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SAMPLE QUESTIONS (DO NOT COMPLETED THIS UNTIL YOU CONTACT
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1) Balance sheet accounts are considered to be __________.
A. nominal accounts
B. permanent accounts
C. temporary stockholders’ accounts
D. capital accounts
2) The major reporting standard for management accounts is __________.
A. generally accepted accounting principles
B. the Sarbanes-Oxley Act of 2002
C. the Standards of Ethical Conduct for Practitioners of Management Accounting and
Financial Management
D. relevance to decisions
3) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin
and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and
wine has a 25 percent contribution margin. If other factors are equal, which product
should H55 push to customers?
A. It should sell an equal quantity of both
B. Wine
C. Beer
D. Selling either results in the same additional income for the company
4) What is the preparation of reports for each level of responsibility in the company’s
organization chart called?
A. Master budgeting analysis
B. Responsibility reporting
C. Static reporting
D. Exception reporting
5) These are selected account balances on December 31, 2008.
Land (location of the corporation’s office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the balance
sheet?
A. $950,000
B. $1,100,000
C. $1,300,000
D. $1,600,000
6) Of the following companies, which one would not likely employ the specific
identification method for inventory costing?
A. Hardware store
B. Farm implement dealership
C. Music store specializing in organ sales
D. Antique shop
7) The cost of an asset and its fair market value are __________.
A. the same on the date of acquisition
B. the same when the asset is sold
C. never the same
D. irrelevant when the asset is used by the business in its operations
8) A company just starting in business purchased three merchandise inventory items at
the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the
company sold two units for a total of $240 and used FIFO costing, the gross profit for the
period would be _____.
A. $50
B. $75
C. $65
D. $60
9) The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. prove that revenues exceed expenses if there is a net income
C. provide information about the investing and financing activities during a period
D. provide information about the cash receipts and cash payments during a period
10) Which list below best describes the major services performed by public accountants?
A. Cost accounting, production scheduling, recruiting
B. Employee training, auditing, bookkeeping
C. Bookkeeping, mergers, budgets
D. Auditing, taxation, management consulting
11) The standards and rules that are recognized as a general guide for financial reporting
are called __________.
A. standards of financial reporting
B. generally accepted accounting principles
C. generally accepted accounting standards
D. operating guidelines
12) If a company reports a net loss, it __________.
A. will not be able to make capital expenditures
B. will not be able to pay cash dividends
C. may still have a net increase in cash
D. will not be able to get a loan
13) What exists when budgeted costs exceed actual results?
A. An excess profit
B. A favorable difference
C. A budgeting error
D. An unfavorable difference
14) One of Astro Company's activity cost pools is machine setups, with estimated
overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups).
How much of the machine setup cost pool should be assigned to sparklers?
A. $90,000
B. $60,000
C. $150,000
D. $75,000
15) For a college student who wishes to calculate the true costs of going to college, the
costs of room and board __________.
A. plus the cost of tuition, equals the opportunity cost of going to college
B. should be counted only to the extent that they are more expensive at college than
elsewhere
C. should be counted in full, regardless of the costs of eating and sleeping elsewhere
D. usually exceed the opportunity cost of going to college
16) If a binding price ceiling were imposed in the computer market, __________.
A. the quality of computers would increase
B. the supply of computers would decrease
C. the demand for computers would increase
D. a shortage of computers would develop
17) Which of the following statements about GDP is correct?
A. GDP increases if the total population increases.
B. Money continuously flows from households to government and then back to
households, and GDP measures this flow of money.
C. GDP measures two things at once: the total income of everyone in the economy and
the unemployment rate.
D. GDP is to a nation’s economy as household income is to a household.
18) What you give up to obtain an item is called your __________.
A. direct cost
B. explicit cost
C. opportunity cost
D. true cost
19) In order to be successful, a cartel must __________.
