Solved Final Exam - Managing Financial Resources | MSOM 300, Exams of Business Finance

Download Solved Final Exam - Managing Financial Resources | MSOM 300 and more Exams Business Finance in PDF only on Docsity! Submission to Final Exam Spring 2013 5/8/13 9:54 PM Submission to Final Exam Spring 2013 (1) 1. Which of the following is a disadvantage of a sole proprietorship? Entrenched management. Unlimited liability of the owner. Double taxation. Excessive regulation. (1) 2. Which of the following is not a factor in explaining why the present value of a future dollar is less than one dollar? Inflation Interest Historical cost Risk of failure to receive expected cash inflows (1) 3. Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold. For Hico Bottling Company, the salespersons' commissions are an example of a variable cost. a fixed cost. a mixed cost. none of these (1) 4. Select the incorrect statement about the master budget. The master budget is a group of detailed budgets and schedules representing the company's operating and financial plans for the past accounting period. The master budget usually includes operating budgets, capital budgets and pro forma financial statements. The budgeting process usually begins with preparing the operating budgets. Preparing the master budget begins with the sales forecast. (1) 5. Larry's Lawn Care incurs significant gasoline costs. This cost would be classified as a variable cost if the total gasoline cost: varies inversely with the number of hours the lawn equipment is operated. increases in direct proportion to the number of hours the lawn equipment is operated. https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 1 of 13 Submission to Final Exam Spring 2013 5/8/13 9:54 PM is not affected by the number of hours the lawn equipment is operated. A or B (1) 6. Which of the following is an objective of ratio analysis? Assessing past performance. Assessing the prospects for future performance. Determining whether a company is likely to be able to pay its debts on time. All of these may be objectives of ratio analysis. (1) 7. Barker Company's break-even point is 10,000 units. Its product sells for $25 and has a $10 variable cost per unit. What is the company's total fixed cost amount? $250,000 $100,000 $150,000 Fixed costs cannot be computed with the information provided. (1) 8. The following balance sheet information was provided by Paino Company: Assuming cost of goods sold is $165,000, what is the company's average number of days to sell inventory in 2012? 47.4 days 45.3 days 17.8 days none of these https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 2 of 13 Submission to Final Exam Spring 2013 5/8/13 9:54 PM What is the company's quick (acid-test) ratio? 0.7 1.2 1.5 2.5 (1) 16. The following balance sheet information is provided for Northrup Company: https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 5 of 13 Submission to Final Exam Spring 2013 5/8/13 9:54 PM What is the company's current ratio? 0.73 1.25 1.46 2.55 (1) 17. The excess of a product's selling price over its variable costs is referred to as gross profit. contribution margin. gross margin. manufacturing margin. https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 6 of 13 Submission to Final Exam Spring 2013 5/8/13 9:54 PM (1) 18. Planning concerned with long-range decisions such as defining the scope of the business is referred to as operations budgeting. strategic planning. capital budgeting. master planning. (1) 19. The following balance sheet information is provided for Northrup Company: What is the amount of the company's working capital? $2,810 $8,810 $17,610 https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 7 of 13 Submission to Final Exam Spring 2013 5/8/13 9:54 PM $27,300.00 (0) 29. Select the incorrect statement regarding the relevant range of volume. Total fixed costs are expected to remain constant within the relevant range. Total variable costs are expected to vary in direct proportion with changes in volume within the relevant range. Total cost per unit is expected to remain constant within the relevant range. Variable cost per unit is expected to remain constant within the relevant range. (1) 30. Budgeting that involves the development of a master budget to direct the firm's activities over the short-term is referred to as operations budgeting. capital budgeting. strategic planning. None of these (1) 31. When Northern Company district managers submitted their preliminary budget proposals, top management discovered that the southern district manager had requested a new project management information system. Unfortunately, the system is incompatible with the system used at headquarters. Which of the following advantages of budgeting reduces the likelihood that the company will end up with two incompatible systems? Planning Corrective action Performance measurement Coordination (1) 32. On January 2, 2012, the Hoover Corporation issued 25,000 shares of $10 stated-value common stock for $24 per share. Which of the following statements is true? The Paid-in Capital in Excess of Stated Value account will increase by $350,000. The Cash account will increase by $500,000. The Stock Payable account will increase by $600,000. https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 10 of 13 → Submission to Final Exam Spring 2013 5/8/13 9:54 PM The Common Stock account will increase by $600,000. (1) 33. Java Joe's operates a chain of coffee shops. The company pays rent of $12,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The manager of each shop is paid a salary of $2,000 per month, and all other employees are paid on an hourly basis. Relative to the number of customers for a shop, the cost of rent is which kind of cost? Fixed cost Variable cost Mixed cost Relevant cost (1) 34. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. If the company's volume doubles, the cost per unit will stay the same. double as well. increase but will not double. decrease. (1) 35. Which of the following statements describes the cost of capital? The return that a company must pay its investors and creditors The maximum acceptable rate of return on investments The internal rate of return on investments The interest rate the bank charges its best customers (1) 36. For 2012, Flint Corporation sold 100,000 units of its product for $20 each. The variable cost per unit was $12, and Flint's margin of safety was 30,000 units. What was the amount of Flint's total fixed costs? $560,000 $800,000 $1,200,000 $360,000 (1) 37. Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 11 of 13 Submission to Final Exam Spring 2013 5/8/13 9:54 PM If the company's volume increases to 1,500 units, the cost per unit will be $60. $55. $65. $70. (1) 38. Flynn Company issued 2,000 shares of $10 par value common stock at a market price of $16. As a result of this accounting event, total paid-in capital would increase by $12,000. be unaffected by the event. increase by $32,000. increase by $20,000. (1) 39. Which form of business organization is established as a separate legal entity from its owners? Sole proprietorship Corporation Partnership None of these (1) 40. Which of the following statements historically described the term "par value?" The maximum liability of the investor. The amount that must be paid to purchase a share of stock. Determined by dividing total stockholder's equity by the number of shares of stock. The number of shares currently in the hands of stockholders. Prepared by: Rafi, Reza EZ Test Online (9b031) is Copyright ©2009 by The McGraw Hill Companies, Inc.. Support - Terms of Use - Privacy https://www.eztestonline.com/800019/13668338474896100.tp4?REQUEST=finishTest Page 12 of 13