. a binding commitment to extend credit.
c. antecedent debt.
65. With the exception of pledges, a security agreement a. be in an authen-

must: ticated record.
a. be in an authenticated record.
9 / 11
acct final
b. be signed by the debtor with his personal, not busi-
ness, name.
c. contain at least a generic description of the collat-
eral, such as "all my personal property."
d. (a) and (b) are correct.
e. (b) and (c) are correct.
66. Generally, when may a security interest be perfected e. All of the above,
in collateral? depending on the
a. By the secured party's filing a financing statement type of collateral.
in the designated public office.
b. By the secured party's taking or retaining posses-
sion of the collateral.
c. Automatically, on the attachment of the security
interest.
d. Temporarily, for a period specified by the Code
e. All of the above, depending on the type of collateral.
67. Steve defaults on a car loan secured by his car d. All of the above.
and guaranteed by both Sam and Dave. Subrogation
would allow Sam, who paid Steve's full obligation to:
a. repossess the car.
b. collect from Dave.
c. collect from Steve.
68. Gary decided to borrow from Jones Bank since it b. No, because a
promised that his loan interest rate would be system- fraud perpetrated
atically reduced every year when the board met. The upon Gary will be
loan rate was never reduced, but actually increased a defense.
monthly. Gary refused to pay the interest demanded
and sued for rescission of the contract. The bank at-
tempted to collect from Lewis, a surety under the loan.
Does Lewis have to pay?
a. Yes, because there is no defense.
b. No, because a fraud perpetrated upon Gary will be
a defense.
c. Yes, since the surety obligation is separate from the
underlying contract.
10 / 11
acct final
d. No, because the surety stands in the shoes of the
debtor for all purposes.
69. Subrogation includes: d. creditor's rights

a. creditor's rights against the principal debtor, but in security of the
not including the creditor's priorities in a bankruptcy principal debtor.
proceeding.
b. no rights against cosureties.
c. no rights against co-makers.
d. creditor's rights in security of the principal debtor.
70. What party(ies) is/are involved in a suretyship rela- a. The principal

tionship? debtor.
a. The principal debtor.
b. An ancillary bailee.
c. Principal bailee.
71. If the principal debtor defaults, the surety has rights e. All of the above.
against the principal debtor, third parties, and co-
sureties. These rights would include:
a. exoneration.
b. reimbursement.
c. subrogation.
d. contribution.
e. All of the above.
72. What contractual defenses are available to those par- d. All of the above.
ties involved in surety relationships?
a. The nonexistence of the principal debtor's obliga-
tion.
b. Discharge of the principal debtor's obligation.
c. Modification of the principal debtor's contract.
11 / 11
Exit Exam USD- Financial Accounting
Study online at https://quizlet.com/_2qvdj2
1. Generally accepted -Rules that govern accounting, based on a conceptu-

accounting princi- al framework
ples (GAAP) -Goal: to provide useful information to those making
investment and lending decisions
2. Types of businesses Proprietorship, partnership, corporations, Limited Li-

organizations ability companies
3. Accounting period Businesses prepare financial statements for specific

periods to evaluate performance
4. Revenue recognition Record revenue when it is earned

principle When service is provided or product delivered at the
value or service transferred to customer
5. Matching principle -measure all expenses incurred during the account-

ing period
-Match the expenses against the revenues earned
during the same period
6. Time period concept -Requires that accounting information be reported at

regular intervals
-accounts are updated at the end of each accounting
period
7. Entity concept separate the owners (person transactions) of the

business from the transactions the company is in-
volved in
8. Reliability Principle you can verify and look at to make sure what is on the
financial statement is on their and accurate
9. Cost Principle You are being able to record things at a certain value
(what dollar value it cost you for a particular item)
10. Going concern Prin- We are able to can believe that the company will be
ciple able to operate in the net year
- the company will be a company next year
11.
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Monetary unit Princi- We are recording things in the books with a dollar
ple value
12. Consistency Princi- Businesses should use the same accounting meth-
ple ods from period to period
13. Disclosure principle Companies should report enough information for out-
siders to make decisions about the company
14. Materiality principle Companies must follow accounting rules for signifi-
cant items (significant- cause a user to change deci-
sion)
15. Conservatism princi- Exercise caution in financial reporting

ple
16. Accounting Cycle During the period: Journalize transaction, post to ac-
counts
End of period: adjust accounts, prepare financial
statements, close accounts
17. The accounting Assets= Liabilities + Stockholders' equity

Equation
18. Assets (Def. and ex- -Economic resources that have a future benefit
amples) -Cast, accounts receivable, merchandise inventory,
furniture, land
19. Liabilities (Def. and -Debts payable to outsiders

examples) -Accounts payable, bank loans, unearned revenues
20. Equity (Def. and ex- -Owners; equity, stockholder's equity

amples) -Owner's capital and drawings, common stock, re-
tained earnings
21. Retained earnings =Net income - dividends
22. Financial Statements Income statement, balance sheet, retained earnings

statement, cash flow statement
2/6
23. Income statement -Reports profitability of business for period of time
- Revenues - Expenses = Net income (net loss)
24. Gross profit (equa- Sales - Cost of goods sold = gross profit
tion)
25. Operating income Gross profit- operating expenses = operating income

(equation)
26. Net income (equa- Operating income +/- other revenues and expenses =
tion) Net income
27. Statement of retained Summary if changes in an entity's retired earnings

earnings (Def & equa- during a specific period
tion) - Beginning Retained earnings + Net income - Divi-
dends = retired earnings
28. Balance Sheet Reports the entity's assets, liabilities, and stockhold-
er's equity as of a specific date
Assets = liabilities + Equity
29. Statement of cash Reports why cash increased or decreased during the
flows (Def. and three period
sections)
-operating- changes in revenues, expenses, current
assets, current liabilities
-Investing- changes in long term assets
-Financing- changes in long term liabilities and equity
30. Journal Entry -Identify each account affected and its type
process -Determine if each account is increased or decrease
-Record transaction in the journal
31. Normal Balances Debt- assets, dividends, expenses

(Debt and Credit) Credit- liabilities, retained earnings, common stock,
revenues
32. Adjusting entries - Debt expense, credit asset

Prepaid expense
3/6
33. Adjusting entries - Debt expense, credit contra asset
Depreciation
34. Adjusting entries - debt expense, credit liability

Accrued expense
35. Adjusting entries - ac- debt asset, credit revenue

crued revenue
36. Adjusting entries - debt liability, credit revenue

Unearned revenue
37. Closing journal en- zero out temporary accounts: revenues, expenses,
tries and dividends
38. Specific Unit cost Each inventory item is identified by its specific cost,
used by businesses that sell unique, easily identified
items
39. FIFO -First in - First out

Assumes oldest items are sold first , newest items are
on hand
-high income attracts investors
40. LIFO -Last- in First out

Assumes newest items are sold first
Lower income= less taxes, if inventory prices are
rising this has higher gross profit and net income
41. Average cost The average cost of each unit in inventory is assigned
to cost of goods sold
cost of inventory on hand / number of units on hand
= avg. cost
Middle ground, if inventory prices are rising, lowest
gross profit and new income
42. Receivables Arise from selling goods and services on credit and
lending money
-accounts receivable and notes receivable
Uncollectible accounts
4/6
43. Method of valuation Credit sales * % uncollectible = uncollectible accounts

of uncollectible ac- expense
counts:
Percentage of sales
44. Method of valuation Uncollectible accounts expense is the difference be-

of uncollectible ac- tween the target allowance balance based on the
counts: aging schedule and the current allowance account
Aging of accounts re- balance
ceivable
45. Methods of calculat- Straight line, unit of production, double declining bal-
ing depreciation ance
46. Straight line (cost - residual value) * (1/useful life) * (# months /12)
= depreciation expense
47. Units of production (cost - residual value) * (1 / life in units) = depreciation

expense
48. Double declining bal- (Cost - accumulated depreciation) * (2/ useful life) * (
ance # months / 12) = depreciation expense
49. Current vs. long term - 1 year

liabilities Current liabilities: accounts payable; short term notes
payables; unearned revenues; sales tax payables; in-
terest payable; salaries payables
Long term liabilities: bonds payables; mortgages
payable
50. Calculation of inter- Principal x annual Rate x Time period

est
51. Equity accounts issuance of stock, dividends (cash or stock divi-

dends), treasury stock (company repurchases own
shares of common stock)
52. Calculating divi- Number of shares outstanding * dividend per share

dends
5/6
53. Horizontal analysis Compares two financial statements to determine dol-

lar and percentage changes
- (current year balance - prior year balance) / prior
year balance = % of change
54. Vertical analysis Shows relationship of each item to a base amount on

financial statements
Income statement- each item expressed as percent-
age of net sales
Balance sheet- each item expressed as percentage
of total assets
55. Financial statement Solvency (liquidity) ratios, profitability ratios

ratios
56. Net working capital net working capital = current assets - current liabilities
(calculation)
57. Current ration (calcu- current assets / current liabilities

lation)
58. Acid Test ratio (calcu- acid test ratio = (cash + ST investments + Net act
lation) receivables) / current liabilities
59. debt ratio (calcula- Debt ratio= total liabilities / total assets
tion)
60. Earnings per share Earnings per share = (net income - preferred divi-
(calculation) dends) / # of shares of common stock outstanding
6/6
Accounting Final Exam
Study online at https://quizlet.com/_9qiwlq
1. Decision making (1) Define business goals. (2) Identify alternative courses
is a four-step of action. (3) Gather and analyze relevant information;
process compare alternatives. (4) Choose the best alternative.
2. Relevant informa- expected future data that differs among alternatives

tion
3. When managers they focus on information that is relevant to the decision

make decisions
4. Relevant costs are costs that are relevant to a particular decision
5. Irrelevant infor- does NOT affect a decision

mation
6. Sunk costs are costs that were incurred in the past and cannot be
changed, regardless of which future action is taken.
- Examples: Depreciation, original purchase price of an
asset
7. Nonfinancial, or For example:

qualitative, fac- - Closing plants and laying off employees can hurt morale.
tors play a role - The decision to outsource may reduce control over
in managers' deci- delivery time or product quality.
sions and, as a re- - Offering discount prices to select customers may upset
sult, can be rele- regular customers and tempt them to take their business
vant elsewhere.
8. Differential analy- A common approach to making short-term business de-

sis cisions is called
9. Short-term deci- - Regular and special pricing

sions include: - Dropping unprofitable products and segments, product
mix, and sales mix
- Outsourcing and processing further
10. 2 Key factors: 1) Focus on relevant revenues, costs & profits

2) Use a contribution margin approach that separates
variable and fixed costs.
1 / 14
11. Managers must - What is the company's target profit?
consider three - How much will customers pay?
questions when - Is the company a price-taker or a price-setter for this
setting regular product or service?
prices:
12. Price-taker little control over pricing because their product or service
is not unique or because competition is intense.
13. Price-setter more control over pricing because their product or service
is unique with little competition.
14. When a company it emphasizes a target-pricing approach to managing

is a price-taker costs and profits.
15. Target Pricing Starts with the market price of the product and then
subtracts the company's desired profit to determine the
maximum allowed target full product cost.
16. Target pricing is a method of managing costs and profits by determining

the target full product cost. The target full product cost is
the full cost to develop, produce, and deliver the product
or service.
17. In setting regular companies must cover all of their costs—whether the
sales prices costs are product or period, fixed or variable.
18. When a company it emphasizes a cost-plus approach to pricing. This pricing

is a price-setter approach is essentially the opposite of the target-pricing
approach.
19. Cost-plus pricing starts with the company's full product costs (as a given)
and adds its desired profit to determine a cost-plus price.
20. Price taker Target Pricing
21. Price Setter Cost Plus Pricing
22. A special pricing when a customer requests a one-time order at a reduced

decision occurs sales price
2 / 14
23. Management - Does the company have the excess capacity available
must consider: to fill the order?
- Will the reduced sales price be high enough to cover the
differential costs of filling the order?
(In other words, will the special order provide a
positive contribution margin.)
24. Will the special or- Decision Rule: Accept Special Pricing Order
der affect regular
sales in the long
run?
25. Major Managerial Deciding which products to produce and sell

decision - If manufacturing capacity is limited, managers must
decide which products to produce.
- Managers must also decide whether to drop products,
departments, or territories that are not as profitable as
desired.
26. Management's - Does the product or segment provide a positive contri-

considerations bution margin?
when dropping a - Will fixed costs continue to exist, even if the company
product or drops the product or segment?
business - Are there any direct fixed costs that can be avoided if the
segment include: company drops the product or segment?
- Will dropping the product or segment affect sales of the
company's other products?
- What would the company do with the freed manufactur-
ing capacity or store space?
27. In the short-term many fixed costs remain unchanged in total, regardless of
how they are allocated to products or other cost objects.
• Allocated fixed costs are irrelevant.
28. Relevant fixed - Will the fixed costs continue to exist even if the product
costs questions is dropped?
include: - Are there any direct fixed costs of the Premium Tablets
that can be avoided if the product is dropped?
29.
3 / 14
Managers consid- - Would dropping it hurt other product sales?
ering dropping a - What could be done with the freed manufacturing ca-
product line or pacity?
segment would
consider:
30. Short-term busi- take into account all costs affected by the choice of action.
ness decisions
should
31. Decision Rule:

Drop Product or
Segment
32. A constraint is a factor that restricts the production or sale of a product.

• For a manufacturer, a constraint could be machine hours
or labor hours.
• For a merchandiser, a constraint could be display space.
33. Managers should Decision Rule: Which Product to Emphasize

consider produc-
ing and selling
the products that
offer the highest
contribution mar-
gin per unit of the
constraint.
34. Maximize prof- • Merchandising companies also have constraints, dis-

itability by com- play space being the most common constraint.
bining the con- • Managers must choose which products to display.
straint limitations • Managers consider space constraints along with the
with the limited contribution margin per unit.
market
35. Short-term man- include how products are produced.

agement deci-
sions
36.
4 / 14
Two questions • Should the company outsource a component of the
are: finished product or make it?
• Should a company sell a product as it is or process if
further?
-Many companies choose to outsource products or ser-
vices. It is important for companies to consider opportu-
nity costs in this decision
37. Opportunity cost is the benefit given up by choosing an alternative course

of action.
38. Management con- - How do the company's variable costs compare to the
siders the follow- outsourcing costs?
ing: - Are any fixed costs avoidable if the company out-
sources?
- What could the company do with the freed manufactur-
ing capacity?
-At what point in processing should a company sell its
product?
39. Decision Rule:

Outsource
40. Managers must - How much revenue will the company receive if it sells
determine: the product as is?
- How much revenue will the company receive if it sells
the product after processing it further?
- How much will it cost to process the product further?
41. Decision Rule:

Sell or Process
Further
42. Joint costs are costs of a production process that yields multiple
products.
43. Capital Budgeting is part of the master budget and is critical because it can
(ch26) involve large sums of cash over long periods of time.
5 / 14
44. A capital asset is an operational asset used for a long period of time, such
as buildings and equipment.
45. A capital invest- is the acquisition of a capital asset.

ment
46. Capital Budgeting is the process of making capital investment decisions,

(cont.) planning to invest in long-term assets in a way that returns
the most profitability to the
company.
47. **Capital Budget- focuses on net cash flows, not operating income which is
ing (cont..) generated using GAAP traditional absorption costing.
48. Capital budgeting Although the calculations these methods require may
is not an exact appear precise, remember that they are based on es-
science. timates—predictions about an uncertain future. These
estimates must consider many unknown factors, such as
changing consumer preferences, competition, the state
of the economy, and government regulations. This makes
long-term decisions riskier than short-term decisions.
49. The capital bud- Step 1: Develop strategies (long-term goals).

geting process Step 2: Plan for the specific action to achieve those goals.
consists of the --Substep 1: Identify potential capital investments.
following steps: --Substep 2: Analyze potential capital investments. (meth-
ods include Payback, ARR, NPV and IRR)
--Substep 3: Apply capital rationing to choose which in-
vestment(s) to pursue
Step 3: Act. (Acquire and use approved capital invest-
ments.)
Step 4: Control. (Perform post-audits, during and at the
end of the investment's life.)
50. Capital Budgeting - Payback

Process (cont.) - Accounting rate of return (ARR)
• Four popu- - Net present value (NPV)
lar methods of - Internal rate of return (IRR)
analyzing poten-
6 / 14
tial capital invest-
ments are:
51. Stages of capital 1. Screen the potential capital investments using one or
budgeting: both of the methods that do not incorporate the time value
of money.
2. Further analyze the potential investments using the net
present value and/or internal rate of return methods.
52. Because these • Generally Accepted Accounting Principles (GAAP) are

methods consider based on accrual accounting.
the time value of • Capital budgeting focuses on cash flows.
money, they pro-
vide more accu-
rate information
about the poten-
tial investment's
profitability.
53. Capital Rationing is the process of ranking and choosing among term-57al-
ternative capital investments based
on the availability of funds. Managers must determine if
and when to make specific capital
investments, so capital rationing occurs when the compa-
ny has limited cash available to invest in
long-term assets.
54. A post-audit is the comparison of actual results of capital investments

to the projected results. The
comparisons help companies determine whether the in-
vestments are going as planned and deserve
continued support, or whether they should abandon the
project and dispose of the assets
55. Post-audits should be routinely performed during the life of the

(cont.) pterm-57roject, not just at the end of the project life
span. The intermediate post-audits allow managers to
make adjustments to the projects during their
lifetimes. Managers also use feedback from post-audits
to better estimate projections for future
7 / 14
projects. If managers expect routine post-audits, they will
more likely submit realistic estimates with
their capital investment proposals.
56. Step two in the The first two methods, payback and accounting rate of
capital budgeting return, are fairly quick and easy, and they work well for
process involves capital investments that have a relatively short life span
analyzing the in-
vestments using
one or more
capital budgeting
methods
57. Payback and ac- screen potential investments from those that are less
counting rate of desirable. Payback provides management with valuable
return are also information on how fast the cash invested will be re-
used to couped. The accounting rate of return shows the effect of
the investment on the company's accrual-based income.
However, these two methods are inadequate if the capital
investments have a longer life span because these meth-
ods do not consider the time value of money.
58. The last two meth- net present value and internal rate of return, factor in
ods: the time value of money, so they are more appropriate
for longer-term capital investments. Management often
uses a combination of methods to make final capital
investment decisions.
59. Cash Inflows from a capital investment include cash revenue generated
by the investment, cash
savings in operating costs, and any future residual value
of the investment (asset).
60. Cash outflows from a capital investment include the initial investment
(acquisition cost), cash
operating costs incurred, and cash paid for refurbish-
ment, repairs, and maintenance.
61.
8 / 14
Capital Invest-
ment Cashflows
Chart
62. The desirability of depends on its ability to generate net cash inflows—that
a capital asset is, cash inflows in excess of cash outflows—over the
asset's useful life.
63. The capital invest- Of the four capital budgeting methods covered in this
ment's net cash chapter, only the accounting rate of return method uses
inflows, therefore, accrual-based accounting income. The other three meth-
will differ from its ods use the investment's projected net cash inflows.
operating income
64. Life Cycle of Cap- in our calculations, we will always consider the amount
ital Investments of the investment separately from all other cash flows
related to the investment
65. Payback is a capital investment analysis method that measures the

length of time it takes to recover, in net cash inflows, the
cost of the initial investment.
66. The initial in- All else being equal, the shorter the payback period,
vestment is also the more attractive the asset. Computing the payback
called the capital depends on whether net cash inflows are equal each year
outlay. or differ over time.
• Net cash flows arise from an increase in revenues, a
decrease in expenses, or both.
• When net cash inflows are equal each year, managers
compute the payback
The payback equation works only when net cash inflows
are the same each period. When periodic cash flows are
unequal, you must total net cash inflows until the amount
invested is recovered
67. The payback The key point is that the investment with the shortest
method does not payback is best only if all other factors are the same.
9 / 14
consider the as- Therefore, managers usually use the payback method as
set's profitability. a screening device to eliminate investments that will take
The method only too long to recoup the initial investment. They rarely use
tells management payback as the sole method for deciding whether to invest
how quickly it will in an asset. Managers also use accounting rate of return,
recover the cash net present value, and internal rate of return to evaluate
capital investments.
68. Decision Rule:

