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Business
Q:
To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:
A.Objectivity principle.
B.Realization principle.
C.Business entity principle.
D.Going-concern principle.
E.Revenue recognition principle.
Q:
Pitch Co. paid $50,000 in fees to its accountants and lawyers in acquiring Slope Company. Pitch will treat the $50,000 as
A) an expense for the current year.
B) a prior period adjustment to retained earnings.
C) additional cost to investment of Slope on the consolidated balance sheet.
D) a reduction in additional paid-in capital.
Q:
Which one of the following industries could be classified as an oligopoly?A) Tobacco production B) RetailingC) Farming D) Fast food restaurants
Q:
If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:
A.$95,000.
B.$137,000.
C.$138,500.
D.$140,000.
E.$150,000.
Q:
Historically, much of the controversy concerning accounting requirements for business combinations involved the ________ method.
A) purchase
B) pooling of interests
C) equity
D) acquisition
Q:
Which of the following is NOT a feature of monopolistic competition?
A) significant numbers of sellers in a highly competitive market
B) differentiated products
C) sales promotion and advertising
D) inability of firms to enter or exit the market
Q:
Rules adopted by the accounting profession as guides in measuring, recording, and reporting the financial condition and activities of a business:
A.Are comprised of both general and specific principles.
B.Are known as generally accepted accounting principles.
C.Are abbreviated as GAAP.
D.Arise from both long-used practices and from rulings of authoritative groups.
E.All of these.
Q:
Following the accounting concept of a business combination, a business combination occurs when a company acquires an equity interest in another entity and has
A) at least 20% ownership in the entity.
B) more than 50% ownership in the entity.
C) 100% ownership in the entity.
D) control over the entity, irrespective of the percentage owned.
Q:
A firm that must determine the price-output combination that maximizes profit because it faces a downward-sloped demand curveA) has a perfectly elastic demand curve. B) has a perfectly inelastic demand curve. C) is a price-taker. D) is a price searcher.
Q:
A business merger differs from a business consolidation because
A) a merger dissolves all but one of the prior entities, but a consolidation dissolves all of the prior entities.
B) a consolidation dissolves all but one of the prior entities, but a merger dissolves all of the prior entities.
C) a merger is created when two entities join, but a consolidation is created when more than two entities join.
D) a consolidation is created when two entities join, but a merger is created when more than two entities join.
Q:
The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:
A.Going-concern principle.
B.Business entity principle.
C.Objectivity principle.
D.Cost Principle.
E.Monetary unit principle.
Q:
A constant-cost industry will have
A) a perfectly elastic long-run supply curve.
B) a perfectly inelastic long-run supply curve.
C) an upward sloping demand curve in the long run.
D) an upward sloping supply curve in the long run.
Q:
Which of the following is not a reason for a company to expand through a combination, rather than by building new facilities?
A) A combination might provide cost advantages.
B) A combination might provide fewer operating delays.
C) A combination might provide easier access to intangible assets.
D) A combination might provide an opportunity to invest in a company without having to take responsibility for its financial results.
Q:
The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:
A.Objectivity principle.
B.Business entity assumption.
C.Going-concern assumption.
D.Revenue recognition principle.
E.Cost principle.
Q:
The goal of the perfectly competitive firm is toA) maximize total revenue. B) maximize total profits.C) minimize AFC. D) minimize ATC.
Q:
The private group that currently has the authority to establish generally accepted accounting principles is the:
A.APB.
B.FASB.
C.AAA.
D.AICPA.
E.SEC.
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, when output is 8 units, average total costs areA) $4.75. B) $3.50. C) $38. D) $28.
Q:
The committee that attempts to create more harmony among the accounting practices of different countries by identifying preferred practices and encouraging their worldwide acceptance is the:
A.AICPA.
B.FASB.
C.CAP.
D.SEC.
E.IASB.
