Chapter 1 - Pricing, Sales, And Advertising Miss Margins
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1.
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_____________________ is NOT a sign of revenue base erosion: 0
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  A decline in sales and other sources of revenue
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A loss in market share to competitors
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An early stage in product's life cycle
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Selling prices marked down
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2.
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When considering a special order that will enable a company to make use of currently idle capacity, which of the following costs is irrelevant? 0
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Materials
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Fixed costs (e. g. , depreciation, rent)
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Direct labor
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Variable overhead
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3.
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High levels of merchandise returns are NOT caused by: 0
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Poor-quality merchandise
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Innovative advertising
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Incorrect or excessive pricing
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Failure to meet specifications
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Chapter 2 - Inventory And Production Shortfalls
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4.
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__________________ is NOT a cause for low turnover of merchandise: 0
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Slow sales
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Lack of demand for products
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Inventory and sales meeting demands
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Deficiencies in the product line
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5.
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Which condition justifies a low inventory turnover ratio? 0
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High carrying costs
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High stockout costs
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Short lead times
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Low ordering costs
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6.
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For inventory management, ignoring safety stocks, which of the following is a valid computation of the reorder point? 0
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The economic order quantity
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The economic order quantity times the anticipated demand during lead time
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The anticipated demand per day during lead time times lead time in days
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The square root of the anticipated demand during the lead time
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7.
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The carrying costs associated with inventory management include: 0
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Insurance costs, shipping costs, storage costs, and obsolescence
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Storage costs, handling costs, interest on capital invested, and obsolescence
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Purchasing costs, shipping costs, setup costs, and quantity discounts lost
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Obsolescence, setup costs, interest on capital invested, and purchasing costs
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8.
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The order costs associated with inventory management include: 0
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Insurance costs, purchasing costs, shipping costs, and obsolescence
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Obsolescence, setup costs, quantity discounts lost, and storage costs
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Purchasing costs, shipping costs, setup costs, and quantity discounts lost
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Quantity discounts lost, storage costs, handling costs, and interest on capital invested
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9.
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The purpose of the economic order quantity (EOQ) model is to: 0
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Minimize the safety stock
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Minimize the sum of the order costs and the carrying costs
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Minimize the inventory quantities
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Minimize the sum of the demand cost and the backlog costs
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10.
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The economic order quantity (EOQ) will rise following: 0
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A decrease in annual unit sales
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An increase in carrying costs
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An increase in the per-unit purchase price of inventory
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An increase in the variable costs of placing and receiving an order
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11.
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The economic order quantity (EOQ) formula assumes that: 0
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Purchase costs per unit differ because of quantity discounts
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Costs of placing an order vary with quantity ordered
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Periodic demand for the good is known
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Erratic usage rates are cushioned by safety stocks
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12.
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______________ is used in enterprise supply chain management to improve the efficiency of inventory tracking and management. 0
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13.
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Lack of inventory storage space may be a result of 0
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Decrease in production efficiency
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Missed production deadlines
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Improper production planning
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Missing parts
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Chapter 3 - Profit Targets Are Off
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14.
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______________________ is the degree or amount that sales may decline before losses are incurred: 0
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Margin of safety
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Residual income rate
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Marginal rate of return
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Target (hurdle) rate of return
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15.
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Contribution margin is the excess of revenues over: 0
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Cost of goods sold
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Manufacturing cost
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Direct cost
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All variable costs
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16.
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The most likely strategy to reduce the breakeven point would be to: 0
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Increase both the fixed costs and the contribution margin
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Decrease both the fixed costs and the contribution margin
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Decrease the fixed costs and increase the contribution margin
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Increase the fixed costs and decrease the contribution margin
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17.
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Basic break-even and CVP models are subject to limiting assumptions such as: 0
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The selling price per unit is nonlinear
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Costs classified as fixed costs
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There is uncertain sales mix
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Inventories do not change from period to period.
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18.
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Generally, the lower the break-even point, the higher the profit and the less the ______________, other things being equal. F 0
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Operating risk
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Financial risk
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Systematic risk
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Market risk
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19.
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When used in cost-volume-profit analysis, sensitivity (what-if) analysis: 0
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Determines the most profitable mix of products to be sold
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Allows the decision maker to introduce probabilities in the evaluation of decision alternatives
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Is done through various possible scenarios and computes the impact on profit of various predictions of future events
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Is limited because in cost-volume-profit analysis, costs are not separated into fixed and variable components
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20.