Payback
69. Accounting Rate is a capital investment analysis method that measures

of Return (ARR) profitability of an investment.
ARR = Average annual operating income / Average
amount invested
-Notice that accounting rate of return focuses on the
operating income, not the net cash inflow, that an asset
generates.
70. Accounting Rate ARR measures the average annual rate of return over the
of Return (ARR) asset's entire life, so it is sometimes called average rate
cont. of return or annual rate of return.
-Also, notice the similarity to ROI (return on investment),
used to evaluate investment centers. The primary differ-
ence is that ARR is used to evaluate the lifetime return
of an investment, and ROI is used to evaluate an annual
return.
71. Before calculat-

ing the ARR, first
determine the av-
erage annual op-
erating income
using the fol-
lowing formula:
[(A-B)/C]
72. Decision Rule:

ARR
10 / 14
73. The Decision Rule that if the expected accounting rate of return meets or
for accounting exceeds the required rate of return, the company should
rate of return is invest. If the expected accounting rate of return is less
than the required rate of return, the company should not
invest.
74. A dollar received because today's dollar can be invested to earn additional
today is worth interest over time.
more than a dollar
to be received in
the future.
75. The fact that in- the time value of money.**

vested cash earns
interest over time
is called
76. Net Present Val- Time value of money depends on several key factors:
ue and Internal · The principal amount (p)—The amount of the investment
Rate of Return (Principal is stated as either a single lump sum or an
- 2 Capital in- annuity.)
vestment analysis · The number of periods (n)—The length of time from the
methods that use beginning of the investment until termination
the time value of · The interest rate (i)—The annual percentage earned on
money. the investment
77. Simple Interest that interest is calculated only on the principal amount.
means
78. Compound Inter- that interest is calculated on the principal and on all
est means previously earned interest. Compound interest assumes
that all interest earned will remain invested and earn
additional interest at the same interest rate.
• Most investments yield compound interest, so we as-
sume compound interest, rather than simple interest, for
the rest of this chapter.
11 / 14
79. The future value of the investment in our example is simply its worth at the
end of the five-year term.
• The future value is the principal plus interest earned.
80. We can calculate (1) principal amount (2) number of periods (3) interest
the future value rate.
or the present val- *The only difference between present value and future
ue of any invest- value is the amount of interest that is earned in the
ment by know- intervening time span.
ing (or assuming)
information about
the three factors
81. Two capital in- net present value (NPV) and internal rate of return (IRR).
vestment analy-
sis methods that
incorporate the
time value of mon-
ey:
82. HOW DO DIS- • Neither payback nor ARR recognizes the time value of
COUNTED CASH money. (That is, these methods fail to consider the timing
FLOW METHODS of the net cash inflows an asset generates)
WORK? • The methods incorporating compound interest are:
- Net present value (NPV)
- Internal rate of return (IRR)
83. The NPV and IRR rely on present value calculations to compare an invest-
methods ment's initial cost with its expected net cash inflows.
84. Net present value is a capital investment analysis method that measures
(NPV): the net difference between the present value of an invest-
ment's net cash inflows and the investment's initial cost.
85. The internal rate is the rate of return, based on discounted cash flows, of
of return (IRR) a capital investment.
86. The Discount is management's minimum desired rate of return on a

Rate: capital investment.
12 / 14
87. An annuity is a stream of equal cash payments made at equal time

intervals. In contrast, a lump sum
payment is a one-time cash payment. An ordinary annuity
is one in which the installment payments occur at the end
of each period.
88. **If the present that's a good investment

value of an invest-
ment's net cash
inflows exceeds
the initial cost of
the investment,
89. The Decision Rule that a positive net present value means that the project
for Net Present earns more than the required rate of return, and the com-
Value is that pany should invest in the project. A negative net present
value means that the project earns less than the required
rate of return, and the company should not invest in the
project.
90. Decision Rule: Choose the project with the highest NPV when comparing
NPV projects with similar investments.
91. Use the Profitabil- when initial investment amounts differ.

ity Index (also -Profitability index= Present Value of Net Cash In-
known as the pre- Flows/Initial Investment
sent value index) The profitability index allows us to compare alternative
investments in present value terms (like the net present
value method), but it also considers differences in the
investments' initial cost.
92. It is the interest The actual rate of return is called the internal rate of
rate that makes return. In other words, the internal rate of return is the
the NPV of the in- interest rate that makes the initial cost of the investment
vestment equal to equal to the present value of the investment's net cash
zero.
13 / 14
inflows, which means the net present value is zero.
-The higher the IRR, the more desirable the project
93. Decision Rule:

IRR
94. Comparison of
Capital Invest-
ment Analysis
Methods
14 / 14
ACCOUNTING EXIT EXAM
Study online at https://quizlet.com/_4nz6kh
1. solvency long-term viability

the ability to continue doing business
2. cash vs. accrual record/recognize transactions when:
cash
rev: cash is received
exp: expenses are paid
accrual
rev: earned
exp: incurred
3. copayment flat fee paid every time visit a provider
4. cost purchase price (value of all assets) tangible
5. conservatism anticipate loss, un anticipate gains
6. prepaid expense an asset purchased to benefit a future ac-

counting period
7. for profit NA "paid in" contributed capital

amount investors have purchased to estab-
lish share of ownership
8. not for profit NA simply retained earnings of excess rev over

expenses (retained earnings invested back
into the organization)
9. fair value (market) accounting based on supply/demand market econom-

ics
10. financing transactions related to repayment of re-

sources obtained through short-term bor-
rowing
11. coinsurance
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percentage of the billed charged that the
patient is responsible even it/ when insur-
ance begins
12. operating transaction directly and indirectly related to

the provision of the services to the patients
13. investing transactions related to the purchase and

selling of securities
14. net realizable value what is the asset worth if we sold it today,
but accounting for additional costs involved
with the sale
15. replacement cost each asset is valued at the amount it would

cost to replace
16. method two matching princi- expenses matched with revenues earned in
ple corresponding time period
17. example 3: private physician net realizable

experiencing losses
18. example one: risk of over in- replacement cost

surance
19. example 2: net realizable value future profit

of equipment post-purchase
20. future profit using potential profit the asset should pro-
duce in the future
21. allowance for un collectable total AR (volume X charges)

accounts equation - allowance
=
A/R (net realizable value)
22. historical cost acquisition or purchase price
23. real accounts

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assets, liabilities, net assets
values carry over into the next financial pe-
riod
24. liquidity how fast to turn assets (tangible and intan-

gible) into cast
25. viability the ability to continue doing business each

year
26. nominal accounts revenues and expenses value "zero" at the

end of the year
27. permanently restricted used for a specific purpose given by dona-

tor
28. contractual adjustment the discount
29. basic accounting equation A = L + NA
30. assets economic resources
31. liabilities economic obligations
32. NA whats your worth (financial position)
33. the goals of financial manage- profitability and viability

ment
34. profitability trade off risk and the higher the risk, greater return the lower
return the risk, lower return
35. bad debt expense able to pay bill but refuse to pay for it
36. materiality large or significant, errors
37. going concern an assumption that the organization will ex-

ist in the foreseeable future "ongoing viabil-
ity"
38. ACA
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- stay on insurance till 26
- employers with 50 or more employees
must provide insurance
- emphasizes prevention of care
39. what goes on every statement name of organization

what the statement is
date/range
40. objective evidence paperwork! paperwork! paperwork!
41. unrestricted funds general can be used for anything
42. temporarily restricted restricted for a specific time
43. matching principle expenses = revenue
44. 3 sections of cash flow operating, investing, financing
45. 4 ways that patients can par- deductions, premiums, coinsurance, co-
ticipate in cost sharing payments
46. what GAAP rule is required BOTH

to be used in healthcare ac-
counting
47. GDP - healthcare 18-20%
48. payment terms ""/"", net "" ____ discount if paid within ____ days, oth-
erwise due in the full amount within ____
days
49. finance take past financial information and making

decisions
50. trade off: liquidity and solven- too much liquidity - not investing
cy not enough cash - bankrupt
51. unearned (deferred) revenue a liability that has been received but not yet
earned
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52. endowment an investment given/donated for the pur-
pose of operating future rev and the princi-
ple value is never to be spent
53. charity care services provided to indigent patients
54. TAHCA 834 billion cuts to medicaid

increase premiums
can cross state lines with exchanges
55. NPSR equation GPSR

- deduction (charity care, contractural ADJ)
=
NPSR
56. consistency organization must pick specific and subjec-

tive actions - and stick with them
57. purpose of a ledger assess the ending balance of and single

account
58. full disclosure transparent as possible
59. fund account an accounting entity with its own set of fi-
nancial records
60. profitability excess of revenues over expenses (a good

thing!)
61. the accounting cycle source documents

record JE
post to ledge
trial balance
62. GAAP methods method 1: conservative approach

method 2: matching principle
method 3: overly optimistic
63. manager's report

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written by management to readers of the
annual report
64. clean opinion financial statements are in accordance with

GAAP and are a fair representation of the
organization period
65. qualified (disclaimer) opinion financial statements are in accordance with

GAAP and are a fair representation of the
organization, with exceptions noted
66. adverse opinion financial statements are:

- not in accordance with GAAP
- not a fair representation of the organiza-
tion
67. the auditor's report 3 paragraphs

opening/introduction
scope
opinion
68. physician self-referral law a medical provider refers a beneficiary for a

(stark law) violation designated health service to a business in
which the provider has an invested interest
69. anti-kickback statute (AKS) vi- a medical provider receives cash or below
olation fair market value rent for medical offices in
exchange for referrals to another specialty
provider
70. false claim act (FCA) violation a physician's office submits claims to
medicare for a higher level of medical ser-
vices than actually provided or that the
medical record documents
71. a "contra-asset" account as the account grows in value over time

it pulls value from its corresponding asset
account
72.
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what happens to the accumu- "save for a rainy day" fund for the equipment
lated dep. (fund) account item
rather than financing a new machine you
are new prepared to purchase one with
your own money
73. supply expense value of what was used in the course of

patient care delivery
74. inventory valuation value of what is on the shelf, unused
75. basic inventory equation BI + P - S = EI
76. LIFO costing assumes that the supplies issued from in-
ventory are pulled from the newest stock,
therefore the stock remaining in inventory is
the oldest stock
77. FIFO costing assumes that the supplies issued from in-
ventory are pulled from the oldest stock,
therefore the stock remaining in inventory is
the newest stock
78. weighted- average assumes that the units issued from inven-
tory are drawn more and less equally from
each acquisition of supplies
79. specific identification assumes each item is individually tagged to

show actual unit cost
80. perceptual can only use the purchases to-date to

cost-out items
81. periodic use entire month (period) to cost-out items
82. benchmark an assessment of appropriateness
83. 3 principle benchmarks organization's history

comparison: competition
comparison: industry
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84. ratios a comparison of any two numbers
85. key point for ratios use ratio analysis to assess and identify
any important figure relationships for the
organization
86. sum-of-years digits formula HC- SV = TD
87. Note E goodwill
88. Note D legal proceedings/claims

commitments, contingencies, litigations
89. Note C long term liabilities

bonds payable
90. Note B receivables A/R
91. note A significant accounting policies

NPSR
short term investments
inventory
property, plant equipment
income taxes
charity care
temp and permanent restrictions
92. example of error incorrect coding
93. example of waste medically unnecessary services
94. updated accounting cycle source documents

"record"
journal entries
"post"
posting to ledger
trial balance
"worksheet"
"audit"
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95. error > fraud error > waste > abuse > fraud
96. primary purpose of financial providing accounting information, generally

accounting historical in nature, to external users includ-
ing owners, suppliers the government and
insurers
97. managerial accounting provide accounting information generally

current in nature to internal users, including
managers
98. what is the distinction be- healthcare management- accomplish the

tween the purpose of health- organizational purposes
care management and the financial management - provide accounting
purpose of healthcare finan- and finance information that helps health-
cial management care managers accomplish the organiza-
tions purpose
99. management functions accomplish organizational purposes

through planning, organizing, staffing, di-
recting and controlling
100. objective of healthcare man- accomplish the organizational purposes

agement
101. a corporate owned (via stock- provide profit for the owner meet the con-
holders) for-profit healthcare sumer's needs
organization's purpose
102. not-for-profit organization's provide healthcare services to the commu-

purpose nity
must generate revenue to offset expenses
to allow for growth
103. 2 things non-profit and a congruent and well-understood organiza-

for-profit have in common to tional purpose
be successful a functional management team
104. management letter report to top management that makes sug-

gestions for the improvement of internal
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control to reduce errors and undetected
fraud and embezzlement
105. auditor's report letter from the outside auditor giving an

opinion on whether or not the organization
financial statements are a fair representa-
tion of the organization results of op. cash
flows and financial position in accordance
with GAAP
106. management report a letter from the organization management

that is a part of the annual report
107. COSO opinion the company's and auditor's assessment

of the company's internal controls. this re-
quired disclosure can be incorporated into
the auditor's opinion letter or in a separate
report
108. balance sheet tells the financial position of an organization

at a point in time
109. cash flows shows sources and uses of the organiza-

tion's cash, inflow and outflow operating,
investing and financing activities
110. the statement of operations to show the ending balance in each revenue
and expenses account
111. statement of NA shoes the net change of an organization's

net worth over a period of time
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Accounting
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1. What is accounting? "A process of 3 activities: identifying, recording and

communicating the economic event of an organiza-
tion"
2. What are the Assump- Monetary Unit Assumption

tions in Financial Re- Economic Entity Assumption
porting? Time Period Assumption
Going Concern Assumption
3. Monetary Unit As- "Only those numbers being reported in money are
sumption included in accounting records"
4. Economic Entity As- "Every economic entity can be separately identified

sumption and accounted for"
5. Time Period Assump- "The life of a business can be divided into artificial
tion time periods and that useful reports covering those
periods can be prepared for the business."
6. Going Concern As- "The business will remain in operation for the fore-
sumption seeable future"
7. Cost Principle Assets are recorded at their cost
8. Liabilities Current: Accounts Payable, Salaries Interest, Notes

Long-Term: Mortgage, Notes
9. Full Disclosure Princi- "Requires that all circumstances and events that
ple would make a difference to financial statement
users should be disclosed
10. What three parts do Assets = Liabilities + Shareholders' Equity

balance sheets consist
of?
11. Assets Current Assets: Cash, Inventory, Accounts Receiv-

able
Long-term investments
Property, Plant and equipment
Intangible Assets: Patents, Copyrights, Brands
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Accounting
12. Cost a sacrifice of resources
13. Shareholders' equity Common Stock

Retained Earnings
14. Statement of cash Shows both the incoming and outgoing cash flow
flows
15. Cash Flows from oper- Transactions that create revenues or expenses
ating Activities Apply to the net income
16. Cash Flows from in- Purchasing and disposing of investments and pro-
vesting Activities ductive long-lived assets using cash
Lending money and collecting the loans
17. Cash Flows from fi- Obtaining cash from issuing debt and repaying the
nancing Activities amounts borrowed
Obtaining cash from stockholders and paying divi-
dends
18. Direct costs Costs that can be traced to a given cost object (prod-
uct, department, etc.) in an economically feasible
way.
19. Cost driver Any factor whose change "causes" a change in the
total cost of a related cost object. Note: Cost drivers
can be factors other than volume
20. Cost assignment Direct costs are traced to a cost object. Indirect
costs are allocated or assigned to a cost object.
21. Indirect costs Costs that cannot be traced to a given cost object in
an economically feasible way. These costs are also
known as "overhead".
22. Activities-based cost- An overhead cost allocation system that allocates

ing overhead to multiple activity cost pools
23. Product costs

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Accounting
Costs that "attach" to the units that are produced
(i.e., manufacturing costs) and are not reported ex-
penses until the goods are sold.
24. Activity an event, action, transaction, or work sequence that

causes a cost to be
incurred in producing a product or providing a ser-
vice
25. Activity cost pool a distinct type of activity(ordering materials)
26. Cost driver any factors or activities that have a direct cause and
effect relationship with the resources consumed
27. Basis of the ABC sys- Identify activities

tem Trace the cost of resources to the activities con-
sumed
Identify activity measures by which the costs of the
process vary most directly
Trace activity costs to the cost objects
28. Typical activity cost Units produced

drivers Number of receipts for materials/parts
Direct labor hours
Set-up hours
Number of customer complaints
29. Two main tools used Break-even analysis

for CVP analysis Contribution margin analysis which compares prof-
itability of production lines
30. Budget a formal written statement of management's plans

for a specific future time period, expressed in finan-
cial terms
31. Economics is the social science concerned with the use of

scarce resources like land and labor used to fulfill
unlimited human wants. Economics is the study of
the arrangements that societies make for the use
and development of their scarce resources.
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Accounting
32. Resources are the inputs used to produce the goods and ser-
vices that humans want.
33. Land represents not only land in the conventional sense

but other natural resources including bodies of wa-
ter, trees, oil reserves and minerals
34. Labor comprises the broad category of human effort,

physical and mental
35. Capital represents human creations used to produce goods

and services
.-Physical capital consists of roads, airports, build-
ings and other manufactured items.
-Human capital consists of the knowledge and skill
people acquire to enhance their labor productivity.
36. Good is a tangible item that is used to satisfy wants.
37. Service is an intangible activity that is used to satisfy wants.
38. Positive Economics What something is, can be measured Example:

measuring disposable personal income which is an
individual' salary after taxes
39. . Normative Economics What something ought to be, Subjective, difficult to

measure Example: should the minimum wage be
increased spending increase and social spending
be lowered
40. Scarcity is defined as the condition of human wants and

needs exceeding production possibilities.
41. Economic goods are goods that are scarce
42. Free goods if they are desired but in such abundance that they
are not scarce e.g.: water, air
43. Opportunity cost

