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ACC 410 Week 11 Final Exam – Strayer
ACC 410 Week 11 Final Exam – Strayer
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Chapter 6 Through 15
Part 1: Chapter 6 Through 10
Part 2: Chapter 11 Through 15
Governmental Activities - Accounting for Capital Projects and Debt Service
TRUE/FALSE (CHAPTER 6)
1. The resources to service all long-term debts of the governmental entity are typically accounted for in debt service funds.
2. When governments establish capital projects funds, they may choose to maintain a separate fund for each major project, or they may choose to combine two or more projects in a single fund.
3. GASB Statement No. 34 does not require a budgetary comparison statement for capital projects funds as it does for the general fund and for each major special revenue fund that has a legally adopted annual budget.
4. Capital projects funds do not report long-term obligations in the fund.
5. When bonds are issued at a premium, the capital projects fund can transfer those excess resources to the debt service fund.
6. When bonds are issued at a discount, the debt service fund usually transfers an amount to the capital projects fund to make up for the deficiency.
7. In accounting for costs incurred on a major construction project in a capital projects fund, the construction outlays would be accumulated in a long-term asset account.
8. Debt service funds are maintained to account for resources accumulated to pay interest and principal on general long-term debt—that is, long-term debt associated primarily with governmental activities.
9. In contrast to the accounting for debt service fund expenditures, the interest revenue on bonds held as investments should be accrued in the period the revenue is earned.
10. Special assessments are imposed nonexchange transactions, similar to property tax levies.
11. The interest paid on debt issued for public purposes by state and local governments is generally subject to federal taxation.
12. Nongovernmental not-for-profits must account for defeasances differently than governments.
MULTIPLE CHOICE (CHAPTER 6)
1. The capital project fund of a governmental entity is accounted for using which of the following bases of accounting?
a) Budgetary basis.
b) Cash basis.
c) Modified accrual basis.
d) Accrual basis.
2. In which fund type would a governmental entity’s capital project fund be found?
a) Governmental fund type.
b) Proprietary fund type.
c) Fiduciary fund type.
d) Capital project fund type.
3. The debt service fund of a governmental entity is accounted for using which of the following bases of accounting?
a) Budgetary basis.
b) Cash basis.
c) Modified accrual basis.
d) Accrual basis.
4. In which fund type would a governmental entity’s debt service fund be found?
a) Governmental fund type.
b) Proprietary fund type.
c) Fiduciary fund type.
d) Capital project fund type.
5. With regard to the resources dedicated to the acquisition of fixed assets which will be used in general government activities, which of the following is true?
a) Governments must maintain capital project funds for resources that are legally restricted to the acquisition of fixed assets.
b) Governments may maintain capital project funds for resources that are legally restricted to the acquisition of fixed assets.
c) Governments may account for any resources dedicated (whether legally or not) to the acquisition of fixed assets in any of the governmental funds.
d) Government must account for all resources set aside for fixed asset acquisition in a capital project fund.
6. Salt City issued $5 billion of bonds at face value to fund the reconstruction of the major interstate highways in and around their city. The bond underwriters withheld $2 million for underwriting fees and remitted the balance to the City. Assuming the City maintains its books and records in a manner that facilitates the preparation of fund financial statement, how would the underwriting fee be accounted for in the capital project fund?
a) Reduce Other financing sources $2 million.
b) Reduce Bonds payable $2 million.
c) Increase Expenditures $2 million.
d) It would not be accounted for in the capital project fund.
7. Sugar City issued $2 million of bonds to fund the construction of a new city office building. The bonds have a stated rate of interest of 5% and were sold at 101. Which of the following entries should be made in the Capital Project Fund to record this event?
a) Debit Cash $2.02 million; Credit Bonds Payable $2 million and Premium on Bonds Payable $.02 million.
b) Debit Cash $2.02 million; Credit Bonds Payable $2 million and Other Financing Sources $.02 million.
c) Debit Cash $2.02 million; Credit Other Financing Sources $2.02 million.
d) Debit Cash $2.02 million; Credit Other Financing Sources $2 million and Revenue $.02 million.
Use the following information to answer questions # 8 and #9
Voters in Lincoln School District approved the construction of a new high school and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction. Bids were received and the low bid was $10 million. When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million. The School Board voted to fund the balance of the construction by a transfer from the general fund.
8. The entry in the capital project fund to record the receipt of the bond proceeds would be
a) Debit Cash $9.5 million; Credit Bonds Payable $9.5.
b) Debit Cash $9.5 million; Credit Other Financing Sources $9.5.
c) Debit Cash $9.5 million and Expenditures $.5 million; Credit Bonds Payable $10 million.
d) Debit Cash $9.5 million and Expenditures $.5 million; Credit Other Financing Sources $10.
9. The entry in the capital project fund to record the additional funding for the construction would be
a) Debit Due from General Fund $.5 million; Credit Other financing Sources $.5 million.
b) Debit Due from General Fund $.5 million; Credit Revenue $.5 million.
c) Debit Cash $.5 million; Credit Due to General Fund $.5 million.
d) Debit Other Financing Sources $.5 million; Credit Due to General Fund $.5 million.
Use the following information to answer questions #10 and #11
Voters in Phillips City approved the construction of a new $10 million city hall building and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction. When the bonds were issued, they sold for 101. What are appropriate entries related to the premium?
10. In the capital project fund
a) Debit Cash $100.000; Credit Revenues $100,000 ; no other entries required.
b) Debit Cash $100,000; Credit Other Financing Sources $100,000; No other entries required.
c) Debit Cash $100,000; Credit Revenues; ALSO
Debit Other Financing Uses—Nonreciprocal Transfer $100,000; Credit Cash $100,000
d) Debit Cash $100,000; Credit Other Financing Sources—$100,000; ALSO
Debit Other Financing Uses—Nonreciprocal Transfer $100,000; Credit Cash $100,000
11. In the debt service fund
a) Debit Cash $100.000; Credit Revenues $100,000 ; no other entries required.
b) Debit Cash $100,000; Credit Other Financing Sources—Nonreciprocal Transfer $100,000; No other entries required.
c) Other Financing Sources—Nonreciprocal Transfer $100,000; credit Cash $100,000.
d) No entry in the Debt Service Fund
12. Sister City was notified by the State that they had been awarded a $6 million grant to aid in the construction of a senior citizens center. At the time of the notification what is the appropriate entry in the capital project fund (assuming that the City maintains its books and records in a manner to facilitate the preparation of the fund financial statements)?
a) No entry at the time of the notification
b) Debit Grants Receivable $6 million; Credit Revenue $6 million
c) Debit Grants Receivable $6 million; Credit Deferred Revenue $6 million.
d) Debit Grants Receivable $6 million; credit Other Financing Sources—Nonreciprocal Transfer $6 million.
13. Previously Rose City issued bonds with a face value of $10 million to construct a new city maintenance facility. Assuming that the City maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives a progress billing from the contractor?
a) Debit Building; Credit Cash
b) Debit Building; Credit Accounts Payable.
c) Debit Expenditure; Credit Accounts Payable
d) No entry is required.
14. Previously Atomic City had issued bonds with a face value of $10 million to construct a new city hall. Because the money will not be needed for several months, the city invested the bond proceeds in U.S. Government securities. Assuming that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives interest on the investments?
a) Debit Cash; Credit Revenue.
b) Debit Cash; Credit Other Financing Source
c) Debit Cash; Credit Deferred Revenue
d) No entry required.
15. A City issued bonds for the purpose of financing a major capital improvement. Which fund is the most appropriate fund in which to record the receipt of the bond proceeds?
a) General Fund.
b) Special Revenue Fund.
c) Capital Project Fund.
d) Debt Service Fund.
16. Use of a Debt Service Fund is required
a) When financial resources are being accumulated for the purpose of paying for capital asset acquisition.
b) When financial resources are being accumulated for the purpose of paying principal and interest when it matures.
c) For all bonded debt service payments.
d) For all debt service payments.