Q:
Which of the following is a TRUE statement about stock markets?A) Economists can make above-average profits in the stock market because of their specialized knowledge of economics.B) It is always better to buy growth stocks than the older and more stable blue -chip stocks.C) The stock market on average over time is random and totally unrelated to the performance of the economy.D) It is illegal for a friend of a corporate executive to make large profits in the stock market by using his inside information.
Q:
The rules adopted by the accounting profession as guides in preparing financial statements are:
A.Comprised of both general and specific principles.
B.Known as generally accepted accounting principles.
C.Abbreviated as GAAP.
D.Intended to make information in financial statements relevant, reliable, and comparable.
E.All of these.
Q:
An accountant shows an invoice for a resource to the manager of the firm. They are discussingA) explicit costs. B) implicit costs.C) economic profits.D) either explicit costs or implicit costs, but we canʹt tell without more information.
Q:
A corporation:
A.Is a business legally separate from its owners.
B.Is controlled by the FASB.
C.Has shareholders who have unlimited liability for the acts of the corporation.
D.Is the same as a limited liability partnership.
E.All of these.
Q:
CombinationGood AGood BA174B135C106D87Refer to the above table. The table gives the various combinations of Good A and Good B along Janeʹs indifference curve. The marginal rate of substitution when Jane goes from combination C to combination D isA) 4:1. B) 3:1.C) 2:1. D) 0.
Q:
Businesses can take the following form(s):
A.Sole proprietorship.
B.Common stock.
C.Partnership.
D.A and C only.
E.All of these.
Q:
If someone complains that she doesnʹt feel very well because she ate too much pizza, we would conclude that the marginal utility of the last piece of pizza eaten wasA) positive. B) zero. C) very large. D) negative.
Q:
The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence other than someone's belief or opinion is the:
A.Business entity principle.
B.Monetary unit principle.
C.Going-concern principle.
D.Cost principle.
E.Objectivity principle.
Q:
Suppose that the cross price elasticity of demand between bagels and cream cheese is -1.45. This indicates that the two goods are
A) substitutes.
B) complements.
C) both inferior.
D) completely unrelated in the minds of consumers.
Q:
Ethics:
A.Are beliefs that separate right from wrong.
B.And law often coincide.
C.Help to prevent conflicts of interest.
D.Are critical in accounting.
E.All of these.
Q:
Suppose that the price of eggs increases from 75 cents to $1.00 per dozen and as a result a typical farmer experiences a decrease in egg sales from 300 to 200 dozen per week. Using the method of average values, the absolute price elasticity of demand isA) 1.4. B) 0.8. C) 3.0. D) 1.75.
Q:
Social responsibility:
A.Is a concern for the impact of our actions on society.
B.Is a code that helps in dealing with confidential information.
C.Is required by the SEC.
D.Requires that all businesses conduct social audits.
E.All of these.
Q:
The optimal amount of air pollution isA) found by equating the marginal benefits from reducing pollution by one more unit with the marginal costs of reducing pollution by an additional unit.B) found by equating the total benefits from reducing pollution by one more unit with the total costs of reducing pollution by an additional unit.C) found by setting the marginal benefits from reducing pollution by one more unit equal to zero.D) a meaningless concept since we cannot monetize the environment.
Q:
Ethical behavior requires:
A.That auditors' pay not depend on the figures in the client's reports.
B.Auditors to invest in businesses they audit.
C.Analysts to report information favorable to their companies.
D.Managers to use accounting information to benefit themselves.
E.All of these.
Q:
Which program provides assistance to the aged, blind and disabled?A) Social Security ProgramB) Supplemental Security Income programC) TANF D) Earned Income Tax Credit
Q:
A Certified Public Accountant
A.Must meet education and experience requirements
B.Must pass an examination
C.Must exhibit ethical character
D.May also be a Certified Management Accountant.
E.All of these.
Q:
If a single supplier of labor, such as a union, were supplying labor to a single monopsonistic employer, this is referred to as a(n)A) bilateral monopoly. B) trilateral monopoly. C) total monopsony. D) collective monopoly.
Q:
Accounting certifications include the:
A.Certified Public Accountant.