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Accounting
is the cost incurred (sacrifice) by choosing one op-
tion over the next best alternative
44. Production Possibili- "transformation curve" is a graph that shows the

ties Frontier (PPF) different quantities of two goods that an economy
could efficiently produce with limited productive re-
sources.
45. Efficiency The condition that exists when there is no way re-
sources can be allocated to increase the production
of one good without decreasing the production of
another
46. Comparative advan- The ability to produced one good at a relatively low-
tage er opportunity cost than other goods. It explains how
trade is beneficial for all parties involved (countries,
regions, individuals and so on), as long as they
produce goods with different relative costs.
47. Law of Comparative states that the individual or country with the low-
Advantage est opportunity cost of producing a particular good
should specialize in producing that good.
48. Absolute Advantage The ability to produce something with fewer re-
sources than other producers use
49. Specialization The condition in which resources are primarily de-

voted to specific tasks.
50. Economic System is the set of mechanisms and institutions that re-
solve the what, how and for whom questions.
51. Pure Capitalism An economic system characterized by private own-

ership of resources and the use of prices to coordi-
nate economic activity in unregulated markets
52. Command Economy an economic system characterized by public own-

ership of resources and centralized economic plan-
ning
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Accounting
53. Mixed Capitalist Econ- An economic system characterized by private own-
omy ership of some resources and public ownership of
other resources.
54. Microeconomics Branch of economics that looks at how individuals

make decisions to allocate limited resources, and
how prices, production, and income distribution are
determined.
55. Supply and Demand Shows the market relationship of buyers and sellers,
Curve usually assumes perfect competition
56. Supply Amount of goods or resources that producers are

willing to sell under varying market conditions
57. Law of Supply Quantity of goods or resources supplied varies di-

rectly with price. High prices will cause sellers to
increase the amount of goods that they make avail-
able per period
58. Demand Amount of goods or resources that customers are

able to purchase, given the prices and choices avail-
able to them
59. Law of Demand Quantity of goods and resources demanded varies

inversely with price. People buy fewer goods at high
prices, and more goods at lower prices. Consumers
buy more goods at lower prices because of the
substitution effect, diminishing marginal utility, and
the income effect
60. Substitution Effect Cheaper goods will be substituted for higher priced
goods
61. Diminishing Marginal Each additional unit provides less satisfaction than
Utility the previous unit, so prices fall as more goods are
consumed.
62. Income Effect Lower price for any good means that individuals pur-
chasing power of their income rises, they can buy
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Accounting
more goods while maintaining or even increasing
their other purchases.
63. Market Equilibrium Price where quantity supplied is equal to quantity

demanded, at this price there are no shortages or
surpluses.
64. Utilitarianism The best society is one that produces the greatest
amount of good for the greatest number of people
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Accounting Exit Exam
Study online at https://quizlet.com/_7jfa7o
1. What is the accounting equation? Assets = Liabilities + Owner's Equity
2. Adding property plant or equip- D increase owners equity and increase

ment into a business through an assets
investment by the owner would:
3. Paying off an accounts payable Decrease assets and decrease liabilities

with cash would:
4. Define the terms debit and credit. Debit falls on the left side. They increase
Which side of a T-account do they assets and expenses while decreasing
fall on? liabilities, owners equity, and revenue
Credit falls on the right side of a T-ac-

count. They increase liabilities, owners
equity, and revenue while decreasing as-
sets and expenses
5. What does the normal balance of The normal balance is the side that will
accounts mean and identify what increase (+) the certain account
the normal balance is of each of Asset normal balance= debit
the categories listed in #1. Liability normal balance=credit
OE normal balance= credit
6. What is a trial balance and what

is it's purpose
Listing of all accounts with their

gl balance
Separated into two columbs: de-
buts and credits
Used to verify debits=credits
The trial balance is a report in

which all of the accounts are list-
ed with debits and credits. The
total amount of debt for each
account must match the total
amount of credit for each ac-
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count. The trial balance is per-
formed to catch errors that might
have occurred during the ac-
counting process.
7. All of the following are assets ex- Retained earnings are not
cept?
Cash accounts receivable and inventory
are
8. How do you know when to ex- Expense-items that will be used within
pense a purchase or add it as an the current accounting cycle and will not
asset? last more than a year (rent, advertising,
computer ink, paper, small purchases
Asset- large purchases that will be used
over the course of many years. Sys-
tematically depreciate these items over
their useful life (vehicles, computers, and
buildings)
9. Define accrual accounting and Accrual accounting records revenues

cash accounting. Which is re- and expenses when they occur, regard-
quired for gap? Which can be less of when cash is exchanged.
used for tax purposes? Cash accounting-records revenue when
cash is received and records the pur-
chases when cash is paid out
GAAP requires accrual accounting. Ei-
ther can be used for tax purposes.
10. What are adjusting entries, why Adjusting entries-journal entries made at
are they important, and provide a the end of an accounting period to allo-
detailed example cate income and expenditure to the peri-
od in which they actually occurred
Important- get accounts to their proper
balance
Example paying an invoice online but not
recording the entry
11. What is a contra account and give An account with an opposite + as its
two examples of contra accounts parent account. A normal asset as a +
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setup (debits increase assets) however
accumulated depreciation has a - + set-
up and while a credit increases the a/d,
it actually decreases total assets
12. List the four principle financial Income statement

statements for a sole proprietor- Statement of owners equity
ship. Balance sheet
Statement of cash flows
13. Which financial statements retain Balance sheet

all of its balances into the next
year
14. A company purchased prepaid -2000

six months of rent November 1,
200& for $3000. As of dec 31, 2008
what would be the prepaid rent
balance
15. A company purchased $1000 of Supply expense 700

supplies on July , 2008 and listed Supplies 700
them as an asset (rather than ex-
pensing them upfront) as of dec
31,2008 supply count, there are
$300 left in supplies. Provide the
journal entry to account for this
16. Define the term book value What a particular account is actually
worth on the books
17. Depreciation -provide the dec 31, Straight line depreciation

200& depreciation for a machine (23000-3000)/5=4000
that was purchased Jan 1, 2006 Double down depreciation
and has a 5 year useful life with 23000*.4=9200 and 13800*.4=5520 and
a $3000 residual value (salvage 8280*.4=3312
value) units during its life. Dur- Units of production
ing 2008, the machine produced (23000_3000)*(150000/500000)=6000
150,000 units
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18. What are liquid assets Cash and cash equivalents. Cash equiv-
alents are investments that can be con-
verted into a known amount of cash in
three months or less
19. Which asset is most liquid Cash
20. Define current assets and list at Assets that can be converted to cash,
least 43 accounts that are current sold, or used during the operating cycle
assets or one year whichever is shorter.
Accounts receivable
Inventory
Supplies
21. Define FOB shipping point and FOB shipping point shipping term that
FOB destination why are these requires the buyer to pay shipping costs
important to accountants? FOB destination shipping terms that re-
quires the seller to pay shipping costs
22. What is the difference between a Perpetual system update the inventory
perpetual inventory system and a account each time there is a sale or pur-
periodic Inventory system chase of inventory.
Period system updates the inventory at
the end of the period only.
23. Gross revenue )10,000 Net sales = 10000-600-1600=7800

Sales discounts $600 Gross profit=7800-4800=3000
Sales returns $1,600 Net income=3000-3200=-200(net loss)
COGS $4,800
other expenses $3,200
24. Bank reconciliation 32100-50+750-1500=31300

Business's oct 31 2008 cash be-
fore reconciliation =32100
Deposits in transit=4500
Bank service charge=50
Interest revenue=750
NSF check=1500
4/9
What is the adjusted cash bal-
ance?
25. Define petty cash Small cash fund available for minor of-
fices expenses.
26. Petty cash fund, established with B. Debit to cash short and over $7
a $500 balance, had petty cash
tickets totaling $474 and cash
amount of $19. The entry to re-
plenish the fund will include a
27. The current credit balance in C. 3500

allowance for uncollectible ac-
counts before adjustments is
1500. An aging schedule reveals
3500 of uncollectible accounts.
The ending balance in allowance
for uncollectible accounts should
be
28. How much interest should be col- B. $90 4000*(90/360)

lected in a 9% interest note for *.09=60
4000 due in 90 days (assume a
360 day year)
29. Explain if using lifo will increase Using lifo during periods of rising prices
or decrease net income during a will decrease net income since the most
period of rising prices expensive items the last ones to come in
are the first ones to be sold and out to
COGS
30. Sales =100000 // purchases 12000+50000-16000=46000

=50000 // beg inv =12000 // ending
inv = 16000. What is the COGS?
31. What type of liabilities that have Likely- included on BS if amount is fairly
yet to occur must be included on certain and notes
the balance sheet, the notes, or Possible-notes
left off (likely, possible, remote) Remote-neither
5/9
32. What payroll taxes are withheld Social security capped

from an employee and are they Medicare
capped Federal withholding a
State and local depend on state
33. What payroll taxes must the em- Social security capped
ployer also pay on top of what Medicare
the employee pays? are they Federal unemployment futa capped
capped? State unemployment sits generally
capped varies by state
34. Explain when the present value Present value of $1 would be used to
of $1 compulsion would be used? determine how much a future lump sum
What's the purpose? payment is worth right now due to the
time value of money interest
35. Explain when the future value of Future value of $1 would be used to de-
$1 computation would be used? termine how much a. Lump sum payment
What's the purpose? right now is worth at some point in the
future
36. The present value of $30000 to be There are different ways to calculate the
received In one year, at 6% com- easiest way is to us the pv fv calculator
pounded annually is rounded to
the nearest dollar.
37. Why does a bond sell for a dis- A bond sells for a discount when the
count bond interests rate is lower than the cur-
rent market rate for a similar bond. In-
vestors will not want a lower interest rate
unless they don't have to pay as much for
the bond up front.
38. List the main items that are listed Casualties floods in a non flood area pro-
as extraordinary on the income hibition under new law
statement
39. What are the difference between Common stock is voting stock
primary and preferred stock Common bears the ultimate risk and re-
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ward
Preferred receives dividends before

common and are the same regardless of
earnings
40. What is treasury stock A company's own stock that is repur-

chased from investors and kept. The
shares are no longer considered out-
standing
41. What does par value mean A dollar amount that is assigned to a se-
curity when representing the value con-
tributed for each share in cash or goods
Stocks will typically have a par value of
.01 or none at all
42. Journalists the following entry. Cash $600

Jordan sold 30 shares of its $3 CS 80
par common stock for $20 each Apic-cs 510
43. What is earnings per share and The portion of profits allocated to each
how is it calculated? outstanding share of common stock.
EPS serves as an indicator of a compa-
ny's profitability
Calculated as: net income - preferred
dividends /weighted average of common
shares
44. For the year that just ended, a 400,000÷5000 = 80 dollars

company reports net income of
$400,000. There are 10,000 shares
authorized, 6000 shares issued,
and 5000 shares of common
stock outstanding. What is the
earnings per share?
45. What are conversion cost? Direct labor plus factory overhead. Cost
to convert direct materials into finished
product
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46. When is it appropriate to use Job order = best used when production
the job order costing or process involves specialty items process costing
costing methods? +best used for mass produced items
47. Assuming you work in an auto- Direct materials - steel, glass, rubber
mobile factory, what would be: Indirect materials - screws, nails, glue
Direct labor - those working on the actual
production line and making the cars
Indirect labor - those who still work in
the factory, but not directly on the cars
such as supervisor janitor machine re-
pairment
Other factory overhead Dash rent on fac-
tory building, real estate tax on factory,
electricity for factory
48. What does equivalent unit a pro- Equivalent units of production equals
duction mean? Why is it needed? how many total and complete unit could
have been made when you factor in
those that were partially completed to
begin with and those that have been
started but not completed. This is needed
when using the process costing method
to assign cost to partially completed
units. If 200 units or 25% complete at the
end of the period, your equivalent units
to assign cost to would be 50 units.
49. Describe and give examples of Variable cost Dash course of change rel-
each ative to use. If you make more items, to-
tal cost for that expenditure will continue
to rise at an even rate. Examples direct
materials, direct labor, electricity
Fixed costs Dash costs that remain the
same regardless of the number of items
produced examples real estate ,tax ,de-
preciation
Mixed cost - costed have an upfront cost,
but will also increase with use. Example
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cell phone bill. Basic flat fee, but addition-
al charges could be applied if One goes
over their minutes
9/9
ETS Exam Study Questions: Accounting
Study online at https://quizlet.com/_34esp1
1. Helpful in determining past and future performance, A) Income State-

contains revenues and expenses: A) Income statement
ment, B) Retained earnings statement, C) Balance
Sheet, D) Statement of cash flows
2. Defines Assets = liabilities + Shareholder's equity: C) Balance Sheet

A) Income statement, B) Retained earnings statement,
C) Balance Sheet, D) Statement of cash flows
3. Shows the amounts and causes of changes in re- B) Retained Earn-

tained earnings during the stated period, Solved by ings Statement
starting retained earnings + net income - dividends
paid:
4. Which has been adopted as the standard financial D) Statement of

statement? cash flows
5. True or False: Costs that attach to the units that True

are produced are not reported as expenses until the
goods are sold
6. What is Lifo? recording the last

units purchased
as the first goods
sold
7. What is fifo? Recording the old-

est units will be
first to be sold
8. A formal written statement of management's plans for A budget

a specific future time period expressed in financial
terms
9. Standard costing
1 / 14
A system of cost accounting which is designed to find
out how much should be the cost of a product under
the existing conditions
10. What Assumption states that the business will remain Going Concern
in operation for the Assumption
foreseeable future?
11. What is the full disclosure principle? Requires that

all circumstances
and events that
would
make a difference
to financial state-
ment users should
be disclosed
12. Any factor whose change "causes" a change in the Cost Driver
total cost of a related
13. Costs that can be traced to a given cost object (prod- Direct Cost
uct, department, etc.)
in an economically feasible way.
14. Costs that cannot be traced to a given cost object in Indirect Costs
an economically
feasible way. These costs are also known as "over-
head".
15. Explain Lifo LIFO-recording

the last units
purchased as the
first goods sold
In times of infla-
tion, LIFO results
in higher reported
cost of goods sold
and thus lower in-
come and retained
earnings
2 / 14
This leads to low-
er taxes, which re-
sults in higher net
income
Results in low-
er reported assets
and equity
In the case of
LIFO, the business
will appear less
well off
16. Explain Fifo In times of infla-

tion, FIFO results
in lower reported
cost of goods sold
and thus higher in-
come and higher
retained earnings
This leads to high-
er taxes, which re-
sults in lower net
income
Results in high-
er reported assets
and equity
Business will ap-
pear better off than
in LIFO
17. What is ABC costing compared to a traditional costing In a tradition-

system? al costing sys-
tem, and labor
rate or manufac-
turing rate is set
for the year and
used as a figure
for all costs. In
ABC, the rates dif-
3 / 14
fer between activ-
ities, which could
include units pro-
duced, direct la-
bor hours, set up
hours, etc.
18. Formula For Break Even Point? Fixed Costs/ Con-

tribution Margin
19. Formula For Contribution Margin? selling price per

unit / variable cost
per unit
20. What is the Contribution Margin? A number that

shows the amount
of money each unit
chips away at a
fixed cost to give
us a break even
point
21. What year was the international accounting standards 1973

commmittee formed?
22. Which internal control is demonstrated by assigning b. Segregation of

different individuals to be responsible for related ac- duties
tivities?
a. Documentation procedures
b. Segregation of duties
c. Establishment of responsibility
d. Independent internal verification
23. Where can an investor find operating activities in a c. On the state-

company's financial statements? ment of cash flows
a. On the statement of cash flows and the income
b. On the income statement statement
c. On the statement of cash flows and the income
statement
d. On all four financial statements
4 / 14
24. At what point in time does a company recognize an

expense when it uses the allowance method of ac-
counting for uncollectible accounts?
a. When a customer's account is identified as being
uncollectible
b. In the same period as the revenue is earned
c. At the time expenses related to the collection ac-
tivities are incurred
d. At the time the account is written off
25. Which of the following describes shipping terms of a. The purchaser is

FOB shipping point? responsible for the
a. The purchaser is responsible for the shipping shipping charges.
charges.
b. The shipping charges are debited to Delivery Ex-
pense by the seller.
c. At the end of the year, any items in transit should
be included as part of the seller's inventory.
d. The seller must absorb the cost of shipping the
items.
26. Which statement is true concerning the preparation of d. They result in

closing entries? updating the bal-
a. They can be prepared before or after adjusting ance in Retained
entries. Earnings for the
b. They cause the balances of all accounts at the end period.
of the period to be adjusted to zero.
c. They are necessary before financial statements can
be prepared.
d. They result in updating the balance in Retained
Earnings for the period.
27. Which of the following errors will cause a trial balance C. Posting a debit
to be out of balance? amount as a credit
a. Posting the issuance of stock as a debit to Cash in the ledger
and a credit to Common stock
b. Recording the payment of prepaid rent as rent
expense
5 / 14
c. Posting a debit amount as a credit in the ledger
d. Posting a journal entry twice
28. Which entity (ies) is/are responsible for establishing d. Financial Ac-
accounting standards? counting Stan-
a. Securities and Exchange Commission dards Board and
b. International Accounting Standards Board the International
c. Financial Accounting Standards Board Accounting Stan-
d. Financial Accounting Standards Board and the dards Board
International Accounting Standards Board
29. What does the balance in the Discount on Bonds a. Additional inter-
Payable account represent? est cost associ-
a. Additional interest cost associated with the is- ated with the is-
suance of debt suance of debt
b. A reduction of interest cost associated with the
issuance of debt
c. A reduction of the maturity value of the bonds
d. An increase of the maturity value of the bonds
30. Which of the following is not an operating activity? d. Cash paid for
a. Cash paid for interest on loans dividends
b. Cash received from customers on account
c. Cash paid to suppliers for purchases made during
prior months
d. Cash paid for dividends
31. Which one of the following is an advantage of the d. Ability to acquire

corporate form of entity? capital
a. Limited life
b. Government regulation
c. Ownership rights are restricted to the same share-
holders
d. Ability to acquire capital
32. Which of the following pairs of terms in the area of c. Vertical — Com-
financial statement analysis both express each item in mon Size
a financial statement as a percent of a base amount?
a. Vertical — Trend
b. Horizontal — Trend
6 / 14
c. Vertical — Common Size
d. Horizontal — Common Size
33. Which of the following items is an item considered to C. An unrealized

be part of comprehensive income, but is not reported gain on an avail-
as part of net income? able-for-sale secu-
a. A gain from the disposal of plant assets rity
b. A realized loss from the sale of a trading security
c. An unrealized gain on an available-for-sale security
d. An extraordinary loss
34. Which of the following should be classified as an A. Effects of rare,

extraordinary item? major flooding
a. Effects of rare, major flooding
b. Write-off of a significant amount of receivables
c. Loss from the expropriation of facilities by a foreign
government
d. Loss from disposal of the service division
35. Which of the following is not a characteristic of man- D. Reports are pre-
agerial accounting? pared according to
A. Information is used by internal parties. GAAP.
B. Information is subjective, relevant, future-oriented.
C. Reports are prepared as needed.
D. Reports are prepared according to GAAP.
36. Manufacturing overhead consists of: C. all manufac-