17. Six years ago Hill City issued $10 million of 6% term bonds, due 30 years from the date of issue. Interest on the bonds is payable semi-annually on January 1 and July 1. Hill City has a September 30 fiscal year end. The amount of interest payable that would be included on the balance sheet for the debt service fund of Hill City at September 30 would be
a) $ -0-
b) $150,000
c) $300,000
d) $600,000
18. Sue City has outstanding $5 million in general term bonds used to finance the construction of the new City Library. Sue City has a June 30 fiscal year-end. Interest at 6% is payable each January 1 and July 1. The principal of the bonds is due 10 years in the future. The City budgeted the July 1, 1999 interest payment in the budget for the fiscal year ended June 30, 1999. On June 30, cash was transferred from the General Fund to the Debt Service Fund to make the required payment. The maximum amount of interest payable that may be included on the balance sheet of the debt service fund of Sue City at June 30 would be
a) $ -0-
b) $150,000.
c) $300,000.
d) $3,000,00.
Use the following information to answer questions #19 and #20
Calhoun County makes annual transfers from the general fund to the debt service fund to pay principal and interest on long-term debt.
19. When the County makes the transfer the entry in the debt service fund should be
a) Debit Cash; Credit Revenue.
b) Debit Cash; Credit Other Financing Sources.
c) Debit Cash; Credit Interest Payable.
d) Debit Cash with Fiscal Agent; Credit Other Financing Sources.
20. In the debt service fund, what is the appropriate entry when the principal payment is made?
a) Debit Bonds Payable; Credit Cash.
b) Debit Expenditures; Credit Cash.
c) Debit Other Financing Uses—Nonreciprocal Transfer; Credit Cash.
d) No entry is required.
Use the following information to answer questions #21 and #22.
The citizens of a specific area of the City of Arlington approved the construction of sidewalks in their residential neighborhood and approved a $1 million bond issue to finance construction of those sidewalks. The citizens agreed to tax themselves for 20 years in an amount sufficient to pay principal and interest on the bonds. The City will oversee the construction of the sidewalks and act as agent for servicing the debt. The City does not guarantee the debt nor does it assume any legal or moral obligation for the bonds.
21. The proceeds of the bond issue should be recorded in which fund of the City of Arlington?
a) Agency Fund.
b) Special Assessment Fund.
c) Capital Project Fund.
d) Debt Service Fund.
22. When the City collects the special tax, the proceeds of that tax should be accounted for in which fund of the City of Arlington?
a) Agency Fund.
b) Special Assessment Fund.
c) Capital Project Fund.
d) Debt Service Fund.
Use the following information to answer questions #23 - #25.
The citizens of a specific area of the City of Arlington approved the construction of sidewalks in their residential neighborhood and approved a $1 million bond issue to finance construction of those sidewalks. The citizens agreed to a special tax on their property for 20 years in an amount sufficient to pay principal and interest on the bonds. The City will oversee the construction of the sidewalks and act as agent for servicing the debt. If the special tax is not sufficient to make the principal and interest payments, the City will assume the obligations.
23. The proceeds of the bond issue should be recorded in which fund of the City of Arlington?
a) Agency Fund.
b) Special Assessment Fund.
c) Capital Project Fund.
d) Debt Service Fund.
24. When the City collects the special tax, the proceeds of that tax should be accounted for in which fund of the City of Arlington?
a) Agency Fund
b) Special Assessment Fund.
c) Capital Project Fund.
d) Debt Service Fund.
25. When the City of Arlington levies the special assessment tax, the best entry would be
a) Debit Taxes Receivable; Credit Revenues.
b) Debit Taxes Receivable; Credit Deferred Revenues.
c) Debit Taxes Receivable; Credit Liability.
d) Debit Taxes Receivable; Credit Fund Balance.
26. Adams County has outstanding $10 million in bonds issued by the County to construct a sewer system in a specific area of the county. The taxpayers in that area voted for the construction and the bonds and agreed to tax themselves to pay the principal and interest on the bonds. The County contracted for the construction and issued the bonds but the City assumed no legal or moral obligation for the bonds. If the special tax payments are not sufficient to make the required principal and interest payments, the County will not make up the difference. The $10 million of bonds should appear in which fund financial statements or schedule?
a) Capital Project Fund.
b) Special Assessment Fund.
c) Schedule of Long-term Obligations.
d) The bonds need not appear on the face of the financial statements of Adams County.
27. Harbor City issued 6% tax-exempt bonds and used the proceeds to acquire federal government securities yielding 7%. After paying the interest on the tax-exempt bonds, the City cleared 1%. This is an example of
a) An illegal act.
b) Poor fiscal management.
c) Arbitrage.
d) Debt refunding.
28. The City of St. Joe had outstanding $5 million of 6% bonds with a call provision. Due to changes in the prevailing interest rates, the City issued new bonds at 4.5% and used the proceeds to call the 6% bonds. This is an example of
a) Debt retirement.
b) Debt refunding.
c) In-substance defeasance.
d) Economic defeasance.
29. A governmental entity has elected to issue new debt and use the proceeds to redeem existing debt because there is an economic gain in doing so. There is, however, an ‘accounting loss’ associated with these events. An accounting loss is defined as
a) The present value of the principal and interest payments on the new debt less the present value of the principal and interest payments on the old debt.
b) The present value of the principal and interest payments on the old debt less the present value of the principal and interest payments on the new debt.
c) The cash paid to redeem the old debt less the book value of the old debt.
d) The face value of the new debt less the cash paid to redeem the old debt.
30. The City of Williamsburg decided to defease old 6% bonds carried in its Electric Enterprise Fund with new 4.5% bonds. As a result of the defeasance, the City incurred an accounting loss. This loss should be recognized
a) As an adjustment to retained earnings since it is applicable to prior periods.
b) In the year of the defeasance.
c) Over the remaining life of the old bonds or the new bonds, whichever is shorter.
d) It should not be recognized.
PROBLEMS (CHAPTER 6)
1. The voters of Salt Lake City authorized the construction of a new north-south expressway for a total cost of no more that $75 million. The voters also approved the issuance of $50 million of 5% general obligation bonds. The balance of the necessary funds will come from the following sources: $15 million from a federal grant and $10 million from a state grant. The City controls expenditures in capital project funds through project management The City does not formally incorporate budgetary entries in the capital project fund but it does use encumbrance accounting for control purposes. REQUIRED: Assuming the City maintains its books and records in a manner that facilitates the preparation of the fund financial statements, prepare journal entries, in the Capital Project Fund, for the following transactions.
(a) The City issued $50 million of 5% general obligation bonds at 101.
(b) The City transferred the premium to the appropriate fund.
(c) The City incurred bid-related expenditures of $1,000.
(d) The City signed a contract with the lowest competent bidder for $48 million.
(e) The city received notice from the State that the grant had been approved and the proceeds will be forwarded to the City in the State’s current fiscal year.
(f) The City received the federal grant in full.
(g) The City received a progress billing from the contractor for $10 million. The City pays the billing.
2. The City of Eugene has the following balances in the accounts of its capital project fund at year-end. All accounts have normal balances. All amounts are in millions of dollars.
REQUIRED: (a) Prepare an operating statement for the capital project fund.
(b) Prepare a Balance Sheet for the capital project fund.
Cash $ 68
Deferred Revenue $ 5
Expenditures $ 10
Fund Balance—Unreserved $ 14
Grants Receivable $ 10
Other Financing Sources $ 50
Other Financing Uses $ 1
Revenues $ 20
3. In 1999, the voters of Southside City authorized the construction of a new swimming pool for a total cost of no more that $5 million. The voters also approved the issuance of $5 million of 5% general obligation serial bonds to be repaid by a special property tax . Interest on these bonds is payable annually on June 30. On June 30, 1999, the City sold the bonds at 101 and signed contracts for the construction of the swimming pool. Each June 30, beginning in 2000, $250,000 of the bonds mature. If the property tax is not sufficient to make the necessary principal and interest payments the City is obligated to transfer the necessary monies from the general fund to the debt service fund. The City does not formally incorporate budgetary entries in the debt service fund but it does use encumbrance accounting for control purposes. The City has a June 30 fiscal year end.
REQUIRED: Assuming the City maintains it books and records in a manner that facilitates the preparation of the fund financial statements, prepare journal entries, in the Debt Service Fund, for the following transactions.
(a) The City immediately transferred the premium to the Debt Service Fund. The Debt Service Fund may not use the premium to pay principal or interest until the year 2019.
