8/18/2022


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Course # 171026
Accounting and Finance for Business Operations
based on the electronic .pdf file(s):

Accounting and Finance for Business Operations
by: Dr. Jae K. Shim, Ph.D., 2014, 315 pages


18 CPE Credit Hours
Accounting

A P E X C P E . C O M  . . . . .  1.877.317.9047  . . . . .  support@apexcpe.com


Chapter 1 - Essentials Of Accounting And Finance

1.    Managers spend a good portion of time:   
Delegating
Purchasing
Processing
Planning
2.    Capital investments projects do NOT include:   
Property
Plant
Inventory
Equipment
3.    The Controller is responsible for all EXCEPT:   
Custody of records
Legal work
Budgeting
Payroll
4.    The three major types of business entities are:   
Profit, nonprofit, and corporate organizations
Corporations, partnerships, and proprietorships
Corporations, associations, and nonprofit organizations
Institutions, partnerships, and corporations
5.    A business owned by two or more people is called a:   
Nonprofit organization
Partnership
Corporation
Sole proprietorship
6.    An S corporation cannot have more than ______________ shareholders.   
35
20
75
100
7.    ____________ are typically not permitted to carry on certain service businesses (e.g., law, medicine, and accounting).   
Partnerships
LLCs
S Corporations
C corporations


Chapter 2 - Types Of Cost Data And Cost Analysis

8.    _________________ are related to time rather than to producing the product (e.g., advertising costs, sales commissions, and administrative salaries).   
Product costs
Conversion costs
Period costs
Prime costs.
9.    The wood in an oak desk is an example of:   
Direct materials
Indirect materials
Direct labor
Indirect labor
10.    Prime costs consist of:   
Direct materials and direct labor
Direct labor and manufacturing overhead
Direct materials and manufacturing overhead
Fixed and variable costs
11.    Conversion costs consist of   
Direct materials and direct labor
Direct labor and manufacturing overhead
Direct materials and manufacturing overhead
Fixed and variable costs


Chapter 3 - Contribution Analysis

12.    _______________________ is not very useful for decision analysis.   
Contribution margin
Margin of safety
Profit margin
Gross margin
13.    Contribution margin is calculated as:   
Sales minus cost of goods sold
Sales minus total variable costs
Sales minus total variable manufacturing costs
Sales minus total variable manufacturing costs and total fixed manufacturing costs
14.    The contribution margin ratio is calculated as:   
Total contribution margin divided by total revenues
Total contribution margin divided by total variable costs
Total variable costs divided by contribution margin
Income divided by contribution margin


Chapter 4 - Break-Even And Cost-Volume-Profit Analysis

15.    The break-even point in sales dollars is computed using the:   
Fixed costs divided by the contribution margin ratio
Variable costs expressed as a percentage of sales
Fixed costs expressed as a percentage of sales
Sales revenue expressed as a percentage of net income
16.    The formula that can be used to calculate unit sales necessary in order to earn a desired profit is:   
(fixed costs + contribution margin)/variable cost ratio
(fixed costs + desired profit)/ unit CM
(fixed costs + variable costs)/CM ratio
(fixed costs + desired profit)/(1 - sales ratio)
17.    Sales mix is the relative combination of:   
Inputs required to produce a product
Outputs produced by a firm
Products sold by a firm
Distribution channels used by a firm
18.    The ______________ measures the percentage change in profits resulting from a percentage change in sales.   
Variable cost ratio
Contribution margin ratio
Degree of operating leverage
Sales margin ratio


Chapter 5 - Relevant Cost And Making Short-Term Decisions

19.    ___________ refer to all the manufacturing costs incurred prior to the split-off point.   
Separation costs
Joint costs
Processing costs
Transferred-in costs.
20.    For a cost or revenue to be relevant to a particular decision, the cost or revenue must   
Differ between the alternatives being considered
Be a past cost
Be a sunk cost
Continue regardless of the decision
21.    ______________ are the result of past decisions and cannot be changed by current or future actions.   
Sunk costs
Opportunity costs
Avoidable costs
Differential costs


Chapter 6 - Forecasting Cash Needs And Budgeting

22.    Forecasting tries to   
Neutralize hedge
Minimize uncertainty or risk about the future
Minimize costs
Plan ahead
23.    The _____________________ is immediately followed by the sales budget:   
Cash budget
Production budget
Direct materials budget
Selling and administrative budget