A. all manufacturing costs. turing costs, ex-
B. indirect materials but not indirect labor. cept direct materi-
C. all manufacturing costs, except direct materials and als and direct la-
direct labor. bor.
D. indirect labor but not indirect materials.
37. Conversion cost consists of which of the following? D. Direct labor

A. Manufacturing overhead cost. and manufacturing
B. Direct materials and direct labor cost. overhead cost.
C. Direct labor cost.
D. Direct labor and manufacturing overhead cost.
38.
7 / 14
Which of the following costs is an example of a period B. Wages of sales-
rather than a product cost? persons.
A. Depreciation on production equipment.
B. Wages of salespersons.
C. Wages of production machine operators.
D. Insurance on production equipment.
39. In describing the cost formula equation Y = a + bX, B. "a" is the fixed
which of the following statements is correct? component.
A. "X" is the dependent variable.
B. "a" is the fixed component.
C. In the high-low method, "b" equals change in activ-
ity divided by change in costs.
D. As "X" increases "Y" decreases.
40. 6. Which of the following types of firms would most C. Sunshine Soft
likely use process costing? Drinks
A. Superior Auto Body & Repair
B. Crammond Custom Cabinets
C. Sunshine Soft Drinks
D. Jackson & Taylor Tax Service
41. 7. Which of the following types of firms would most B. Huey, Lewey &
likely use job order costing? Dewie, Attorneys
A. Happy-Oh Cereal Company
B. Huey, Lewey & Dewie, Attorneys
C. SoooSweet Beverage
D. C-5 Cement Company
42. All the costs assigned to an individual job are summa- B. job cost sheet.
rized on a
A. cost driver sheet.
B. job cost sheet.
C. materials requisition form.
D. labor time ticket.
43. Which of the following would probably be the least C. direct la-
appropriate allocation base for allocating overhead in bor-hours
a highly automated manufacturer of specialty valves?
A. machine-hours
8 / 14
B. power consumption
C. direct labor-hours
D. machine setups
44. Which terms will make the following statement true? B. credit, actual
When manufacturing overhead is overapplied, the
Manufacturing Overhead account has a __________
balance and applied manufacturing overhead is
greater than __________ manufacturing overhead.
A. debit,
B. credit, actual
C. debit, estimated
D. credit, estimated
45. Which of the following represents the accumulated B. Work in Process

costs of jobs as yet incomplete? Inventory
A. Raw Materials Inventory
B. Work in Process Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
46. Variable cost: B. remains con-

A. increases on a per unit basis as the number of units stant on a per unit
produced increases. basis as the num-
B. remains constant on a per unit basis as the number ber of units pro-
of units produced increases. duced increases.
C. remains the same in total as production increases.
D. decreases on a per unit basis as the number of units
produced increases.
47. When disposed of, underapplied manufacturing over- A. increase Cost of

head will Goods Sold.
A. increase Cost of Goods Sold.
B. increase Finished Goods.
C. decrease Cost of Goods Sold.
D. decrease Finished Goods.
48. . Which type of quality cost would a firm most want to D. External failure
eliminate or reduce as much as possible? costs
9 / 14
A. Prevention costs
B. Appraisal or inspection costs
C. Internal failure costs
D. External failure costs
49. 25. The cost of scrap and rework is an example of what C. Internal failure
type of quality cost? costs
A. Prevention costs
B. Appraisal or inspection costs
C. Internal failure costs
D. External failure costs
50. When target costing is used, the target cost is deter- A. finding the dif-
mined by ference between
A. finding the difference between the market price and the market price
the amount of profit needed to satisfy stakeholders. and the amount of
B. adding the cost of direct materials, direct labor, and profit needed to
activity costs of a product. satisfy stakehold-
C. subtracting all nonvalue-added costs from total ers.
manufacturing costs of a product.
D. adding the manufacturing and nonmanufacturing
costs of the product.
51. 27. A mixed cost C. contains both

A. is fixed over a wider range of activity than a step fixed and variable
cost. components.
B. is a fixed cost over the relevant range and a variable
cost everywhere else.
C. contains both fixed and variable components.
D. always increases on a per unit basis.
52. The intercept of the cost line on a scattergraph repre- B. total fixed cost.
sents
A. fixed cost per unit.
B. total fixed cost.
C. variable cost per unit.
D. sales price per unit.
53. Total contribution margin is defined as

A. selling price times units sold.
10 / 14
B. cost to produce times units sold. C. total sales rev-
C. total sales revenues less total variable costs. enues less total
D. total variable costs less fixed costs. variable costs.
54. The contribution margin ratio is the contribution

A. the contribution margin stated as a percentage of margin stated as
sales. a percentage of
B. the contribution margin stated as a percentage of sales.
profit.
C. the contribution margin stated as a percentage of
total costs.
D. the contribution margin stated as a percentage of
fixed costs.
55. The break-even point is B. the point where

A. the point where zero contribution margin is earned. zero profit is
B. the point where zero profit is earned. earned.
C. the point where selling price just equals variable
cost.
D. equal to sales revenue less fixed costs.
56. The margin of safety is the difference between B. actual sales and
A. actual sales and budgeted sales. break-even sales.
B. actual sales and break-even sales.
C. target sales and actual sales.
D. target sales and budgeted sales.
57. Which of the following would be included in net in- B. Depreciation

come but not in annual cash flows?
A. Sales revenue
B. Depreciation
C. Initial investment
D. Direct labor
58. Which of the following capital budgeting methods fo- B. Accounting rate
cuses on net income rather than cash flows? of return
A. Payback period
B. Accounting rate of return
C. Net present value
D. Internal rate of return
11 / 14
59. When making screening decisions using the net pre- C. the NPV is pos-
sent value method, a project is acceptable if itive.
A. the NPV is greater than the hurdle rate.
B. the NPV is greater than the IRR.
C. the NPV is positive.
D. the NPV is negative.
60. 51. Independent projects should be prioritized accord- A. profitability in-

ing to their dex.
A. profitability index.
B. net present value.
C. payback period.
D. total cash flows.
61. Participative budgeting is an approach to budgeting D. is more likely

that to motivate peo-
A. is top-down in nature. ple to work to-
B. allows top management to set the budget. wards the organi-
C. discourages budget slack. zation's goals than
D. is more likely to motivate people to work towards a top-down ap-
the organization's goals than a top-down approach. proach
62. 53. The starting point for preparing the master budget B. sales budget
is the
A. inventory policy
B. sales budget
C. production budget
D. budgeted balance sheet
63. 56. A master budget is an example of a A. static budget.

A. static budget.
B. flexible budget.
C. standard cost card.
D. volume variance.
64. Total liabilities divided by total assets is the: B. Debt-to-assets

A. Total liabilities turnover ratio. ratio.
B. Debt-to-assets ratio.
12 / 14
C. Return on assets ratio.
D. Equity ratio.
65. The current ratio is calculated as: D. Current assets

A. Total assets divided by total liabilities. divided by current
B. Cash and accounts receivable divided by current liabilities
liabilities.
C. Current assets divided by accounts payable.
D. Current assets divided by current liabilities
66. 71. A company's ability to use current assets to repay A. Liquidity.

liabilities as they come due is referred to as:
A. Liquidity.
B. Solvency.
C. Effectiveness.
D. Profitability.
67. 75. Which of the following ratios would be used to C. Time interest
assess a company's ability to pay interest expense earned
with its income?
A. Return on assets
B. Current ratio
C. Time interest earned
D. Net profit margin
68. Under activity based management, cost management A. Managing the

is achieved by underlying activi-
A. Managing the underlying activities. ties.
B. Reducing production volume.
C. Eliminating value-added activities.
D. Assigning indirect costs to products based on their
activities.
69. The cost of NOT doing something is a(n) B. opportunity

A. out-of-pocket cost. cost.
B. opportunity cost.
C. direct cost.
D. cost object.
70.
13 / 14
A direct cost is one which B. can be traced to
A. involves an actual outlay of cash for a specific cost a specific cost ob-
object. ject.
B. can be traced to a specific cost object.
C. cannot be traced to a specific cost object.
D. is not worth the effort of tracing to a specific cost
object.
71. . For a cost to be relevant, it must meet which of the B. It must differ be-
following criteria? tween the decision
A. It must not differ between the decision alternatives alternatives and it
and it must be incurred in the future rather than in the must be incurred
past. in the future rather
B. It must differ between the decision alternatives and than in the past.
it must be incurred in the future rather than in the past.
C. It must not differ between the decision alternatives
and it must have occurred in the past rather than in
the future.
D. It must differ between the decision alternatives and
it must have occurred in the past rather than in the
future.
72. Which of the following costs is not relevant to the B. The cost of the
decision whether to replace an old computer with a old computer.
new one?
A. The cost of the new computer.
B. The cost of the old computer.
C. The cost of a service plan on the new computer.
D. The cost to repair the old computer if a new com-
puter is not purchased.
14 / 14
Finance Final Exam
Study online at https://quizlet.com/_1ucahy
1. Which of the following best defines a promissory written agreement

note? to repay a loan
written agreement to repay a loan

consumer-protection law
type of product warranty
report summarizing credit history
2. Which of the following is an example of open-end credit card

credit?
mortgage
car loan
credit card
student loan
3. Which type of credit is used for a one-time loan for a closed-end credit
specific purpose, such as the purchase of a car, and
must be repaid by a certain date?
open-end credit
closed-end credit
revolving credit
trade credit
4. If Ned pays for a new refrigerator using an installment He makes a series

plan, which best describes the method of payment? of payments over
time.
He makes a series of payments over time.
He pays in full with a single payment in the future.
He pays in full using cash at the time of purchase.
He pays in full using a check at the time of installa-
tion.
5. Which term describes an asset that is used to secure collateral

a loan?
1 / 34
Finance Final Exam
credit
mortgage
down payment
collateral
6. Which of the following statements concerning credit Credit is used

is false? by consumers and
businesses but
Credit is a major economic force in the United States. not by govern-
Credit involves creating a debt that must be repaid. ments.
Credit is used by consumers and businesses but not
by governments.
Credit is used to obtain items when we do not have
cash to pay for them.
7. Which term denotes someone who has obtained a debtor

loan to purchase a small fishing boat?
creditor
debtor
lender
drawer
8. Which of the following is an advantage of credit They consolidate

cards? bills to allow for
making a single
They consolidate bills to allow for making a single payment on debts.
payment on debts.
Because they are not cash, they discourage over-
spending and impulse purchasing.
Their users generally do not incur interest or fees on
unpaid balances.
They discourage their users from making purchases
that cannot be afforded.
9. Which best describes the purpose of the 20-10 Rule? to decide whether
to decide whether an individual can afford a loan an individual can
to evaluate financial institutions when choosing a afford a loan
bank
to calculate the interest rate and fees on a credit card
2 / 34
Finance Final Exam
to set the amount of time provided for a short-term
loan
10. Which is not an advisable action to take when decid- Avoid reviewing
ing whether to buy an item on credit? personal budgets,
because they
Be careful of attempts by a lender to make a payment must be adjusted
seem smaller than it is. too often.
Consider the opportunity costs and trade-offs of
using credit to buy an item.
Before making a purchase using credit, shop for
similar items that cost less.
Avoid reviewing personal budgets, because they
must be adjusted too often.
11. Melinda has obtained a $10,000 loan to buy a used A longer loan peri-
car. She is considering 12-, 24-, and 48-month loans, od means she will
all of which carry an annual interest rate of 6%. Which pay more total in-
of the following statements is true? terest.
A shorter loan period means she will pay more total

interest.
A longer loan period means her monthly payments
will be higher.
A longer loan period means she will pay more total
interest.
A shorter loan period means her monthly payments
will be lower.
12. When deciding whether to obtain a loan from a bank, annual percent-
which of the following is not relevant? age yield
down payment
annual percentage rate
total loan cost
annual percentage yield
13. Antonio's annual net income is $40,000. According to $8,000

the 20-10 Rule, what is the maximum amount of debt
he should carry?
3 / 34
Finance Final Exam
$4,000
$8,000
$12,000
$30,000
14. What is the formula for calculating simple interest on Principal × Inter-
a loan? est Rate × Time
Principal × Interest Rate × Time

Debt × Principal × Interest Rate
Down payment × Principal × Interest Rate
Collateral × Interest × Principal
15. What is meant by amortization of a loan? paying off a loan in

installments
securing a loan with something of value
paying off a loan before its due date
paying off a loan in installments
keeping good records on what is owed
16. Lenders are interested in the Five Cs of Credit when consumption his-
deciding whether to make a loan. Which of the follow- tory of the individ-
ing is not one of the Five Cs? ual
character of the individual

capital in the individual's possession
capacity of the individual to repay debt
consumption history of the individual
17. When considering whether to provide a loan, espe- Assets - Liabilities

cially a large loan, potential lenders are interested in = Net Worth
an individual's net worth. Which formula is used to
figure net worth?
Savings - Credit = Net Worth

Liabilities - Assets = Net Worth
Assets - Liabilities = Net Worth
Credit - Savings = Net Worth
18.
4 / 34
Finance Final Exam
Which of the following would not be found in a report parents' and sib-
on your credit history? lings' net worths
previous credit card accounts held

parents' and siblings' net worths
late bill payments from 18 months prior
unpaid bills from 12 months prior
19. Before extending credit, lenders evaluate a potential assets owned

borrower's capital. What is capital?
assets owned
personal reputation
amount of debt
credit score
20. Which of the following best defines collateral? an asset used to

secure a loan
a type of loan used to buy a home or real estate
an asset used to secure a loan
the act of spreading loan payments over a period of
time
a numerical score assigned to a credit record
21. Which of the following actions would not necessarily Make sure that er-
help someone establish a good credit history? rors on credit re-
ports are removed
only after seven
years.
Pay all debts in full and on time.
Maintain checking and savings accounts.
Make sure that errors on credit reports are removed
only after seven years.
Be cautious when making transactions over the
phone and online.
22. Which of the following would likely be the least alarm- The applicant's
ing to a potential creditor when evaluating a loan credit card bal-
applicant's credit history? ances are so low
The applicant's debt, not including a mortgage, is 40
5 / 34
Finance Final Exam
percent of her annual net income. that they are paid
The unpaid balances of her debts are unknown. in full each month.
Other credit applications made by the applicant have
been rejected by several lenders.
The applicant's credit card balances are so low that
they are paid in full each month.
23. Roger is seeking a consumer counseling service to a debt-consolida-

help solve his credit problems. Which of the following tion service adver-
resources would probably be least reputable? tised on television
Roger's employee assistance program at work

a debt-consolidation service advertised on televi-
sion
National Foundation for Credit Counseling
Consumer Credit Counseling Service
24. How does the Truth in Lending Act protect consumer Consumers must
rights? be fully informed
about all loan
Loan applicants must tell the truth on credit applica- costs.
tions.
Consumers must be fully informed about all loan
costs.
Consumers must be specific about the purpose of a
loan.
Lenders can investigate a loan applicant's credit
history.
25. What is the purpose of the Equal Credit Opportunity Lenders can-
Act? not discriminate
against certain
Lenders cannot discriminate against certain groups. groups.
Equal numbers of loans must be offered in every
state.
All debtors will pay equal rates of interest on their
loans.
No U.S. citizen can be refused a loan by an FDIC-in-
sured bank.
6 / 34
Finance Final Exam
26. Which law prohibits abuse by professionals hired to Fair Debt Collec-
collect money owed to a business? tion Practices Act
Fair Credit Billing Act

Fair Credit Reporting Act
Fair Debt Collection Practices Act
Fair and Accurate Credit Transactions Act
27. Which is not an item of information that must be conditions of war-

divulged by a lender according to U.S. law? ranty covering a
home to be mort-
annual percentage rate and amount financed gaged
conditions of warranty covering a home to be mort-
gaged
payment schedule and payment amounts for an au-
tomobile to be purchased
penalties for prepayments or late payments
28. KWYS is an acronym used as a warning for con- Know What You're
sumers dealing with a credit contract. What do these Signing
letters stand for?
Keep What You Save

Keep What You Should
Knowledge Will Yield Savings
Know What You're Signing
29. Which term best describes Equifax, Experian, and credit reporting
TransUnion? bureaus
major U.S. mortgage lenders

credit counseling services
credit reporting bureaus
major U.S. savings and loan associations
30. How is a FICO score commonly used? to determine risk

factors of people
to determine risk factors of people applying for mort- applying for mort-
gage loans gage loans
to regulate lending practices of banks in smaller
7 / 34
Finance Final Exam
communities
to indicate the quality and security of banks and
credit unions
to indicate how many loans a bank has made in the
past year
31. Which term best describes Fannie Mae and Freddie mortgage lenders
Mac?
mortgage lenders
credit card companies
financial counselors
credit-reporting bureaus
32. What is the purpose of a credit reporting bureau? to collect, store,

and distribute
to process financial transactions for member banks credit histories
to disseminate information to businesses, but not to
individuals
to counsel individuals with poor credit histories
to collect, store, and distribute credit histories
33. If a loan applicant has a credit score of 730, what does quality of his credit
that number reflect regarding the applicant? history
quality of his credit history

his total net worth
his loan identification number
the total amount of credit available to him
34. Which statement is most accurate concerning the Positive reports

information contained in credit reports? (ontime bill pay-
ments) can remain
Positive reports (ontime bill payments) can remain on reports indefi-
on reports indefinitely. nitely.
Only unpaid or late bills appear on credit reports.
Negative information remains on reports for 20
years.
Declared bankruptcy remains on reports forever.
8 / 34
Finance Final Exam
35. In which legal process are all or some of the individ- bankruptcy
ual's assets distributed among creditors to pay the
individual's debts?
security
bankruptcy
refinancing
consolidation
36. Which best describes the main difference between Credit cards have
credit provided by a credit card and closed-end cred- a line of credit that
it? can be used as
Credit cards have a line of credit that can be used as needed.
needed.
Closed-end credit usually carries a higher APR.
Closed-end credit must be repaid in full each month.
Credit cards require borrowers to put up collateral.
37. Which best describes a basic difference between Debit card pur-
credit cards and debit cards? chases are auto-
matically deduct-
Credit cards have a lower APR than debit cards. ed from one's
Debit card purchases are automatically deducted bank account.
from one's bank account.
Holders of credit cards must be at least 25 years old.
Debit cards require at least a minimum payment each
month.
38. According to the Federal Reserve, by the year 2007 nearly $1 trillion
about how much total consumer revolving debt exist-
ed on all credit cards in the United States?
nearly $10 billion

nearly $100 billion
nearly $500 billion
nearly $1 trillion
39. Using which type of card is similar to paying with a debit card
check because the card is linked to a bank account?
9 / 34
Finance Final Exam
credit card
student card
debit card
travel and entertainment card
40. How often do consumers usually receive bills for their monthly
credit card purchases?
weekly
bimonthly
monthly
yearly
41. Which type of card is most likely to require that its travel and enter-
balance be paid in full at the end of each billing cycle? tainment card
bank card
retail store card
gas card
42. Which of the following cards is the most versatile in bank card
that it can be used at the largest number of locations?
bank card
retail store card
gasoline card
43. Which type of credit card is most likely issued by retail store card
Macy's Department store?
gasoline card
retail store card
debit card
44. Are all MasterCards® and Visa® cards alike regarding No, they can be
the fees and interest rates they charge? different depend-
Yes, they are all alike, because their fees are regulat-
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Finance Final Exam
ed by the Fair Credit Billing Act. ing on the bank
No, they can be different depending on the bank that that issues them.
issues them.
MasterCard® rates are all the same, but Visa® card
rates vary based on the bank that issues them.
Visa® card rates are all the same, but MasterCard®
rates vary based on the bank that issues them.
45. If the card company states, "No fee for the number a large number of
of individual credit card purchases," which of the transactions
following would least likely result in interest charges
or other credit card fees?
unpaid balances carried forward

late payments
exceeding one's credit limit
a large number of transactions
46. What are the two main sources of revenue for finan- fees from mer-
cial institutions that issue Visa® cards and Master- chants and in-
Cards®? terest from cus-
tomers
fees from merchants and interest from customers
taxes from governments and fees from customers
interest from customers and fees from banks
fees collected by Fannie Mae and Freddie Mac
47. Which phrase best defines a credit card's APR? interest rate ap-
plied to unpaid
rewards offered by the card balances
interest rate applied to unpaid balances
annual fee charged by the card
the card's maximum credit limit
48. Which of the following is not a method used by credit adjusted yearly
card companies to figure interest? balance
average daily balance

