A.O.L. Exam
If a company had an operating cash flow of $50,000 and spent $25,000 on equipment, what is the free cash flow, assuming no other costs and everything was paid in cash? a. $25,000 b. $75,000 c. $50,000 d. $100,000
a. $25,000
On which section of the balance sheet is inventory reported? a. Assets b. Owner's equity c. Revenue d. Liabilities
a. Assets
Which of the following is NOT a trait of a corporation? a. Can be sued for all of the owner's assets b. Can be owned by multiple people c. Often subject to double taxation d. Limits liability
a. Can be sued for all of the owner's assets
Shazam Electronics is a major retailer specializing in a large variety of computer chips. All of the chips have to be stored at a specific temperature, which is a significant expense to Shazam's monthly electric bill. Which of the following categories does this expense refer to? a. Carrying costs b. Storage costs c. Inventory costs d. Ordering costs
a. Carrying costs
Which of the following BEST explains sustainable economic growth? a. Economic growth that can be sustained with minimally adverse effects on the environment b. Economic growth that increases at the same rate year over year c. Economic growth that can be sustained with minimally adverse effects on agriculture and livestock d. Environmental growth that can be sustained with minimally adverse effects on the global economy
a. Economic growth that can be sustained with minimally adverse effects on the environment
Which budget lets you figure out how much to charge to make a profit? a. Ending finished goods inventory budget b. Cash budget c. Selling and administrative expense budget d. Direct materials budget
a. Ending finished goods inventory budget
Income tax is paid based on the taxable income. In some cases, the taxable income is not known until after the tax liability is due. What type of liability is this? a. Estimated b. Current c. Predated d. Nonexempt
a. Estimated
What is the formula for calculating interest? a. I = P x R x T b. I = P / R x T c. I = P x R - T d. I = P + R + T
a. I = P x R x T
If a seller knows that the demand for his good or service is inelastic, then what would they most likely do? a. Increase the price. b. Keep the price the same. c. Try to make their product elastic. d. Decrease the price.
a. Increase the price.
Which of the following best explains the stand-alone principle? a. It focuses on the cash flow of the investment or project under consideration and ignores all other cash flows. b. It includes only past cash flows for the entire company. c. It includes only future cash flows for the entire company. d. It includes all cash flows for the company.
a. It focuses on the cash flow of the investment or project under consideration and ignores all other cash flows.
Portal Palace is a door manufacturer that is considering moving into a new regional market. Which of the following would be information on a balanced scorecard? a. Number of people that buys doors in the region b. The company's motto statement c. Employee satisfaction d. A list of door styles
a. Number of people that buys doors in the region
Brown's Business is concerned that another company is trying to take it over, what can it do prevent this from happening? a. Repurchase some of its own shares of stock. b. Sell all outstanding shares of stock. c. Authorize additional shares of stock to be issued. d. Create an IPO.
a. Repurchase some of its own shares of stock.
The money multiplier is a relationship between which two drivers? a. Reserves in a banking system and the money supply. b. Reserves in the banking system and the interest rate. c. Reserves loaned out by banks and the total reserves. d. Required reserves and the money supply.
a. Reserves in a banking system and the money supply.
Which of these bond types are bonds in which a portion of the outstanding bonds mature or become due at several dates which typically fall in a series? a. Serial bond b. Unsecured bond c. Convertible bond d. Registered bond
a. Serial bond
Susie is an accountant for XYZ Tech Firm, and she is preparing the post closing trial balance. She goes to one of her co-workers to request the revenue and expense account balances to include in her report. What will her co-worker tell her? a. She will remind her that those do not belong in the report since they are temporary accounts. b. She will give her the balances so she can transfer them over to the next accounting period. c. She will remind her that those do not belong in the report since they are permanent accounts. d. She will give her the balances as they are necessary to include in the report.
a. She will remind her that those do not belong in the report since they are temporary accounts.
