acct 3309 exam 2 (extra)

For a business to attract equity capital, ____________must believe that the value they will potentially receive will exceed the value they are giving up

Investors

High benefits of return directly correlate with __________ risk

high

A_____ communicates the companies' business model, strengths, and operating values. Most large corporations publish this for stakeholders.

Mission statement

Governments often place restrictions (trade barriers) on imports to limit direct foreign investment. This action is called_____.

Protectionism

Culture is a function of _____

Social values, education level, geography, (D. All of the above)

Which of the following is an example of a fixed asset?

Equipment owned by the businesses

Which of the following are factors of production?

Money and knowledge as well as labor and natural resources.

______Occurs when the cost of an item goes up because the price of its ingredients increases.

Cost push inflation

Which of the following statements is false?

A controlled economy, where all government controls every aspect of the economy, is much more efficient at creating valuable.

When a business in a different country has an advantage in producing certain products over other countries then they hold a ____

Competitive advantage

forgetting taxes, revenue-___-=net income

Operating expense, Interest expense

Which of the following do businesses compete for?

Assets, money, people (All of the above)

Which aspect of the business ultimately adds the most value to a product or service?

Employees and managers

All of the following are considered to be part of a business'es assets, except ______

Payables

What is the primary purpose of any business?

Maximize value

In the context of a management process in a business, which of the following involves using systems to compare the desired outcomes to the actual results.

Reviewing

Because of the business world is constantly changing, a business has to _____in order to gain a sustainable advantage.

Innovate

James has a cold. Although the brand name drug is more expensive than the generic, he buys the brand name product. James is familiar with the brand name drug and knows exactly what to expect when taking the drug. James chooses to purchase the more expensive brand name drug. Because in his opinion, it has ______________

less risk

Little Emily's lemonade stand has a net income of $7 and an interest expense of $14

$21

An_____ is an economic resource a business owns and can use to operate a business.

Assets

In a free market environment, when suppliers create more product than buyers demand, prices______.

Fall

When demand and supply do not react to price changes, we say the demand and supply functions are which of the following?

Price inelastic

Which marginal function in business management process involves envisioning the future, finding opportunities, setting goals, determining the best alternatives

Exports less imports is often called the

balance of trade and/or trade account

Which of the following explains that when one's men's money, income is created for someone else.

Multiplier effect

Managers at P &G need and accurate and timely financial information to operate the business. They need to be accountable to the providers of money to the business. P&G's_______adds value to the organization by meeting these information needs.

Accounting department

Which of the following is the most risky form of global business?

Direct foreign investment

Which of the following is the result of buyers and sellers sharing economic power equally?

Perfect competition

The question "how would specific business reacts to change in tax law?" Falls under_____.

Microeconomics

How a business creates and delivers value is called its____

Business model

Which of the following describes the condition where buyers and sellers are free to determine what is sold and what price

free market economy

Prices typically go____when demand exceeds supply and prices go_____when supply exceeds demand

UP, down

All of the following are ways for globalization to increase business value, except____.

Increasing risk from exchange-rate exposure

When a business uses another business to build all or part of its product it is called_____.

Outscourcing

A businesses strategy is designed to create the firm's substantial competitive advantage. Which of the following is correct with respect to business strategy

Business strategy and business model are not the same thing.

1. A court must have the authority, known as ____ to resolve a dispute.

jurisdiction

2. GAAP requires that businesses use which type of an accounting system?

Accrual basis system

3. In the United States, Federal income taxes are assessed ___.

as a graduated fate of taxable income

4. The codes and standards of behavior by which we live our lives is which of the following?

ethics

5. When preparing an income statement, the cost of products sold is called ___.

COGS

6. You go to the car dealer and you order a new car. You and the car dealer shake hands after you promise to pay him as soon as the car arrives. What is true?

No recordable transaction has occurred

7. Which of the following equations is equal to the Weighted Average cost of Capital (WACC)?

(% of Debt) * (Cost of Debt) * (1-tax rate) + (% of equity) * (cost of equity)

8. You own a jewelry stores that produces one type of gold ring. The cost of the gold (raw materials) is dependent upon the amount of gold used to produce each ring and upon the number of rings produced. What type of cost is gold in this case?

variable cost

9. When considering a potential investment in an asset, then are several methods that can be used to decide between alternatives. The method which considers the time it takes for the business to recover its cash investment is the ___.

payback period

10. In a common size analysis, all of the items on the balance sheet should be expressed as a percentage of:

total assets

11. What agency is responsible for administering laws designed to protect consumers.

Federal Trade Commission (FTC)

12. When a company buys 100% of the stock of another company, the purchased company is said to be a ___ and the financial information of the purchased company must be ___ with that of the parent.