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Finance Final Exam
adjusted yearly balance
adjusted balance
previous balance
49. Which credit card interest calculation method is usu- adjusted balance
ally the least expensive for cardholders who do not
pay the full balance after each billing cycle?
average daily balance

adjusted yearly balance
adjusted balance
previous balance
50. Which of the following is not a step someone should Avoid credit cards
take before applying for a credit card? with introductory
offers.
Determine how he or she would use a credit card.
Compare credit card interest rates and fees.
Evaluate credit card terms and conditions.
Avoid credit cards with introductory offers.
51. Which term denotes the number of days between the grace period
credit card billing date and the date the bill must be
paid to avoid finance charges?
credit period
interest period
grace period
periodic rate of APR
52. According to the Fair Credit Billing Act, what must a statement of
customers receive when they open a credit card ac- customer rights
count?
a reward such as a low APR

a statement of customer rights
a sample bill
a chance to choose their billing cycle
53. 60
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Finance Final Exam
To dispute an error on a credit card statement, within
how many days must the cardholder notify the com-
pany?
30
60
90
100
54. According to Consumer Reports, what are your 1 in 4

chances of being a victim of cybercrime in general?
1 in 4
1 in 10
1 in 25
1 in 50
55. Which of the following is not an important way to Do not tell your
prevent identity theft? friends your mid-
dle name or date
Do not give out your Social Security to an entity that of birth.
is not normally cleared to request it.
Do not put your credit card number on a check at a
store clerk's request.
Do not loan your credit card or identification card to
anyone.
Do not tell your friends your middle name or date of
birth.
56. If your credit card is lost or stolen, what is the first Call the card is-
action you should take? suer to report the
card lost or stolen.
Contact the Better Business Bureau.
Write the card issuer a certified letter reporting the
card lost or stolen.
Call the card issuer to report the card lost or stolen.
Call merchants to cancel your most recent purchas-
es.
57. $50
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Finance Final Exam
If your credit card is lost or stolen, what is the most
you will have to pay for unauthorized purchases if you
report the loss or theft within 60 days?
$50
$500
$1,000
$1,500
58. Which will most likely result if an insurance company The policy will be
discovers that a policyholder has failed to tell the declared null and
truth on her insurance application form? void.
The policyholder's claims will be approved anyway.
The policyholder's grace period will be eliminated.
The policy will be declared null and void.
The policyholder's credit rating will be lowered.
59. What is the main purpose of insurance? protects against

risk of economic
provides savings opportunities loss
encourages careful budgeting
increases current spending power
protects against risk of economic loss
60. Which denotes the costs for insurance coverage that premiums
are paid by the policyholder?
policies
terms
premiums
beneficiaries
61. Many health insurance policies require the policy- deductible

holder to pay the first portion of a covered medical
expense before the insurance company pays the re-
mainder. Which term denotes this first portion?
deductible
liability
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Finance Final Exam
premium
claim
62. What is the purpose of an insurance policy docu- It is a contract be-

ment? tween the compa-
ny and the con-
The policyholder uses it when filing a claim with the sumer, establish-
company. ing coverage.
It is a contract between the company and the con-
sumer, establishing coverage.
The document helps consumers select the insurance
they need.
It explains the three types of insurance risks that
consumers face.
63. Against which type of risk does liability insurance damage to the
protect the policyholder? property of others
illness requiring hospitalization

damage to the property of others
theft of one's valuable personal property
fire or wind damage to a home
64. Which is an example of a claim that came about due broken arm result-
to personal risk? ing from a bicycle
wreck
broken arm resulting from a bicycle wreck
damage a policyholder caused to another person's
car
theft of a coin collection the policyholder owns
vandalism of the policyholder's property
65. Which of the following probably would not be covered injuries the pol-
by homeowner's insurance? icyholder suffers
while on her prop-
wind damage to a roof during a storm erty
injuries others suffer while on the policyholder's
property
injuries the policyholder suffers while on her proper-
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Finance Final Exam
ty
living expenses if the home is damaged
66. What is the main advantage of comprehensive med- It combines regu-

ical insurance? lar, hospital, sur-
gical, and major
Unlike regular medical insurance, it has no premi- medical insurance
ums. policies.
It combines regular, hospital, surgical, and major
medical insurance policies.
It reimburses a worker for lost wages if he is injured
on the job.
It covers long-term care often needed by the elderly
or disabled.
67. If a health insurance plan requires a co-payment, The policyholder

what does that mean? must pay a flat
fee each time she
Part of the premium is an investment that has future receives medical
cash value. services.
The policyholder must pay a flat fee each time she
receives medical services.
The policyholder must pay a small percent of each
medical bill.
The plan is paid for by the state or federal govern-
ment.
68. Which best describes exclusions in a health insur- conditions or pro-

ance policy? cedures not cov-
ered by the insur-
ance policy
people who receive payment in the event of a policy-

holder's death
health factors used to determine the cost of home-
owner's insurance premiums
government-funded health insurance for low-income
Americans
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Finance Final Exam
conditions or procedures not covered by the insur-
ance policy
69. Many individuals and their families are covered by group plan
health insurance policies offered by employers, labor
unions, and other membership organizations. Which
term best describes this type of insurance?
group plan
Medicaid
worker's compensation
health credit union
70. How does the Consolidated Omnibus Budget Recon- It continues in-
ciliation Act (COBRA) relate to health insurance? surance for an
individual who
It guarantees insurance for all people regardless of changes or loses
race or gender. a job.
It continues insurance for an individual who changes
or loses a job.
It provides insurance for people in isolated areas of
the country.
It protects people from overcharging by insurance
companies.
71. Which of the following is not a characteristic of a HMO members

health maintenance organization (HMO)? can seek treat-
HMOs have a staff of doctors and hospitals that ment from any
provide service to their members. doctor they wish.
HMO members must pay a monthly fee.
HMO members can seek treatment from any doctor
they wish.
HMOs focus on preventative health care.
72. Which of the following is not a government-support- PPO

ed health insurance program?
Medicaid
Medicare
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Finance Final Exam
workers' compensation
PPO
73. If Roberta's health insurance includes coinsurance, She will pay a per-
how will that affect the amount she pays for her med- centage of the bill
ical services? in addition to the
She will pay a flat fee each time she visits a doctor's deductible.
office.
She will pay a percentage of the bill in addition to the
deductible.
She will pay only the deductible for each medical
procedure she receives.
She will split the cost of medical services with her
employer.
74. Which is the best rule of thumb for determining how The more depen-
much life insurance someone should purchase? dents one has, the
more life insur-
The more dependents one has, the more life insurance one needs.
ance one needs.
Only retirees or people with disabilities need to buy
life insurance.
The lower one's income, the more life insurance one
needs.
People in dangerous occupations need more life
insurance coverage than others.
75. Which of the following is not a purpose of life insur- to pay for
ance? short-term care in
a hospital follow-
to assist dependents in the event of a breadwinner's ing surgery
death
to potentially act as part of a savings and investment
plan
to reduce or prevent economic loss associated with
death
to pay for short-term care in a hospital following
surgery
76.
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Finance Final Exam
Which of the following statements concerning life Permanent life in-
insurance is true? surance is an
Term life insurance does not pay a death benefit. investment with
Permanent life insurance is for a period of only five cash value.
to twenty years.
All term life insurance policies cost the same.
Permanent life insurance is an investment with cash
value.
77. Which of the following is least likely to affect whether the type of car the
a life insurance company will insure an applicant? applicant owns
whether the applicant smokes

the type of car the applicant owns
the applicant's current life-threatening illnesses
the applicant's participation in dangerous activities
78. Which is the best example of a variable cost associ- repair bills
ated with owning a vehicle?
insurance premiums
loan payments
repair bills
license and registration
79. Which is not an important consideration when figur- vehicle inspection

ing the financing costs associated with the purchase
of a vehicle?
down payment
APR
vehicle inspection
monthly payments
80. Which factor does not affect the cost of auto insur- amount of life in-
ance premiums? surance
make and model of the car

policyholder's driving record
19 / 34
Finance Final Exam
geographic location
amount of life insurance
81. Which is the least important consideration when color and styling
shopping for a vehicle? details
how the vehicle will be used

color and styling details
cost and how much can be afforded
reliability of the vehicle
82. Which of the following is not important when consid- The owner's ver-
ering purchasing a 10-year-old car from an individ- bal guarantee the
ual? vehicle is in good
condition.
Have the car checked out by a reliable mechanic to
uncover any hidden problems.
Test-drive the car to assess its comfort and perfor-
mance.
Research the car's value in the Kelley Blue Book.
The owner's verbal guarantee the vehicle is in good
condition.
83. Which is a potential disadvantage of trading in one's One might get a

current car when buying a new car from a dealership? higher price for the
car by selling it
The trade-in value is subtracted from the cost of the himself.
new car.
One might get a higher price for the car by selling it
himself.
The trade-in value increases the amount of the car
loan.
A trade-in will increase the required down payment.
84. Which statement best describes a car's implied war- an unwritten

ranty? promise that the
car will run and get
a service contract purchased to cover certain repairs a person around
in the future
an unwritten promise that the car will run and get a
20 / 34
Finance Final Exam
person around
a written promise to pay for certain repairs for a
length of time
a statement that the seller makes no written promises
about the reliability of the car
85. New cars often include a manufacturer's warranty express warranty

covering repairs during an initial period of ownership,
such as the first three years or thirty-six thousand
miles (whichever comes first). Which term is used for
this type of written warranty?
express warranty
implied warranty
as-is warranty
extended warranty
86. A used car that Liam purchased six months ago now Liam
needs expensive repairs. If he purchased the car "as
is" from a used car dealership, who is responsible for
paying for the repairs?
dealership
auto manufacturer
Liam
warranty company
87. Which is another term for a service contract that extended warranty
many dealers try to sell along with a vehicle?
bogus warranty
implied warranty
as-is warranty
extended warranty
88. When deciding whether to purchase a service con- Does the sales-
tract for a new car, which of the following is the least person think I
important question to consider? need the contract?
Is there a deductible?
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Finance Final Exam
Does it duplicate another warranty?
What repairs are covered?
Does the salesperson think I need the contract?
89. "Lemon laws" passed in all 50 states are designed to problem-plagued

protect consumers from which of the following? new vehicles
problem-plagued new vehicles

dishonest mechanics
high-pressure sales tactics
fraudulent warranty clauses
90. The Truth in Lending Act of 1968 does not require maintenance
lenders to provide which piece of information to con- costs
sumers?
total sale price

annual percentage rate
maintenance costs
payment amounts
91. Financial responsibility laws enacted by states re- prove they can pay
quire car owners to do which of the following? for an accident
prove they can pay for an accident

have a state issued driver's license
make car loan payments on time
purchase affordable vehicles
92. Which event would be covered by a car owner's col- an impact with an-
lision insurance? other automobile
a tree falling on a parked car during a storm

an impact with another automobile
car windows broken out by vandals
theft of a car during the night
93. If Bob is at fault in an accident involving a collision injuries to people

with another vehicle, what is covered by the bodily in the other car
injury liability portion of his car insurance?
22 / 34
Finance Final Exam
injuries to people in Bob's car

damage to the body of the other car
damage to the body of Bob's car
injuries to people in the other car
94. Which statement best describes no-fault auto insur- The insurance
ance? pays the policy-
holder's claims re-
Policyholders are not required to pay insurance pre- gardless of fault.
miums.
Policyholders are never at fault in an accident.
The insurance pays the policyholder's claims regard-
less of fault.
The insurance pays claims unless the policyholder is
at fault.
95. In most states, what is the mandatory insurance cov- liability

erage that car owners are required to purchase?
liability
collision
comprehensive
medical payments
96. Which type of insurance coverage would pay for dam- comprehensive
age to a car caused by a hail storm?
liability
collision
comprehensive
medical payments
97. Which of the following would not affect the cost of an parents' driving
individual auto insurance policy for a young driver? record
driver's home address

annual miles driven
driver's age
parents' driving record
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Finance Final Exam
98. If a driver were looking for ways to lower the cost increasing the de-
of his or her car insurance premiums, which action ductible amount
would accomplish that goal?
adding additional types of coverage

eliminating the deductible
purchasing a service contract
increasing the deductible amount
99. Which vehicle characteristic plays the least important type of fuel re-
role in determining the cost of auto insurance premi- quired
ums?
age of the vehicle

type of fuel required
make and model
cost of replacement parts
100. Which does not provide a common auto insurance increasing liability
premium discount for young drivers? coverage
getting good grades

avoiding traffic tickets and accidents
increasing liability coverage
taking a driver's education course
101. Which situation would most likely lead to a person's failing to make car
vehicle being repossessed? loan payments
failing to make car loan payments

cancelling an implied warranty
being late with insurance premiums
failing to purchase a service contract
102. Which accurately describes a potential advantage of Leasing usually

leasing rather than purchasing an automobile? requires a low-
er down payment
Leasing grants legal rights associated with owner- than purchasing.
ship of the vehicle.
24 / 34
Finance Final Exam
Leasing does not require credit approval.
Leasing places no limit on the number of miles the
automobile is driven.
Leasing usually requires a lower down payment than
purchasing.
103. What is the meaning of the Latin phrase caveat emp- Let the buyer be-
tor? ware.
The buyer has rights.
Let the buyer beware.
The seller has responsibilities.
Opinions are not facts.
104. Which of the following was not one of the consumer ability to sue man-
rights provided by the Consumer Bill of Rights as it ufacturers
was originally signed into law by President Kennedy
in 1962?
ability to sue manufacturers

accurate product information
choice of products
safe products
105. For which products does the United States Depart- vegetables and
ment of Agriculture set standards for grading, pro- meat
ducing, inspecting, and labeling?
drugs and cosmetics

vegetables and meat
home appliances
oil and natural gas
106. Which type of product would Underwriters Laborato- a new processed

ries not certify? food product
an automotive windshield defroster

a commercial fire sprinkler
a new processed food product
a fiber optic cable extension
25 / 34
Finance Final Exam
107. What is the primary role of the Better Business Bu- to record com-
reau? plaints by con-
sumers
to resolve consumer complaints
to determine whether a product is safe
to record complaints by consumers
to advertise businesses and products
108. In which order are ingredients listed on food labels? largest amount to
least amount
most nutritious to least nutritious
most calories to least calories
largest amount to least amount
alphabetical order
109. Which of the following distributes informational con- Federal Citizen In-
sumer publications prepared by government agen- formation Center
cies and departments?
Underwriters Laboratories
Consumers Union
Wall Street Journal
Federal Citizen Information Center
110. Which of the following magazines does not accept Consumer Re-
advertising so that it can provide unbiased assess- ports
ments of products and services?
Good Housekeeping
Consumer Reports
Forbes
Parents
111. Which process involves evaluating the price, quality, comparison shop-
and features of different products from different sell- ping
ers?
comparison shopping
impulse buying
26 / 34
Finance Final Exam
unit pricing
cooling off
112. Which of the following is not part of the FAB selling providing a war-
approach? ranty for all prod-
ucts presented un-
presenting a product's features der the approach
explaining the benefits to the consumer
describing the advantages of making the purchase
providing a warranty for all products presented un-
der the approach
113. Which of the following should hold the least influence advertisement
on a consumer when she is making a buying deci- claims
sion?
product quality
customer service
convenience of purchase
advertisement claims
114. If someone were purchasing a new mattress, which of in-store discount

the following would least likely be a hidden cost? price
in-store discount price

delivery cost
disposal cost of the old mattress
extended warranty for the new mattress
115. For which product would it be most useful for a con- foods
sumer to calculate the unit price?
automobile
furniture
foods
clothing
116. Which formula is used to calculate unit prices? total price ÷ num-
ber of units
total price × number of units
27 / 34
Finance Final Exam
total price ÷ number of units
number of units × total price
number of units ÷ total price
117. Which statement would be a fact about a used truck? This truck has
four-wheel drive.
This truck is the best truck on the lot.
This truck will catch everyone's attention.
This truck will probably run another hundred thou-
sand miles.
This truck has four-wheel drive.
118. Which of the following statements would be consid- This new video
ered an opinion? game will sweep
the nation.
This candy bar contains peanuts and chocolate.
The color of this car is called candy-apple red.
This new video game will sweep the nation.
This fabric is made of linen and cotton.
119. If a product someone wants is on sale at a store, compare prices at

which is probably the first action the person should other stores
take?
stock up quickly, before the product sells out

compare prices at other stores
purchase it using a layaway plan
check the price with the Better Business Bureau
120. In the American food industry, which of the following all natural
phrases is the most vague?
all natural
100% beef
contains no trans fat
expiration date: Nov. 15, 2009
121. A case of soda containing 24 12-ounce cans costs $0.15

$3.60. What is the unit price per can?
28 / 34
Finance Final Exam
$0.0125
$0.15
$0.24
$0.30
122. An 80-ounce package of trail mix costs $9.60. A $0.20

5-ounce package costs $1.60. About how much per
ounce would you save by purchasing the larger pack-
age?
$0.12
$0.20
$0.32
$0.44
123. If Regina is planning to rent an apartment, which of plumbing repairs

the following is least likely to be an expense that she
would have to include in her budget?
plumbing repairs
renter's insurance
electric bills
apartment rental costs
124. Which of the following is not a good way to reduce cutting back on
the cost of living expenses when moving out on one's healthy meals
own?
shopping at flea markets and garage sales

watching for sales
having a roommate
cutting back on healthy meals
125. Which best exemplifies an efficiency or studio apart- one large room
ment? plus a bathroom
one large room plus a bathroom

building containing two separate rental units
29 / 34
Finance Final Exam
multi-level homes attached at one wall
two-bedroom apartment with open floor plan
126. Which best exemplifies a duplex? a residence con-

taining two sep-
high-rise apartment building found in large cities arate rental units
on-campus building with living space for college with separate en-
students trances
a residence containing two separate rental units with
separate entrances
individually owned unit in an apartment-like building
127. What is the primary difference between a A lease requires

month-to-month rental agreement and a lease? a longer commit-
ment.
A lease surrenders ownership of the rental unit.
A lease requires a longer commitment.
A lease is a written agreement.
A lease is used only when renting an apartment.
128. If you have a one-year lease and decide to move out pay another ten
of your apartment at the end of two months, which months' rent
would be your financial obligation to the landlord?
pay another ten months' rent

pay another one month's rent
pay another twelve months' rent
pay another two months' rent
129. Which of the following is a disadvantage of renting a Rent payments do

place to live? not bring owner-
ship.
Renting does not require a long-term commitment.
Renters are not responsible for repairs.
Rent payments do not bring ownership.
Rental units may have lower utilities.
130. What is involved in completing a rental inventory? checking the con-

dition of things in
measuring an apartment's square footage the apartment
30 / 34
Finance Final Exam
calculating the total cost of a year's living expenses
counting the number of electrical outlets
checking the condition of things in the apartment
131. If Ashley is moving into a new apartment, at a mini- Ashley and the
mum, which two people should complete the rental landlord
inventory?
Ashley and the landlord

Ashley and a parent
the landlord and Ashley's best friend
the landlord and his attorney
132. Which one of the following usually is not a responsi- make electrical re-
bility of a tenant outlined in a lease agreement? pairs to the smoke
alarm when need-
read, understand, and abide by the contract ed
pay rent in full by the due date
use the premises only for purposes intended
make electrical repairs to the smoke alarm when
needed
133. Which is not a responsibility of a landlord who owns pay for any dam-
rental properties? ages other than
normal wear and
install locks or other security features tear
keep plumbing fixtures in good working condition
pay for any damages other than normal wear and tear
make structural repairs in a reasonable amount of
time
134. Which factor may be a legitimate reason to reject a his previous evic-
person's rental application? tion
her age
his previous eviction
her national origin
his marital status
135.
31 / 34
Finance Final Exam
Which is most likely not a correct assumption to General expenses
make when planning for retirement? will be lower after
retirement.
Health care costs will be higher after retirement.