Chapter 7 - Cost Control And Variance Analysis

24.    Variance analysis is a tool used to:   
Evaluate financial performance
Evaluate customer satisfaction
Determine cost ratios
Identify and control product compatibility
25.    Variances indicate:   
The cause of the variance
Who is responsible for the variance
That problems exist
When the variance should be investigated
26.    When should variances be investigated?   
When they fall out of the accepted range or the control limit
When the variances are unfavorable
When the variances are over $10,000
All variances should be investigated
27.    The performance evaluation of a cost center is typically based on its:   
Sales volume variance
ROI
Flexible budgeting
Static budget variance
28.    The standard quantity allowed for actual output is used in the calculation of which of the following variances?   
It is NOT used in the Materials Price Variance, and it is NOT used in the Materials Quantity (Usage) Variance
It is NOT used in the Materials Price Variance, but it is used in the Materials Quantity (Usage) Variance
It is used in the Materials Price Variance, but it is NOT used in the Materials Quantity (Usage) Variance
It is used in the Materials Price Variance, and it is used in the Materials Quantity (Usage) Variance
29.    Under a standard cost system, the labor rate variances are usually the responsibility of the:   
Production manager
Cost accounting manager
Human resource manager
Purchasing manager
30.    Under a standard cost system, the sales price variances are the responsibility of:   
Production supervisor and foreperson
Marketing and sales
Purchasing and sales
Sales and industrial engineering
31.    An unfavorable direct labor efficiency variance could be caused by a(n):   
Unfavorable fixed overhead spending variance
Favorable labor rate variance
Unfavorable variable overhead volume variance
Poor supervision
32.    How is labor efficiency variance computed?   
The difference between standard and actual rates, times actual hours
The difference between standard and actual rates, times standard hours allowed
The difference between standard and actual hours, times standard rate
The difference between standard and actual hours, times the difference between standard and actual rates


Chapter 8 - Managing Financial Assets

33.    Working capital consists of:   
Equipment
Inventory
Bonds payable
Revenue
34.    When a firm finances each asset with a financial instrument of the same approximate maturity as the life of the asset, it is applying:   
Working capital management
Return maximization
Financial leverage
A hedging approach
35.    A lock-box system   
Reduces the need for compensating balances
Accelerates the inflow of funds
Provides security for late night deposits
Reduces the risk of having checks lost in the mail
36.    Which one of following is least likely an investment vehicle for excess cash?   
Time deposits
Corporate bonds
Money market funds
Bankers' acceptances
37.    A working capital technique that increases the payable float and therefore delays the outflow of cash is:   
Concentration banking
A draft
Electronic Data Interchange (EDI)
A lockbox system


Chapter 9 - Managing Accounts Receivable And Credit

38.    You can increase your rate of return by:   
Extended credit
Accelerated cash receipts and delay cash payments
Increase cash payments
Make early cash payments
39.    The cost of a product is 30% of the selling price, and the carrying cost is 12% of the selling price. On the average, accounts are paid 90 days after the sale date. Sales average $30,000 per month. What is your accounts receivable for this product?   
$90,000
$120,000
$270,000
$30,000
40.    Your accounts receivable (A/R) amounts to $100,000. The cost of a product is 30% of the selling price, and the carrying cost is 10% of the selling price. What is the amount of investment in A/R?   
$100,000
$10,000
$40,000
$30,000


Chapter 10 - Managing Inventory

41.    Economic order quantity refers to the order size that:   
Minimizes the size of the order
Minimizes the carrying costs associated with inventory
Minimizes total inventory costs
Minimizes the ordering costs associated with inventory
42.    One of the elements included in the economic order quantity (EOQ) formula is:   
Safety stock
Annual demand (usage)
Selling price of item
Lead time for delivery
43.    The amount of inventory that a company would tend to hold in stock would increase as the:   
Sales level falls to a permanently lower level
Cost of carrying inventory decreases
Variability of sales decreases
Cost of running out of stock decreases
44.    The Stewart Co. uses the economic order quantity (EOQ) model for inventory management. A decrease in which one of the following variables would increase the EOQ?   
Annual sales
Cost per order
Safety stock level
Carrying costs