Larry the leader has a low LPC score. Which situation will he work best in? a. Situations where success depends on meeting production goals b. Situations that require a Theory Y management style c. Situations where complex decisions are required d. Situations where he supervises only a few people e. Situations that require frequent relocation
a. Situations where success depends on meeting production goals
Which of the following is the feeling that is most crucial after collaboration? a. That both parties are satisfied without feeling a sense of sacrifice b. That you won regardless of the cost c. That you found a way towards middle ground d. That both parties agree that their original ideas have been included in the proposal
a. That both parties are satisfied without feeling a sense of sacrifice
Communicating expectations and measurements relating to performance standards occurs during this function of management. a. controlling b. organizing c. leading d. planning
a. controlling
In view of its forthcoming closure, Company A sells its vehicles and machinery (two trucks, one excavator and one dumper) to Company B for $120,000. If the trucks are appraised at $40,000 each, the excavator at $60,000 and the dumper at $20,000, what is the cost of the excavator to company B? a. $60,000 b. $45,000 c. $37,500 d. $30,000
b. $45,000
Latervia is a very small country that has exports of $100,000, imports of $20,000, net income from abroad $250,000, and net current transfers $200,000. What is Latervia's current account? a. $370,000 b. $530,000 c. $250,000 d. $570,000
b. $530,000
Jane recently inherited $300,000, and she wants to invest a portion of it so that she will have $500,000 saved by the time she retires in 20 years. However, she is unsure how much interest she can earn annually on her investment. If she earns 3% compound interest annually, how much more would she have to save today than if she earned 5% annually? a. $276,838 b. $88,393 c. $188,445 d. $100,052
b. $88,393
Diverse employees need their managers' awareness so that they can _____. 1. Develop their professional talents. 2. Find appropriate food in the company cafeteria. 3. Make friends at work. 4. Communicate successfully with colleagues. a. 1, 2, 3, and 4 b. 1 and 4 c. 2 and 3 d. 4 only e. 1, 3, and 4
b. 1 and 4
Which of the following statements is true regarding a callable bond? a. A callable bond allows the issuer to call the investor about changes in the bond's contract. b. A callable bond allows the issuer to repurchase the bond. c. A callable bond allows the issuer to turn the bond into stock. d. A callable bond allows the investor to sell the bond early.
b. A callable bond allows the issuer to repurchase the bond.
What is the most common accounting method used by businesses? a. Debit b. Accrual c. Cash d. Ledger
b. Accrual
Which of the following is NOT an inelastic demand for a product? a. An elasticity of 0.7. b. An elasticity of 1.5. c. An elasticity of 0.95. d. An elasticity of 0.
b. An elasticity of 1.5.
Which of the following people has the highest opportunity cost of earning a college degree, if they must give up their present job? a. Sue, who is a chef earning $25,000 b. Curly, who is a salesman earning $60,000 c. Moe, who is unemployed d. Larry, who is a Navy Seal earning $40,000
b. Curly, who is a salesman earning $60,000
Why is it important for a manager to include his employees when setting goals that are part of their performance appraisals? a. It allows the manager to protect himself from retaliation in the event that he has to take corrective action against his employees. b. Employees are more likely to achieve their goals if they have input in the goal setting process. c. It saves time to have employees think of their own goals versus having the manager write goals for all of his staff. d. A manager can place blame on employees if goals are not met.
b. Employees are more likely to achieve their goals if they have input in the goal setting process.
How did his work as a bricklayer inspire Frank Gilbreth's standardization and method studies? a. He realized the importance of chain production over individual work. b. He studied the basic movements needed to lay brick effectively. c. He identified the basic needs of his fellow bricklayers and studied the ways to meet those needs. d. He used psychology to analyze how unsatisfied bricklayers were less productive.
b. He studied the basic movements needed to lay brick effectively.
The U.S. dollar is valued at 0.94 euros. If arbitrage occurs, what will happen to the value of the dollar? a. It will create a bell-shaped exchange curve. b. It will increase. c. It will remain the same. d. It will decrease.
b. It will increase.
