Introduction to Accounting Test Bank
Course Introduction
Introduction to Accounting provides students with a foundational understanding of the principles and practices of financial accounting. The course covers essential topics such as the accounting cycle, recording of business transactions, preparation of financial statements, and the use of accounting information in decision-making. Students will learn how to analyze and interpret basic financial data, understand the role of accounting in various business contexts, and explore ethical considerations in financial reporting. By the end of the course, students will be equipped with the skills necessary to understand and apply basic accounting concepts relevant to both personal and professional financial management.
Recommended Textbook
Horngren's Accounting 12th Edition by Tracie L. Miller Nobles
Available Study Resources on Quizplus
26 Chapters
5571 Verified Questions
5571 Flashcards
Source URL: https://quizplus.com/study-set/3613 Page 2
Chapter 1: Accounting and the Business Environment
Available Study Resources on Quizplus for this Chatper
246 Verified Questions
246 Flashcards
Source URL: https://quizplus.com/quiz/71719
Sample Questions
Q1) According to the ________,acquired assets should be recorded at the amount actually paid rather than at the estimated market value.
A) going concern assumption
B) economic entity concept
C) cost principle
D) monetary unit assumption
Answer: C
Q2) The statement of cash flows informs users about the changes in the owner's capital account over a period of time.
A)True
B)False
Answer: False
Q3) The income statement is also called the statement of earnings.
A)True
B)False
Answer: True
Q4) What is the primary objective of financial reporting?
Answer: The primary objective of financial reporting is to provide information useful for making investment and lending decisions.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Recording Business Transactions
Available Study Resources on Quizplus for this Chatper
219 Verified Questions
219 Flashcards
Source URL: https://quizplus.com/quiz/71720
Sample Questions
Q1) The account title used for recording the payment of rent in advance for an office building is ________.
A) Prepaid Rent
B) Rent Payable
C) Rent Revenue
D) Rent Expense
Answer: A
Q2) Which of the following represents the correct flow of accounting data?
A) transactions occur; transactions are analyzed; transactions are journalized and posted; source documents are prepared
B) transactions occur; source documents are prepared; transactions are journalized and posted;
C) transactions occur; source documents are prepared; transactions are analyzed; transactions are journalized and posted
D) source documents are prepared; transactions occur; transactions are analyzed; transactions are journalized and posted
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Adjusting Process
Available Study Resources on Quizplus for this Chatper
225 Verified Questions
225 Flashcards
Source URL: https://quizplus.com/quiz/71721
Sample Questions
Q1) On June 1,Edison Company borrowed $27,000 on a one-year Note Payable with an interest rate of 10% per year.It will repay the principal and interest at the end of the one-year period.The company makes accrual adjustments at the end of each month.The company should record interest expense of $2,700 on June 30.
A)True
B)False
Answer: False
Q2) The revenue recognition principle guides accountants in ________.
A) ensuring only revenues received in cash are recorded
B) determining when to record expenses
C) determining when to record revenues
D) ensuring expenses are deducted from revenues
Answer: C
Q3) Revenue is earned when ________.
A) there is a binding agreement to provide goods or services
B) the journal entry to record revenue has been prepared
C) the business has received cash from the customer
D) (or as) the business satisfies each performance obligation
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Completing the Accounting Cycle
Available Study Resources on Quizplus for this Chatper
208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/71722
Sample Questions
Q1) The Martinez,Capital account is a permanent account.
A)True
B)False
Q2) The ending balance in the Owner,Capital account is shown on the income statement columns of the worksheet.
A)True
B)False
Q3) In the worksheet,the adjusted balance of the Service Revenue account appears in the credit column of the income statement.
A)True
B)False
Q4) Which of the following statements regarding intangible assets is incorrect?
A) Intangible assets have no physical form.
B) Intangible assets are valuable because of the special rights they carry.
C) Intangible assets are not reported on the balance sheet.