Chapter 11 - The Time Value Of Money

45.    If a loan is to be repaid in equal periodic amount it is:   
Personal loan
Amortized loan
Commercial loan
Variable loan
46.    The basic idea of time value of money is that money received in the future is:   
Not as valuable as money received today
More valuable than money received today
Increases in value with time
Future value
47.    Which of the following is true regarding capital rationing decisions?   
Companies should always rank the investment with the payback period
Companies should rank the investments with the profitability index
Companies should always choose the investment with the highest IRR
Companies should always choose the investment with the highest ARR


Chapter 12 - Capital Budgeting Decisions

48.    Long-term investment projects do NOT include investments in:   
Property and plant
Information technology (IT)
New product development
Yearly tax deductions
49.    Several methods of evaluating investments are all EXCEPT:   
Payback period
Nonprofit ratio
Net present value (NPV)
Internal rate of return (IRR)
50.    The newest rule for computing depreciation for tax purposes is called the   
Accelerated depreciation method
Modified accelerated cost recovery system (MACRS)
Accelerated cost recovery system (ACRS)
Accelerated depreciation range
51.    Sally, Inc. is considering the purchase of an investment that has a negative net present value based on Sally's 10% hurdle rate (minimum required rate of return). The internal rate of return would be:   
0
< 10%
10%
> 10%


Chapter 13 - Improving Managerial Performance

52.    _______________ is NOT an action management can take to enhance rate of return on investment (ROI):   
Improve margin by reducing expenses, raising selling prices, or increasing sales faster than expenses
Improve turnover by increasing sales while holding the invest­ment in assets relatively constant, or by reducing assets
Improve both
Enhance the cost of capital
53.    The breakdown of ROI into margin and turnover is popularly known as   
The ROI formula
The Du Pont formula
The Margin-Turnover Relationship
The breakdown principle


Chapter 14 - Evaluating And Improving Your Department'S Performance

54.    Which of the following is NOT a responsibility center?   
Cost center
Asset center
Profit center
Investment center
55.    The best transfer price is the __________________ of the assembled product or service since it is a fair price and treats each profit center as a separate economic entity. .   
Cost plus price
Dual price
Negotiated market value
Outside market price


Chapter 15 - Sources Of Short-Term Financing

56.    Which one of the following provides a spontaneous source of financing for a firm?   
Trade credit (accounts payable)
Mortgage bonds
Accounts receivable
Debentures
57.    An example of secured short-term financing is   
Commercial paper.
A warehouse receipt.
A revolving credit agreement.
Trade credit.
58.    __________________ are often used to finance the shipment handling of both domestic and foreign merchandise.   
Agency securities.
Bankers’ acceptances.
Commercial paper.
Repurchase agreements.
59.    Commercial paper:   
Ordinarily does not have an active secondary market
Has a maturity date greater than 1 year
Is issued by corporations of any size
Has an interest rate higher than a bank loan


Chapter 16 - Considering Term Loans And Leasing

60.    Intermediate-term loans do NOT include   
Repurchase agreements
Debentures
Insurance company term loans
Equipment financing
61.    Revolving credit is used mainly for:   
Long-term financing
Seasonal financing
Capital financing
Renovation financing


Chapter 17 - Long-Term Debt And Equity Financing

62.    An issuer of new securities selects an investment banker by   
A negotiated deal.
Best efforts.
A general cash offer or a rights offer.
A firm commitment.
63.    When dealing with venture capital firms, do NOT:   
Read the fine print
Watch for delay maneuvers
Guard your trade secrets
Give up an ownership interest
64.    Bond holders are:   
Creditors
Debtors
Entrepreneurs
Risk takers
65.    Zero-coupon bonds:   
Are initially sold at par value (a zero discount)
Are issued at prices significantly below face value
Are initially sold for a price above par value
Are tax free
66.    Which of the following is false about junk bonds?   
Issued when the debt ratio is very high
Securities rated at less than investment grade
They are useless securities
Securities that are highly risky but offer high yields
67.    A firm must select from among several methods of financing arrangements when meeting its capital requirements. To acquire additional growth capital while attempting to maximize earnings per share, a firm should normally:   
Attempt to increase both debt and equity in equal proportions, which preserves a stable capital structure and maintains investor confidence
Select debt over equity initially, even though increased debt is accompanied by interest costs and a degree of risk
Select equity over debt initially, which minimizes risk and avoids interest costs
Discontinue dividends and use current cash flow, which avoids the cost and risk of increased debt and the dilution of EPS through increased equity
68.    Common shareholders with preemptive rights are entitled to   
Vote first at annual meetings.
Purchase any additional bonds sold by the firm
Purchase sufficient shares so as to maintain their ownership percentage.
Gain control of the firm in a proxy fight.
69.    In what way do investment bankers make money under best efforts offerings?   
By receiving the difference between the purchasing price and the offering price.
By receiving a commission.
By receiving a discount of the difference between the purchasing price and the offering price.
By purchasing unsold securities for their own account.