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The difference between sales and total variable costs is: 0
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Gross operating profit
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Net profit
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The breakeven point
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The contribution margin
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21.
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Problems of weak sales mix are caused by all EXCEPT: 0
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Easier to sell cheaper items than top-of-the-line
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Sales mix occurs as budgeted
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Sales quotas are set in number of units sold rather than profit
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Shift in sales mix toward less profitable products
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22.
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Falling sales and/or profit margin is usually NOT a result of: 0
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Stock options
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Cost overruns
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Inaccurate pricing
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Ineffective advertising
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Chapter 4 - Risk-Return Unbalance
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23.
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What are the risk and the risk-return trade-off: 0
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The lesser the risk, the greater the return expected
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The greater the risk, the greater the return expected
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The greater the investment, the lesser the risk expected
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The greater the investment, the greater the return expected
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24.
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Which of the following are components of interest-rate risk? 0
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Purchasing-power risk and default risk
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Price risk and market risk
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Portfolio risk and reinvestment-rate risk
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Price risk and reinvestment-rate risk
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25.
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Lack of diversification can be identified by all EXCEPT: 0
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Increased risk
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Highly specialized and concentrated operations
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Lower profitability
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Operating leverage
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26.
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The type of risk that is NOT diversifiable and affects the value of a portfolio is: 0
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Purchasing-power risk
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Market risk
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Nonmarket risk
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Interest-rate risk
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27.
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The risk that securities cannot be sold at a reasonable price on short notice is called: 0
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Default risk
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Liquidity risk
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Interest-rate risk
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Purchasing-power risk
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28.
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A warning sign of financial problems does NOT include: 0
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Costly inventory buildups
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Incompatible and uncoordinated projects
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Actual costs below standard production costs
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Operating inefficiencies
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Chapter 5 - Inability To Finance Weakens Business Development
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29.
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Market price drops of stock can be caused by all EXCEPT: 0
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Market conditions
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Excessive business risk
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Foreign competition
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Updated technology to meet market needs
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30.
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Moody's and Standard & Poor's debt ratings depend on: 0
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The chances of default
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The size of the company
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The size and the type of issue
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The firm's industry
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31.
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If a bond is rated below BBB, it is called: 0
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A zero-coupon bond
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An investment grade bond
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A junk bond
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An income bond
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32.
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Dividends per share/market price per share is 0
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Current yield
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Dividend yield
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Yield to maturity
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Dividend payout ratio
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Chapter 6 - Business Control Threatened
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33.
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Which of the following cannot lead to bankruptcy? 0
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Declining profitability
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Cash flow inadequacies
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Unavailability of financing
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Aggressive expansion/growth of business
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34.
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Management can take many steps to protect itself against business failure excludes 0
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Avoiding excessive debt
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Reducing prices on fast-moving inventory
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Restricting capital expansion
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Selling off unprofitable business segments.
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35.
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An investor has calculated Altman's Z-Score for each of four possible investment alternatives. Each firm is a public industrial firm. The calculated scores for the four investments were as follows: Firm W = 3. 89; Firm X = 2. 48; Firm Y = 2. 00 and Firm Z = 1. 10. Given this info, which statement is true? 0
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Z is least risky and W is most risky
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Y is least risky and W is most risky
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W is least risky and Z is most risky
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X is least risky and W is most risky
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36.
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A defensive measure defines as when the target buys back stock accumulated by the raider at a premium price is: 0
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Green mail
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Poison pill
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Golden parachute
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White knight
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Chapter 7 - Cash Flow Disturbances
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37.
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Cash-related ratios to be computed by management do NOT include: 0
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Cash from sales to total sales
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Cash debt coverage equals cash flow from operations less dividends divided by total debt
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Cash dividends coverage equal to cash flow from operations divided by total dividend
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Current ratio
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38.
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To generate adequate cash flow, you do the following EXCEPT: 0
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Obtain immediate financing
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Do not delay cash payments
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Establish open line of credit
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Sell assets to generate cash
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39.
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When investing surplus funds, aggressive cash managers seek: 0
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Maximizing yields
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Minimizing taxes.
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Investing in Treasury bonds since they have no default risk,
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Liquidity and safety.
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40.
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Which of the following is NOT an early warning sign for going broke? 0
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The company shows a profit but has no cash.
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Management mistakes accounts receivable for cash, while daily payments are made for inventory purchases, payroll, and taxes.
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The company fails to budget properly for capital expenditures and emergencies.