(b) On June 30, Southside City invests the premium in a 10-year 5% Certificate of Deposit at a local financial institution. The Certificate pays interest annually on June 30. The interest is automatically reinvested in the Certificate.
(c) Property taxes in the amount of $300,000 were collected by June 30, 2000. Another $50,000 is expected to be collected by August 31.
(d) The city transferred, to the debt service fund, the cash necessary to make the June 30, 2000 payments. The checks will be mailed on July 1.
(e) The city recognized the interest earned on the Certificate of Deposit.
(f) The city recognizes the appropriate liabilities in the debt service fund.
ESSAYS (CHAPTER 6)
1. The citizens of a defined geographical area of the City of Sale authorized a special assessment to be levied on their property to finance the reconstruction of the sewer system infrastructure that serves the area. The City will solicit bids, oversee reconstruction, issue the debt in the name of the City, and service the debt. The City does not guarantee the debt but the City will collect the special assessments and make principal and interest payments to the bondholders. Discuss the appropriate accounting for the construction phase and the debt service phase of this project. Justify the required accounting and financial reporting for these two phases of this project.
2. What is arbitrage? What are its potential uses and/or abuses? How are potential abuses regulated?
Chapter 7
Governmental Activities - Capital Assets and Investments in Marketable Securities
TRUE/FALSE (CHAPTER 7)
1. General capital assets are distinguished from the capital assets of proprietary funds and fiduciary funds.
2. General capital assets are excluded from governmental funds, themselves, because of the funds measurement focus (current financial resources).
3. In governmental funds, the capital asset costs are reported as expenses when the assets are acquired.
4. At the government-wide level, governments must depreciate inexhaustible assets, such as land, works of art, or historical treasures.
5. Governments do not have to depreciate infrastructure assets if they can demonstrate they are preserving them in a specified condition.
6. Unlike businesses, governments should not capitalize interest on general capital assets that they construct themselves.
7. Most infrastructure assets are the responsibility of the federal government, not state and local governments.
8. Prior to the issuance of GASB Statement No. 34, state and local governments provided virtually no information as to most of their infrastructure.
9. Governments invest in marketable securities for much the same reason that businesses do—to earn a return on cash that would otherwise be unproductive.
10. Governments are prohibited from entering into reverse repurchase agreements.
MULTIPLE CHOICE (CHAPTER 7)
1. The objectives of financial reporting for fixed assets should be to provide information
a) About a governmental entity’s physical resources.
b) That can be used to assess the service potential of a governmental entity’s physical resources.
c) To help users assess a government’s long- and short-term capital needs.
d) All of the above.
2. A governmental entity may record long-term assets in which of the following funds or account groups?
a) General Fund
b) Internal Service Fund.
c) Capital Project Fund
d) Debt Service Fund.
3. General fixed assets are excluded from governmental funds because
a) The measurement focus of governmental funds is on current financial resources.
b) They are not used to generate revenues.
c) The basis of accounting is accrual.
d) None of the above.
4. The City of Shiloh sold a used police car. The police car, which had a historical cost of $17,000 and a fair value of $12,000, was sold for $5,000. Assuming that the City maintains its books and records in a manner to facilitate the preparation of the fund financial statements, what is the appropriate entry in the General Fund to record this sale?
a) Debit Cash $5,000; Credit Revenue $5,000.
b) Debit Cash $5,000 and Loss on Sale $7,000; Credit Automotive Equipment $12,000.
c) Debit Cash $5,000; Credit Other Financing Sources—Sale of Asset $5,000.
d) Debit Cash $5,000; Credit Automotive Equipment $5,000.
5. Which of the following costs will be included in the cost of land on the government-wide financial statements?
a) Purchase price (invoice amount).
b) Cost of demolishing existing structures that cannot be used.
c) Closing costs.
d) All of the above.
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CIS 562 Week 11 Final Exam – Strayer New
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Chapters 7 Through 16
Chapter 7: Current Computer Forensics Tools
TRUE/FALSE
1. When you research for computer forensics tools, strive for versatile, flexible, and robust tools that provide technical support.
2. In software acquisition, there are three types of data-copying methods.
3. To help determine what computer forensics tool to purchase, a comparison table of functions, subfunctions, and vendor products is useful.
4. The Windows platforms have long been the primary command-line interface OSs.
5. After retrieving and examining evidence data with one tool, you should verify your results by performing the same tasks with other similar forensics tools.
MULTIPLE CHOICE
1. Computer forensics tools are divided into ____ major categories.
a.
2
c.
4
b.
3
d.
5
2. Software forensics tools are commonly used to copy data from a suspect’s disk drive to a(n) ____.
a.
backup file
c.
image file
b.
firmware
d.
recovery copy
3. To make a disk acquisition with En.exe requires only a PC running ____ with a 12-volt power connector and an IDE, a SATA, or a SCSI connector cable.
a.
UNIX
c.
Linux
b.
MAC OS X
d.
MS-DOS
4. Raw data is a direct copy of a disk drive. An example of a Raw image is output from the UNIX/Linux ____ command.
a.
rawcp
c.
d2dump
b.
dd
d.
dhex
5. ____ of data involves sorting and searching through all investigation data.
a.
Validation
c.
Acquisition
b.
Discrimination
d.
Reconstruction
6. Many password recovery tools have a feature that allows generating potential lists for a ____attack.
a.
brute-force
c.
birthday
b.
password dictionary
d.
salting
7. The simplest method of duplicating a disk drive is using a tool that does a direct ____ copy from the original disk to the target disk.
a.
partition-to-partition
c.
disk-to-disk
b.
image-to-partition
d.
image-to-disk
8. To complete a forensic disk analysis and examination, you need to create a ____.
a.
forensic disk copy
c.
budget plan
b.
risk assessment
d.
report
9. The first tools that analyzed and extracted data from floppy disks and hard disks were MS-DOS tools for ____ PC file systems.
a.
Apple
c.
Commodore
b.
Atari
d.
IBM
10. In Windows 2000 and XP, the ____ command shows you the owner of a file if you have multiple users on the system or network.
a.
Dir
c.
Copy
b.
ls
d.
owner
11. In general, forensics workstations can be divided into ____ categories.
a.
2
c.
4
b.
3
d.
5
12. A forensics workstation consisting of a laptop computer with a built-in LCD monitor and almost as many bays and peripherals as a stationary workstation is also known as a ____.
a.
stationary workstation
c.
lightweight workstation
b.
field workstation
d.
portable workstation
13. ____ is a simple drive-imaging station.
a.
F.R.E.D.
c.
FIRE IDE
b.
SPARC
d.
DiskSpy
14. ____ can be software or hardware and are used to protect evidence disks by preventing you from writing any data to the evidence disk.
a.
Drive-imaging
c.
Workstations
b.
Disk editors
d.
Write-blockers
15. Many vendors have developed write-blocking devices that connect to a computer through FireWire,____ 2.0,and SCSI controllers.
a.
USB
c.
LCD
b.
IDE
d.
PCMCIA
16. The ____ publishes articles, provides tools, and creates procedures for testing and validating computer forensics software.
a.
CFTT
c.
FS-TST
b.
NIST
d.
NSRL
17. The standards document, ____, demands accuracy for all aspects of the testing process, meaning that the results must be repeatable and reproducible.
a.
ISO 3657
c.
ISO 5725
b.
ISO 5321
d.
ISO 17025
18. The NIST project that has as a goal to collect all known hash values for commercial software applications and OS files is ____.
a.
NSRL
c.
FS-TST
b.
CFTT
d.
PARTAB
19. The primary hash algorithm used by the NSRL project is ____.
a.
MD5
c.
CRC-32
b.
SHA-1
d.
RC4
20. One way to compare your results and verify your new forensic tool is by using a ____, such as HexWorkshop, or WinHex.
a.
disk imager
c.
bit-stream copier
b.
write-blocker
d.
disk editor
21. Although a disk editor gives you the most flexibility in ____, it might not be capable of examining a ____ file’s contents.
a.
testing, compressed
c.
testing, pdf
b.
scanning, text
d.
testing, doc
COMPLETION
1. Software forensic tools are grouped into command-line applications and ____________________ applications.
2. The Windows application of EnCase requires a(n) ____________________ device, such as FastBloc, to prevent Windows from accessing and corrupting a suspect disk drive.