D) Intangible assets include the exclusive right to produce or sell an invention.
Q5) The steps of the accounting cycle are followed throughout the accounting period.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Merchandising Operations
Available Study Resources on Quizplus for this Chatper
277 Verified Questions
277 Flashcards
Source URL: https://quizplus.com/quiz/71723
Sample Questions
Q1) Under the new revenue recognition standard,companies should only record sales revenue in the amount they expect to eventually realize.
A)True
B)False
Q2) The Income Summary account has a credit balance of $25,000 after the revenue and expense accounts have been closed.Which of the following is credited to close the Income Summary account?
A) Owner, Withdrawals
B) Sales Revenue
C) Cost of Goods Sold
D) Owner, Capital
Q3) Provide definitions for the following:
\[\begin{array} { | l | l | }
\hline \text { Item } & \text { Definition } \\
\hline \text { Cost of Goods Sold } & \\
\hline \text { Gross Profit } & \\
\hline \text { Operating Expenses } & \\
\hline
\end{array}\]
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Merchandise Inventory
Available Study Resources on Quizplus for this Chatper
199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/71724
Sample Questions
Q1) When using the LIFO inventory costing method and the periodic inventory method,the ending inventory comes from the newest costs of the period.
A)True
B)False
Q2) In a period of rising costs,the last-in,first-out (LIFO)method results in a higher cost of goods sold and a lower net income than the first-in,first-out (FIFO)method.
A)True
B)False
Q3) List and briefly discuss three measures that can be taken to maintain good controls over merchandise inventory.
Q4) Which of the following remains the same regardless of the inventory costing method used by a company? Assume the cost of inventory is rising.
A) purchases
B) cost of goods sold
C) ending merchandise inventory
D) net income
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Accounting Information Systems
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/71725
Sample Questions
Q1) An accounting information system is said to have good control characteristics,if it
A) works smoothly with the business's employees and organizational structure
B) safeguards a business's assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time
Q2) The accounts payable subsidiary ledger ________.
A) does not indicate the amount owed to each vendor
B) shows only a single total for the amount owed on account
C) lists vendors in alphabetical order, along with amounts paid to the vendors and the remaining amounts owed to them
D) has a format that is entirely different from an accounts receivable subsidiary ledger
Q3) Because of the risk of fraud,electronic invoices and electronic receiving reports are seldom used in accounting information systems.
A)True
B)False
Q4) Describe the transactions recorded in the cash payments journal.
Q5) List and describe two features of an effective accounting information system.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Internal Control and Cash
Available Study Resources on Quizplus for this Chatper
258 Verified Questions
258 Flashcards
Source URL: https://quizplus.com/quiz/71726
Sample Questions
Q1) Vaughan Services hires a new accountant to maintain its petty cash fund.Although the employee possesses an accounting degree,he/she had been previously convicted of embezzlement.Which internal control procedure needs to be addressed in this situation?
A) assignment of responsibilities
B) competent, reliable, and ethical personnel
C) separation of duties
D) documents
Q2) At the end of each day,the accountant proves the cash by comparing the cash in the drawer against the point-of-sale terminal record of cash sales.
A)True
B)False
Q3) Which of the following is described as a system where customers send their checks directly to a post office box that belongs to a bank?
A) an encryption system
B) an imprest system
C) a lock-box system
D) a firewall system
Q4) List the four steps,the proper order,of the purchasing and payment process.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Receivables
Available Study Resources on Quizplus for this Chatper
233 Verified Questions
233 Flashcards
Source URL: https://quizplus.com/quiz/71727
Sample Questions
Q1) Which of the following statements,regarding notes receivable,is incorrect?
A) Notes receivable usually have longer terms than accounts receivable.
B) A notes receivable is a written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.
C) All notes receivable are considered long-term assets.
D) Notes receivable are sometimes called promissory notes.