A. agree on the prices charged by each member, but they need not agree on amounts
produced
B. agree on the total level of production for the cartel, but they need not agree on the
amount produced by each member
C. find a way to encourage members to produce more than they would otherwise produce
D. agree on the total level of production and on the amount produced by each member
20) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
A. borrower who supplies money to the financial system
B. saver who supplies money to the financial system
C. saver who demands money from the financial system
D. borrower who demands money from the financial system
21) The general term for market structures that fall somewhere in-between monopoly and
perfect competition is __________.
A. monopolistically competitive markets
B. imperfectly competitive markets
C. incomplete markets
D. oligopoly markets
22) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One
of their contributions was to argue that if a central bank could convince people to expect
zero inflation, then the Fed would be tempted to raise output by increasing inflation. This
possibility is known as __________.
A. the sacrifice ratio dilemma
B. the monetary policy reaction lag
C. inflation targeting
D. the time inconsistency of policy
23) The open-economy macroeconomic model includes __________.
A. neither the market for loanable funds or the market for foreign-currency exchange
B. only the market for loanable funds
C. both the market for loanable funds and the market for foreign-currency exchange
D. only the market for foreign-currency exchange
24) The principal lag for monetary policy __________.
A. is the time it takes for policy to change spending. The principal lag for fiscal policy is
the time it takes to implement it
B. and fiscal policy is the time it takes to implement policy
C. is the time it takes to implement policy. The principal lag for fiscal policy is the time it
takes for policy to change spending
D. and fiscal policy is the time it takes for policy to change spending
25) President George W. Bush and congress cut taxes and raised government
expenditures in 2003. Which of the following is not correct?
A. In general it is easier to reverse monetary policy than to reverse fiscal policy.
B. At the time the economy was just moving into a recession.
C. In general monetary policy can be implemented faster than fiscal policy.
D. While there was subsequent improvement in economic performance, it’s not entirely
clear that this was due to the policy.
26) In the open-economy macroeconomic model, other things the same, a decrease in the
interest rate shifts __________.
A. the supply of dollars in the market for foreign-currency exchange to the left
B. the demand for dollars in the market for foreign-currency exchange to the right
C. the supply of dollars in the market for foreign-currency exchange to the right
D. the demand for dollars in the market for foreign-currency exchange to the left
27) Which of the following statements about GDP is correct?
A. Nominal GDP consistently underestimates the value of production, whereas real GDP
consistently overestimates the value of production.
B. Nominal GDP values production at current prices, whereas real GDP values
production at constant prices.
C. Nominal GDP values production at market prices, whereas real GDP values
production at the cost of the resources used in the production process.
D. Nominal GDP values production at constant prices, whereas real GDP values
production at current prices.
28) The manager's first question for you is "What law do I need to look at to make sure I
am in compliance on this issue?" The correct answer to that question is:
A. Sexual harassment policy
B. There is no law in the United States that covers this issue
C. Pregnancy Discrimination Act
D. Americans with Disabilities Act
E. American Civil Liberties Act
29) An organization that is managed aggressively and has growth and high profits as
primary objectives may be considered a(n):
A. Online Business
B. Multinational corporation
C. Entrepreneurship venture
D. Small business
E. Large corporation
30) One of the most important contributors to total quality management has been the
introduction of statistical tools to analyze the causes of product defects in an approach
called:
A. Organic
B. Six Sigma Quality
C. Mechanistic
D. ISO 9000
E. Total quality integration
31) ABC International carefully watches the actions of its most innovative competitor
and learns from them. ABC can establish a low-cost position by:
A. Technology followers are not successful at low-cost strategies
B. Making subtle changes to the product, thereby avoiding patent restrictions
C. Mass-producing products that have an established market niche
D. Learning from the leader thereby avoiding the costs and risks of technology leadership
E. Producing an imitation of the new technology that utilizes lower-quality and lowercost materials
32) Teams that operate separately from the regular work structure and exist temporarily
are known as:
A. Transnational teams
B. Management teams
C. Self-managed teams
D. Self-designing teams
E. Parallel teams
33) Teams that work on long-term projects but disband once the work is completed are
known as:
A. Transnational teams
B. Parallel teams
C. Project and development teams
D. Traditional work groups
E. Management teams
34) __________ is the process of working with people and resources to accomplish
organizational goals.