Inflation will reduce purchasing power.
Social Security will cover part of retirement expens-
es.
General expenses will be lower after retirement.
136. Which of the following statements best explains why Prices tend to in-
inflation is an important factor to consider when sav- crease over time.
ing for retirement?
Social Security benefits could drop.

Prices tend to increase over time.
Americans are living more active lives.
Health care costs are lower in retirement.
137. According to the commentary, what percent of Amer- 97

ican workers are currently covered by the Social Se-
curity system?
100
67
97
85
138. A 401(k) is an example of which type of retirement defined-contribu-

plan? tion plan
Roth IRA
defined-benefit plan
defined-contribution plan
variable annuity
139. Which of the following individuals would be most like- owner of a small
ly to participate in a self-employed retirement plan? business
32 / 34
Finance Final Exam
accountant who works for a corporation
owner of a small business
laborer in an auto-assembly plant
teacher in a large school district
140. Which term denotes the time at which an employee vesting

is entitled to partial or full access to the money that
a company has contributed to his or her retirement
plan?
maturity
annuity
vesting
probate
141. Which of the following is not a requirement in order have other

to collect Social Security benefits? sources of retire-
ment income
pay into the system a required period of time
reach a required age to apply for benefits
pay Social Security tax as a worker
have other sources of retirement income
142. Which most closely states the intent of the Social to supplement a
Security system? citizen's other re-
tirement income
to pay all of a citizen's reasonable expenses after
retirement
to supplement a citizen's other retirement income
to pay health care costs after retirement
to pay the costs of an assisted living facility
143. What is the government-funded program that helps Medicare

retirees pay the cost of health care?
traditional IRA
Roth IRA
Medicare
annuity
33 / 34
Finance Final Exam
144. Which of the following is a characteristic of a Roth Earnings in a Roth
IRA? IRA are not sub-
ject to income tax.
Contributions to a Roth IRA are tax deductible.
Earnings in a Roth IRA are not subject to income tax.
Withdrawals made after retirement are taxed.
Money cannot be withdrawn before age seventy-five.
145. In order to make the maximum contribution to a Roth $99,000

IRA, what is the maximum amount a single taxpayer
may earn?
$200,000
$156,000
$25,000
$99,000
146. At what age must a person begin withdrawing money 70 years and six
from a traditional IRA? months
70 years and six months

59 years and six months
62 years
65 years
147. Which type of annuity provides predetermined pay- fixed annuity

ment amounts for a certain number of years?
fixed annuity
variable annuity
intermediate annuity
deferred annuity
34 / 34
Study online at https://quizlet.com/_benp4h
1. Assets = Liabilities + Owner's Eq- What is the accounting equation?

uity (optional to include Revenues
and Expenses)
2. d. Increase O.E. and increase as- 1. Adding Property Plant or Equip-

sets ment into a business through an in-
vestment by the owner would:
a. Increase expenses and increase
assets
b. Increase one asset and decrease
another asset
c. Decrease one asset and increase
another asset
d. Increase O.E. and increase assets
3. d. Decrease assets and decrease 1. Paying off an account payable with

liabilities Cash would:
a. Increase assets and decrease O.E.
b. Increase liabilities and decrease as-
sets
c. Increase O.E. and decrease liabili-
ties
d. Decrease assets and decrease lia-
bilities
4. Debits fall on the Left side of a T-Ac- 1. Define the terms debit and credit.
count They increase Assets and Which side of a T-account to they fall
Expenses while decreasing liabili- on?
ties, owner's equity, and revenue
Credits fall on the Right side of a

T-Account. The increase liabilities,
owner's equity, and revenue while
decreasing assets and expenses
5. assets and expenses What does a debit increase?
6. Liabilities, Owners Equity, Revenue What does a debit decrease?
1 / 17
7. Liabilities, Owners Equity, Revenue What does a credit increase?
8. assets and expenses What does a credit decrease?
9. The normal balance is the side What does the term normal balance of
that will increase (+) the certain ac- accounts mean ?
count.
10. debit balance WHat is the normal balance of asset

accounts?
11. Credit balance WHat is the normal balance of liability

accounts?
12. credit balance What is the normal balance of owner's

equity accounts?
13. a. Listing of all accounts with their What is a trial balance and what is its
GL balance purpose? 3 answers
b. Separated into two columns:
Debits and Credits
c. Used to verify debits = credits
14. trial Balance what is a report in which all of the ac-

counts are listed with debits and cred-
its. The total amount of debt for each
account must match the total amount
of credit for each account. Performed
to catch errors that might have oc-
curred in the accounting process?
15. a. retained earnings 1. All of the following are Assets ex-

cept?
a. Retained Earnings
b. Cash
c. Accounts Receivable
d. Inventory
16. Items that will be used within the When should a purchase be an ex-
current accounting cycle and will pense?
2 / 17
not last more than a year (Rent,
advertising, computer ink, paper,
small purchases
17. Large items that will be used over When should a purchase be included
the course of many years - system- in assets?
ically depreciate these items over
their useful life (vehicles, comput-
ers, buildings...
18. Expense - Items that will be used How do you know when to expense a
within the current accounting cy- purchase or add it as an asset?
cle and will not last more than a
year (Rent, advertising, computer
ink, paper, small purchases
Asset - Large items that will be
used over the course of many years
- systemically depreciate these
items over their useful life (vehi-
cles, computers, buildings...)
19. Accrual Accounting - records rev- Define Accrual Accounting

enues and expenses when they oc-
cur, regardless of when cash is ex-
changed.
20. Cash Accounting - records rev- define cash accounting

enues when cash is received, and
records purchases when cash is
paid out.
21. GAAP requires Accrual Account- Which method of accounting is re-

ing quired for GAAP?
22. accrual or cash accounting can be Which method of accounting is re-

used for tax purposes quired for tax purposes?
23. Accrual Accounting - records rev- 1. (4 pts) Define Accrual Accounting

enues and expenses when they oc- and Cash Accounting. Which is re-
cur, regardless of when cash is ex-
3 / 17
changed. quired for Gap? Which can be used for
Cash Accounting - records rev- tax purposes?
enues when cash is received, and
records purchases when cash is
paid out.
GAAP requires Accrual Account-
ing. Either can be used for tax pur-
poses.
24. Adjusting entries - journal entries 1. (3) What are adjusting entries, why
made at the end of an accounting are they important, and provide a de-
period to allocate income and ex- tailed example
penditure to the period in which
they actually occurred.
Important - Get accounts to their

proper balance
Example - Depreciating a piece of

equipment at the end of each year
to Accumulated Depreciation.
25. Adjusting entries - journal entries What are adjusting entries?

made at the end of an accounting
period to allocate income and ex-
penditure to the period in which
they actually occurred.
26. they get accounts to their proper Why are adjusting entries important?
balance
27. Depreciating a piece of equipment What is an example of adjusting en-

at the end of each year to Accumu- tries?
lated Depreciation.
28. An account with an opposite + - 1. (3) What is a Contra account and

as its parent account. A normal as- give two examples of contra accounts.
set as a + - setup (debits increase
assets). However Accumulated De-
preciation has a - + setup and while
4 / 17
a credit increases the A/D, it actual-
ly decreases total Assets.
29. An account with an opposite + - as What is a contra account?

its parent account
30. -Income Statement 1. (4 pts) List the four principle finan-

- Statement of Owners Equity cial statements for a sole proprietor-
- Balance Sheet ship.
- Statement of Cash Flows
31. balance sheet 1. Which financial statement(s) re-

tain(s) all of its balances into the next
year?
32. $2000.00 1. A company purchased prepaid six

months of rent November 1, 2008 for
$3,000. As of Dec. 31, 2008, what
would be the prepaid rent balance?
33. Supply Expense 700 1. (3 pts) A company purchased

Supplies 700 $1,000 of supplies on July 1, 2008
and listed them as an asset (rather
than expensing them upfront). As of
the Dec. 31, 2008 supply count, there
are $300 left in supplies. Provide the
Journal Entry to account for this.
34. - What a particular account is ac- 1. Define the term Book Value.
tually worth on the books. For ex-
ample, a piece of equipment listed
at 10,000 with $4,000 Accumulat-
ed Depreciation would have a book
value of $6,000. The historic listing
value less accumulated deprecia-
tion.
35. a. Straight line depreciation = Depreciation - Provide the Dec. 31,

- (23,000 - 3,000) / 5 = $4,000 2008 depreciation expense for a ma-
chine that was purchased Jan. 1, 2006
5 / 17
and has a 5-year useful life with a
$3,000 residual value (salvage val-
ue). The machine was purchased for
$23,000. The Machine is estimated to
produce 500,000 total units during its
life. During 2008, the machine pro-
duced 150,000 units
What is the depreciation under

straight-line depreciation?
36. a. Double Declining depreciation = Depreciation - Provide the Dec. 31,

-Yr 1 = 23,000 x .4 = 9,200 2008 depreciation expense for a ma-
Yr 2 = 13,800 x .4 = 5,520 chine that was purchased Jan. 1, 2006
Yr 3 = 8,280 x .4 = $3,312 and has a 5-year useful life with a
duced 150,000 units
WHat is depreciation calculated as

double delcining depreciation?
37. (asset cost-acc.deprec./useful life) How to calculate double declining de-

*2 preciation?
38. (asset cost-residual value)/useful How to calculate straight line method

life of depreciation?
39. (asset cost - residual value / life How to calculate unit of production
time production) * units produced method of depreciation?
40. Units of Production = (23,000 - 1. Depreciation - Provide the Dec. 31,

3,000) x (150,000 / 500,000) = $6,000 2008 depreciation expense for a ma-
chine that was purchased Jan. 1, 2006
and has a 5-year useful life with a
6 / 17
duced 150,000 units
What is depreciation using the units of

production method of depreciation?
41. into the general journal Where are closing entries entered?
42. Cash and cash equivalents. Cash 1. What are liquid assets?
equivalents are investments that
can be converted into a known
amount of cash in three months or
less
43. Cash equivalents are investments what are cash equivalents?

that can be converted into a known
amount of cash in three months or
less
44. cash which asset is most liquid?
45. -Assets that can be converted to Define current assets

cash, sold or used during the oper-
ating cycle or one year whichever
is shorter
46. Accounts Receivable, inventory, What are 3 accounts that are consid-
supplies ered current assets?
47. FOB Shipping point - shipping term Define FOB Shipping point
that requires the buyer to pay ship-
ping costs
48. FOB Destination - shipping term define FOB Destination

that requires the seller to pay ship-
ping costs
49.
7 / 17
FOB Shipping point - shipping term 1. Define FOB Shipping point and
that requires the buyer to pay ship- FOB Destination. Why are these im-
ping costs portant to accountants?
FOB Destination - shipping term
that requires the seller to pay ship-
ping costs
These terms are important not only

for who will pay shipping but also
to determine when ownership of
inventory transfers from seller to
buyer.
50. This is a sales discount used to What does 2/10 net 30 mean?
encourage early payment by cus-
tomers. It means the customer may
deduct 2% from the selling price
provided the bill is paid within ten
days of the invoice date. Otherwise
the full invoice amount is due in 30
days
51. ($3,000 X 97%) = $2,910 or $3,000 - If a company purchases an asset for

($3,000 X 3%) = $2,910 $3,000 on July 1st with 3/15 net eom
terms, how much would the company
owe if they paid on July 10th?
52. Perpetual system updates the in- 1. What is the difference between a
ventory account each time there perpetual inventory system and a pe-
is a sale or purchase of inventory. riodic inventory system?
Purchases of inventory get record-
ed in inventory.
Period system updates inventory at
the end of the period only. Purchas-
es of inventory go to the purchases
account.
53. a. What is the Net Sales? $10,000 - 1. Gross Revenue - $10,000

$600 - $1,600 = $7,800 Sales Discounts -$ 600
Sales Returns - $ 1,600
8 / 17
COGS - $ 4,800
Other Expenses - $ 3,200
What is the Net Sales?
54. What is the Gross Profit? $7,800 - 1. Gross Revenue - $10,000

$4,800 = $3,000 Sales Discounts -$ 600
COGS - $ 4,800
What is the Gross Profit? $7,800 -

$4,800 = $3,000
55. What is the Net Income? $3,000 - 1. Gross Revenue - $10,000

$3,200 = ($200) net loss Sales Discounts -$ 600
COGS - $ 4,800
What is the Net Income? $3,000 -

$3,200 = ($200) net loss
56. A cash receipts journal is used by what is the cash journal used for?
companies to record all cash re-
ceived from any source. This in-
cludes cash sales, receipt of funds
from a bank loan, payments from
customer accounts, and the sale of
assets.
57. The sales journal is used to record what is the sales journal used for?
all of the company sales on credit.
Most often these sales are made
up of inventory sales or other mer-
chandise sales. Notice that only
credit sales of inventory and mer-
chandise items are recorded in the
sales journal. Cash sales of inven-
9 / 17
tory are recorded in the cash re-
ceipts journal
58. A purchases journal is a record of what is the purchase journal used for?
all acquisitions made on credit dur-
ing a period. In other words, this
is a journal that keeps track of the
orders placed using vendor credit
or accounts payable as well as the
current balance owed to each ven-
dor
59. 32,100 - 50 + 750 - 1,500 = 31,300 1. Bank Reconciliation

Business's Oct. 31, 2008 Cash (be-
fore reconciliation) = $32,100
Deposits in Transit = $4,500
Bank Service charge = $50
Interest Revenue = $750
NSF check returned = $1,500
What is the adjusted cash balance?
60. A small fund maintained for in- define petty cash

cidental expenses when writing a
check would not be cost effective.
This fund is generally controlled by
one or two individuals
61. b. Debit to Cash short and over $7 1. Petty cash fund, established with a
$500 balance, had petty cash tickets
Credit Misc expenses $474 totaling $474 and cash in the amount
debit cash short $7 of $19. The entry to replenish the fund
debit cash $481 would include a:
a. Debit to cash in bank for $481

b. Debit to Cash short and over $7
c. Credit to Petty cash for $481
d. Credit to Cash in Bank for $474
62.
10 / 17
C. $3500.00 . 1. The current credit balance in al-
lowance for uncollectible accounts be-
The aging of A/R shows what the fore adjustment is $1,500. An ag-
new balance should be. The entry ing schedule reveals $3,500 of un-
would be collectible accounts. The ending bal-
ance in allowance for uncollectible ac-
Bad Debt Expense 2,000 counts should be:
Allow. For uncollectible accts2,000 a. $1,500
b. $3,000
c. $3,500
d. $5,000
63. b. $90. 1. How much interest should be col-

lected on a 9% interest note for $4,000
4,000 x (90/360) x .09 = $90 due in 90 days (assume a 360-day
year)?
a. None
b. $ 90
c. $360
d. $4,090
64. 4,000 x (60/360) x .09 = $60 How much interest should be collect-
ed on a 9% interest note for $4,000
due in 90 days (assume a 360-day
year)?
1. Assuming the same example as #5

how much interest has accrued if the
loan was made on Nov. 1 and there is
a normal fiscal year in.
65. Using LIFO during periods of ris- Explain if using LIFO will increase or
ing prices will decrease Net Income decrease Net Income during a period
since the most expense items (the of rising prices.
last ones to come in) are the first
ones to be sold and put to COGS
66. 12,000 + 50,000 - 16,000 = 46,000 Sales = 100,000 // Purchases =

$50,000 // Beg. Inv = 12,000 // Ending
Inv. = 16,000. What is the COGS?
11 / 17
67. Gross Profit Margin Ratio = gross 1. What is the Gross Margin ratio?
profit / sales.
68. Likely - Included on B.S. (if amount What type of liabilities that have yet
is fairly certain) and Notes to occur must be included on the Bal-
Possible - Notes ance Sheet, the notes, or left off (Like-
Remote - Neither ly, Possible, Remote).
69. 600 + 112.50 = 712.50 An employee works for $15/hour for a

40-hour work week. Any hours over 40
and they are paid time and a half. How
much would an employee receive if
they worked 45 hours?
70. Employee - Social Security What payroll taxes are withheld from
(Capped), Medicare, Federal With- an employee? Do any of these with-
holdings, State and Local (depends holdings have a cap?
on the State)
71. Social Security (Capped), What payroll taxes must the employer
Medicare, also pay on top of what the employee
Federal Unemployment (FUTA) has taken out? Do any of these have
- Capped, State Unemployment a cap?
(SUTA) - generally capped (varies
by state)
72. Present Value of $1 would be used 1. Explain when the Present Value
to determine how much a future of $1 computation would be used?
lump sum payment is worth Right What's the purpose?
Now (due to the time value of mon-
ey = interest).
73. Future Value of $1 would be used to Explain when the Future Value of $1
determine how much a lump sum computation would be used? What's
payment right now is worth at some the purpose?
point in the future (due to the time
value of money = interest).
74.
12 / 17
There are different ways to calcu- 1. The present value of $30,000
late #3 and #4, but the easiest two to be received in one year, at 6%
are to use PV and FV tables found compounded annually, is (rounded to
in most accounting text books or nearest dollar):
online. The other way is to use a
PV/FV calculator.
PV = $28,302
75. There are different ways to calcu- 1. The future value of $30,000 to be re-
late #3 and #4, but the easiest two ceived in one year, at 6% compound-
are to use PV and FV tables found ed annually, is (rounded to nearest
in most accounting text books or dollar):
online. The other way is to use a
PV/FV calculator.
FV = $31,800
76. A bond sells for a discount when 1. Why does a bond sell for a dis-
the bond interest rate is lower than count?
the current market rate for a similar
bond. Investors will not want a low-
er interest rate unless they don't
have to pay as much for the bond
up front
77. Items that are Both Unusual and 1. List the main items that are listed
infrequent as extraordinary on the income state-
Examples - Casualties, Floods in a ment.
non-flood area, Prohibition under a
new law
78. Common Stock is voting stock 1. What are the primary differences
(Preferred is not) between Common Stock and Pre-
ferred Stock?
Preferred receives dividends be-
fore Common. Preferred dividends
are the same regardless of earn-
ings. Common shareholders get
what's left after Preferred take their
share.
13 / 17
Common bears the ultimate risk

and reward.
79. A company's own stock that is re- 1. What is treasury stock?

purchased from investors and kept.
These shares are no longer consid-
ered outstanding.
80. A dollar amount that is assigned 1. What does par value mean?
to a security when representing the
value contributed for each share in
cash or goods..
The par values for different fixed-in-

come products will vary. Bonds
generally have a par value of
$1,000, while most money market
instruments have higher par val-
ues.
81. Stocks will typically have a par val- Stock par value is usually ?
ue of $0.01 or none at all.
82. Cash $600 Journalize the following entry. Jordan

C.S. $90 inc. sold 30 shares of its $3 par com-
APIC-CS $510 mon stock for $20 each.
83. The portion of a company's prof- 1. What is earnings per share and how
it allocated to each outstand- is it calculated?
ing share of common stock. EPS
serves as an indicator of a compa-
ny's profitability.
Calculated as:(Net income - Pre-

ferred dividends) / Weighted aver-
age of Common Shares
84. how is earnings per share calculated?
14 / 17
Calculated as:(Net income - Pre-
ferred dividends) / Weighted aver-
age of Common Shares
85. 400,000 / 5,000 = $80 For the year that just ended, a com-
pany reports net income of $400,000.
There are 10,000 shares autho-
rized, 6,000 shares issued, and 5,000
shares of common stock outstanding.
What is the earnings per share?
86. Direct Labor + Factory Overhead. 1. What are conversion costs?

