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Question;1. A bonus usually differs from a salary in;terms of;A.;Amount and timing.;B.;Base, timing, and;financial statement effect.;C.;Tax implications.;D.;Motivation effects.;E.;Base, pool, and payment;terms.;2. Of the three basic forms of management;compensation (salary, bonus, benefits), the fastest growing part of total;compensation is;A.;Salary.;B.;Bonus.;C.;Benefits.;D.;Salary and bonus.;3. As a firm's strategy changes to respond to;different stages of a product's life cycle, compensation;A.;Can be affected.;B.;Is affected, but only to;a very limited extent.;C.;Should change in;response to the new strategy.;D.;Should increase.;E.;Should decrease.;4. Risk aversion by managers should be;recognized when revising compensation plans because;A.;Compensation mix (salary, bonus) can;influence a manager's risk aversion.;B.;Most companies want risk;averse managers.;C.;Most companies want risk;taking managers.;D.;It costs less to pay;risk averse managers.;5. Due in part to the failure of many banks in;2008, executive compensation is getting increased oversight by;A.;Audit committees of corporate boards;B.;Top management;C.;Compensation committees;of corporate boards;D.;Banking regulators and;corporate compensation committees;E.;Banking regulators such;as the SEC;6. Any system of compensation;A.;May encourage unethical behavior.;B.;Must be approved by the;appropriate regulatory authority.;C.;Should be designed by;top management.;D.;Must be approved by the;auditor.;7. The objectives of management compensation;when compared to the objectives used to develop performance measurement;systems, are;A.;More numerous.;B.;Less specific.;C.;Consistent in content.;D.;Significantly broader in;scope.;E.;More specific.;8. In developing compensation plans, the;management accountant works to achieve fairness by making the plan;A.;Precise, comprehensive and directive.;B.;Simple, clear and;consistent.;C.;Attractive.;D.;Rewarding.;E.;Selective.;9. Bases for management bonus compensation often;include;A.;Stock price performance.;B.;Percentage of salary.;C.;Achievement of;break-even sales.;D.;Percentage of firm-wide;net income.;10.;When strategic;performance measures or critical success factors are used to determine bonus;compensation, the bonus will usually depend either on the amount of improvement;in the measure or on;A.;Maintaining the current level.;B.;Achieving a;predetermined goal.;C.;Quality of work;completed.;D.;Intensity of effort;expended.;11.;Bonus plans should be tied to variable cost income which is not affected by;inventory level changes, rather than the conventional;A.;Tax-based net income.;B.;Marginal cost income.;C.;Full cost income.;D.;Operating income.;12. The;balanced scorecard critical success factors (CSFs) provide strong motivation in;bonus compensation plans if the non-controllable factors are;A.;Emphasized.;B.;Separated.;C.;Recognized.;D.;Excluded.;E.;Controlled.;13.;If fairness only is considered, unit managers prefer;A.;Not to be evaluated.;B.;A subjective measure.;C.;A single, objective;measure.;D.;A firm-wide pool over a;unit-based pool.;E.;A unit-based pool over a;firm-wide pool.;14.;Generally, the current;and deferred types of bonus payment options currently in use tend to focus the;manager's attention on short-term performance measures, most commonly;A.;Division profit.;B.;After tax corporate;profit.;C.;Cash flow.;D.;Growth in firm value.;E.;Stock price.;15.;The stock option form of bonus payments to managers usually;A.;Motivates well even in extended market;downturns.;B.;Can lose some motivation;because of the delay in reward.;C.;Focuses on the;short-term.;D.;Is not consistent with;shareholder interests.;E.;Has less risk than other;types of bonus payment plans.;16.;The ideal compensation;plan would make all company contributions to the plan immediately;tax-deductible and all tax consequences for managers;A.;Insignificant.;B.;Deferred or avoidable.;C.;Limited, but current.;D.;Limited, but pre-paid.;17.;In management compensation, the use of the balanced scorecard achieves;A.;Fairness.;B.;Alignment of manager's;incentives and the organization's strategy.;C.;The desired ethical;environment.;D.;Revenue generation and;cost control.;E.;A specific non-financial;measurement.;18.;The balanced scorecard evaluation of the firm is an especially strong financial;tool because of its;A.;Use of qualitative measures.;B.;Use of quantitative;measures.;C.;Simplicity in use.;D.;Ability to predict;change.;E.;Use of multiple