TinyCompany Inc. is concerned that there will be a downturn in the market. What will they do with their cash? a. Buy real estate b. Keep it in the bank c. Invest it in stocks d. Invest it in bonds
b. Keep it in the bank
_____ is the study of business and consumers, while _____ is the study of the economy as a whole. a. Microeconomics; inflation b. Microeconomics; macroeconomics c. Macroeconomics; microeconomics d. Consumer economics; macroeconomics
b. Microeconomics; macroeconomics
What is capital as it relates to financial management? a. Long term assets b. Money and anything that can be converted to money c. Retained earnings d. Net profit after all expenses
b. Money and anything that can be converted to money
If you want to compare investment opportunities, what must you calculate to ensure you are comparing apples-to-apples? a. Future value of cash flows b. Present value of cash flows c. Inflation rate d. Gross domestic product
b. Present value of cash flows
The costs associated with generating revenue must be reported in the same time period as the revenue is a criteria for which of the following? a. Cost appreciation b. Revenue recognition c. Cost recognition d. Revenue adjustment
b. Revenue recognition
Define cost. a. A financial gain when producing something b. Sacrificing one resource to obtain another resource c. Money obtained in return for labor or services d. A periodic payment from government to an employer
b. Sacrificing one resource to obtain another resource
What is the correct formula for calculating an investment dollar amount return? a. Sale Price - Purchase Price - Dividends b. Sale Price - Purchase Price + Dividends c. (Sale Price - Purchase Price + Dividends) / Purchase Price d. Purchase Price - Sale Price + Dividends
b. Sale Price - Purchase Price + Dividends
An asset has drastically decreasing production as it becomes older. Which depreciation method will be the most suitable one for such an asset? a. Straight - line depreciation b. Sum of years' digits depreciation c. Double - declining balance depreciation d. Units of production depreciation
b. Sum of years' digits depreciation
A company that cannot grow anymore without borrowing more money is known to have reached its _____. a. External growth rate b. Sustainable growth rate c. Internal growth rate d. Substantial growth rate
b. Sustainable growth rate
As Rosa considers where to build her new bakery, she also factors in the number of other bake shops in the area. If she builds in an area where she is one of many bakeries, she will be forced to charge lower prices in order to compete with the other bakeries already in the neighborhood. This is an example of which economic theory? a. The law of macroeconomics b. The law of supply and demand c. The law of microeconomics d. The law of consumer behavior
b. The law of supply and demand
Assume that you have two hours to spend at the mall. You can either visit the bookstore or enjoy a movie at the theater. The opportunity cost of watching a movie is equivalent to which of the following? a. The cost of the movie ticket. b. The time you could have spent visiting the bookstore. c. The time you spent watching the movie. d. The time it takes to walk from the parking lot to the movie theater.
b. The time you could have spent visiting the bookstore.
How do business leaders use the IRR? a. To decide which projects have the longest duration b. To measure and compare the profitability of various business projects and investments c. To determine which project managers to hire d. To determine capital costs
b. To measure and compare the profitability of various business projects and investments
Which of the following will most likely be favored by a Keynesian economist if the economy is experiencing a recessionary gap? a. a budget surplus b. an expansionary fiscal policy c. contractionary fiscal policy d. a balanced budget e. depending on the economy's self-correcting mechanism
b. an expansionary fiscal policy
A retired individual who needs cash will likely favor _____. a. low dividend payouts b. high dividend payouts c. monthly dividend payouts d. yearly dividend payouts
b. high dividend payouts
In order to adjust a nominal interest rate for inflation, which of the following formula should be used? a. n = r - i b. r = n - i c. r = i x n d. mv = py
b. r = n - i
Mary Beth ran a local newspaper business. She found that fewer people were purchasing the local paper since they were able to conveniently access the news online via their computers and smart phones. Mary Beth's business was no longer making a profit, and she was forced to close its doors. This led to people losing their jobs, such as journalists, printers, and newspaper delivery boys. This is an example of _____. a. cyclical unemployment b. structural unemployment c. seasonal unemployment d. frictional unemployment
b. structural unemployment
How is price elasticity of demand measured? a. change in quantity demanded/change in price b. change in quantity supplied/change in price c. % change in quantity demanded/% change in price d. % change quantity supplied/% change in price
c. % change in quantity demanded/% change in price
What kind of business uses a traditional income statement? a. A larger business that is more concerned with variable costs b. Only public corporations c. A smaller business that doesn't have to pay costs off over time d. A well-run business of any size
c. A smaller business that doesn't have to pay costs off over time
All of the following can occur when a charismatic leader has personal motives EXCEPT: a. Subordinates becoming dependent upon the leader b. Lack of resiliency while the organization is changing c. Allowing subordinates to share in the decision making d. Diminished accountability
c. Allowing subordinates to share in the decision making
What does the law of demand state? a. As price increases, demand increases b. The demand for goods and services are fixed c. As price increases, quantity demanded decreases d. As price decreases, demand decreases e. As price decreases, quantity demanded decreases
c. As price increases, quantity demanded decreases
If your costs are $15,000 for producing product A, and your costs are $32,500 for producing products A and B, $17,500 would be which of the following costs? a. Opportunity b. Avoidable c. Differential d. Sunk
c. Differential
Thomas works in a PR company. The company's manager is not satisfied with his performance and wants to fire him. Why would it be a good idea to try to find an alternative to firing him, such as finding him a new post in the company? a. It isn't, as it may cause legal problems. b. It increases investor confidence. c. It raises company morale. d. It isn't, because it gives him false hope.