3. The ____________________ function is the most demanding of all tasks for computer investigators to master.
4. Because there are a number of different versions of UNIX and Linux, these platforms are referred to as ____________________ platforms.
5. Hardware manufacturers have designed most computer components to last about ____________________ months between failures.
MATCHING
Match each item with a statement below
a.
JFIF
f.
PDBlock
b.
Lightweight workstation
g.
Norton DiskEdit
c.
Pagefile.sys
h.
Stationary workstation
d.
Salvaging
i.
SafeBack
e.
Raw data
1. letters embedded near the beginning of all JPEG files
2. European term for carving
3. a direct copy of a disk drive
4. usually a laptop computer built into a carrying case with a small selection of peripheral options
5. one of the first MS-DOS tools used for a computer investigation
6. software-enabled write-blocker
7. system file where passwords may have been written temporarily
8. a tower with several bays and many peripheral devices
9. command-line disk acquisition tool from New Technologies, Inc.
SHORT ANSWER
1. What are the five major function categories of any computer forensics tool?
2. Explain the validation of evidence data process.
3. What are some of the advantages of using command-line forensics tools?
4. Explain the advantages and disadvantages of GUI forensics tools.
5. Illustrate how to consider hardware needs when planning your lab budget.
6. Describe some of the problems you may encounter if you decide to build your own forensics workstation.
7. Illustrate the use of a write-blocker on a Windows environment.
8. Briefly explain the NIST general approach for testing computer forensics tools.
9. Explain the difference between repeatable results and reproducible results.
10. Briefly explain the purpose of the NIST NSRL project.
Chapter 8: Macintosh and Linux Boot Processes and File Systems
TRUE/FALSE
1. If a file contains information, it always occupies at least one allocation block.
2. Older Macintosh computers use the same type of BIOS firmware commonly found in PC-based systems.
3. GPL and BSD variations are examples of open-source software.
4. A UNIX or Linux computer has two boot blocks, which are located on the main hard disk.
5. Under ISO 9660 for DVDs, the Micro-UDF (M-UDF) function has been added to allow for long filenames.
MULTIPLE CHOICE
1. Macintosh OS X is built on a core called ____.
a.
Phantom
c.
Darwin
b.
Panther
d.
Tiger
2. In older Mac OSs, a file consists of two parts: a data fork, where data is stored, and a ____ fork, where file metadata and application information are stored.
a.
resource
c.
blocks
b.
node
d.
inodes
3. The maximum number of allocation blocks per volume that File Manager can access on a Mac OS system is ____.
a.
32,768
c.
58,745
b.
45,353
d.
65,535
4. On older Macintosh OSs all information about the volume is stored in the ____.
a.
Master Directory Block (MDB)
c.
Extents Overflow File (EOF)
b.
Volume Control Block (VCB)
d.
Volume Bitmap (VB)
5. With Mac OSs, a system application called ____ tracks each block on a volume to determine which blocks are in use and which ones are available to receive data.
a.
Extents overflow file
c.
Master Directory Block
b.
Volume Bitmap
d.
Volume Control Block
6. On Mac OSs, File Manager uses the ____to store any information not in the MDB or Volume Control Block (VCB).
a.
volume information block
c.
catalog
b.
extents overflow file
d.
master directory block
7. Linux is probably the most consistent UNIX-like OS because the Linux kernel is regulated under the ____ agreement.
a.
AIX
c.
GPL
b.
BSD
d.
GRUB
8. The standard Linux file system is ____.
a.
NTFS
c.
HFS+
b.
Ext3fs
d.
Ext2fs
9. Ext2fs can support disks as large as ____ TB and files as large as 2 GB.
a.
4
c.
10
b.
8
d.
12
10. Linux is unique in that it uses ____, or information nodes, that contain descriptive information about each file or directory.
a.
xnodes
c.
infNodes
b.
extnodes
d.
inodes
11. To find deleted files during a forensic investigation on a Linux computer, you search for inodes that contain some data and have a link count of ____.
a.
-1
c.
1
b.
0d.
2
12. ____ components define the file system on UNIX.
a.
2
c.
4
b.
3
d.
5
13. The final component in the UNIX and Linux file system is a(n) ____, which is where directories and files are stored on a disk drive.
a.
superblock
c.
boot block
b.
data block
d.
inode block
14. LILO uses a configuration file named ____ located in the /Etc directory.
a.
Lilo.conf
c.
Lilo.config
b.
Boot.conf
d.
Boot.config
15. Erich Boleyn created GRUB in ____ to deal with multiboot processes and a variety of OSs.
a.
1989
c.
1994
b.
1991
d.
1995
16. On a Linux computer, ____ is the path for the first partition on the primary master IDE disk drive.
a.
/dev/sda1
c.
/dev/hda1
b.
/dev/hdb1
d.
/dev/ide1
17. There are ____ tracks available for the program area on a CD.
a.
45
c.
99
b.
50
d.
100
18. The ____provides several software drivers that allow communication between the OS and the SCSI component.
a.
International Organization of Standardization (ISO)
b.
Advanced SCSI Programming Interface (ASPI)
c.
CLV
d.
EIDE
19. All Advanced Technology Attachment (ATA) drives from ATA-33 through ATA-133 IDE and EIDE disk drives use the standard ____ ribbon or shielded cable.
a.
40-pin
c.
80-pin
b.
60-pin
d.
120-pin
20. ATA-66,ATA-____, and ATA-133 can use the newer 40-pin/80-wire cable.
a.
70
c.
96
b.
83
d.
100
21. IDE ATA controller on an old 486 PC doesn’t recognize disk drives larger than 8.4 ____.
a.
KB
c.
GB
b.
MB
d.
TB
COMPLETION
1. Before OS X, Macintosh uses the ____________________, in which files are stored in directories, or folders, that can be nested in other folders.
2. The Macintosh file system has ____________________ descriptors for the end of file (EOF).
3. ____________________ is a journaling version of Ext2fs that reduces file recovery time after a crash.
4. When you turn on the power to a UNIX workstation, instruction code located in firmware on the system’s CPU loads into RAM. This firmware is called ____________________ code because it’s located in ROM.
5. CD players that are 12X or faster read discs by using a(n) _____________________ system.
MATCHING
Match each item with a statement below
a.
File Manager
f.
Volume
b.
Inode blocks
g.
ls
c.
ISO 9660
h.
Catalog
d.
LILO
i.
Finder
e.
Clumps
1. older Linux boot manager utility
2. Macintosh tool that works with the OS to keep track of files and maintain users’ desktops
3. any storage medium used to store files
4. the list command on Linux
5. maintains relationships between files and directories on a volume on a Mac OS
6. the first data after the superblock on a UNIX or Linux file system
7. ISO standard for CDs
8. Mac OS utility that handles reading, writing, and storing data to physical media
9. groups of contiguous allocation blocks
SHORT ANSWER
1. Explain the relation between allocation blocks and logical block on a Mac OS file system.
2. Explain the use of B*-trees on Mac OS 9 file system.
3. Explain the use of forensic tools for Macintosh systems.
4. What are the functions of the superblock on a UNIX or Linux file system?
5. What is a bad block inode on Linux?
6. What is a continuation inode?
7. Describe the CD creation process.
8. Write a brief history of SCSI.
9. Explain the problems you can encounter with pre-ATA-33 devices when connecting them to current PCs.
10. What problems can hidden partitions on IDE devices cause to forensic investigators?
Chapter 9: Computer Forensics Analysis and Validation
TRUE/FALSE
1. The defense request for full discovery of digital evidence applies only to criminal cases in the United States.
2. For target drives, use only recently wiped media that have been reformatted and inspected for computer viruses.
3. FTK cannot perform forensics analysis on FAT12 file systems.
4. FTK cannot analyze data from image files from other vendors.
5. A nonsteganographic graphics file has a different size than an identical steganographic graphics file.
MULTIPLE CHOICE
1. ____ increases the time and resources needed to extract,analyze,and present evidence.
a.
Investigation plan
c.
Litigation path
b.
Scope creep
d.
