BUS 475 Capstone Final Examination Part 2

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BUS 475 Capstone Final Examination Part 2
1. Which of the following is not a current liability on December 31, 2014?
A lawsuit judgment to be decided on January 10,2015
A Note Payable due December 31 2015
Accrued salaries payable from 2014
An Accounts Payable due January 31,2015
2. Continuous monitoring, in the contemporary approach, is beneficial
because_____________.

it increases the time it takes to detect changes in the competitive

environment

3.

organization response time is increased

organizational flexibility is reduced

It reduces time lags

The acquisition of treasury stock by a corporation:

requires that a gain or loss be recognized on the income statement.

increases its total assets and total stockholders equity.

has no effect on total assets and total stockholders equity.

decreases its total assets and total stockholders equity.

4. You work in marketing for a company that produces work boots.

Quality control has sent you a memo detailing the length of time before
the boots wear out under heavy use. They find that the boots wear out in
an average of 208 days, but the exact amount of time varies, following a
normal distribution with a standard deviation of 14 days. For an
upcoming ad campaign, you need to know the percent of the pairs that
last longer than six months-that is, 180 days. Use the empirical rule to
approximate this percent.

97.5%

95%

2.5%

5%

5. __________involves ensuring proper strategic controls and

organizational designs.

6.

7.

Corporate governance

Strategy implementation

Business-level strategy

Corporate-level strategy

A post-closing trial balance will show:

only income statement accounts

zero balances for balance sheet accounts

only balance sheet accounts

zero balances for all accounts

The preparation of adjusting entries is:

straightforward because the accounts that need adjustment will be

out of balance
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needed to ensure that the expense recognition principle is
followed.

only required for accounts that do not have a normal balance.

optional when financial statements are prepared.

8. In a simple linear regression model, if the plots on a scatter diagram

lie on a straight line, what is the standard error of the estimate?

9.

Infinity

+1

-1

The fraud triangle applies to:

U.S. and Canadian companies, but not other international

companies.

U.S companies but not international companies.

U.S and international companies.

international companies but not U.S. companies.

10. According to value-chain analysis, which of the following would be

considered part of the general administration in a firm?

information systems

procurement

technology development

human resource management

11. Which of the following can be represented by a discrete random

variable?

The circumference of a randomly generated circle

The number of defective light bulbs in a sample of five

The time of a flight between Chicago and New York

The average distance achieved in a series of long jumps

12. What is an advantage of the correlation coefficient over the

covariance?

It falls between 0 and 1.

It falls between -1 and 1.

It falls between -1 and 1; and it is a unit free measure, therefore

making it easier to interpret.

It is a unit-free measure, therefore making it easier to interpret.

13. GAAP, compared to IFRS, tends to be more:

rules-based

simple in accounting requirements

principles-based

simple in disclosure requirements

14. The resource-based view (RBV) of the firm combines two

perspectives:

the internal analysis of the firm and the external analysis of the
industry and competitive environment

the primary and support activities of the firm

the industry and the competitive environment

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the interrelationships among the primary activities of the firm and
corporate management
15. Sarbanes Oxley applies to:

U.S and international companies.

U.S. and Canadian companies but not other international

companies.

U.S companies but not international companies.

international companies but not U.S. companies.

16. Is it possible for a data set to have no mode?

No, unless there is an odd number of observations

Yes, if two observations occur twice

Yes, if there are no observations that occur more than once

No, if the data set is nonempty, there is always a mode

17. Under the accrual basis of accounting:

events that change a company's financial statements are

recognized in the period they occur rather than in the period in which
cash is paid or received.

the ledger accounts must be adjusted to reflect a cash basis of

accounting before financial statements are prepared under generally
accepted accounting principles.

cash must be received before revenue is recognized.

net income is calculated by matching cash outflows against cash

inflows.
18. Which trial balance will consist of the greatest number of accounts?

Trial balance
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Adjusted trial balance

Balance

Post-closing trial balance

19. Vertical analysis is a technique that expresses each item in a financial

statement:

in dollars and cents.

as a percent of a base amount.

as a percent of the item in the previous year.

starting with the highest value down to the lowest value.