Q2) On October 1,2019,ABC Company loaned A.Jenkins $13,000 at an annual interest rate of 3% with a maturity date of April 1,2020.On October 1,2019,ABC Company will record
A) no entry since the note is due on April 1, 2020
B) a debit to Notes Receivable - A. Jenkins of $13,390
C) a credit to Notes Payable - A. Jenkins of $13,000
D) a debit to Notes Receivable - A. Jenkins of $13,000
Q3) Bad Debt Expense is not debited when a company writes off an account receivable when using the allowance method because the company has already recorded the Bad Debt Expense as an adjusting entry.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Plant Assets,natural Resources,and Intangibles
Available Study Resources on Quizplus for this Chatper
212 Verified Questions
212 Flashcards
Source URL: https://quizplus.com/quiz/71728
Sample Questions
Q1) O'Keith Company purchased a mine on January 1,2018,for $530,000.The mine is estimated to contain 37,000 tons of iron ore.There is no residual value.The business extracted and sold 2500 tons of ore in 2018 and 19,800 tons of ore in 2019.What is the book value of the mine at the end of 2019? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)
A) $456,000
B) $210,664
C) $371,000
D) $530,000
Q2) Gulfcoast Company purchased a van on January 1,2019,for $930,000.Estimated life of the van was five years,and its estimated residual value was $95,000.Gulfcoast uses the straight-line method of depreciation.Calculate the book value of the van at the end of 2019.
A) $755,625
B) $871,875
C) $835,000
D) $763,000
Q3) Prepare the journal entry to record the acquisition of fences and signs for $5,000 cash.Omit explanation.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Current Liabilities and Payroll
Available Study Resources on Quizplus for this Chatper
221 Verified Questions
221 Flashcards
Source URL: https://quizplus.com/quiz/71729
Sample Questions
Q1) Vacation pay is an example a liability that exists but the exact amount is not known.
A)True
B)False
Q2) Sales tax is an expense of the business.
A)True
B)False
Q3) Which of the following is a control risk related to payroll?
A) theft of inventory by staff
B) a dishonest employee cashing a paycheck that was written to a fictitious person
C) expenses being recorded as assets in order to manipulate earnings
D) contracts being awarded to relatives of employees
Q4) Maywood Company withholds $720 from Steve's paycheck for federal income tax.This amount is part of the company's payroll tax expense.
A)True
B)False
Q5) The times-interest-earned ratio is also called the short interest ratio.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Partnerships
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/71730
Sample Questions
Q1) When a partner sells his interest to another party,the journal entry simply credits the withdrawing partner's capital account and debits the new partner's capital.
A)True
B)False
Q2) The sum (or total)of the net income (loss)allocated to each partner should always equal the total net income (loss)of the partnership.
A)True B)False
Q3) A(n)________ must carry large insurance policies to protect the public in case the partnership is found guilty of malpractice.
A) general partnership
B) S Corporation
C) limited liability partnership
D) C Corporation
Q4) Neil and Paul formed a partnership.During the year,Neil and Paul withdrew $13,000 and $6,000,respectively.Provide the journal entry to close the withdrawal accounts.Omit explanation.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Corporations
Available Study Resources on Quizplus for this Chatper
277 Verified Questions
277 Flashcards
Source URL: https://quizplus.com/quiz/71731
Sample Questions
Q1) Which of the following occurs when a corporation distributes a stock dividend?
A) Total liabilities would increase.
B) Total stockholders' equity would increase.
C) Total assets would decrease.
D) Total stockholders' equity would be unchanged.
Q2) A higher price/earnings ratio signifies a higher return on investment.
A)True
B)False
Q3) When a corporation issues no-par stock,it debits the asset received and credits the stock account.
A)True
B)False
Q4) The journal entry for the purchase of treasury stock includes a credit to Cash. A)True
B)False
Q5) Thomas Business Supply reported a negative amount in Retained Earnings.What term describes this negative amount? What can cause this to happen?