c. It raises company morale.
Grant is a high school student who is taking a math test. The teacher had to step out of the room for an emergency and instructed the class to continue silently taking their tests. One of the other students realizes the teacher left the answer key on his desk and begins passing it around. Grant continues to silently take his test and does not look at the answers when they pass his desk. Where is Grant on the Mach scale? a. Manipulative b. Moderate c. Low d. High
c. Low
Expenses incurred to generate revenue must be recorded in the same time period as the revenue it generates. Which principle is this? a. Revenue principle b. Concept principle c. Matching principle d. Monetary unit principle
c. Matching principle
The Fisher equation measures the relationship between which two factors? a. Inflation and market value b. Maturity date and par value c. Nominal and real interest rates d. Time value of money and capital
c. Nominal and real interest rates
A person who encourages staff participation in the decision making process is which type of leader? a. Bureaucratic b. Situational c. Participative d. Charismatic
c. Participative
Which of the following is a standard cost? a. A one time expense b. Contingency expense c. Rent expense d. New technology expenses
c. Rent expense
Which of these statements about retained earnings is true? a. Retained earnings are private and are not released to shareholders. b. Retained earnings is not a good measure for shareholders to go by to see how much they'd be entitled to. c. Retained earnings shows shareholders how much money the company has. d. Retained earnings is not important to shareholders.
c. Retained earnings shows shareholders how much money the company has.
A majority investor in ABC Motors wants to see how much money the company is reinvesting in itself. In which financial statement will the investor find this information? a. Income Statement b. Statement of Cash Flows c. Statement of Retained Earnings d. Balance Sheet
c. Statement of Retained Earnings
What is the point where total costs are equal to total revenue? a. The target profit b. The contribution margin c. The break-even point d. The contribution ratio
c. The break-even point
Why would the stock inventory go down if a dealer received a buy order from a client? a. The dealer would be buying shares of stock from the client. b. The dealer would sell the client's shares on the stock exchange, depleting inventory. c. The dealer would be selling shares from the inventory to the client. d. The dealer would buy shares of stock from the stock exchange to add to inventory.
c. The dealer would be selling shares from the inventory to the client.
Human capital refers to which of the following? a. Investments used by individuals to fund a business. b. The technology that is available to workers. c. The education and experience of the labor force. d. New equipment purchased by businesses.
c. The education and experience of the labor force.
Which of the following is an inaccurate explanation of why wages are sticky? a. Minimum wages prevent firms from lowering wages. b. Firms don't know if shocks to the economy are permanent or temporary. c. The government keeps taxes too low. d. Some employees have employment contracts.
c. The government keeps taxes too low.
Which of the following statements regarding full employment GDP is FALSE? a. Savings equals investment b. Aggregate supply equals aggregate demand c. Unemployment is at zero percent d. Inflation is not accelerating
c. Unemployment is at zero percent
Before you can complete the adjusted trial balance, you first have to create the _____. a. cash flow statement b. balance sheet c. trial balance d. statement of retained earnings
c. trial balance
Bernie is considering investing $1,000 in a stock with a beta of 1.5. If the value of the broader market increases by 4% this year, how much should Bernie anticipate his investment to be worth at the end of the year? a. $1,026 b. $1,150 c. $1,040 d. $1,060
d. $1,060
A company sells 5000 units at $25 each. If the variable costs are $35,000, what is the contribution margin ratio? a. 0.50 b. 0.28 c. 0.44 d. 0.72
d. 0.72
If a 10% change in price leads to a 30% change in the quantity demanded, then what is the elasticity? a. 30 b. 0.333 c. 0.033 d. 3
d. 3
When was the quantitative school of management born? a. Before World War II b. Just before World War I c. During the Persian Gulf War d. After World War II e. After the Vietnam War
d. After World War II
Which of the following assets would be considered 'long-term'? a. Supplies b. Cash c. Inventory d. Building
d. Building
All of the following are examples of fiscal policy to lower unemployment, EXCEPT: a. Increasing tax credits for small business owners. b. Passing a bill to build more highways and infrastructure. c. Lowering the corporate tax rate. d. Decreasing government spending.
d. Decreasing government spending.
