BUS 475 Final Exam Study Guide 2012 – Set 2
100 Answers from 2012 BUS/475 Final Exam
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1) Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign
that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's
net income increase?
A. $12,000
B. $18,000
C. $6,000
D. $28,000
2) Multinational corporations __________.
A. are firms that conduct their operations in more than one country through subsidiaries, divisions,
or branches in foreign countries
B. are U.S. companies that sell goods and services in other countries
C. are required to use international accounting standards
D. are U.S. companies that trade their securities on the exchanges in other countries
3) Balance sheet accounts are considered to be __________.
A. capital accounts
B. nominal accounts
C. temporary stockholders’ accounts
D. permanent accounts
4) What is value chain management best defined as?
A. The incremental value of costs associated with hiring a new production floor leader
B. All activities associated with providing a product or service
C. A large chain that keeps the machines from falling on the production floor
D. Management decisions that affect how quickly the production run occurs
5) The primary purpose of the statement of cash flows is to __________.
A. provide information about the cash receipts and cash payments during a period
B. facilitate banking relationships
C. provide information about the investing and financing activities during a period
D. prove that revenues exceed expenses if there is a net income
6) In what situations will a static budget be most effective in evaluating a manager's effectiveness?
A. The planned activity levels match actual activity levels.
B. The company has no fixed costs.
C. The company has substantial fixed costs.
D. The company has substantial variable costs.
7) Which one of the following is a product cost?
A. Sales person’s salaries

B. Advertising costs
C. Indirect labor
D. Office salaries
8) 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. $1,600,000
B. $950,000
C. $1,300,000
D. $1,100,000
9) Of the following companies, which one would not likely employ the specific identification
method for inventory costing?
A. Antique shop
B. Music store specializing in organ sales
C. Hardware store
D. Farm implement dealership
10) If a company reports a net loss, it __________.
A. will not be able to get a loan
B. may still have a net increase in cash
C. will not be able to make capital expenditures
D. will not be able to pay cash dividends
11) The income statement and balance sheet columns of Pine Company's worksheet reflects the
following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
To enter the net income (or loss) for the period into the above worksheet requires an entry to the
__________.
A. income statement debit column and the income statement credit column
B. income statement credit column and the balance sheet debit column
C. income statement debit column and the balance sheet credit column
D. balance sheet debit column and the balance sheet credit column
12) The cost principle requires that when assets are acquired, they be recorded at __________.
A. selling price
B. appraisal value

C. list price
D. exchange price paid
13) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Current income statement
B. Adjusted trial balance
C. Additional information
D. Comparative balance sheets
14) Managerial accounting __________.
A. pertains to the entity as a whole and is highly aggregated
B. is concerned with costing products
C. places emphasis on special-purpose information
D. is governed by generally accepted accounting principles
15) A logical starting point from which the study of international trade begins is __________.
A. the principle of absolute advantage
B. the recognition that not all markets are competitive
C. the principle of comparative advantage
D. the recognition that government intervention in markets sometimes enhances the economic
welfare of the society
16) Without trade, __________.
A. a country can still benefit from international specialization
B. a country is better off because it will have to learn to be self-sufficient without trade
C. interdependence is more extensive than it would be with trade
D. a country's production possibilities frontier is also its consumption possibilities frontier
17) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other
firms' production levels as given. Then in equilibrium the output effect __________.
A. must balance with the price effect
B. must dominate the price effect
C. must be smaller than the price effect
D. can be larger or smaller than the price effect
18) To move the allocation of resources closer to the social optimum, policymakers should typically
try to induce firms in an oligopoly to __________.
A. compete rather than cooperate with each other
B. collude with each other
C. form various degrees of cartels
D. cooperate rather than compete with each other
19) When, in a particular market, the law of demand and the law of supply both apply, the
imposition of a binding price ceiling in that market causes quantity demanded to be __________.
A. equal to quantity supplied
B. greater than quantity supplied

C. less than quantity supplied
D. double the quantity supplied
20) If a price ceiling is a binding constraint on the market, __________.
A. sellers cannot sell all they want to sell at the price ceiling
B. the equilibrium price must be below the price ceiling
C. there is excess supply
D. buyers cannot buy all they want to buy at the price ceiling
21) A tax on an imported good is called a __________.
A. supply tax
B. quota
C. tariff
D. trade tax
22) The political business cycle refers to __________.
A. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle
B. the fact that about every four years some politician advocates greater government control of the
Fed
C. the potential for a central bank to increase the money supply and therefore real GDP to help the
incumbent get re-elected
D. changes in output created by the monetary rule the Fed must follow
23) Real GDP __________.
A. is not a valid measure of the economy's performance, since prices change from year to year.
B. evaluates current production at current prices.
C. evaluates current production at the prices that prevailed in some specific year in the past.
D. is a measure of the value of goods only; it excludes the value of services.
24) The model of short-run economic fluctuations focuses on the price level and __________.
A. the neutrality of money
B. real GDP
C. economic growth
D. Net GDP
25) In the market for foreign-currency exchange in the open economy macroeconomic model, the
amount of net capital outflow represents the quantity of dollars __________.
A. demanded for the purpose of buying U.S. net exports of goods and services
B. supplied for the purpose of buying assets abroad
C. supplied for the purpose of selling assets domestically
D. demanded for the purpose of importing foreign goods and services
26) The open-economy macroeconomic model examines the determination of __________.
A. the output growth rate and the inflation rate
B. unemployment and the exchange rate
C. the output growth rate and the real interest rate
D. the trade balance and the exchange rate
27) The balance of payment account is made up of:

BUS 475 Final Exam Study Guide 2012 � Set 2

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