Costs to convert Direct Materials
into finished product
87. Job Order - Best used when pro- 1. (3) When is it appropriate to use the
duction involves specialty items Job Order Costing or Process Costing
methods?
Process Costing - Best used for
Mass Produced items
88. Steel, Glass, Rubber 1. Assuming you work in a Automobile

factory, what would be:
Direct materials?
89. Screws, nails, Glue 1. Assuming you work in a Automobile

factory, what would be:
Indirect materials?
90. those working on the actual pro- 1. Assuming you work in a Automobile
duction line in making the cars factory, what would be:
Direct labor?
91. those who still work in the facto- Assuming you work in a Automobile
ry, but not directly on the cars.... factory, what would be:
supervisor, janitor, machine repair- Indirect labor?
ment
92. (besides indirect materials and in-

direct labor)
15 / 17
Rent on factory building, Real Es- Assuming you work in a Automobile
tate tax on Factory, Electricity for factory, what would be:
Factory Other factory overhead?
93. Equivalent Units of Production = What does Equivalent Units of Pro-

How many total and complete units duction mean? Why is it needed?
could have been made when you
factor in those that were partially
completed to begin with and those
that have been started but not com-
pleted.
This is needed when using the
Process Costing method to assign
costs to partially completed units
If 200 units were 25% complete at

the end of the period, your equiva-
lent units to assign costs to would
be 50 units.
94. How many total and complete units What does Equivalent Units of Pro-
could have been made when you duction mean?
factor in those that were partially
completed to begin with and those
that have been started but not com-
pleted.
95. This is needed when using the why is equivalent units of production
Process Costing method to assign needed?
costs to partially completed units
If 200 units were 25% complete at

the end of the period, your equiva-
lent units to assign costs to would
be 50 units.
96. costs that change relative to use. describe variable costs and give an
If you make more items, total cost example
for that expenditure will continually
rise at a given rate
16 / 17
97. costs that remain the same regard- describe fixed costs and give an ex-
less of the number of items pro- ample
duced, real estate tax, depreciation,
etc.
98. costs that have an upfront cost describe mixed costs and give an ex-
(fixed) but will also increase with ample
use. Example: cell phone bill.
99. who takes ownership with FOB the seller transfers any title of own-
shipping point ership to the buyer upon the product
leaving the seller's location
100. who takes ownership with FOB the the title of ownership is transferred
destination at the buyer's loading dock, post office
box, or office building. Once the goods
are delivered to the buyer's specified
location, the title of ownership of the
goods transfers from the seller to the
buyer
101. who pays shipping with FOB desti- the buyer

nation
102. who pays shipping with FOB ship- the seller

ping point
17 / 17
Accounting 700 Exam 1
Study online at https://quizlet.com/_ay7u72
1. Managerial ac- determine the price of product

counting
2. What organiza- Coorporations

tion has a board
of directors?
3. Who has the FASB

GAAP?
4. relevance The quality of information that indicates the information

makes a difference in a decision.
5. Faithful Repre- information that is complete, neutral, and free from error
sentation
6. Comparability Ability to compare the accounting information of different

companies because they use the same accounting princi-
ples.
7. verifiability information faithfully represents
8. timeliness Information is available prior to the decision
9. understand clear and concise
10. cash flow how balance in cash is changed
11. income state- A financial statement showing the revenue and expenses
ment for a fiscal period.
12. Stockholders' balance in common stock

Equity
13. balance sheet de- A financial statement that reports assets, liabilities, and
finition owner's equity on a specific date.
14. Economic As- specific economic entity

sumptions
1/2
Accounting 700 Exam 1
Study online at https://quizlet.com/_ay7u72
15. going concern Assumes that the entity will remain in operation for the
assumption foreseeable future.
16. time period as- Assumption that an organization's activities can be divided
sumption into artificial time periods such as months, quarters, or
years.
17. Monetary Unit nominal units of money, no adjusting

Assumption
18. income state- rev-exp=net income

ment equation
19. balance sheet A=L+OE

equation
20. Cash Flow state- tcf = ocf+icf+fcf

ment equation
21. Stockholders' opening earnings + net income - dividends = end retained

Equity equation earnings
22. expenses assets used up
23. equity net assets owned by owners
24. unearned rev- advance payment of cahs

enue
25. revenues provides products or services
26. assets economic resources
27. net assets assets - liabilities
28. pre-paid expens- assets paid cash in advance

es
29. liability obligations to pay
2/2
Accounting test bank 2
Study online at https://quizlet.com/_1u4azs
1. Significant changes in stockholders' equity are re- statement of

ported in stockholders' equi-
ty
2. Retained earnings changes are sum-

marized in the
retained earnings
statement
3. which of the following would appear as a prior-period error in the compu-

adjustment tation of deprecia-
tion expense in the
preceding year
4. A restriction/appropriation of retained earnings has no effect on to-

tal retained earn-
ings
5. Treasury stock should be reported int eh financial deduction from

statements of a corporation as stockholders' equi-
ty
6. The reduction of par or stated value of stock by stock split

issuance of a proportionate number of additional
shares is termed
7. When a corporation completes a 3-for-1 stock split b) the market

price per share of
the stock is de-
creased
c) the par value
per share is de-
creased
d) b and c
8. The primary purpose of a stock split is to reduce the mar-

ket price of the
stock per share
9.
1/6
A company with 100,000 authorized shares of $4 par decrease retained
common stock issued 50,000 shares at $9. Subse- earnings, increase
quently, the company declared a 2% stock dividend common stock, an
on a date when the market price was $10 a share. increase paid-in
The effect of the declaration and issuance of the stock capital
dividend is to
10. Which of the following statements is not true about ta total contributed
2-for-1 split capital increases
11. Which of the following concepts of cash is not appro- cash and U.S.
priate to use in preparing the statement of cash flows? treasury bonds
12. Preferred stock issued in exchange for land would be a separate sched-
reported in the statement of cash flows in ule
13. Which of the following represents an inflow of cash issuance of

and therefore would be reported on the statement of long-term debt
cash flows
14. The last item on the statement of cash flows prior cash at the end of
to the schedule of noncash investing and financing the year
activities reports
15. Which of the following is a noncash investing and issuance of com-

financing activity mon stock to ac-
quire land
16. Which of the following should be shown on a state- the payment of

ment of cash flows in the financing section cash to retire a
long-term note
17. Cash flow per share is not required to be

reported on any
statement
18. On the statement of cash flows prepared by the indi- amortization of

rect method, the cash flows from operating activities premium on bonds
section would include payable
2/6
19. The statement of cash flows is not useful for calculating the net
worth of a compa-
ny
20. The order of presentation of activities on the state- operating, invest-

ment of cash flows is ing and financing
(OIF)
21. Financing activities include issuing debt
22. Investing activities include collecting cash on

loans made
23. Cash receipts from interest and dividends are classi- operating activities
fied as
24. Depreciation on factory equipment would be reported the cash flows

in the statement of cash flows prepared by the indirect from operating ac-
method in tivities section
25. Which of the following below increases cash? Borrowing mon-

ey by issuing a
six-month note
26. Which one of the following below would not be clas- payment of divi-
sified as an operating activity dends
27. Which of the following types of transactions would be purchase of non-

reported as a cash flow from investing activity on the current assets
statement of cash flows?
28. Equipment with an original cost of $75,000 and accu- increase by

mulated depreciation of $20,000 was sold at a loss of $48,000
$7,000. As a result of this transaction, cash would
29. On the statement of cash flows, the cash flows from receipts from the
financing activities section would include issuance of capital
stock
30.
3/6
On the statement of cash flows, the cash flows from payments of in-
financing activities section would include all of the terest on bonds
following except payable
31. A business issues 20-year bonds payable in exchange a separate sched-

for preferred stock. This transaction would be report- ule
ed on the statement of cash flows in
32. A corporation uses the indirect method for preparing ($4,500)

the Statement of Cash Flows. A fixed asset has been
sold for $25,000 representing a gain of $5,400. The
value in the operating activities section regarding this
event would be:
33. If accounts payable have increased during a period expenses on an

accrual basis are
greater than ex-
penses on a cash
basis
34. On the statement of cash flows, the cash flows form payment for inter-
operating activities section would include est on short-term
notes payable
35. The percentage analysis o fincrease and decreases in horizontal analysis

inidvidual items in comparative financial statements
is called
36. Which of the following below generally is the most common-sized fi-
useful in analyzing companies of different sizes nancial state-
ments
37. The percent of fixed assets to total assets is an exam- vertical analysis
ple of
38. An analysis in which all the components of an income vertical analysis

statement are expressed as a percentage of net sales
is called
39.
4/6
A balance sheet that displays only component per- common-sized
centages is called balance sheet
40. One reason that common-size statement is a useful make a better

tool in financial analysis is that it enables the user to comparison of two
companies of dif-
ferent sizes in the
same industry
41. In a common size balance sheet, the 100% figure is total assets
42. In a common size income statement, the 100% figure net sales
is
43. Horizontal analysis is a technique for evaluating finan- over a period of

cial statement data time
44. Horizontal analysis of comparative financial state- calculation of

ments includes the dollar amount
changes and per-
centage changes
fro the previous to
the current year
45. In horizontal analysis, each item is expressed as a base year

percentage of the
46. In performing a vertical analysis, the base for cost of net sales
goods sold is
47. Which of the following measures a company's ability current ratio

to pay its current liabilities?
48. An acceleration in the collection of receivables will increase

tend to cause the accounts receivable turnover to
49. Which of the following ratios provides a solvency ratio of fixed as-
measure that shows the margin of safety of bond- sets to long-term
holders and also gives an indiction of the potential liabilities
5/6
ability of the business to borrow additional funds on
a long-term basis?
50. The current ratio is used to evaluate a

company's liquidi-
ty and short-term
debt paying ability
51. The tendency of the rate earned on stockholders' eq- leverage

uity to vary disproportionately from the rate earned on
total assets is sometimes referred to as
52. The particular analytical measures chosen to analyze product quality or

a company may be influenced by all of the following service effective-
except ness
53. Which one of the following is not a characteristic marketability

generally evaluated in ratio analysis?
54. Short-term creditors are typically most interested in solvency

assessing
55. A common measure of liquidity is receivable

turnover
56. Leveraging implies that a company contains debt fi-

nancing
6/6
USD Exit Exam: Accounting I & II
Study online at https://quizlet.com/_8imgvx
1. Basic accounting vo-

cabulary and con-
cepts -
2. Users of financial in- Stakeholders of a business

formation
3. Types &characteris- sole proprietorship,

tics of business orga- partnership, LLCs, corporations, LL partnerships,
nizations
4. Define assets, liabili- ËAssets

ties, and equity. Ë Liabilities
Ë Equity -stocks/shares -retained earnings
5. Accounting equation Assets = Liabilities + Owner's Equity
6. Income Statement Net sales, Op expenses, Op Income, Income before

taxes, Net income
7. Balance sheet (As-

sets, Liabilities , OE)
and classifications
8. Revenues made this year
9. Expense expenses
10. Classify assets &

liabilities as current
(less than a year) or
long-term (more
than a year)
11. Types of inventory ËPeriodic - count, certain period of time

systems Ë Perpetual - normal, automated
12. Inventory sys- (LIFO, FIFO, Avg. Cost, Specific ident.)

tems/costing methods
1/8
13. Internal control ob-
jectives, components,
and control proce-
dures
14. Estimation of bad percentage of account receivables

debt expense/al-
lowance method/NRV
15. Fixed asset cost allo- depreciation

cations
16. Current Liabilities liabilities due within a short time, usually within a year
17. Payables & interest ex-

pense
18. Owner's equity com- retained earnings, dividends, shares

ponents
19. Ethical issues in ac-

counting - sarbox(en-
ron separate duties,
reporting)
20. Deferred/accrued rev- ËDR = not earned yet, owed to customer (paid in
enues and expenses advance, down
payments)
Ë DE = already incurred but not consumed (prepaid
insurance)
Ë AR = sale recognized by seller but not yet billed to
customer
(electric company)
Ë AE = recognized in book before paid for (electric bill)
21. Accrual vs. cash-basis ËAccrual = records when incurred (more common)
accounting Ë Cash basis = recorded when expenses paid and
revenues received
22.
2/8
Use 2 allowance meth- Direct write-off
ods to account for un- Method and Allowance Method(percentage)
collectibles
23. Direct write-off Recognizing bad debt expense from credit sales
method for uncol-
lectibles
24. Basic payroll and

payroll tax amounts-
medicare, ss, federa,
state,
unemployment
25. Accounting signifi- different countries have

cance in globalized different standards
business
26. Debits and Credits The terms debit (Dr.) and credit (Cr.) mean left
and right, respectively. These terms do not mean
increase or decrease, but instead describe where
a company makes entries in the recording process.
That is, when a company enters an amount on the
left side of an account, it debits the account.
- When it makes an entry on the right side, it credits
the account. When comparing the totals of the two
sides, an account shows a debit balance if the total
of the debit amounts exceeds the credits. An account
shows a credit balance if the credit amounts exceed
the debits.
27. Journalize Transac- 2nd step in accounting cycle

tions
28. prepare a trial balance Lists all accounts and their balances
(debits = credit) Total debits must equal total credits
These balances are used to create the financial
statements
29. Adjusting entries

3/8
Entries made at the end of an accounting period
to ensure that the revenue recognition and expense
recognition principles are followed. (prepaid expens-
es that need to be adjusted at end of year, or
payroll that does not end on friday)
30. Purchase and sale of

inventory using a per-
petual system
31. lower of cost or mar- rule that merchandise inventory should be reported
ket rule in the financial statements at whichever is lower - its
historical cost or its market value
At the end of the year, inventory is accounted for

by lower of the cost to purchase it or the current
market value
32. Bank reconciliation bank and book reconciliation

and related entries
33. Notes receivable A written promise that a customer will pay a fixed
amount of principal plus interest by a certain date in
the future.
less than a year loan out to someone
34. Measure the cost of a how much you paid, subtract how much you
plant asset can get back after full depreciation
35. Long-term notes over a year payable and

payable and mort- buying a facility
gages payable
36. Report liabilities on

the balance sheet
37. classes of stock preferred, common, and series.
38. retained earnings

4/8
An amount earned by a corporation and not yet
distributed to stockholders.
39. cash dividend a cash distribution of earnings by a corporation to its

shareholders
40. stock dividend Corporation's distribution of its own stock to its stock-
holders without the receipt of any payment.
41. Stock splits an action by a company that gives stockholders two

or more shares of stock for each one they own
42. Treasury Stock A corporation's own stock that it has issued and later
reacquired.
43. Purpose of the state- to see how money is going in and out
ment of cash flows
44. Operating, invest-

ing(other companies
and equipment), and
financing activities
45. Vertical & hori- Ëhorizontal: account balance changes from last year
zontal analysis of fi- %.
nancial statements Ë Vertical: financial statement numbers as a percent-
age of assets, liabilities,
net income ect.
46. Standard financial ra-

tios
47. Costs Categories Monetary($), temporal(time), psychological, behav-

ioral
48. Cost of Goods Sold the amount of money a firm spent to buy or produce
the products it sold during the period to which the
income statement applies
49.
5/8
Cost of Goods Manu- Total cost of work in process less the cost of the
factured ending work in process inventory.
50. job order and process

costing
51. Quality cost (preven-

tion, appraisal, inter-
nal failure, external
failure-most
expensive)
52. Cost Categories variable, fixed, mixed
53. Cost-Volume-Profit The study of the effects of changes in costs and

Analysis volume on a company's profits.
break even point & target income amounts
54. Sensitivity Analysis investigation of what happens to NPV when only one
variable is changed
55. Information relevant everything

to business decisions
56. Pricing Decisions Pricing objectives

Nonfinancial prices
Indirect payment
Separation between payers and users
Below-cost pricing
57. Prepare financial

analysis for various
short term business
decisions
58. *Importance of capital

investments
59. value of the dollar decreases over time

6/8
Time value of money
concepts
60. Present value and fu- FV = the future value of money.