Court order for discovery
2. You begin any computer forensics case by creating a(n) ____.
a.
investigation plan
c.
evidence custody form
b.
risk assessment report
d.
investigation report
3. In civil and criminal cases, the scope is often defined by search warrants or ____, which specify what data you can recover.
a.
risk assessment reports
c.
scope creeps
b.
investigation plans
d.
subpoenas
4. There are ____ searching options for keywords which FTK offers.
a.
2
c.
4
b.
3
d.
5
5. ____ search can locate items such as text hidden in unallocated space that might not turn up in an indexed search.
a.
Online
c.
Active
b.
Inline
d.
Live
6. The ____ search feature allows you to look for words with extensions such as “ing,”“ed,” and so forth.
a.
fuzzy
c.
permutation
b.
stemming
d.
similar-sounding
7. In FTK ____ search mode, you can also look for files that were accessed or changed during a certain time period.
a.
live
c.
active
b.
indexed
d.
inline
8. FTK and other computer forensics programs use ____ to tag and document digital evidence.
a.
tracers
c.
bookmarks
b.
hyperlinks
d.
indents
9. Getting a hash value with a ____ is much faster and easier than with a(n) ____.
a.
high-level language, assembler
b.
HTML editor, hexadecimal editor
c.
computer forensics tool, hexadecimal editor
d.
hexadecimal editor, computer forensics tool
10. AccessData ____ compares known file hash values to files on your evidence drive or image files to see whether they contain suspicious data.
a.
KFF
c.
NTI
b.
PKFT
d.
NSRL
11. Data ____ involves changing or manipulating a file to conceal information.
a.
recovery
c.
integrity
b.
creep
d.
hiding
12. One way to hide partitions is to create a partition on a disk, and then use a disk editor such as ____ to manually delete any reference to it.
a.
Norton DiskEdit
c.
System Commander
b.
PartitionMagic
d.
LILO
13. Marking bad clusters data-hiding technique is more common with ____ file systems.
a.
NTFS
c.
HFS
b.
FAT
d.
Ext2fs
14. The term ____ comes from the Greek word for“hidden writing.”
a.
creep
c.
escrow
b.
steganography
d.
hashing
15. ____ is defined as the art and science of hiding messages in such a way that only the intended recipient knows the message is there.
a.
Bit shifting
c.
Marking bad clusters
b.
Encryption
d.
Steganography
16. Many commercial encryption programs use a technology called ____, which is designed to recover encrypted data if users forget their passphrases or if the user key is corrupted after a system data failure.
a.
steganography
c.
password backup
b.
key escrow
d.
key splitting
17. People who want to hide data can also use advanced encryption programs, such as PGP or ____.
a.
NTI
c.
FTK
b.
BestCrypt
d.
PRTK
18. ____ recovery is a fairly easy task in computer forensic analysis.
a.
Data
c.
Password
b.
Partition
d.
Image
19. ____ attacks use every possible letter, number, and character found on a keyboard when cracking a password.
a.
Brute-force
c.
Profile
b.
Dictionary
d.
Statistics
20. ____ are handy when you need to image the drive of a computer far away from your location or when you don’t want a suspect to be aware of an ongoing investigation.
a.
Scope creeps
c.
Password recovery tools
b.
Remote acquisitions
d.
Key escrow utilities
21. ____ is a remote access program for communication between two computers. The connection is established by using the DiskExplorer program (FAT or NTFS) corresponding to the suspect (remote) computer’s file system.
a.
HDHOST
c.
DiskEdit
b.
DiskHost
d.
HostEditor
COMPLETION
1. For most law-enforcement-related computing investigations, the investigator is limited to working with data defined in the search ____________________.
2. FTK provides two options for searching for keywords: indexed search and ____________________ search.
3. ____________________ search catalogs all words on the evidence disk so that FTK can find them quickly.
4. To generate reports with the FTK ReportWizard, first you need to ____________________ files during an examination.
5. The data-hiding technique ____________________ changes data from readable code to data that looks like binary executable code.
MATCHING
Match each item with a statement below
a.
Court orders for discovery
f.
PRTK
b.
Investigation plan
g.
Validating digital evidence
c.
Digital Intelligence PDWipe
h.
MD5
d.
Live search
i.
System Commander
e.
Cabinet
1. defines the investigation’s goal and scope, the materials needed, and the tasks to perform
2. a hashing algorithm
3. one of the most critical aspects of computer forensics
4. a type of compressed file
5. an FTK searching option
6. a password recovery program available from AccessData
7. a disk-partitioning utility
8. program used to clean all data from the target drive you plan to use
9. limit a civil investigation
SHORT ANSWER
1. Describe the effects of scope creep on an investigation in the corporate environment.
2. Describe with examples why the approach you take for a forensics case depends largely on the specific type of case you’re investigating.
3. How should you approach a case in which an employee is suspected of industrial espionage?
4. What are the file systems supported by FTK for forensic analysis?
5. How does the Known File Filter program work?
6. How can you validate the integrity of raw format image files with ProDiscover?
7. How can you hide data by marking bad clusters?
8. Briefly describe how to use steganography for creating digital watermarks.
9. What are the basic guidelines to identify steganography files?
10. Briefly describe the differences between brute-force attacks and dictionary attacks to crack passwords.
Chapter 10: Recovering Graphics Files
TRUE/FALSE
1. Bitmap imagesare collections of dots, or pixels, that form an image.
PTS: 1 REF: 398
2. Operating systems do not have tools for recovering image files.
PTS: 1 REF: 405
3. If a graphics file is fragmented across areas on a disk, first you must recover all the fragments to re-create the file.
PTS: 1 REF: 405
4. With many computer forensics tools, you can open files with external viewers.
PTS: 1 REF: 425
5. Steganography cannot be used with file formats other than image files.
PTS: 1 REF: 428
MULTIPLE CHOICE
1. ____are based on mathematical instructions that define lines, curves, text, ovals, and other geometric shapes.
a.
Bitmap images
c.
Vector graphics
b.
Metafile graphics
d.
Line-art images
PTS: 1 REF: 398
2. You use ____ to create, modify, and save bitmap, vector, and metafile graphics files.
a.
graphics viewers
c.
image viewers
b.
image readers
d.
graphics editors
PTS: 1 REF: 398
3. ____ images store graphics information as grids of individual pixels.
a.
Bitmap
c.
Vector
b.
Raster
d.
Metafiles
PTS: 1 REF: 398
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Week 11 Final Exam: Chapters 8 Through 17
Chapter 8
Multiple Choice
1. Of the following items, the one that should be classified as a current asset is
a. Trade installment receivables normally collectible in 18 months
b. Cash designated for the redemption of callable preferred stock
c. Cash surrender value of a life insurance policy of which the company is beneficiary
d. A deposit on machinery ordered, delivery of which will be made within six months
Answer
2. The advantage of relating a company’s bad debt experience to its accounts receivable is that this approach
a. Gives a reasonable correct statement of receivables in the balance sheet
b. Relates bad debts expense to the period of sale
c. Is the only generally accepted method for valuing accounts receivable
d. Makes estimates of uncollectible accounts unnecessary
Answer
3. Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because
a. Most short-term receivables are not interest bearing
b. The allowance for uncollectible accounts includes a discount element
c. The amount of the discount is not material
d. Most receivables can be sold to a bank or factor
Answer
4. An account that would be classified as a current liability is
a. Dividends payable in stock
b. Accounts payable - debit balance
c. Reserve for possible losses on purchase commitments
d. Excess of replacement cost over LIFO cost of basic inventory temporarily liquidated
Answer
5. Which of the following statements is not valid as it applies to inventory costing methods?
a. If inventory quantities are to be maintained, part of the earnings must be invested (plowed back) in inventories when FIFO is used during a period of rising prices.
b. LIFO tends to smooth out the net income pattern, since it matches current cost of goods sold with current revenue, when inventories remain at constant quantities.
c. When a firm using the LIFO method fails to maintain its usual inventory position (reduces stock on hand below customary levels), there may be a matching of old costs with current revenue.
d. The use of FIFO permits some control by management over the amount of net income for a period through controlled purchases, which is not true with LIFO.
