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Finance Multiple Choice Questions Quiz




Question;Question 1.1. (TCO 1) A common starting point in the budgeting process is _____. (Points: 5)expected future net incomepast performanceto motivate the sales forcea clean slate, with no expectationsQuestion 2.2. (TCO 2) ?Groupthink? is a primary disadvantage of which qualitative forecasting method? (Points: 5)Executive opinionsSales force pollingDelphi methodConsumer surveysQuestion 3.3. (TCO 3) Which of the following is not used to evaluate the accuracy of regression results? (Points: 5)Mean absolute deviationCoefficient of determinationPrediction confidence intervalT-statisticQuestion 4.4. (TCO 4) Which of the following is not a reason why capital expenditures are incurred? (Points: 5)Changes in production methodsChanges in styleReduced costsReduced salesQuestion 5.5. (TCO 5) Which of the following is true when ranking proposals using zero-base budgeting? (Points: 5)Nonfunded packages should not be ranked.Adjustments are not allowed once the ranking is complete.Due to changing circumstances, a low-priority item may later become a high-priority item.Decision packages are ranked in order of increasing benefit.Question 6.6. (TCO 6) When using the payback period technique, the payback period is expressed in terms of _____.(Points: 5)a percentagedollarsyearsmonthsQuestion 7.7. (TCO 6) The profitability index is computed by dividing the _____.(Points: 5)total cash flows by the initial investmentpresent value of cash inflows by the present value of each outflowinitial investment by the total cash flowsinitial investment by the present value of cash flowsQuestion 8.8. (TCO 6) A company projects annual cash inflows of $85,000 each year for the next 5 years if it invests $300,000 in new equipment. The equipment has a 5-year life and an estimated salvage value of $75,000. What is the accounting rate of return on this investment? (Points: 5)28.3.3%43.3%Question 9.9. (TCO 6) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end of its 10-year life, and generates annual net cash inflows of $30,000 each year, the payback period is _____. (Points: 5)5 years6 years7 years8 yearsQuestion 10.10. (TCO 6) Selma Inc. is comparing several alternative capital budgeting projects as shown below.ProjectsABCInitial Investment$40,000$60,000$80,000Present value of cash inflows$60,000$55,000$100,000Using the profitability index, rank the projects, starting with the most attractive. (Points: 5)A, C, BA, B, CC, A, BC, B, AQuestion 11.11. (TCO 6) A company has a minimum required rate of return of 9%. It is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for 3 years. The approximate net present value of this project is _____. (Points: 5)$177,170$35,000$17,718$2,191Question 12.12. (TCO 7) Which of the following would not appear as a fixed expense on a selling and administrative expense budget? (Points: 5)Freight-outOffice salariesProperty taxesDepreciationQuestion 13.13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals? (Points: 5)107,400 units102,000 units96,600 units138,000 unitsQuestion 14.14. (TCO 8) Which of the following is not a cause of profit variance? (Points: 5)Changes in sales priceChanges in sales mixChanges in sales volumeAll of the above are causes of profit variance.Question 15.15. (TCO 9) A static budget is appropriate for _____.(Points: 5)variable overhead costsdirect materials costsfixed overhead costsNone of the aboveQuestion 16.16. (TCO 9) If the activity level increases 10%, total variable costs will _____.(Points: 5)remain the sameincrease by more than 10%decrease by less than 10%increase 10%Question 17.17. (TCO 9) Using the high-low method, what is the unit variable cost for the following information?MonthMilesTotal CostJanuary80,000$96,000February50,000$80,000March70,000$94,000April90,000$130,000(Points: 5)$1.44$1.25$1.60$1.50Question 18.18. (TCO 10) Which of the following statements regarding budget reports is incorrect? (Points: 5)The cost of budget reports should not outweigh the benefits.Budget reports are used for planning, control, and information.Reports prepared for upper management typically have fewer details than reports prepared for lower level managers.Reports are prepared more frequently for upper management than for lower level managers.


Paper#48935 | Written in 18-Jul-2015

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