"wholly owned" subsidiary, consolidated

13. Weighted Average Cost of Capital (WACC) is the _____.

weighted average cost of all long-term capital employed in the firm

14. What does the Net Profit Margin Ratio (percentage) measure?

what percentage of sales was retained after taking out all expenses

15. Which of the following are risks of being in business?

investing in assets

how the business is financed

hiring people

ALL ARE CORRECT

16. What do we call the money that we have tied up in the things we intend to sell?

inventory

17. A business will minimize its Weighted Average Cost of Capital (WACC) by ____.

borrowing all of the money it can afford then financing the rest with owners' equity

18. Which of the following ratios would management want to minimize?

Days' receivables outstanding

19. Which of the following is NOT a way in which a company can finance its long

term capital needs?-purchase stock in other companies and use the dividends received

20. Tyco International once owned businesses that manufactured industrial tape, medical supplies, and security systems. Tyco International was an example of ____.

a conglomerate

*Use the Owen Company financial statements to answer the questions 21-26 below for the year 2015.

21. What is the current ratio?

1.92:1

22. What is the day's sales in receivables?

17.66 days

23. What is the day's sales in inventory?

9.61 days

24. What is the gross profit margin?

38.71%

25. What is inventory turnover?

40.00 times

26. What is the price/earnings ratio?

1.73 times

*Used information on a table to answer questions 27-28.

27. Which statement is true regarding percent uncollectible?

Peyton performed better than Kaisen both years.

28. Which statement is true regarding Days' receivables outstanding (O/S)?

Peyton performed worse in 2012 than Kaisen.

*Used table to answer questions 29-33

29. Compare the sales in 2010 to that of 2009. By how much did Orach Sales grow from 2010 (percentage growth)?

(-14.9%)

30. In a common size analysis, what percentage would you show for Cost of Goods?

27.5%

31. In a vertical common size analysis, what percentage would you show for Operating Expense?-

10.3%

32. In a vertical common size analysis, what percentage would you show for Gross profit in 2009?

26.9%

33. In a vertical common size analysis, what percentage would you show for the Net Profit Margin for 2010?

9.4%

34. In the Fantasia case, Roberto Ponti violated one of the first principles that should be considered when creating the capital structure of a business. The principle he violated was which of the following:

Long-term capital needs should not be financed with short-term borrowing.

35. In our discussion of the Fantasia Case, we identified several major issues or problems with the company. Which of the following was NOT one of the problems that we identified?

Ponti's lack of manufacturing expertise demonstrated by the need for expanded manufacturing capacity.

A court must have the authority, known as ________________, to resolve a dispute.

Jurisdiction

GAAP requires that businesses use which type of accounting system?

Accrual Basis System

In the United States, Federal Income taxes are assessed ______________.

Progressive Graduated Rate

The codes and standards of behavior by which we live our lives is which of the following?

Ethics

When preparing an income statement, revenue minus the cost of the products SOLD is called _________________.

Gross Profit

You go to a car dealer and you order a new car. You and the car dealer shake hands after you promise to pay him as soon as the car arrives. What is true?

No recordable transaction has occurred.

If one company acquires another company by using the acquired company's asset as collateral for _____________ used to finance the acquisition,

Leveraged Buyout

The owners of a corporation empower _____________ to act as their agents.

The Board of Directors

Which Federal agency is responsible for regulating markets in which financial instruments are bought and sold?

SEC

In common size analysis, all of the items on the balance sheet should be expressed as a percentage of:

Total Assets

Which agency is responsible for administering laws designed to protect consumers?

FTC

When a company buys 100% of the stock of another company, the purchased company is said to be a ______________ and the financial information of the purchased company must be ______________ with that of the parent.

"Wholly owned" subsidiary, consolidated

A Chapter 11 Bankruptcy involves the liquidation of a company's assets while a Chapter 7 Bankruptcy is an attempt to reorganize the company so that it can continue to operate.

FALSE

What does the Net Profit Margin ratio (percentage) measure?

What percentage of sales was retained after taking out all expenses.

Which of the following involve risks when operating a business?

Investing in Assets

How the business is financed

Hiring People

ALL ARE CORRECT

On the Balance Sheet, what do we call the money we have tired up in the things we intend to sell?

Inventory

Which of the following is NOT considered to be intellectual property?

Long term employee

Which of the following ratios would management want to minimize?

Days' Receivables Outstanding

When one drug manufacturer purchases all of the common stock of another drug manufacturer because the acquired company makes a drug that compliments the drug first made and sold by the acquiring company, that is an example of what type of transaction?

Horizontal merger

Which of the following equations is equal to the Weighted Average Cost of Capital (WACC)?

WACC = (% of Debt)[(Cost of Debt)(1-Tax Rate)] + (% of Equity)(Cost of Equity)