Answer
6. Jamison Corporation’s inventory cost on its statement of financial position was lower using first-in, first-out than last-in, first-out. Assuming no beginning inventory, what direction did the cost of purchases move during the period?
a. Up
b. Down
c. Steady
d. Cannot be determined
Answer
7. If inventory levels are stable or increasing an argument that favors the FIFO method as compared to LIFO is
a. Income taxes tend to be reduced in periods of rising prices
b. Cost of goods sold tends to be stated at approximately current cost in the income statement
c. Cost assignments typically parallel the physical flow of the goods
d. Income tends to be smoothed as prices change over time
Answer
8. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is
a. FIFO
b. LIFO
c. Conventional retail
d. Weighted average
Answer
9. When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?
a. Sales price net of conversion costs
b. Net realizable value
c. Historical cost
d. Net realizable value reduced by a normal profit margin
Answer
10. Which of the following inventory cost flow methods involves computations based on broad inventory pools of similar items?
a. Regular quantity of goods LIFO
b. Dollar-value LIFO
c. Weighted average
d. Moving average
Answer
11. When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of an account previously written off would
a. Increase net income
b. Have no effect on total current assets
c. Increase working capital
d. Decrease total current liabilities
Answer
12. The original cost of an inventory item is above the replacement cost. The replacement cost is below the net realizable value less the normal profit margin. Under the lower of cost or market method the inventory item should be priced at its
a. Original cost
b. Replacement cost
c. Net realizable value
d. Net realizable value less the normal profit margin
Answer
13. Liquidity is the ability
a. To increase net assets through regular operations
b. To generate cash from sources other than regular operations
c. To convert existing assets into cash
d. Of financial statement users to predict a company’s cash flows
Answer
14. Liquidity ratios measures the
a. Operating success of a company over a period of time
b. The ability of a company to survive over a long period of time
c. The short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash
d. The number of times interest is earned
Answer
15. Working capital is a measure of
a. Financial flexibility
b. Liquidity.
c. Profitability.
d. Solvency.
Answer
16. A common measure of liquidity is
a. Return on assets.
b. Accounts receivable turnover.
c. Profit margin.
d. Debt to equity.
Answer
1. The net realizable value of receivables is calculated as the face value of the receivables less adjustments for
a. Credit sales
b. Actual uncollected amounts adjusted for purchase discounts.
c. Bad debts already written off.
d. Estimated uncollectible accounts
18. A successful discount retail store such as Wal-Mart would probably have
a. A low inventory turnover
b. A high inventory turnover
c. Zero profit margin
d. Low volume
Answer
Use the following information to answer questions
Acme Auto Supplies
Balance Sheet
December 31, 2007
Cash $ 60,000 ��Accounts Payable $ 65,000
Prepaid Insurance 40,000 Salaries Payable 10,000
Accounts Receivable 50,000 Mortgage Payable 90,000
Inventory 70,000 Total Liabilities $165,000
Land held for investment 80,000
Land 95,000
Building $100,000 Common Stock $120,000
Less Accumulated Retained Earnings 250,000
Depreciation (30,000) 70,000 Total stockholders’ equity $370,000
Trademark 70,000 Total Liabilities and
Total Assets $535,000 Stockholders’ Equity $535,000
19. The total amount of working capital is
a. $155,000.
b. $145,000.
c. $60,000.
d. $150,000.
Answer
20. The current ratio is
a. 1.86 : 1.
b. 2.00 : 1.
c. 3.38 : 1.
d. 2.93 : 1.
Answer
Essay
1. Define working capital.
2. Define the following terms:
a. Cash equivalents
b. Temporary investments
c. Receivables
d. Inventories
e. Payables
f. Deferrals
g. Current maturities
3. Define the following terms:
a. LIFO liquidation
b. LIFO conformity
c. Lower of cost or market inventory valuation
.
4. List and briefly define the methods of accounting for investments under SFAS No. 115“Accounting for Certain Investments in Debt and Equity Securities” (FASB ASC 320).
5. Define and discuss the two methods of estimating bad debts on receivables.
6. Why are cost flow assumptions used to determine inventory valuations? Define and explain the rationale for using each of the cost flow assumptions.
.
7. Obtain a company’s financial statements and ask the students to compute the following:
a. Working capital
b. Current ratio
c. Acid test ratio
d. Cash flow from operations to current liabilities ratio
e. Accounts receivable turnover
f. Inventory turnover
Chapter 9
Multiple Choice
1. When a closely held corporation issues preferred stock for land, the land should be recorded at the
a. Total par value of the stock issued
b. Total book value of the stock issued
c. Appraised value of the land
d. Total liquidating value of the stock issued
Answer
2. A principal objection to the straight-line method of depreciation is that it
a. Provides for the declining productivity of an aging asset
b. Ignores variations in the rate of asset use
c. Tends to result in a constant rate of return on a diminishing investment base
d. Gives smaller periodic write-offs than decreasing charge methods
Answer
3. Property, plant, and equipment are conventionally presented n the balance sheet at
a. Replacement cost less accumulated depreciation
b. Historical cost less salvage value
c. Original cost adjusted for general price level changes
d. Acquisition cost less depreciated portion thereof
Answer
4. As generally used in accounting, depreciation
a. Is a process of asset valuation for balance sheet purposes
b. Applies only to long-lived intangible assets
c. Is used to indicate a decline in market value of a long-lived asset
d. Is an accounting process that allocates long-lived asset cost to accounting periods
Answer
5. Lyle, Inc., purchased certain plant assets under a deferred payment contract on December 31, 2011. The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years. The plant assets should be valued at
a. The present value of a $20,000 ordinary annuity for five years
b. $120,000
c. $120,000 less imputed interest
d. $120,000 plus imputed interest
Answer
6. For income statement purposes, depreciation is a variable expense if the depreciation method used for book purposes is
a. Units of production
b. Straight line
c. Sum-of-the-year’s-digits
d. Declining balance
Answer
7. A method that excludes salvage value from the base for the depreciation calculation is
a. Straight line
b. Sum-of-the-year’s digits
c. Double-declining balance
d. Productive output
Answer
8. When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be
a. Expensed as incurred
b. Added to the cost of the plant
c. Added to the cost of the land
d. Amortized over the estimated time period between the tearing down of the building and the completion of the plant
Answer
9. A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1, 2010. On December 31, 2012, the accumulated depreciation using the sum-of-year’s digits method would be
a. (Original cost less salvage value) multiplied by 9/10
b. Original cost multiplied by 9/10
c. Original cost multiplied by 9/10 less total salvage value
d. (Original cost less salvage value) multiplied by 1/10
Answer
10. The theoretical justification for reporting depreciation expense is
a. Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period.
b. Depreciation expense represents the impairment of the asset that has occurred during the accounting period.
c. Depreciation expense represents the unrealized loss that has been incurred by using the asset during the accounting period.
d. Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period.
Answer
11. A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached. An insurance recovery was received. The net book value of these group asset accounts would be decreased by the
a. Original cost of the truck
b. Original cost of the truck less the insurance recovery received
c. Original cost of the truck less depreciation on the truck to the date of retirement
d. Insurance recovery received
Answer
12. When equipment is retired, accumulated depreciation is debited for the original cost less any residual recovery under which of the following depreciation methods?
Composite Group
Depreciation Depreciation
a. No No
b. No Yes
c. Yes No
d. Yes Yes
Answer
13. Recognizing depletion expense is an example of the accounting process of
AllocationAmortization
a. No No
b. No Yes
c. Yes Yes
d. Yes No
Answer
14. A donated plant asset for which the fair value has been determined, and for which incidental costs were incurred in acceptance of the asset, should be recorded at an amount equal to its
a. Incidental costs incurred
b. Fair value and incidental costs incurred
c. Book value on books of donor and incidental costs incurred
d. Book value on books of donor
Answer
Essay
1. List the objectives of accounting for property, plant and equipment.
2. Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.
3. Discuss the three approaches to allocating fixed overhead to a self-construction project.
4. Discuss the issue of allocating interest to self construction projects. That is, when should interest be allocated and how much interest should be allocated?