20. Cost allocation of an intangible asset is referred to as:

accretion

amortization

depreciation

capitalization

21. According to the text, the triple bottom line approach to corporate
accounting includes three components:

financial, environmental, and social

financial, organizational, and customer

financial, environmental, and customer

financial, organizational, and psychological

22. An analyst believes the probability that U.S. stock returns exceed longterm corporate bond returns over a 5-year period is based on personal
assessment. This type of probability is best characterized as a(n)
____________.
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Subjective probability

Objectivity probability

Empirical probability

A priori probability

23. Green, Inc. had 200,000 shares of common stock outstanding before a
stock split occurred and 800,000 shares outstanding after the stock split.
The stock split was:

2-for-8

1-for-8

8-for-1

4-for-1

24. Firms must be aware of goals other than short-term profit

maximization. One area of concern should be social responsibility which
is:

the expectation that business will strive to improve the overall

welfare of society

the fact that court costs could impact the financial bottom line

the idea that organizations are solely responsible to local citizens

the idea that businesses are responsible to maintain a healthy

social climate for their employees
25. Expenditures that maintain the operating efficiency and expected
productive life of a plant asset are generally:

expensed when incurred.

not recorded until they become material in amount.

debited to the Accumulated Depreciation account.

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capitalized as a part of the cost of the asset.

26. For both qualitative and quantitative data, what is the difference
between the relative frequency and the percent frequency?

The relative frequency equals the percent frequency multiplied by

100.

The percent frequency equals the relative frequency multiplied by

100

As opposed to the relative frequency, the percent frequency is

divided by the number of observations in the data set.

As opposed to the percent frequency, the relative frequency is

divided by the number of observations in the data set.

27. Shaw Industries, a giant carpet manufacturer, increases its control

over raw materials by producing much of its own polypropylene fiber, a
key input to its manufacturing process. This is an example of
_______________.

using related diversification to achieve value by leveraging core

competencies to achieve economies of scope

using related diversification to achieve value by pooling

negotiating power to achieve market power

using related diversification to achieve value by integrating

vertically in order to attain economies of scope

using related diversification to achieve value by integrating

vertically in order to acquire market power
28. Which of the following can be represented by a continuous random
variable?

The average temperature in Tampa, Florida, during the month of

July
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The number of customers who visit a department store between
10:00 a.m. and 11:00 a.m. on Mondays

The number of students who will get financial assistance in a

group of 50 randomly selected students

The number of typos found on a randomly selected page of this

test bank
29. Which of the following controls would best help detect the removal of
a blank check by an employee from the back of a company's checkbook
for subsequent misappropriation of funds?

An accounting policies manual

Tracing any debit memorandums from the bank to the company's

records

A review of the cash budget

The use of pre-numbered checks

30. A SWOT analysis is a framework for analyzing a firms environments.

A SWOT is made up of

Internal environmental analysis of threats and weaknesses.

Internal strengths and weaknesses; external threats and

opportunities.

Internal threats and weakness and external strengths and

opportunities.

External analysis of strengths and opportunities.

31. Trumpeting Trumpets has the following inventory data:

July 1: Beginning
inventory

30 units at $120

July 5: Purchases

180 units at
$112

July 14: Sale

120 units

July 21: Purchases

90 units at $115

July 30: Sale

84 units

Assuming that a periodic inventory system is used, what is the cost of goods
sold on a FIFO basis?

$23,088

$11,022

$10,992

$23,118

32. Which of these statements regarding the industry life cycle is correct?

It points out the need to maintain a differentiation advantage and a

low cost advantage simultaneously.

Trends suggested by the market life cycle model are generally not
reversible or repeatable.

It has important implications for company generic strategies,

functional areas, value-creating activities, and overall objectives.

Part of the power of the market life cycle is its ability to serve as a
short-run forecasting device.
33. What is a difference between merchandising companies and service
enterprises?

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Merchandising companies must prepare multiple-step income
statements and service enterprises must prepare single-step income
statements.

Cost of goods sold is an expense for service enterprises but not for
merchandising companies.

The operations in merchandising companies and service

enterprises are identical.

Merchandising companies generally have a longer operating cycle

than service enterprises.
34. Which of the following meets the requirements of a simple random
sample?

A population contains 10 members under the age of 25 and 20

members over the age of 25. The sample will include six males chosen at
random, without regard to age.

A population contains 10 members under the age of 25 and 20

members over the age of 25. The sample will include six people who
volunteer for the sample.