A. Supervising
B. Planning
C. Decision making
D. Controlling
E. Management
35) A series of quality standards developed by a committee working under the
International Organization for Standardization to improve total quality in all businesses
for the benefit of both producers and consumers is:
A. Customer-based integration
B. Total quality management
C. Computer-integrated manufacturing (CIM)
D. ISO 9000
E. Just-in-time control (JIT)
36) Building a dynamic organization is another way of describing which function of
management?
A. Staffing
B. Planning
C. Controlling
D. Leading
E. Organizing
37) Which of these describes a vision, as it pertains to leadership?
A. A short-term goal of an organization
B. Likely to land you in a padded room
C. A mental image of a future state of an organization
D. A long-term goal of an organization
E. The method through which leaders achieve goals
38) As related to managing of human resources, diversity refers to:
A. Differences in retention strategies (such as training, hiring, incentives, etc)
B. Differences in pay methods (such as hourly, salaried, overtime, hazard-pay,
commissioned, etc.)
C. Differences in recruiting methods (such as newspapers, schools, flyers, magazines,
agencies, etc.)
D. Differences in employee benefit plans (such as pensions, insurance, vacations,
memberships, etc.)
E. Differences in demographics (such as age, race, gender, disability status, lifestyle,
veteran status, educational level, etc.)
39) To be competitive in a global economy, Europeans must increase their level of:
A. Financial subsidy
B. Philanthropic contributions
C. Productivity
D. Population density
E. Espionage activity
40) One study found that manufacturing labor costs about _____ an hour in China,
compared to _____ dollars in the United States.
A. Less than $1; about 40
B. $2; about 25
C. About $2; about 15
D. Less than $1; about 15
E. Less than $1; about 25
41) Having individuals actually do the job they are applying for as a test to see if they can
do it is __________.
A. a formal means of screening candidates
B. an approach with high reliability
C. an approach with high face validity
D. an approach with low reliability
E. an informal means of screening candidates
48) A project has three paths. A–B–C has a length of 25 days. A–D–C has a length of 15
days. Finally, A–E–C has a length of 20 days. Which one of the following statements is
TRUE?
A. The expected duration of this project is 25 + 15 + 20 = 60 days.
B. The expected duration of this project is 25 days.
C. A–B–C has the most slack.
D. A–D–C is the critical path.
49) A computer analysis reveals that the best-fitting trend model is Yt = 4.12 e 0.987 t.
The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for
the last six years. The R2 is 0.8571.
Which conclusion is not correct?
A. The absolute annual growth (in dollars per share) is increasing.
B. Few investments could match the astounding growth rate.
C. At the end of year 3 the stock price would be nearly $80.
D. The stock's true intrinsic value is $4.12.
50) Theoretically, service capacity must exceed demand, lest queues become infinitely
long. If capacity does not exceed demand, what is likely to happen?
A. All of these
B. Servers will eliminate time-consuming portions of their jobs, thereby increasing
capacity.
C. Servers will decrease time spent per customer, thereby increasing capacity.
D. Customers will renege or balk, thereby reducing demand.
51) Likely reasons for inaccurate control limits would include which of the following?
A. Process variation was not zero, as expected.
B. There was insufficient preliminary sampling.
C. The engineers were underpaid for their work.
D. The engineering parameter for variance is unknown.
52) The one-worker, multiple machines approach functions as:
A. a way to create uniform workstation loads.
B. a production bottleneck.
C. a one-person production line.
D. a poka-yoke device.
53) Which of the following is NOT an advantage of the buy option for acquiring IS
applications?