Chapter 18 - Interpreting Financial Statements

70.    The basic financial statements include a   
Balance sheet, income statement, statement of retained earnings, and statement of changes in retained earnings
Statement of financial position, income statement, statement of retained earnings, and statement of changes in retained earnings
Balance sheet, statement of financial position, income statement, and statement of changes in retained earnings
Balance sheet, income statement, and statement of cash flows
71.    A statement of cash flows is to be presented in general purpose external financial statements by which of the following?   
Publicly held business enterprises only.
All business enterprises and not-for-profit organizations.
Privately held business enterprises only.
All business enterprises.
72.    The primary purpose of the balance sheet is to measure:   
The fair market value of the firm’s assets
Assets, liabilities, and cash flows
The liquidation value of the firm’s assets
The firm’s financial position at a given date
73.    Another name for the balance sheet is the:   
Statement of cash flows
Statement of earnings
Statement of financial position
Retained earnings statement
74.    Which of the following types of accounts are not found on the balance sheet?   
Revenues
Assets
Liabilities
Owners' equity
75.    Which of the following would be classified as a current liability?   
Accounts payable
Land
Capital stock
Accounts receivable
76.    The financial statement that shows the origin and disposition of an enterprise's cash flows is called the:   
Balance sheet
Statement of cash flows
Income statement
Retained earnings statement
77.    Which of the following is a primary use of cash?   
Borrowing
Investment by owners
Operating expenses
Sale of equipment


Chapter 19 - Accounting Conventions And Recording Financial Data

78.    Double-entry system implies:   
Each transaction has a dual effect
The use of two accounts
The use of two journals
The use of a journal and a ledger
79.    The idea that a transaction affects either both sides of the equation by the same amount or one side of the equation only, by increasing and decreasing it by identical amounts and thus netting zero:   
The additive concept
The going concern assumption
The monetary measurement concept
Double-entry accounting
80.    The basic accounting equation is:   
Assets = liabilities + owners' equity
Assets + liabilities = owners' equity
Assets + owners' equity = liabilities
Liabilities - owners' equity = assets
81.    A journal is:   
A flowchart of all transactions
An accounting procedures manual
A chart of account
The initial recording of transactions
82.    The ledger is:   
A listing of the titles and numbers of all accounts in the chart of accounts
A flowchart of all transactions
The group of accounts which sum up the financial operations of the company
A journal
83.    What function do general ledgers serve in the accounting process?   
Reporting
Summarizing
Classifying
Recording
84.    Borrowing money from a bank:   
Increases assets and decreases liabilities
Increases liabilities and decreases assets
Decreases assets and decreases liabilities
Increases assets and increases liabilities
85.    If a company purchased equipment for cash, the accounting equation would show a(n):   
Increase in assets and decrease in assets
Decrease in liabilities and increase in assets
Increase in liabilities and increase in assets
Decrease in liabilities and decrease in assets


Chapter 20 - Assessing Financial Health And Fitness

86.    What ratio is used to measure a firm's liquidity?   
Debt ratio
Asset turnover
Current ratio
Return on equity
87.    What ratio is used to measure a firm's leverage?   
Debt ratio
Current ratio
Asset turnover
Return on equity
88.    What ratio is used to measure a firm's efficiency at using its assets?   
Current ratio
Total asset turnover
Return on sales
Return on equity
89.    What ratio is used to measure the profit earned on each dollar invested in a firm?   
Current ratio
Asset turnover
Return on sales
Return on total asset
90.    What type of ratio is rate of return on net sales?   
Profitability ratio
Activity ratio
Liquidity ratio
Leverage ratio
91.    If a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest?   
Return on total assets
Return on operating assets
Return on equity (ROE)
Return on total shareholders’ equity

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