_____ fiscal policy addresses a _____ economy, while _____ fiscal policy addresses an _____ economy. a. Inflationary; recessionary; recessionary; inflationary b. Contractionary; recessionary; expansionary; inflationary c. Recessionary; contractionary; inflationary; expansionary d. Expansionary; recessionary; contractionary; inflationary
d. Expansionary; recessionary; contractionary; inflationary
What type of cost is the base cost that is paid when renting machines? a. Variable b. Constant c. Mixed d. Fixed
d. Fixed
How are fixed costs related to production levels? a. Fixed costs increase as production levels decrease. b. Fixed costs increase as production levels increase. c. Fixed costs decrease as production levels increase. d. Fixed costs can change, but not due to changes in production levels.
d. Fixed costs can change, but not due to changes in production levels.
Elasticity of demand is said to be elastic when elasticity is: a. Less than 1. b. Greater than 0. c. Equal to 1. d. Greater than 1.
d. Greater than 1.
Who developed the equity theory in 1963? a. E.L. Thorndike b. Victor Vroom c. John Smith d. John Stacey Adams
d. John Stacey Adams
Which of these residual incomes is best for a business? a. None b. Small c. Medium d. Large
d. Large
Which of the following is NOT a subject in the study in macroeconomics? a. Unemployment b. Fiscal policy c. Inflation d. Local real estate
d. Local real estate
Which of these best describes the proposal step of the collective bargaining process ? a. Both sides do research into the last labor dispute b. The two sides make offers and counteroffers c. Both sides agree to new terms d. Management makes an initial offer to the union e. The two sides discuss and define the dispute
d. Management makes an initial offer to the union
According to the AS/AD Model, what happens to real GDP, prices, and unemployment when Consumption increases? a. Real GDP decreases, price level decreases and unemployment falls b. Real GDP remains constant, but prices and unemployment rise c. Real GDP decreases, price level decreases but there is no change in unemployment d. Real GDP increases, price level increases and unemployment falls e. Real GDP increases, price level remains the same and unemployment rises
d. Real GDP increases, price level increases and unemployment falls
If you have three choices and with each choice these costs are different, what type of costs are they? a. Overhead b. Irrelevant c. Sunk d. Relevant
d. Relevant
Which of the following is NOT a benefit of specialization and exchange? a. Resources can be used more efficiently. b. A country can produce beyond its production possibility curve. c. Larger quantities of goods and services can be produced. d. Taxes will be reduced.
d. Taxes will be reduced.
What is economics? a. The study of consumers' spending habits b. The study of buying and selling in the stock market c. The study of a government's distribution of resources d. The study of a society's allocation of resources
d. The study of a society's allocation of resources
Tony is considering adding a new product line to his business. What analysis would be crucial in driving his decision to carry new products? a. a constrained resource analysis to determine the amount of space available for housing the products. b. overall management buy-in should be analyzed before the decision to carry new products. c. determining the new product's position in its sales market. d. determining if the money made from their sale would be enough to cover costs and make a profit.
d. determining if the money made from their sale would be enough to cover costs and make a profit.
Autocratic leaders a. are at a disadvantage when decisions need to be made quickly. b. readily trust their subordinates to complete tasks to their standards. c. dislike planning and prefer to react to situations as they unfold. d. expect their subordinates to trust that they have come to the best possible decision on their own.
d. expect their subordinates to trust that they have come to the best possible decision on their own.
Juanita is a manager at the bank. This morning she advised her staff that she wanted all pending credit applications completed and on her desk for review by 3 PM. Juanita is using _____ power. a. reward b. coercive c. expert d. referent e. legitimate
e. legitimate