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The company shows increasing overhead.
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41.
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The average collection period for a firm measures the number of days: 0
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After a typical credit sale is made until the firm receives the payment.
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For a typical check to ôclearö through the banking system.
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Beyond the end of the credit period before a typical customer payment is received.
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Before a typical account becomes delinquent.
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Chapter 8 - Mess In Accounts Payable And Receivable
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42.
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Vendor’s price increases can be prevented by all EXCEPT: 0
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Accumulate stocks of supplies and raw materials
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Enter into futures contracts for later date delivery
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Enter into long-term supply arrangements
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Use horizontal integration
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43.
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Using a 360-day year, what is the opportunity cost to a buyer of not accepting terms 2/10, net 30? 0
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24. 70%
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31. 81%
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36. 70%
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101. 73%
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44.
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_______________________ do(es) NOT affect credit ratings: 0
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Market conditions
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Excessive new and innovative assets
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Excessive business risk
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The quality of management
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45.
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Which of the following measures does NOT aim at preventing check fraud and improper payments? 0
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Review, evaluate, and install new internal control procedures for cash disbursement
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Perform a monthly bank reconciliation
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Purchase an insurance policy for reimbursement of any actual future losses
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Account for all check numbers issued during the month ending on the audit date
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Chapter 9 - Lackluster Financial Statements
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46.
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___________________ is NOT an example of liquidity ratio: 0
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Cash ratio
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Cash burn rate
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Times interest earned
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Current ratio
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47.
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An early warning signal of inadequate liquidity does NOT include: 0
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Failure to pay bill or debts on time
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Higher profitability
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Inability to buy inventory or assets
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Deteriorating credit rating
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48.
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Return on Investment (ROI) CANnot be enhanced by management: 0
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Improving margin
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Improving turnover
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Improving both turnover and margin
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Improving liquidity
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49.
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ROE is: 0
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ROI x equity multiplier
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Net Profit after Taxes / Total Assets
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Net profit margin x total asset turnover
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ROI x debt ratio
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50.
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A lower rate of return can be detected early by 0
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High asset turnover
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Lower earnings estimates by broker analyst
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lower beta rankings
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Low management turnover
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51.
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Which of the following is NOT a sign for poor-quality earnings? 0
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Lower price/earnings ratio
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Lower cost of financing
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Unavailability of suitable financing
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Higher compensating balances and security for loan agreements
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Chapter 10 - Costs Out Of Control
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52.
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Stability in product revenue can be determined by computing the ____________ in sales over five to ten years. 0
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Correlation
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Beta coefficient
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Standard deviation
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Expected return
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53.
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Excessive labor costs are caused by all EXCEPT: 0
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Lack of supervision
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Giving-in to the union
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Adequate training
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Obsolete machinery and equipment
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54.
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The percentage change in earnings before interest and taxes associated with the percentage change in revenues is the degree of: 0
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Operating leverage
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Financial leverage
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Breakeven leverage
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Combined leverage
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55.
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An accounting system that collects financial and operating data on the basis of the underlying nature and extent of the cost drivers is: 0
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Activity-based costing
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Target costing
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Cycle-time costing
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Variable costing
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56.
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A profit-maximizing firm would never choose to lower its price in the ____________ range of its demand curve. 0
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Inelastic
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Elastic
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Unitary
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Extreme
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Chapter 11 - Budgeting And Cost Control Problems
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57.
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Actual costs exceeding budgeted costs are caused by all EXCEPT: 0
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Economy of scale
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Lack of cost control and planning
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Lack of efficiency and cost management
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Duplication of effort and facilities
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58.
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An efficiency variance equals: 0
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A flexible budget amount minus a static budget amount
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(standard quantity - actual quantity) x standard price
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Actual operating income minus flexible budget operating income.
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Actual unit price minus budgeted unit price, times the actual units produced
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Chapter 12 - Fragile Internal Controls
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59.
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Record keeping errors can be identified by all EXCEPT: 0
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Misstated financial statement figures
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Extension of audit report due date
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Stable audit fees
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Incomplete records
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Chapter 13 - Tax Planning And Preparation
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60.
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Which of the following statement is false regarding the election of an S corporation? 0
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All shareholders must be individuals, estates, or certain kinds of trusts.
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The shareholders cannot be nonresident aliens.
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The corporation may never have more than 70 shareholders
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The corporation's election of S corporation status is valid only if all shareholders consent to the election.
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