A. saves money
B. saves time
C. few types of off-the-shelf software are available, thus limiting confusion
D. software can be tried out
E. company will know what it is getting
54) When customers access a Web site and make purchases, they generate __________.
A. Hyperlink data
B. Clickstream data
C. Tracking cookies
D. Information
E. Web data
55) Which of the following statements is correct?
A. The Internet has increased individuals’ privacy
B. An individual’s right to privacy supersedes the needs of society
C. An individual’s right to privacy is absolute
D. It is difficult to determine and enforce privacy regulations
E. Advances in information technologies have not affected individual privacy
56) Zappos built the majority of its information systems using which of the following?
A. Consultants
B. Open source software
C. Vendor software
D. Proprietary software
E. Free software
57) The costs of delivering products in the _____ channel are much higher than
delivering products in the _____ channel.
A. physical, digital
B. digital, physical
C. e-commerce, digital
D. digital, e-commerce
E. physical, financial
58) Credit card companies would most likely use which of the following to check for
fraudulent credit card use?
A. Data mining
B. Expert systems
C. Neural networks
D. Multidimensional data analysis
E. Structured query language
59) The management cockpit best exemplifies which type of system?
A. Group decision support system
B. Digital dashboard
C. Decision support system
D. Expert system
E. Functional area information system
60) Which of the following is not a reason that managers need IT support?
A. Decision makers are often in different locations
B. Decisions are becoming more complex
C. Number of alternatives are decreasing
D. Decisions must typically be made under time pressure
E. Need to access remote information sources
61) Which of the following are not provided by digital dashboards?
A. Exception reporting
B. Status access
C. Drill down
D. Transaction processing
E. Key performance indicators
62) International Game Technology’s new ERP system produced all of the following
benefits except:
A. Operations employees were able to access manufacturing process details at their
workstations
B. ERP system connected the company’s global operations
C. Integrated the company’s business functions
D. Company was able to maintain its original business processes
E. The company gained flexibility in manufacturing products
63) At 8% compounded annually, how long will it take $750 to double?
A. 12 years
B. 48 months
C. 6.5 years
D. 9 years
64) Dublin International Corporation’s marginal tax rate is 40%. It can issue three-year
bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at
a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs.
Determine the appropriate after-tax cost of debt for Dublin International to use in a
capital budgeting analysis.
A. 7.2%
B. 5.2%
C. 4.5%
D. 6.0%
65) Which of the following represents an attempt to measure the earnings of the firm’s
operations over a given time period?
A. Quarterly statement
B. Cash flow statement
C. Balance sheet
D. Income statement
66) Disadvantages of using current liabilities as opposed to long-term debt include:
A. certainty of interest costs
B. higher cash flow exposure
C. greater risk of illiquidity, and uncertainty of interest costs
D. uncertainty of future liabilities
E. decreased risk of liquidity
67) Forward rates are quoted:
A. on financial statements
B. in an indirect form
C. by the FDIC
D. in direct form and at a premium or discount
E. daily
68) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share.
If the stock is currently selling for $21.25 per share, what is the expected rate of return on
this stock?
A. 13.6%
B. 12.5%
C. 8.0%
D. 36.13%
69) The common stockholders are most concerned with:
A. the spread between the return generated on new investments and the investor’s
required rate of return.
B. the size of the firm’s beginning earnings per share.
C. the risk of the investment.
D. the percentage of profits retained.
70) Suppose you determine that the NPV of a project is $1,525,855. What does that
mean?
A. The project’s IRR would have to be less that the firm’s discount rate.
B. The project would add value to the firm.
C. Under all conditions, the project’s payback would be less than the profitability index.
D. In all cases, investing in this project would be better than investing in a project that
has an NPV of $850,000.
71) Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%,
and the risk-free rate is 5%. According to CAPM, what is the required return on this
stock?
A. 15.62%
B. 9.37%
C. 14.37%
D. 20.62%
72) According to the hedging principle, permanent assets should be financed with _____
liabilities.