ture value of single PV = the present value.
lump sums and annu- i = the interest rate or other return that can be earned
ities ( Calculation) on the money.
t = the number of years to take into consideration.
n = the number of compounding periods of interest
per year.
FV = PV X [1 + (i/n)] ^(n x t)
61. Capital budgeting in- ARR: = (Overall Subscription Cost Per Year + Recur-
vestment decision ring Revenue From Add-ons or Upgrades) - Revenue
models (ARR, pay- Lost from Cancellations.
back, NPC, IRR)
Payback: Initial Investment OR Original Cost of the
Asset / Cash Inflows
62. How and why compa- having decision making move down to
nies decentralize lower managers
63. Why companies use to benchmark, make sure

performance evalua- that your inherent risk is low
tion systems
64. balanced scorecard Clarifying and translating vision into strategy - iden-
and key performance tifying strategic objectives and capturing them in a
indicators strategic map. This requires the business leaders to
reach consensus on what the strategic objectives
truly are, and that all objectives are linked to deliv-
erables to avoid "pet projects."
Communicating strategic objectives and measures
and linking them to operations - this includes estab-
lishing a two-way communications with stakeholders
to encourage dialogue to refine processes and pro-
mote feedback.
Planning and setting targets to align strategic ini-
tiatives - including identifying targets of each of the
7/8
objectives measured by the KPIs. Ideally, individual
targets are set for strategic objectives and projects,
which are in turn linked to the larger strategic objec-
tives.
Enhancing strategic feedback and learning - this
includes learning from performance information and
using the findings from the balanced scorecard to
refine decision-making.
65. ROI, RI (residual in- ROI: Net Profit / Total Investment * 100. Keep in mind
come), & EVA (eco- that if you have a net loss on your investment, the
nomic value added) to ROI will be negative. Shareholders can evaluate the
evaluate ROI of their stock holding by using this formula: ROI
investment centers = (Net Income + (Current Value - Original Value)) /
Original Value * 100.
66. Dropping products, it happens

departments, or terri-
tories
67. Just-in-time (JIT) is a management strategy that aligns raw-material

orders from suppliers directly with production sched-
ules.
68. Apply ethical stan- be ethical

dards to decision mak-
ing
69. Make outsourcing and -WHO WROTE THIS

sell as is or process IS AN IDIOT
further decisions
70. statement of cash gains are deducted from income and losses are
flows in the indirect added to income
method
71. noncash investing

and financing activi-
ties
8/8
Peregrine Exam
Study online at https://quizlet.com/_6x5kcr
1. Which of the following is implementing a restricted hiring policy

NOT a strategic alterna- downsizing the workforce
tive to laying off employ- lowering employment standards
ees? mandating reduced hours
Lowering Employment Standards
2. KJ built his taco truck 194,640

out of $75,000,000 worth 173,310
of titanium and duct tape. 167,125
He uses $10.25 of organic 181,292
bok choy, $6.75 of Wiscon-
sin cheddar cheese, and 173,310
$25.25 of foie gras in each
taco. If he sells tacos at
$475 each, what is his
break-even quantity?
3. The Marketing Concept Sales

today is about what? Relationships
Aggressive advertising
Price
Sales
4. Which of these is not a operating.

cash flow activity cate- investing.
gory in the Statement of financing.
cash flows? depreciating.
Depreciating
5. Which one of the follow- TC = TFC + TVC

ing statements is false? ATC = AFC + AVC
AFC = TFC divided by Q
MC = TC divided by Q
AFC = TFC divided by Q
1 / 13
Peregrine Exam
6. The ratio that explains Receivables turnover ratio
how efficiently companies Asset turnover ratio
use their assets to gener- Income ratio
ate revenue. Quick ratio
Asset Turnover Ratio
7. The sum of the squares measures the total variability in X about the
total (SST) mean.
measures the total variability in Y about the
mean.
measures the variability in X about the regres-
sion line.
measures the variability in Y about the regres-
sion line.
Measures the variability in Y about the regres-

sion line.
8. This strategy sacrifices Multinational strategy

responsiveness to lo- Global strategy
cal markets in favor Transnational strategy
of efficiency. Microsoft, Multidomestic strategy
for example, offers the
same software programs Global
around the world but ad-
justs the programs to
match local languages.
9. Another Time Around The marketing mix

helps young inner city Cause marketing
kids develop products Benevolent advertising
they can make and sell A tax deduction
to earn money for col- Corporate charitable marketing
lege. What concept best None of the above.
describes this?
cause marketing
10. Lauren is an HR manager Employee and labor relations

at a marketing firm. Which Staffing
2 / 13
Peregrine Exam
of the following functions Employee staffing
is LEAST likely to be an Product testing
aspect of Lauren's job?
Product Testing
11. Local area networks link computers that are geographically far apart
(LANs) are used to _____. provide communication services spanning sev-
eral cities or states
connect various wide area networks in metropol-
itan areas
integrate services to a single building or campus
integrate services to a single building or campus
12. n June 2015, American Tacit collusion

steel companies United Collusion
States Steel Corp., Nu- Price fixing
cor Corp., Steel Dynamics Dumping
Inc., ArcelorMittal USA,
AK Steel Corp., and Cal- Dumping
ifornia Steel Industries
filed a complaint with
the Department of Com-
merce and the ITC alleg-
ing that China (and oth-
er countries) were selling
steel in the U.S. market
at prices lower than their
own markets. This prac-
tice is known as
13. Dumping is considered: Repackaging a product currently being sold in a

foreign country.
Collecting and destroying products before they
contaminate the market for the brand.
The sale of an exported product at a price lower
than that charged for the same or a like product
in the "home" market of the exporter.
Offering a bribe to a foreign official for the pur-
3 / 13
Peregrine Exam
poses of opening markets.
Combining a poorly selling product with a new
product.
The sale of an exported product at a price lower

than that charged for the same or a like product
in the "home" market of the exporter.
14. Marginal revenue is equal the change in total revenue associated with a
to: change in quantity.
marginal cost.
the change in total profits associated with a
change in quantity.
total revenue divided by its output.
Marginal cost
15. The primary purpose of promote employee benefits

employer branding is to encourage mentions in social media.
________. attract quality employees
sell consumer products
attract quality employees
16. The days required for a Inventory period

business to receive in- Operating cycle
ventory, sell the inventory, Accounts receivable period
and collect cash from the Accounting period
sale of the inventory.
operating cycle
17. Which of the following Two firms with identical sales and operating
statements is CORRECT? costs but with different amounts of debt and tax
rates will have different operating incomes by
definition.
If a firm is reporting its income in accordance

with generally accepted accounting principles,
then its net income as reported on the income
statement should be equal to its free cash flow.
4 / 13
Peregrine Exam
After-tax operating income is calculated as

EBIT(1 - T) + Depreciation.
Free cash flow (FCF) is, essentially, the cash

flow that is available for interest and dividends
after the company has made the investments in
current and fixed assets that are necessary to
sustain ongoing operations.
Free cash flow (FCF) is, essentially, the cash

flow that is available for interest and dividends
after the company has made the investments in
current and fixed assets that are necessary to
sustain ongoing operations.
18. The data component of an a set of facts that have been analyzed by the
information system is: process component
a series of integrated files containing relevant
facts
the input to the information system
the output of the information system
a series of integrated files containing relevant

facts
19. Another name for a deci- payout table.

sion table is a payoff table.
payment table.
pay-up table.
Payoff table
20. In the automobile indus- price will increase, and quantity will decrease.
try, workers have just ne- price will decrease, and the effect on quantity is
gotiated a new contract indeterminate.
giving workers a large price will decrease, and quantity will increase.
raise. There has also been price will increase, and the effect on quantity is
an increase in the number indeterminate.
5 / 13
Peregrine Exam
of licensed drivers who
are in the market for a price will increase, and quantity will decrease
new car. In the market for
new automobiles, the ef-
fects that these changes
will have on the equilibri-
um price and quantity in-
clude:
21. What is the advantage Helps in retaining advantage over competition

of foreign direct invest- Reduces transportation costs
ment? Creates a company tailored to a foreign market's
characteristics
All of the above
All of the above
22. The contention that tariffs the infant industry argument.

should be imposed when a national defense concern.
a foreign government pro- dumping.
vides financial assistance to counter foreign subsidies.
to its producers is:
the infant industry argument.
23. A new young executive is True

perplexed at the number False
of interruptions that oc-
cur due to employee rela- False
tions. She has decided to
track the number of inter-
ruptions that occur during
each hour of her day. Over
the last month, she has
determined that between
0 and 3 interruptions oc-
cur during any given hour
of her day. The data is
shown below.
number of interruptions -
6 / 13
Peregrine Exam
probability
0 interruptions - .4
On average she should

expect 1 interruption per
hour.
24. _____ is the amount of Protocol

data that can be trans- Bandwidth
ferred from one point to Packet
another in one second. Latency
Bandwidth
25. The principle of rational the most total utility for that dollar.
choice specifically states the most average utility for that dollar.
that you choose how to the most marginal utility for that dollar.
spend additional income the least total utility for that dollar.
based on what gives you:
the most marginal utility for that dollar
26. Outdoor World has every- Socially conscious retailing

thing any hunter or fisher- NRA retailing
man could want, all under Gender targeted retailing
one roof including a dis- Micro target retailing
play of hunting trophies Destination retailing
and a swimming pool full
of bass to test fishing Destination retailing
gear. What kind of retailer
is Outdoor World?
27. Jack has the power to give Legitimate power

a bonus the employees Reward power
to achieve a certain level Expert power
of performance. This is an Referent power
example of:
Reward Power
7 / 13
Peregrine Exam
28. The rate of unemployment unemployed workers divided by the number of

is calculated as the num- employed workers.
ber of: people in the civilian labor force divided by the
number of unemployed.
employed workers divided by the number of un-
employed workers.
unemployed divided by the number of people in
the civilian labor force.
unemployed divided by the number of people in

the civilian labor force.
29. On a hot summer day, For the construction worker, total utility increased
a construction work- at an increasing rate.
er enters a McDonald's Marginal utility increased at an increasing rate.
fast-food restaurant. He Marginal utility declined as he consumed addi-
orders the first Big Mac. tional Big Macs.
He consumes it within 3 The law of diminishing marginal utility does not
minutes. He then orders a apply to consumption of Big Macs.
second Big Mac and con-
sumes it in 10 minutes.
He eats only half of the Marginal utility declined as he consumed addi-
third one in 18 minutes tional Big Macs.
and throws away the rest.
The store manager offers
him the fourth for free. The
construction worker says:
"No thanks." Why?
30. George, a project man- Handle work issues immediately.

ager at a publishing Recognize your own limitations.
firm, is experiencing many Keep your problems to yourself.
stress-related symptoms. Focus on making work a priority.
What is the best advice
an HR manager could give Recognize your own limitations
George?
31. Liabilities
Losses
8 / 13
Peregrine Exam
Which of the following is a Expenses
category or element of the Gains
balance sheet?
Liabilities
32. In the context of the data economic conditions

component of an informa- personnel records
tion system, internal data population statistics
sources include _____. government agencies
Personnel Records
33. According to the hot stove Share the experience with co-workers
rule, disciplinary action Have time to contact an HR manager
should most likely occur Understand the reason for it
immediately, so that the Receive appropriate training opportunities
individual _____.
Understand the reason for it
34. In the context of appli- data mining agents

cations of artificial intelli- firewalls
gence (AI), _____ perform robots
well at simple, repetitive electronic trackers
tasks and can be used to
free workers from tedious Robots
or hazardous jobs.
35. A company has two bonds Both will increase and the 10-year will increase
that are identical except more.
one matures in 5 years Both will decrease and the 5-year will decrease
and one matures in 10 more.
years. If interest rates fall, Both will increase and the 5-year will increase
what will happen to the more.
price of the bonds? Both will decrease and the 10-year will decrease
more.
Both will increase and the 10-year will increase

more.
36. External Fraud

9 / 13
Peregrine Exam
Any business activity,
which resorts to deceitful
practices or devices with
the intent to deprive an-
other of property or oth-
er rights, or to cause eco-
nomic injury.
37. Which of these actions Holding more stocks to offer better customer
would likely result in a service.
lower current ratio? Increasing cash by selling excess fixed assets.
Extending the time to pay suppliers
Allowing major customers more time to pay bills.
Extending the time to pay suppliers
38. Dave is developing a so- Developmental

cial media platform to Demographic
help Saint Leo students Millennial
plan events and track at- Psychographic
tendance. Part of his per- Quantified
sona profile includes age,
gender and class year. Demographic
What part of segmenta-
tion best describes these
factors?
39. Ellen, as a manager, Participating

has always been dri- Consideration
ven by scheduling, di- Transformation
recting group activities, Delegating
planning, and trying out
new ideas. For her, meet- Delegating
ing deadlines is critical
and she always gives ex-
plicit standards of perfor-
mance. Ellen can be de-
scribed as high on which
of these?
10 / 13
Peregrine Exam
40. The following is a payoff Alternative 1
table giving profits for var- Alternative 2
ious situations. Alternative 3
State one: 0.4 / 45 / 16 / 23 Alternative 4
/ 44
State 2 : 0.35 / 37 / 59 / 65 / Alternative 3
33
State 3 : 0.25 / 83 / 72 / 91 /
55
If a person were to use the
expected monetary value
criterion, what decision
would be made?
41. In the long run, the price will equal the minimum average total cost.
for a perfectly competitive will equal marginal cost where marginal cost is at
firm: a minimum.
will allow for positive economic profits.
will be determined by the firm's supply and de-
mand curves.
Will be determined by the firm's supply and de-

mand curves?
42. As an example of this Global strategy

strategy, large fast-food Multidomestic strategy
chains such as McDon- Multinational strategy
ald's and KFC rely on Transnational strategy
the same brand names
and the same core menu Transnational strategy
items around the world,
but make some conces-
sions to local tastes too.
43. _______ laws are feder- Consumer protection

al and state statutes and Canon
regulations that promote Caveat emptor
product safety and pro- FDCA
hibit abusive, unfair, and
11 / 13
Peregrine Exam
deceptive business prac-
tices. Consumer Protection
44. The World Trade Organiza- The only global international organization fo-
tion (WTO) is: cused on negotiating the rules of trade between
nations.
None of the above
A clearing house for orders of high tech, highly
dangerous products from G-7 countries.
The U.S. agency that coordinates payments for
countries in the Western Hemisphere.
A training organization for lesser developed na-
tions seeking to normalize financial agreements.
The only global international organization fo-

cused on negotiating the rules of trade between
nations.
45. Which of these is not Detailed product information

a critical component is Appeal type
designing an advertising Target audience
campaign Objective
Message strategy
Detailed product information
46. In a relational database serial key

model, a _____ is a field secondary key
in a relational table that foreign key
matches the primary key domain key
column of another table.
foreign key
47. The ________ was in- Fair Employment Practices Act

tended to eliminate job Title VII of the Civil Rights Act of 1964
discrimination based on Lilly Ledbetter Fair Pay Act
race, color, national ori- Title II of Genetic Information Nondiscrimination
gin, sex, and religion. Act
Fair employment practices act

12 / 13
Peregrine Exam
48. Which of the following is Managers are always overall aggressive in esti-
not a shortcoming of us- mating hiring requirements
ing manager judgment for None of the above are shortcomings of manage-
forecasting availability? ment judgement
The complexity of forecasting may overwhelm
the manager
Managers may not know employee intentions
Managers are always overall aggressive in esti-

mating hiring requirements
49. Which of these is typically It is advertised via e-media

a characteristic of a sales It requires the consumer to act on the offer in a
promotion? fixed time
The consumer does not have to buy the product
to benefit from the offer
It is a key part of social media marketing
The consumer does not have to buy the product

to benefit from the offer
50. A(n) _____ consists of evolutionary model

programs that mimic hu- spiral model
man thought behavior in a Artificial intelligence system
specific area that human database system
specialists have solved
successfully. Artificial intelligence system
13 / 13

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Peregrine Exam Study Questions

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Peregrine Exam

Study online at https://quizlet.com/_7hl7tq

1. What is a general A general ledger account is an account or record used

liability accounts including Notes Payable, Accounts

stockholders' equity accounts such as Common Stock,

2. What is the differ- Accounts payable is a current liability account in which

5. What is principles Principles of accounting can also refer to the basic

7. What is meant by Reconciling an account is likely to mean proving or

8. What is included In accounting, a company's cash includes the following:

Cash equivalents are short-term, highly liquid invest-

11. AN INCREASE TO Client Fees

13. When a busi- classification

14. A dividend will Retained Earnings

15. Lying by omission withholding material facts.

18. A corporate bond 33.73%

20. TQM is most help- integrated cost-leadership differentiation

21. All of the follow- Work itself

22. Which of the follow- Acquired needs theory

23. Final good

24. The largest compo- consumption

25. In economics, firms Maximize profits

26. Holding everything when either price or quantity increase

27. Government tac- Expropriation

28. "People of the Collusion

29. ____ is a collec- Information

30. ____ is the simu- Virtual reality

31. The Federal the publication of a notice of proposed rulemaking.

32. Kip opens an ac- No federal law

33. The process of Strategic planning

34. One way human strategy formulation process

35. In the SERVQUAL The ability to convey trust and confidence

37. A leading force Global competition

38. A questioning, critical thinking

41. Sensitivity analysis changes in the values of the payoffs.

42. A population char- A parameter

43. OPERATING Income Statement

44. PURCHASES RE- CONTRA-COST ACCOUNTS

46. Mission Statement A MISSION STATEMENT DEFINES THE COMPA-

47. Corporation Struc- A BOARD OF DIRECTORS; OFFICERS; EMPLOY-

48. CORPORATE GOV- IT ESSENTIALLY INVOLVES BALANCING THE IN-

IT ENCOMPASSES PRACTICALLY EVERY SPHERE

49. GDP Calculation THE FORMULA FOR GDP IS: GDP = C + I + G +

50. GROSS DOMESTIC IS ONE OF THE PRIMARY INDICATORS USED TO

ANALYSIS: GDP GROWTH RATE IS THE GROWTH

51. Inflation IS DEFINED AS A SUSTAINED INCREASE IN THE

52. Recession IS A SIGNIFICANT DECLINE IN ECONOMIC AC-

53. International Trade IS THE EXCHANGE OF CAPITAL, GOODS, AND SER-

54. MICROECONOMIC ARE PATTERNS OF MOVEMENTS OR CHANGES

55. MICROECONOMIC ATTEMPTS TO EXPLAIN THE BEHAVIOR OF INDI-

FUNCTIONS THROUGH MODELING AND BY EM-

TOTAL MONETARY - REVENUE TOTAL COSTS.

57. Economic Profit IS THE MONETARY COSTS AND OPPORTUNITY

TOTAL REVENUE-(EXPLICIT COSTS + IMPLICIT

58. LAW OF SUPPLY THAT THE QUANTITY OF A GOOD SUPPLIED (I.E.,

59. Law of Demand SAYS THAT THE QUANTITY OF A GOOD DEMANDED

61. A suit for negli- Actual harm

62. Financial Regula- is a form of regulation or supervision, which subjects

63. THE FTC'S BU- STOPS UNFAIR, DECEPTIVE AND FRAUDULENT

64. 6 BASIC RIGHTS right to safety, right to be informed, right to choose,

66. 5 Functions of HRM 1. Recruitment and Selection 2. Orientation 3. Main-

67. Individual and Interaction of complex intra- and inter-personal forces

Field of study concerned with determination of laws

69. TYPE I ERROR

70. TYPE II ERROR IS FAILING TO REJECT A FALSE NULL HYPOTHESIS