Q6) List the four basic rights of stockholders.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Long-Term Liabilities
Available Study Resources on Quizplus for this Chatper
207 Verified Questions
207 Flashcards
Source URL: https://quizplus.com/quiz/71732
Sample Questions
Q1) Premium on Bonds Payable is additional Interest Expense of the company that issues the bond.
A)True
B)False
Q2) England Corporation issued a $400,000,5.5%,10-year bonds payable at 101 on January 1,2009.The bonds are retired on January 1,2019.Prepare the journal entries on the date of issuance and at the date of retirement.Omit explanations.
Q3) The date on which the principal amount is repaid to the bondholder is known as the
A) issuing date
B) interest date
C) maturity date
D) installment date
Q4) When a bond is issued,the issue price is the present value of the interest payments the bondholder will receive while holding the bond,plus the present value of the bond principal that will be received at maturity.
A)True
B)False
Q5) When computing a bond's cash flow for interest,which interest rate is used? Why?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Investments
Available Study Resources on Quizplus for this Chatper
193 Verified Questions
193 Flashcards
Source URL: https://quizplus.com/quiz/71733
Sample Questions
Q1) Which of the following is TRUE of the Fair Value Adjustment - Trading account for trading debt investments?
A) It will always have a credit balance.
B) It will always have a debit balance.
C) It is considered as an adjunct account if it has a credit balance.
D) It is considered as an adjunct account if it has a debit balance.
Q2) Dynamic Software,Inc.invests excess cash of $100,000 in corporate bonds on March 30,2019.The bonds mature 20 years from the date of purchase.Dynamic plans to hold the bonds until maturity and has the ability to do so.How does the March 30,2019 transaction affect the accounting equation?
A) liabilities will increase
B) equity will decrease
C) long-term assets will decrease
D) total assets will remain unchanged
Q3) Creditors invest in a company and hope to receive a return on their investment.
A)True
B)False
Q4) A security is a share or interest representing financial value.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: The Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
183 Verified Questions
183 Flashcards
Source URL: https://quizplus.com/quiz/71734
Sample Questions
Q1) Most public companies use the indirect method to prepare their statement of cash flows because it is the method the FASB prefers.
A)True
B)False
Q2) Buying property,plant,and equipment for cash is considered a cash outflow for the financing activities section of the statement of cash flows.
A)True
B)False
Q3) Which of the following transactions would be shown in the non-cash investing and financing activities section of the statement of cash flows?
A) sold equipment with book value of $15,000 in exchange for $15,000 cash
B) retired company bonds before the maturity date by paying a negotiated amount
C) issued 50,000 shares of stock at $2 per share
D) purchased land by signing a 10-year note for $500,000
Q4) The three sections of the statement of cash flows report only activities that involve cash.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/71735
Sample Questions
Q1) Ratios can be used to analyze a company's ability to pay long-term debt.
A)True
B)False
Q2) Analysts look for red flags in financial statements that may signal financial trouble.Which of the following is a red flag that suggests that a company may be in trouble?
A) a significant decrease in net income for several years in a row
B) a consistent movement in sales, merchandise inventory, and accounts receivable
C) a reduction in the debt ratio
D) operating activities are a major source of cash flows
Q3) Benchmarking is the comparison of a company's current year results with a previous year's performance.
A)True
B)False
Q4) The price/earnings ratio shows the market price of $1 of earnings.
A)True
B)False
Q5) What is a common-size statement? Why are these statements useful?
Q6) What is an annual report? Briefly describe the key parts of the annual report.
Page 19
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Introduction to Managerial Accounting
Available Study Resources on Quizplus for this Chatper
245 Verified Questions
245 Flashcards
Source URL: https://quizplus.com/quiz/71736
Sample Questions
Q1) Depreciation on manufacturing equipment
A)Product cost
B)Period cost
Q2) The unit product cost is only part of the information that is needed to determine the sales price for each product.