A. fixed
B. spontaneous
C. current
D. permanent
73) PepsiCo calculates unlevered betas for each peer group in order to:
A. eliminate different financial risks.
B. eliminate competitive factors.
C. eliminate judgment factors.
D. eliminate different business risks.
74) Which of the following best represents the stream of income that is available to
common stockholders?
A. Operating profit
B. Earnings before interest and taxes
C. Gross profit
D. Net profit after tax and after preferred dividend payments
75) Your company is considering an investment in a project which would require an
initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of
$87,385 per year. You have determined that the current after-tax cost of the firm’s capital
(required rate of return) for each source of financing is as follows:
Cost of debt 8%
Cost of preferred stock 12%
Cost of common stock 16%
Long-term debt currently makes up 20% of the capital structure, preferred stock 10%,
and common stock 70%. What is the net present value of this project?
A. $1,568
B. $871
C. $1,241
D. $463
76) An Australian wine producer, facing declining sales at home, set up a new channel of
distribution to sell wine in the United States. This seems to be an effort at:
A. stratification.
B. diversification.
C. product development.
D. market development.
E. market penetration.
77) Clustering techniques applied to segmenting markets __________.
A. doesn’t apply to demographic data
B. remove the need for managerial judgment
C. is time consuming and expensive
D. usually require computers to group people based on data from market research
E. eliminate the need for marketing managers to specify in advance what dimensions
might be relevant for grouping consumers
78) "Positioning":
A. eliminates the need for judgment in strategy planning.
B. helps strategy planners see how customers view competitors' offerings.
C. is useful for combining but not for segmenting.
D. applies to new products--but not existing products.
E. is concerned with obtaining the best shelf space in retail outlets.
79) "Marketing strategy planning" means:
A. selecting a target market and developing a marketing strategy.
B. finding attractive opportunities and selecting a target market.
C. selecting an attractive marketing mix.
D. finding attractive opportunities and developing profitable marketing strategies.
E. selecting an attractive target market.
80) Coca-Cola is taking advantage of the new willingness of Chinese leaders to engage in
international trade by marketing its soft drinks in China. What type of opportunity is
Coke pursuing?
A. test marketing
B. diversification
C. market penetration
D. market development
E. product development
81) Marketing:
A. not important if you have a good product.
B. creates materialistic values which did not exist before.
C. is only propaganda.
D. turns consumers into puppets.
E. reflects existing social values in the short run--while reinforcing these values in the
long run.
82) Which of the following is a business or organizational customer?
A. All of these are business and organizational customers.
B. producers of goods or services.
C. a government agency.
D. a retailer.
E. a wholesaler.
83) A firm's "marketing mix" decision areas would NOT include:
A. Place.
B. Promotion.
C. Product.
D. People.
E. Price.
84) When looking at demographic dimensions, marketers should:
A. always consider external influences.
B. know that it is illegal to segment markets based on membership in some racial or
ethnic group.
C. understand that ethnic groups are generally homogeneous within.
D. know that demographics are especially helpful in explaining why specific people buy
specific brands.
E. recognize that demographics can be very useful for estimating the market potential of
possible target markets.
85) Regarding organizational buying, the people who have the power to select or approve
the supplier--especially for larger purchases--are called:
A. users.
B. influencers.
C. gatekeepers.
D. deciders.
E. buyers.
86) The difference between target marketing and mass marketing is that target marketing:
A. aims at increased sales, while mass marketing focuses on increased profits.
B. means focusing on a small market.
C. does not rely on e-commerce but mass marketing does.
D. focuses on short-run objectives, while mass marketing focuses on long-run objectives.
E. focuses on specific customers, while mass marketing aims at an entire market.
87) The "four Ps" of a marketing mix are:
A. Production, Personnel, Price, and Physical Distribution
B. Promotion, Production, Price, and People
C. Potential customers, Product, Price, and Personal Selling
D. Product, Price, Promotion, and Profit
E. Product, Place, Promotion, and Price
88) In which of the following are these steps of a criminal case listed in the correct order?