5. Explain the concept of commercial substance originally outlined in SFAS No. 158.
6. How did SFAS No. 116, now FASB ASC 605-10-15-3, change the accounting for donated assets?
7. Discuss the factors comprising the depreciation process.
8. Discuss the distinction between capital and revenue expenditures for long-term assets.
9. Define and discuss accounting for asset retirement obligations under SFAS No. 14FASB ASC 410-20.
10. Discuss the guidelines for accounting for property, plant and equipment outlined in IAS No. 16.
11. How does IAS no. 23 define borrowing costs?
12. Discuss accounting for the impairment of assets as outlined in IAS No. 36.
Chapter 10
Multiple Choice
1. Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the
a. Investor sells the investment
b. Investee declares a dividend
c. Investee pays a dividend
d. Earnings are reported by the investee in its financial statements
Answer
2. Pence Corporation, which accounts for its investments in the common stock of Walsh Company by the equity method, should ordinarily record a dividend received from Walsh as
a. An addition to the carrying value of the investment
b. Dividend revenue
c. A reduction of the carrying value of the investment
d. Revenue from affiliate
Answer
3. On January 15, 2002, a corporation was granted a patent on a product. On January 2, 2010, to protect its patent, the corporation purchased a patent on a competing product the originally was issued on January 10, 2008. Because of its unique plant, the corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be
a. Amortized over a maximum period of 17 years
b. Amortized over a maximum period of 13 years
c. Amortized over a maximum period of 9 years
d. Expensed in 2010
Answer
4. Pacer Company purchased 300 of the 1, 000 outstanding shares of Queen Company’s common stock for $80,000 on January 2, 2008. During 2009, Queen Company declared dividends of $8,000 and reported earnings for the year of $20,000.
If Pacer Company uses the equity method of accounting for its investment in Queen Company, its Investment in Queen Company account at December 31, 2009 should be
a. $100, 000
b. $88,000
c. $83,600
d. $80,000
Answer
5. Refer to the facts in problem (4). If Pacer Company uses the lower of cost or market method of accounting for its investment in Queen Company, and the value of its investment hasn’t changed, its Investment in Queen Company account on December 31, 2009, should be
a. $100, 000
b. $88,000
c. $80,000
d. $73,600
Answer
6. A large, publicly held company developed and registered a trademark during 2010. The cost of developing and registering the trademark should be accounted for by
a. Charging it to an asset account that should not be amortized
b. Expensing it as incurred
c. Amortizing it over 25 years if in accordance with management’s evaluation
d. Amortizing it over its useful life or 17 years, whichever is shorter
Answer
7. Goodwill should be written off
a. As soon as possible against retrained earnings
b. When there is evidence that its carrying value has been impaired
c. By systematic charges against retained earnings over the period benefited, but not more than 40 years
d. By systematic charges to expense over the period benefited, but not more than 40 years
Answer
8. A net unrealized loss on a company’s long-term portfolio of available for sale securities should be reflected in the current financial statements as
a. An extraordinary item shown as a direct reduction from retained earnings
b. A current loss resulting from holding marketable equity securities
c. A footnote or parenthetical disclosure only
d. A component of other comprehensive income
Answer
9. Changes in the fair value of a long-term available for sale equity securities portfolio should be reported as a component of
a. Other comprehensive income
b. Noncurrent assets
c. Noncurrent liabilities
d. Net income
Answer
10. Cash dividends declared out of current earnings are distributed to an investor. How will the investor’s investment account be affected by those dividends under each of the following accounting methods?
Fair Value Method Equity Method
a. Decrease No effect
b. Decrease Decrease
c. No effect Decrease
d. No effect No effect
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Chapter 1 Through 12
Chapter 1
WHAT IS RESEARCH?
Multiple-Choice Questions
*1. To be considered true research, a project must:
a. gather together a body of existing information and communicate it in a clear and
concise way.
b. uncover obscure or esoteric information and bring it to the consideration of the broader research community.
c. gather and interpret information in a systematic fashion so as to increase understanding of some phenomenon.
d. produce definitive conclusions regarding the subject of study.
**2. Which of the following examples illustrates research the way it is defined in your textbook?
a. Sally is writing a paper about the effects of the Harry Potter books on the reading habits of fourth graders in the United States and United Kingdom. She goes to a research library to find information to include in her paper.
b. Ian wants to know why the population of songbirds has declined in recent years in the Sutton Wilderness Area. He carefully collects soil and water samples, systematically surveys the entire area for predators, and then sits down to make sense of his findings.
c. Leonard is starting a woodworking business and is not sure how to calculate the cost of his labor so he can be both profitable and fair to the customers. He asks several established business owners how they calculate labor changes.
d. Bill is doing a report on the sonnets of Shakespeare. He carefully reads a number of sonnets and then carefully reads scholarly reviews of those same sonnets written by various Shakespeare scholars. He synthesizes all of this information in his report.
*3. Which of the following is defined as an organized body of concepts and principles intended to explain a particular phenomenon?
a. Theory
b. Inference
c. Hypothesis
d. Interpretation
*4. Which of the following is defined as a reasonable guess, or a logical supposition, for explaining the phenomenon under investigation?
a. Theory
b. Inference
c. Hypothesis
d. Interpretation
*5. The process of formal research begins with the identification of:
a. research hypotheses.
b. a feasible research plan.
c. available participants.
d. a research problem.
*6. The purpose of formal research is to:
a. prove or disprove the study hypotheses.
b. support or fail to support the study hypotheses.
c. identify alternative hypotheses.
d. move beyond the need for hypotheses.
*7. Assumptions come into play:
a. in regard to nearly every aspect of every research study.
b. in qualitative research but not in quantitative research.
c. when research is not well thought out.
d. rarely, if ever.
*8. Well-designed research manages to minimize or avoid:
a. assumptions.
b. predictions.
c. theory.
d. bias.
*9. Researchers ______ their phenomenon of interest on the basis of data analysis.
a. make inferences about
b. know facts about
c. define
d. identify
*10. A primary function of the methodology is to:
a. guide and control the acquisition of data.
b. extract meaning from the data that have been gathered.
c. both a and b
d. neither a nor b
*11. Three of the following come into play as the researcher analyzes the data. Which one does NOT?
a. The study hypothesis/hypotheses
b. Preferences for certain outcomes
c. The logical reasoning process
d. Assumptions
*12. A well-designed and well-conducted study:
a. answers questions of importance in the field.
b. raises questions of importance to the field.
c. answers some questions and raises other questions.
*13. Reading the professional literature in the field of interest:
a. will enhance an individual’s ability to design and conduct high-quality research.
b. will stifle creativity and constrain the individual to the status quo.
c. will make little difference to the quality and impact of the individual’s work.
d. is necessary only for the leaders in the field.
*14. One indication that a piece of information is of high quality is that the information:
a. is found on the Internet.
b. is found in a juried (or refereed) research report.
c. resulted from a project that received corporate funding.
d. is the firsthand account of a personal experience.
Essay Questions
15. Your chapter states: “Research is, by its nature, cyclical or, more exactly, helical.” Explain why “cyclical” is an appropriate description of the research process. Then explain why “helical” is a better description.
16. Describe an example of the word research being used inappropriately. Be clear about how your example deviates from the definition of research offered in the chapter.
17. Graduate professors like to insist that the completion of thesis or dissertation research is not merely an “academic exercise” or final hurdle to obtaining the desired degree. Explain at least one personal benefit that the individual derives from completing a high- quality thesis or dissertation. Then explain at least one societal benefit that follows from the individual’s completion of a high-quality thesis or dissertation.
18. In the most rigorous tests of hypotheses, the researcher sets out to fail to support the hypothesis. Why is the attempt to fail to support a more rigorous test of the hypothesis than an attempt to support it?
Chapter 2
TOOLS OF RESEARCH
Multiple-Choice Questions
*1. A ______ is a specific mechanism or strategy the researcher uses to collect,
manipulate, or interpret data.
a. research tool
b. research methodology
c. statistical test
d. theory
*2. Research methodology refers to:
a. the general approach the researcher takes to conducting a research project.
b. a specific device the researcher uses to collect data.
c. the specific theoretical basis of the research project.
d. the statistical tests to be employed in a research project.
**3. Sam wants to find high-quality research reports related to attribution theory that have been published in professional journals. Sam’s best approach would be to:
a. consult the library catalog.
b. consult an online or electronic database.
c. search the World Wide Web.
d. browse the shelves in the library.