B.Certified Management Accountant.
C.Certified Internal Auditor.
D.Personal Financial Specialist
E.All of these.
Q:
A right-to-work state is one in whichA) unions are illegal.B) there is guaranteed employment for all citizens. C) the union shop is prohibited.D) the closed shop is permitted.
Q:
Career opportunities in accounting include:
A.Budgeting.
B.Auditing.
C.Cost accounting.
D.Internal Auditing.
E.All of these.
Q:
If the demand for online banking increases, we would expect to see theA) supply of workers that produce online-banking services to increase. B) supply of workers that produce online-banking services to decrease.C) demand for workers that produce online -banking services to decrease. D) demand for workers that produce online -banking services to increase.
Q:
Career opportunities in accounting include:
A.Auditing.
B.Management consulting.
C.Tax accounting.
D.Cost accounting.
E.All of these.
Q:
The theory that regulatorsʹ behavior will eventually be compromised by the special interests they regulate is known as theA) capitulation hypothesis. B) creative hypothesis. C) captive hypothesis. D) capture hypothesis.
Q:
External users of accounting information include:
A.Shareholders.
B.Customers.
C.Creditors.
D.Government regulators.
E.All of these.
Q:
Which of the following is NOT a characteristic of oligopoly firms?
A) Strategic dependence
B) Product differentiation
C) Non-price competition, such as advertising and promotions
D) Perfectly elastic demand curves
Q:
The operating functions of a business include:
A.Research and development.
B.Purchasing.
C.Marketing.
D.Distribution.
E.All of these.
Q:
In the 1920s and 1930s, economists became increasingly aware that there were industries that did not fit the model of perfect competition or pure monopoly. Two separate theories of monopolistic competition resulted. Edward Chamberlin of Harvard published the Theory of Monopolistic Competition in 1933. Chamberlin defined monopolistic competition asA) a relatively large number of producers offering similar but differentiated products. B) a relatively small number of producers offering similar but differentiated products. C) a market situation in which a large number of firms produce identical products.D) a market situation in which a small number of firms produce similar products.
Q:
The area of accounting aimed at serving the decision making needs of internal users is:
A.Financial accounting.
B.Managerial accounting.
C.External auditing.
D.SEC reporting.
E.Bookkeeping.
Q:
The monopolist is aA) price taker who tries to find the profit-maximizing rate of output. B) price taker who tries to find the profit-maximizing price.C) price searcher who tries to find the profit-maximizing price-output combination. D) price searcher who tries to find the rate of output that maximizes price.
Q:
Internal users of accounting information include:
A.Shareholders.
B.Managers.
C.Lenders.
D.Suppliers.
E.Customers.
Q:
If an industryʹs long-run supply curve slopes downward, then the industry isA) a fixed-cost industry. B) a constant-cost industry.C) an increasing-cost industry. D) a decreasing-cost industry.
Q:
The primary objective of financial accounting is:
A.To serve the decision-making needs of internal users.
B.To provide financial statements to help external users analyze an organization's activities.
C.To monitor and control company activities.
D.To provide information on both the costs and benefits of looking after products and services.
E.To know what, when, and how much to produce.
Q:
The perfectly competitive firmʹs total revenue curveA) is linear and upward sloping. B) has a constant slope. C) has a positive slope. D) all of the above
Q:
Technology
A.Has replaced accounting.
B.Has not changed the work that accountants do.
C.Has closely linked accounting with consulting, planning, and other financial services.
D.In accounting has replaced the need for decision makers.
E.In accounting is only available to large corporations.
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, when output is 8 units, average variable costs areA) $4.75. B) $3.50. C) $1.25. D) $4.50.
Q:
Accounting is an information and measurement system that:
A.Identifies business activities.
B.Records business activities.
C.Communicates business activities.
D.Helps people make better decisions.
E.All of these.
Q:
The theory that there is no predictable trends in securities prices is theA) opportunity cost of capital. B) random walk theory. C) capital reinvestment. D) present value.
