Major Field Test Review

Liquidity

A firm that would like to know whether it has enough cash to meet its bills would be most likely to use which category of financial ratio?

The project returns 85 cents in present value for each dollar invested

A profitability index of .85 for a project means that

Accommodation

A shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled is referred to as a(n) ________.

Adequate assurance of performance

A(n) ________ can be obtained in writing from the other party if there is an indication that a contract will be breached by that party.

Promoter

A(n) ________ is a person who organizes and starts a corporation, negotiates and enters into contracts in advance of its formation, finds the initial investors to finance the corporation, and so forth.

Quasi-Contract

A(n) ________ is an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed.

False

True or False, Article 2 of the UCC applies to sales contracts for the sale of intangible goods.

True

True or False, Provision of services qualifies as a consideration for an enforceable contract?

True

True or False, the board of directors makes policy decisions concerning the operation of a corporation.

True

True or False, to obtain an injunction, the requesting party must show that he or she will suffer irreparable injury if the injunction it not issued.

.50 (100,000/200,000)

What are the earnings per share (EPS) for a company that earned $100,000 last year in after-tax profits, has 200,000 common shares outstanding and $1.2 million in retained earning at the year end?

The conduct of the parties in prior transactions and contracts

What is "course of dealing" when interpreting the express terms of a written statement?

Liability without fault

What is vicarious liability?

Undifferentiated; differentiated

When Henry Ford introduced the Model T, he offered only one model in one color as a way to provide "transportation for the masses." Alfred P. Sloan, President of General Motors, offered the Chevrolet as an affordable starter car, the Buick as a car for those who could afford more features and amenities, and the Cadillac as the ultimate luxury car for those who wanted to show the world they had "arrived." Henry Ford's market segmentation strategy used the ____________ approach, while Alfred P. Sloan's strategy used the ____________ approach.

When the creditor has acquired collateral

When is a creditor a secured creditor?

Warranty Against Interference?

A ________ is a warranty in which the lessor warrants that no person holds a claim or an interest in the goods that arose from an act or omission of the lessor that will interfere with the lessee's enjoyment of his or her leasehold interest.

Sell common stock

A company can improve (lower) its debt-to-total assets ratio by doing which of the following?

$480,000. Or $580,000.

Adam Smith is considering automating his pin factory with the purchase of a $475,000 machine. Shipping and installation would cost $5,000. Smith has calculated that automation would result in savings of $45,000 a year due to reduced scrap and $65,000 a year due to reduced labor costs. The machine has a useful life of 4 years and falls in the 3-year property class for MACRS depreciation purposes. The estimated final salvage value of the machine is $120,000. The firm's marginal tax rate is 34 percent. The incremental cash outflow at time period 0 is closest to:

Ethnography

A fancy word for "observation"

Liquidation

Chapter 7 of the Bankruptcy Code of the bankruptcy act of 2005 primarily deals with ________.

Unearned revenues

Client Jay pays ABC Co. $1,000 in December for ABC to perform services for Jay in 45 days. ABC uses the accrual basis of accounting. In December ABC will debit Cash for $1,000. What will be the other account involved in the December accounting entry prepared by ABC?

Executory

Contracts that have been fully performed by one side but not by the other are classified as ________ contracts.

Highest state courts

Decisions of the ________ are final unless a question of law is involved that is appealable to the U.S. Supreme Court.

10.0 (Credit sales/ average accounts receivable. $830,000/83,000)

For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the beginning of the year its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year its Accounts Receivable were $86,000 and its Inventory was $110,000. On the basis of the information provided, what is the company's accounts receivable turnover

Product

Goods, services, or ideas offered in the exchange with customers are dealt with under the _____ category of the marketing mix.

Promotion

Many people equate advertising with marketing. While advertising is an important part of the marketing process, it is actually a tool utilized under which category of the marketing mix?

This is consistent with the goal of maximizing shareholder value

Market values are often used in computing the weighted average cost of capital because

$108,00

Net income $100,000 Depreciation expense $10,000 Net increase in accounts receivable $5,000 Net increase in accounts payable $3,000 On the basis of the information provided in the table above for a corporation, the corporation's net cash flow from operating activities for the current year is

Interest expense of $1,000 ($100,00 x .12 x 1/12)

On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What should the company report on its income statement for December?