A population contains 10 members under the age of 25 and 20

members over the age of 25. The sample will include six people chosen
at random, without regard to age.

A population contains 10 members under the age of 25 and 20

members over the age of 25. The sample will include two people chosen
at random under the age of 25 and four people chosen at random over 25.
35. The acquisition of treasury stock by a corporation:

increases its total assets and total stockholders equity.

requires that a gain or loss be recognized on the income statement.

has no effect on total assets and total stockholders equity.

decreases its total assets and total stockholders equity.

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36. WellPoint Health Network states: WellPoint will redefine our

industry: through a new generation of consumer-friendly products that
put individuals back in control of their future. This is an example of a:

Vision statement

Vague statement of direction

Strategic objective

Line mangers individual goal

37. If a corporation issued $8,000,000 in bonds which pay 5% annual

interest, what is the annual net cash cost of this borrowing if the income
tax rate is 30%?

$400,000

$120,000

$4,000,000

$280,000

38. International Financial Reporting Standards (IFRS):

implies that receivables with different characteristics should be

reported separately.

implies that receivables with different characteristics should be

reported as one un-segregated amount.

requires that receivables with different characteristics should be

reported as one un-segregated amount.

requires that receivables with different characteristics should be

reported separately.
39. Assume that the Fitzgerald Corporation uses the indirect method to
depict cash flows. Indicate where, if at all, accounts receivable collected
would be classified on the statement of cash flows.
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Does not represent a cash flow.

Operating activities section.

Financing activities section.

Investing activities section.

40. Shaw Industries, a giant carpet manufacturer, increases its control

over raw materials by producing much of its own polypropylene fiber, a
key input to its manufacturing process. This is an example of
_______________.

using related diversification to achieve value by integrating

vertically in order to acquire market power

using related diversification to achieve value by leveraging core

competencies to achieve economies of scope

using related diversification to achieve value by pooling

negotiating power to achieve market power

using related diversification to achieve value by integrating

vertically in order to attain economies of scope
41. In multiple regression, plot the residuals against ____ to detect
changing variability.

The response variable

The predicted values

Collinear variables

All explanatory variables

42. On March 1st, Candy, Inc. had supplies on hand of $1,500. During the
month, Candy purchased supplies of $2,900 and used supplies of $2,800.
The March 31st balance sheet should report what balance in their supplies
account?

$2,800
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$1,500

$1,600

$2,900

43. Which of the following requirements about internal controls were

enacted under the Sarbanes Oxley Act:

Companies must assess the functionality of internal controls only

when a violation occurs.

Companies must develop sound internal controls over financial

reporting.

Independent outside auditors must eliminate redundant internal

controls.

Internal auditors replace independent outside auditors when

evaluating the level of internal control.
44. The four key attributes of strategic management include the idea that:

Strategy must be focused on competitor strengths.

Strategy must be directed toward overall organizational goals and

objectives.

Strategy must be focused on one specific area of an organization.

Strategy must be focused on long-term objectives.

45. Which financial statement would best indicate whether the company
relies on debt or stockholders equity to finance its assets?

Statement of cash flows

Retained earnings statement

Income statement

Balance sheet
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46. When collection is made on Accounts Receivable,

total assets will decrease.

stockholders equity will increase.

total assets will increase.

total assets will remain the same.

47. The manager of Weiser is given a bonus based on net income before
taxes. The net income after taxes is $35,700 for FIFO and $29,400 for
LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is
the manager's bonus if FIFO is adopted instead of LIFO?

$12,600

$9,000

$6,300

$1,800

48. Sampling is used heavily in manufacturing and service settings to

ensure high-quality products. In which of the following areas would
sampling be inappropriate?

Cell phone manufacturing

Custom cabinet making

Computer assembly

Technical support by phone

49. Interest may be included in the acquisition cost of a plant asset:

if the asset is purchased on credit.

during the construction period of a self-constructed asset.

if it is a part of a lump-sum purchase.

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if the asset acquisition is financed by a long-term note payable.

50. The owner of a company has recently decided to raise the salary of one
employee, who was already making the highest salary, by 20%. Which of
the following is(are) expected to be affected by this raise?

Median only

Mean and median only

Mean only

Mean, median, and mode

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