Q:
Chuck Taylor withdrew $6,000 in cash from FastForward. This amount should be included as an expense on the income statement.
Q:
Mary and Jane are partners in a business. Their business is growing but has not yet reached the point where they can afford a new delivery truck. Jane owns an old truck that she has not been using. She decides to donate it to their business for free.
A) This transaction (donation) involves no economic cost.
B) This transaction involves both economic cost and accounting cost.
C) This transaction involves economic cost but no accounting cost.
D) This transaction involves no economic cost and no accounting cost.
Q:
Chuck Taylor invested $175,000 cash in FastForward. This amount would be reported in the statement of cash flows under financing activities.
Q:
CombinationGood AGood BA174B135C106D87Refer to the above table. The table gives the various combinations of Good A and Good B along Janeʹs indifference curve. The marginal rate of substitution when Jane goes from combination B to combination C isA) 4:1. B) 3:1. C) 2:1. D) 0.
Q:
The statement of cash flows reports on cash flows separated into operating, investing, and financing activities over a period of time.
Q:
If a person claims, ʺI wouldnʹt eat liver if you paid me,ʺ we can assume that his marginal utility of liver isA) positive. B) positive, but decreasing. C) zero. D) negative.
Q:
The income statement reports on operating activities at a point in time.
Q:
If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive, then the two goods areA) substitutes. B) unrelated. C) complements. D) not related.
Q:
The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.
Q:
The quantity of raspberries sold at a local store increases from 100 pints to 1,500 pints when the price is reduced from $4.00 to $1.00. In this situation, the absolute price elasticity of demand for raspberries is approximatelyA) 0.69.B) 6.7. C) 1.46.D) 4.3.
Q:
Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or withdrawals by the owner.
Q:
The marginal cost curve of pollution abatementA) slopes upward because of the law of diminishing product. B) slopes upward because firms will maximize profits.C) slopes downward because of the law of diminishing marginal utility. D) slopes downward because of the law of diminishing returns.
Q:
Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.
Q:
The income transfers that a person receives from Social SecurityA) is not related to the amount that they have contributed. B) is a yearly proportion of the amount contributed.C) is the same for everyone whether they contributed to the system or not. D) depends entirely on the amount received from private pensions.
Q:
Owner's contributions and withdrawals are reported on the income statement.
Q:
When workers are paid a wage that is less than their contribution to a monopsonistʹs revenues, A) this is sometimes referred to monopsonistic exploitation.B) this is sometimes referred to as an incentive. C) they seek part time employment.D) they file a grievance with their union representative.
Q:
The balance sheet is based on the accounting equation.
Q:
The Taft-Hartley ActA) permits states to outlaw unions.B) permits states to pass right-to-work laws.C) encourages unions to engage in sympathy strikes.D) encourages unions to engage in secondary boycotts.
Q:
The first section of the income statement reports cash from operations.
Q:
At a perfectly competitive firm, all of the following is true of the MRP curve EXCEPT A) the MRP curve is the derived supply of labor.B) the MRP curve shifts leftward when labor productivity falls. C) the MRP curve shifts rightward when the product price rises.D) the MRP curve shifts leftward when the demand for the final product falls.
Q:
The income statement shows the financial position of a business on a specific date.
Q:
When regulators identify with the special interests of the industry they regulate, this behavior conforms with theA) share-the-gains, share-the-pains hypothesis. B) rate-of-return hypothesis.C) lemon market hypothesis.D) capture hypothesis.
Q:
The statement of cash flows shows the net effect of revenues and expenses for a reporting period.
Q:
Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) and two product formats (A and B) in an industry. A possible outcome of the dominant strategy is:A) Both firm X and firm Y would be willing to choose product format A.B) Neither firm X nor firm Y would be willing to choose product format B simultaneously.C) Firm X chooses product format A while firm Y chooses product format B. D) Firm X chooses product format B while firm Y chooses product format A.
Q:
The income statement is a financial statement that shows revenues earned and expenses incurred during a specified period of time.