A)True
B)False
Q3) The IMA standards of ethical practice require managerial accountants to maintain their professional competence.
A)True
B)False
Q4) Which of the following is TRUE of service companies?
A) All costs of service companies are product costs.
B) Service companies modify and resell products they buy from manufacturers.
C) Revenues of service companies are only recorded on cash receipt.
D) Service companies carry no inventories of products for sale.
Q5) Wages for the assembly line workers
A)Product cost
B)Period cost
Q6) Define direct cost.
Page 20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Job Order Costing
Available Study Resources on Quizplus for this Chatper
191 Verified Questions
191 Flashcards
Source URL: https://quizplus.com/quiz/71737
Sample Questions
Q1) Mira Financial Advisors provides accounting and finance assistance to customers in the retail business.Mira has four professionals on staff,plus an office with six clerical staff.Total compensation,including benefits,for the professional staff runs about $756,000 per year,and it normally has about 8000 billable hours per year.The professional staff keep detailed time sheets organized by client number.The total office and administrative costs for the year are $576,000. Mira allocates office and administrative costs to clients monthly,using a predetermined overhead allocation rate based on billable hours.During July,Mira's professionals spent 38 hours on their client,Riley Sales.Mira adds a 25% markup on its costs to calculate the amount billed to the customer.How much should the company charge Riley Sales for the month of July? (Round your intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)
A) $3591
B) $180,000
C) $7909
D) $6327
Q2) At the end of the year,Martin,Inc.has an unadjusted credit balance in the Manufacturing Overhead account of $95.Provide the year-end adjusting entry needed to adjust the account.Omit explanation.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Process Costing
Available Study Resources on Quizplus for this Chatper
173 Verified Questions
173 Flashcards
Source URL: https://quizplus.com/quiz/71738
Sample Questions
Q1) Garcia Manufacturing has two processes-Coloring and Mixing.The company assigned $390,000 to the 6000 gallons of paint transferred from Mixing Department to Finished Goods Inventory.The journal entry to record this assignment of cost is
A) debit Work-in-Process Inventory-Mixing, $390,000; credit Finished Goods Inventory, $390,000
B) debit Finished Goods Inventory, $390,000; credit Cost of Goods Sold, $390,000
C) debit Cost of Goods Sold, $390,000; credit Finished Goods Inventory, $390,000
D) debit Finished Goods Inventory, $390,000; credit Work-in-Process Inventory-Mixing, $390,000
Q2) A production cost report can help managers identify the most profitable products. A)True
B)False
Q3) The journal entry to record indirect labor costs incurred,but not paid,includes a debit to Manufacturing Overhead and a credit to Wages Payable.Process costing is used.
A)True
B)False
Q4) How is a production cost report prepared using the FIFO method?
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
295 Verified Questions
295 Flashcards
Source URL: https://quizplus.com/quiz/71739
Sample Questions
Q1) When there are no units in the beginning Finished Goods Inventory and the units produced are more than the units sold,the operating income will be higher under absorption costing than variable costing.
A)True
B)False
Q2) Which of the following costing methods charges all the manufacturing costs to the products?
A) variable costing
B) direct costing
C) absorption costing
D) contribution costing
Q3) Fixed costs per unit decrease as production levels decrease.
A)True
B)False
Q4) Fixed manufacturing overhead is considered a product cost under variable costing.
A)True
B)False
Q5) How is the contribution margin calculated?
Q6) List the cost-volume-profit (CVP)assumptions.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Master Budgets
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/71740
Sample Questions
Q1) In the cost of goods sold budget,projected manufacturing cost per unit of product sold does NOT include ________ cost per unit.
A) sales commission
B) direct materials
C) variable manufacturing overhead
D) direct labor
Q2) Which of the following best describes the term "sensitivity analysis"?
A) It is a testing technique to determine how results would differ if key assumptions are changed.
B) It is an analysis of the emotional sensitivity of a company's employees.
C) It is an evaluation of the accuracy of the assumptions.