critical;success factors (CSFs).;19.;The receivables turnover ratio is a measure of;A.;Asset value.;B.;Leverage.;C.;Sales performance.;D.;Profitability.;E.;Liquidity.;20.;Market value of equity is an objective measure which clearly shows what;A.;The firm's financial statements show the;firm's value to be.;B.;Investors think is the;firm value.;C.;Stock analysts calculate;as the firm's value.;D.;Is the sales value of;the firm.;E.;Is the liquidation value;of the firm.;21.;Analysts prefer the following three valuation methods over all others;A.;EVA, cash flow multiplier and sales multiplier;B.;Enterprise value, discounted cash flow;and sales multiple;C.;Sales multiple, earnings;multiple, and discounted cash flow;D.;EVA, return on equity;and discounted cash flow;E.;Enterprise value;earnings multiple, and sales multiple;22. Since;it is based on cash flows, the discounted cash flow (DCF) method of valuation;has the added advantage that it is not subject to the bias of different;A.;Discount rates.;B.;Internal rates of;return.;C.;Monetary systems.;D.;Accounting policies for;determining total assets and net income.;23.;The multiplier used in;an earnings-based method of valuation of a firm is often estimated from the;price-to-earnings ratios of the stocks of comparable;A.;Taxable entities.;B.;Industries.;C.;Firms.;D.;For-profit firms.;E.;Publicly-held firms.;24.;Which one of the following items is not a measure of a company's;liquidity?;A.;Accounts receivable turnover.;B.;Return on equity.;C.;Quick ratio.;D.;Cash flow ratio.;E.;Day's sales in;inventory.;25.;Which one of the following forms of compensation is a based upon the;achievement of performance goals for current the period?;A.;Perk.;B.;Stock option.;C.;Performance shares.;D.;Bonus.;E.;Salary.;26.;Which one of the following forms of compensation includes special services and;benefits for the employee?;A.;Perk.;B.;Stock option.;C.;Performance shares.;D.;Bonus.;E.;Salary.;27. A;method for determining a bonus based upon the performance of the unit is a(n);A.;Segment-based pool.;B.;Unit-based pool.;C.;Firm-based pool.;D.;Activity-based pool.;E.;Function-based pool.;28. A;method for determining a bonus based upon the performance of the firm is a(n);A.;Segment-based pool.;B.;Unit-based pool.;C.;Firm-based pool.;D.;Activity-based pool.;E.;Volume-based pool.;29.;All of the following are listed as common payment options for bonus;compensation plans except;A.;Performance shares.;B.;Current bonus.;C.;Deferred bonus.;D.;Preferred bonus.;E.;Stock options.;30.;The profit multiplier is used to measure;A.;Efficiency.;B.;Effectiveness.;C.;Net revenue.;D.;Collectability.;E.;Accountability.;31.;Each one of the following is a method for directly measuring the value of a;firm's equity except;A.;The discounted cash flow method.;B.;Market value.;C.;Sales multiple.;D.;Earnings-based;valuation.;E.;Enterprise value.;32.;Which one of the following refers to the firm's ability to pay its current;operating expenses and maturing debt?;A.;Discounted cash flow.;B.;Liquidity.;C.;Earnings base.;D.;Profitability.;E.;Purchasing power.;33.;Which one of the following develops the value of the firm as the discounted;present value of the firm's net free cash flows?;A.;Discounted cash flow method.;B.;Liquidity method.;C.;Multiples-based method.;D.;Profitability method.;E.;Purchasing power method.;34. A;deferred bonus consists of;A.;Cash only.;B.;Stock only.;C.;Cash and/or stock.;D.;Membership in a fitness;club.;35.;Which one of the following computes value based on annual earnings?;A.;Discounted cash flow method.;B.;Liquidity method.;C.;Multiples-based method.;D.;Profitability method.;E.;Market value method.;36.;Jackson Supply Company has a 2 to 1 current ratio. This ratio would increase to;more than 2 to 1 if the company;A.;Purchased a marketable security for;cash.;B.;Wrote off an;uncollectible receivable.;C.;Sold merchandise on;account that earned a normal gross margin.;D.;Purchased inventory on;account.;37.;Benefits include all of the following except;A.;Travel.;B.;Life insurance.;C.;Medical benefits.;D.;Membership in a fitness;club.;E.;Performance shares.;38. A;current bonus consists of;A.;Cash only.;B.;Stock only.;C.;Cash and/or stock.;D.;Membership in a fitness;club.;39.;In service firms, improvement in long term profitability is best measured by;all the following except;A.;Staff utilization.;B.;Net revenues.;C.;Collections of customer;accounts.;D.;Materials usage.;40.


Paper#44933 | Written in 18-Jul-2015

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