A. Arrest, indictment, trial, arraignment
B. Arraignment, arrest, trial, indictment
C. Arrest, arraignment, indictment, trial
D. Arrest, indictment, arraignment, trial
E. Indictment, arraignment, arrest, trial
89) Which of the following receives at least some protection under the U.S. Constitution?
A. Neither obscene speech nor offensive speech
B. Obscene speech
C. Both obscene speech and offensive speech
D. Offensive speech
90) Which of the following is correct about interpretive rules?
A. Interpretive rules are not subject to judicial review.
B. They do not establish new law.
C. All federal administrative agencies have implied power to make interpretive rules.
D. They require public notice and participation to create.
E. They must be accompanied by substantive rules.
91) Overtime pay is required to be paid to nonexempt employees who work:
A. Over 50 hours per week.
B. Over 8 hours per day.
C. Over 40 hours per week.
D. Over 10 hours per day.
E. Over 12 hours per day.
92) Which of the following statements is generally not true about state intermediate
appellate courts?
A. Appellate court decisions are final and further appeal is not possible.
B. The appellate court reviews the record of the trial court.
C. The appellate court allows the parties to introduce new evidence so long as it was not
previously introduced at the original trial.
D. The appellate court usually allows the parties to file briefs outlining support for their
positions.
E. The appellate court allows the parties to make oral arguments outlining their position.
93) Which of the following is correct about the states’ powers regarding foreign affairs?
A. Because of the sharing of powers between the federal government and the states, states
have powers over foreign affairs equal to the powers of the federal government.
B. The states have no power over foreign affairs because the U.S. Constitution grants that
power exclusively to the federal government.
C. The states can pass laws so long as they do not unduly burden foreign commerce, but
the states have no authority to enter into treaties with foreign nations.
D. The states can pass laws and enter into treaties with foreign nations so long as they do
not unduly burden foreign commerce.
E. The states can pass laws affecting foreign commerce and enter into treaties with
foreign nations so long as they first obtain the consent of the Senate.
94) Which of the following is true about trademark registration?
A. The registration of a trademark can be renewed an unlimited number of times.
B. Trademark registration is optional because protection is automatic.
C. A trademark must be registered prior to its actual use in commerce.
D. Once a trademark is registered, protection cannot be lost.
95) Generally speaking, the contract of a minor:
A. Is voidable at the minor’s option.
B. Must be in writing.
C. Is void.
D. Is not enforceable by the minor.
96) If you are a creditor, your best protection in the event of the debtor’s bankruptcy
(including protection from the debtor’s other creditors) is usually obtained if you had
previously received:
A. Audited financial statements of the debtor.
B. A security interest granted by the debtor.
C. The debtor’s agreement to pay you first.
D. A written promise from the debtor to pay the debt as agreed.
97) Which of the following terms is not required to be disclosed under the Truth-inLending Act?
A. The amount of late charges or delinquency penalties.
B. The number of payments.
C. The date the finance charge begins to accrue.
D. The amount of attorneys fees to be charged if legal action is needed to collect the debt.
E. The annual percentage rage of interest.
98) Which country does the text describe as becoming the largest producer and consumer
of many of the world's goods?
A. Ecuador
B. China
C. Canada
D. Mexico
E. Japan
99) One study found that manufacturing labor costs about _____ an hour in China,
compared to _____ dollars in the United States.
A. Less than $1; about 40
B. $2; about 25
C. About $2; about 15
D. Less than $1; about 25
E. Less than $1; about 15
100) Although the U.S. has had a longstanding agreement with _____ after the passage of
NAFTA, _____ became the United States' second largest trading partner.
A. Great Britain, Paraguay
B. Mexico, Venezuela
C. Canada, Mexico
D. Mexico, Canada
E. Canada, Venezuela