Secondary data is usually less expensive

One key advantage of using secondary data instead of primary data is

Problem recognition, information search, evaluation of alternatives, & purchase, post-purchase evaluation

The 5 steps of the Consumer Decision-Making process, in order are

Introduction

The XYZ Automotive Corporation has just introduced a new car that runs on vegetable oil. Sales are increasing but profits are negative. The company is investing a great deal in research and development and to generate interest in the new car. These circumstances indicate the car is in the ___________ stage of the Product Life Cycle.

Seller

The ________ bears the risk of loss during transportation in a destination contract.

Emancipation

The act or process of a minor voluntarily leaving home and living apart from his or her parents is referred to as ________.

Underwriting

When the investment banker bears the risk of not being able to sell a new security at the established price, this is known as

Income Statement

Which financial statement will allow you to determine the gross margin for a retailer or manufacturer?

Adequate packaging and labeling of the goods

Which of the following would constitute an implied warranty?

Adjusting

Which type of journal entries are made at the end of each accounting period so that the financial statements better reflect the accrual method of accounting?

ABC (Activity Based Costing)

Which would be the most favorable basis for allocating manufacturing overhead for a factory with automated equipment and a significant variation of services by its indirect labor?

The market price per share of the firm's common stock

"Shareholder wealth" in a firm is represented by

Financing statement

A ________ is a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property.

December 31

A company borrowed $100,000 on December 1 by signing a six-month note that specifies interest at an annual percentage rate (APR) of 12%. No interest or principal payment is due until the note matures on May 31. The company prepares financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that should be entered in the company's records. What date should be used to record the December adjusting entry?

Interest Payable

A company borrowed $100,000 on December 1 by signing a six-month note that specifies interest at an annual percentage rate (APR) of 12%. No interest or principal payment is due until the note matures on May 31. The company prepares financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that should be entered in the company's records. What is the name of the account that will be credited?

Gain

A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a(n):

Retained earnings

A corporation's net income will cause a change in which component of stockholders' equity?

Current assets and current liabilities

A corporation's working capital is calculated using which amounts?

Liabilities increased

ABC Co. incurs cleanup expense of $500 on December 30. The supplier's invoice states that the $500 is due by January 10 and ABC will pay the invoice on January 9. ABC follows the accrual basis of accounting and its accounting year ends on December 31. What is the effect of the cleanup service on the December balance sheet of ABC?

Accounts receivable

ABC Co. performed services for Client Kay in December and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January ABC received the $4,000 from Kay. In January ABC will debit Cash, since cash was received. What account should ABC credit in the January entry?

Reasonable person standard

According to the objective theory of contracts, the intent to enter into an express or implied-in-fact contract is judged by the ________.

Greater than one

An "aggressive" common stock would have a "beta"

$66,000 (current assets - current liabilities) (Cash + accounts receivable + + inventory + prepaid insurance - accounts payable - notes payable - wages payable)

At December 31 a company's records show the following information: Cash $10,000 Accounts Receivable $30,000 Inventory $80,000 Prepaid Insurance $6,000 Long-term Assets $200,000 Accounts Payable $30,000 Notes Payable due in 10 months $25,000 Wages Payable $5,000 Long-term liabilities $70,000 Stockholders' (Owner's) Equity $196,000 The company's working capital is

Interest-rate parity

If the spread between the spot and forward exchange rates of two currencies equals the interest rate difference between the two countries, this phenomenon is referred to as

Fall

In 3 years you are to receive $5,000. If the interest rate were to suddenly increase, the present value of that future amount to you would

Last in, first out (LIFO)

In a period of rising prices, which inventory valuation method would generally yield both the lowest ending inventory value and the lowest net income figure?

That the widgets are of an even kind, quality, and quantity within each unit

In a shipment of containers of widgets, which of the following would be considered an implied warranty?

Secondary data usually cost less

In marketing research, a firm might consider using secondary data over primary data because

A need/desire for the product, the ability to afford the product, and the willingness to purchase

In order for a market to exist there must be

Cash flow

In proper capital budgeting analysis we evaluate incremental

A decrease in accounts payable

In the statement of cash flows, the section for cash flows from operating activities will include which of the following?

Sue Ionic Machines for damages

Jorge, a forklift operator for the retail chain Hansridges, was injured when the fork-lift he was operating toppled over. The forklift was manufactured and maintained by Ionic Machines Inc. As he was covered by workers' compensation insurance, he could recover workers' compensation benefits. However, it was later found that the forklift was not designed to be used to lift as much weight as Ionic Machines claimed it could. Which of the following is Jorge entitled to?

Termination statement

Kelly borrows $12,000 from Terry Oswald to pay for her mother's surgery. The debt-repayment period is 15 months, but Kelly manages to repay it in 11 months. Which of the following must be filed by Oswald after receiving the final installment of his money?