D) It evaluates a company's financial condition by doing financial statement analysis.
Q3) The ________ details how the business expects to go from the beginning cash balance to the desired ending cash balance.
A) capital expenditures budget
B) budgeted income statement
C) cash flow statement
D) cash budget
To view all questions and flashcards with answers, click on the resource link above.
24
Chapter 23: Flexible Budgets and Standard Cost Systems
Available Study Resources on Quizplus for this Chatper
223 Verified Questions
223 Flashcards
Source URL: https://quizplus.com/quiz/71741
Sample Questions
Q1) In a standard cost system,the standard overhead allocation rate replaces the predetermined overhead allocation rate but the concept is the same.
A)True
B)False
Q2) When a manufacturing company uses a standard cost system,Work-in-Process Inventory is debited at standard input quantities and standard costs.
A)True
B)False
Q3) The term management by exception refers to investigating ________.
A) significant variances
B) only unfavorable variances
C) all variances
D) all favorable variances
Q4) A favorable variance reflects a decrease in operating income.
A)True
B)False
Q5) List the direct labor variances and briefly describe each.
Q6) What does the variable overhead efficiency variance measure?
Q7) List the direct materials variances,and briefly describe each.
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 24: Cost Allocation and Responsibility Accounting
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/71742
Sample Questions
Q1) For a centralized company,the major planning and controlling decisions are made by top management.
A)True
B)False
Q2) A radial tire manufacturer produces products in two departments-Divisions A and B.The company uses separate predetermined overhead allocation rates for each department to allocate its overhead.Divisions A and B have estimated manufacturing overhead costs of $150,000 and $350,000,respectively.Division A uses machine hours as the allocation base,and Division B uses direct labor hours as the allocation base.The total estimated machine hours were 31,000,and direct labor hours were 20,000 for the year.Calculate the departmental predetermined overhead allocation rates.(Round your answer to the nearest cent.)
A) Division A-$4.84, Division B-$17.50
B) Division A-$17.50, Division B-$4.84
C) Division A-$7.50, Division B-$11.29
D) Division A-$11.29, Division B-$7.50
Q3) Net income is used in the numerator of the return on investment formula.
A)True
B)False
Q4) List the primary goals of performance evaluation systems.
Page 26
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Short-Term Business Decisions
Available Study Resources on Quizplus for this Chatper
200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/71743
Sample Questions
Q1) Victor Corporation has provided you with the following budgeted income statement for one of its products:
\(\begin{array}{|l|r|}
\hline \text { Sales revenue } & \$ 750,000 \\
\hline \text { Variable costs } & \underline{500,000} \\
\hline \text { Contribution margin } & \$ 250,000 \\
\hline\text { Fixed costs } & 280,000 \\
\hline \text { Operating income } & \\
\text { (loss) } & (\$ 30,000 \\
\hline
\end{array}\)
Victor Corporation believes that 65% of the fixed costs would be avoidable if the product line was dropped.Based on the impact on the company's operating income or loss,Victor should keep the product line.
A)True
B)False
Q2) Managers should only consider financial information when making a decision.
A)True
B)False
Q3) Identify the four steps in the decision-making process.
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 26: Capital Investment Decisions
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/71744
Sample Questions
Q1) Gateway Graphics is considering an investment in new printing equipment costing $502,000.The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $122,000 the first year,$158,000 the second year,and $160,000 every year thereafter until the fifth year.What is the payback period for this investment? The residual value is zero.(Round your answer to two decimal places.)
A) 4.30 years
B) 3.39 years
C) 2.80 years
D) 3.11 years
Q2) Which capital budgeting method uses accrual accounting,rather than net cash inflows,as a basis for calculations?
A) payback
B) accounting rate of return
C) net present value
D) internal rate of return
Q3) The following formula is used to compute the present value of a lump sum: Future value = Present value × PV factor for i = X%,n = X periods
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 28