Limited

Kirsten just bought a car that had a one-year warranty stating that it covered the cost of parts, but not labor. It also stated that the warranty only covered the powertrain, and no other part. What kind of warranty did Kirsten's car have?

Place

Making the product available to the customer in the right quantities and locations when the customer wants them is the definition for which of the marketing mix variables?

$5,080

On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31 bank statement shows a balance of $4,905. Other information is available as follows: 1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge does. 2. A customer's $40 insufficient funds check has been returned with the bank statement. 3. Outstanding checks of $10, $15, and $100 are identified on May What is the correct cash balance on May 31?

Will be viewed as having high creditworthiness

Palo Alto Industries has a debt-to-equity ratio of 1.6 compared with the industry average of 1.4. This means that the company

A mortgage

Roundwell Motors purchases a manufacturing plant for $15 million, pays $5 million in cash as down payment, and borrows the remaining $10 million from Home Providence Bank. To secure the loan, Roundwell gives the plant as collateral to Home Providence Bank. What kind of collateral arrangement is in place between Roundwell Motors and Home Providence Bank?

Cost minus accumulated depreciation

The book value of an asset is defined as

Interest rates are volatile

The call-option value of a callable bond is likely to be high when

There is more systematic risk involved for the common stock

The common stock of a company must provide a higher expected return than the debt of the same company because

Balance sheet

The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the

Customers

The focal point of all marketing activities is

Politcal/Legal, economic, sociocultural, and technological

The forces that may be evaluated in the analysis of the environment may include

Producer, reseller, government, & institutional

The four categories of business markets are

Brand Mark

The golden arches of McDonald's are recognized worldwide. This symbol is an example of a

Greater the unavoidable risk

The greater the beta, the ____ of the security involved

The Four P's

The marketing mix is known by what other name?

Brand name

The part of the brand which can be spoken

Opportunities and threats

The study and assessment of forces outside the organization is a function of ____ and _____.

Differentiated

The three basic segmentation strategies available to marketers are undifferentiated, concentrated, and ___.

The purchaser's intended use of the product

The two types of purchases are consumer and business. The primary distinguishing factor between the two is:

Demographic, psychographic, geographic, and behavioristic

The variables that can be used to segment consumer markets are

Reducing current assets, increasing current liabilities, and reducing long-term debt

Which asset-liability combination would most likely result in the firm's having the greatest risk of technical insolvency?

Being a contractor of the partnership

Which of the following activities is permissible for limited partners?

Disability benefits

Which of the following benefits is a component of Social Security benefits?

First-mortgage bonds

Which of the following bonds offer the investor the most protection?

Corpoation

Which of the following is a major form of conducting a business?

They are both part of the implied warranty of fitness for human consumption

Which of the following is a similarity between the foreign substance food test and the consumer expectation test?

Car

Which of the following is considered tangible personal property?

Problem definition

Which of the following is the first step in undertaking a market research project?

To qualify for chapter 13, the debts must primarily be consumer debt

Which of the following is true of a Chapter 13 petition?

States can enact laws that set the minimum wages higher than the federal minimum wage

Which of the following is true of minimum wages in the United States of America?

It authorizes warrantors to establish an informal dispute-resolution procedure

Which of the following is true of the Magnuson-Moss Warranty Act?

Children employed in agriculture have no time or work restriction

Which of the following is true of the child labor regulations adopted by the U.S. Department of Labor?

It should be conspicuous and noticeable

Which of the following is true of the display of warranty disclaimers

If two or more secured parties claim an interest in the same collateral but only one has perfected his or her security interest, the perfected security interest has priority.

Which of the following is true of the priority of claims?

William

William buys a $500,000 house from Keith Geller through a realtor. He makes a down payment of $200,000. He borrows the rest from Smith and Sons, a lending firm, and places his new house as collateral for the loan. Who is the debtor in this case?

Return on the market portfolio

Within the context of the capital asset pricing model (CAPM), the risk measure known as beta is often computed by regressing the return of the company's stock against the

9%

You are considering investing in a zero-coupon bond that sells for $250. At maturity in 16 years it will be redeemed for $1,000. What approximate annual rate of growth does this represent?

Negotiable instruments

________ are special forms of contracts that satisfy the requirements established by Article 3 of the Uniform Commercial Code (UCC).

Chapter 13

________ is a rehabilitation form of bankruptcy that permits bankruptcy courts to supervise the debtor's plan for the payment of unpaid debts in installments over the plan period.