**4. Sonya is a college freshman who has just been assigned her first research paper, and she doesn’t know how to get started finding information. Sonya should:
a. search the World Wide Web.
b. consult an online or electronic database.
c. consult a reference librarian.
d. browse the shelves in the library.
*5. ______ allows a researcher to receive news in an area of special interest and discuss that news with others.
a. A search engine
b. E-mail
c. A list server
d. A Web browser
*6. ______ allows researchers to personally correspond practically instantly with other users around the world.
a. A search engine
b. E-mail
c. A list server
d. A Web browser
**7. John wants to begin using e-mail. Which of the following steps is NOT necessary for John to get started as an email user?
a. Request an e-mail account
b. Obtain necessary software from the e-mail provider and load it onto a computer
c. Learn to use a Web browser to explore the Internet
d. Learn how to access and use the e-mail provider’s services
*8. Three of the following statements about measurement in the research setting are accurate. Which one is NOT accurate?
a. The purpose of measurement is to systematically limit the data in a way that makes it quantifiable.
b. Measurement is applied by researchers only to insubstantial phenomena.
c. Measurement is a tool that aids researchers in interpreting their observations.
d. Systematic measurement assists researchers in obtaining objectivity in their researcher.
*9. An ordinal scale of measurement:
a. assigns a name to a category.
b. is tied to an absolute zero.
c. incorporates equal units of measurement.
d. communicates greater than and less than relationships.
*10. An interval level of measurement:
a. assigns a name to a category.
b. communicates rank-order information.
c. incorporates equal units of measurement.
d. is tied to an absolute zero.
*11. A ratio scale of measurement:
a. assigns a name to a category.
b. communicates rank-order information.
c. is especially appropriate for opinion data.
d. is tied to an absolute zero.
**12. The main difference between an interval and a ratio scale is that only one of them:
a. includes an absolute zero.
b. uses equal units of measurement.
c. supports the use of statistical analyses.
d. is used in research with human subjects.
**13. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report how politically conservative they are. It includes a 7-point scale where 1 is “not at all conservative” and 7 is “extremely conservative.” This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.
**14. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report their highest level of education by choosing from these options: “some high school,” “completed high school,” “some college,” or “completed 4-year college degree.” This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.
**15. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report their age in years. This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.
**16. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report whether they are currently living in an “urban,” “suburban,” or “rural” setting. This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.
*17. ______ refers to whether a measurement tool actually measures what it is intended to measure.
a. Validity
b. Reliability
c. Accountability
d. Robustness
*18. ______ refers to how consistently a measurement tool will yield the same result when the phenomenon under investigation does not change.
a. Validity
b. Reliability
c. Replicability
d. Dependability
**19. Kade has spent the past month carefully observing a group of third graders on the playground during recess, taking note of how the students interact with one another. On the basis of these observations, Kade is drawing conclusions about the interaction styles of boys and girls. This is an example of:
a. hypothetical logic.
b. deductive logic.
c. inductive logic.
d. propositional logic.
**20. Kimberly knows that teenagers often do not make good decisions in areas where they have little knowledge. She also knows that most teens have little knowledge about human sexuality. Therefore, Kimberly believes that teens are likely to make poor decisions about sexual activity. This is an example of:
a. inductive logic.
b. propositional logic.
c. transductive logic.
d. deductive logic.
Essay Questions
21. In your opinion, what is the one greatest advantage to society of the information revolution? What is the one greatest disadvantage? Support your answer.
22. Near the end of Chapter 2 the authors of your textbook include a relatively lengthy section on writing the research report. Why is it important that research results are carefully written up and made available to the scientific community?
23. Do recent technological advances (e.g., the World Wide Web, electronic databases) assure that future research will be of higher quality, or of greater utility, than past research? Support your answer.
Chapter 3
THE PROBLEM: THE HEART OF THE RESEARCH PROCESS
Multiple-Choice Questions
*1. Research problems, as defined in your textbook:
a. are identified by experts in the field, and not typically knowable by novices.
b. clearly and completely specify important questions that are currently unanswered in a particular field of inquiry.
c. are broad, general statements about the incomplete state of understanding in a particular field of inquiry.
d. can be addressed by compiling and synthesizing existing information in a way that sheds light on the issue of interest.
*2. Basic research is:
a. research intended to enhance basic knowledge about the physical, biological, psychological, or social world or to shed light on historical, cultural, or aesthetic phenomena.
b. large scale research performed under contract with a governmental agency such as the National Science Foundation (NSF), National Institute of Mental Health (NIMH), etc.
c. informal research conducted locally by a small staff with a small budget, the purpose of which is to pave the way for larger research initiatives.
d. research intended to address issues that have immediate relevance to current practices, procedures, and policies.
*3. Applied research is:
a. research intended to enhance basic knowledge about the physical, biological, psychological, or social world or to shed light on historical, cultural, or aesthetic phenomena.
b. large-scale research performed under contract with a governmental agency such as the National Science Foundation (NSF), National Institute of Mental Health (NIMH), etc.
c. informal research conducted by a small staff with a small budget, the purpose of which is to shed light on a problem of local interest.
d. research intended to address issues that have immediate relevance to current practices, procedures, and policies.
**4. Which of the following represents a well-written basic research problem?
a. “Which general education course is more interesting, U.S. History or World Music?”
b. “How do business teams of six or fewer members compare to teams of more than six members in terms of productivity?”
c. “How does the organization of mathematical information in long-term memory differ between 3-year-olds and 13-year-olds?”
d. “What is the ratio of native-born students to international students on the campuses of major U.S. state universities?”
**5. Which of the following represents a well-written applied research problem?
a. “How does the organization of mathematical information in long-term memory differ between 3-year-olds and 13-year-olds?”
b. “How do business teams of six or fewer members compare to teams of more than six members in terms of productivity?”
c. “Which general education course is more interesting, U.S. History or World Music?”
d. “What is the ratio of native-born students to international students on the campuses of major U.S. state universities?”
**6. Three of the following questions lend themselves well to formal research. Which one does NOT?
a. “How does the organization of mathematical information in long-term memory differ between 3-year-olds and 13-year-olds?”
b. “How do business teams of six or fewer members compare to teams of more than six members in terms of productivity?”
c. “Does message medium, print versus television, impact the effectiveness of public service health messages?”
d. “Which general education course is more interesting, U.S. History or World Music?”
*7. Three of the following are characteristics of a well-written research problem. Which one is NOT?
a. The problem statement includes jargon associated with the field.
b. The problem statement clearly delimits the object(s) of study.
c. The problem statement identifies the important factors to be investigated in the study.
d. The problem statement explicitly identifies assumptions.
*8. A common weakness of research problems is that they:
a. delimit the object(s) of study.
b. constrain the variables to be investigated.
c. implicitly rest on common assumptions.
d. incorporate a number of subproblems.
**9. “What proportion of workers hired by selected factories in the state of Oklahoma between 1995 and 2000 held four-year college degrees?”
The chief weakness of this research problem is that:
a. it lacks clarity or completeness in the problem statement.
b. it implies only description of the data, not interpretation.
c. it does not lead to the creation/discovery of new information.
d. studying the question as stated is not feasible.
**10. “What do underemployed U.S. workers (i.e., those workers who are employed, but not in positions for which they have specialized training or expertise) identify as the primary reason for their inability to find suitable employment?”
The chief weakness of this research problem is that:
a. it lacks clarity or completeness in the problem statement.
b. it does not lead to the creation/discovery of new information.
c. it implies only description of the data, not interpretation.
d. studying the question as stated is not feasible.
**11. “What is the correlation between an index of civic-mindedness and years of involvement in local organizations and charities among members of city councils of selected midsized cities in the northeastern United States?”
The chief weakness of this research problem is that:
a. it implies only description of the data, not interpretation.
b. it does not lead to the creation/discovery of new information.
c. it lacks clarity or completeness in the problem statement.
d. studying the question as stated is not feasible.
**12. “Among social workers in selected U.S. urban areas, are the personality characteristics of Need for Structure or In-Group Preference related to prejudicial social judgments about African Americans, Latino Americans, or Asian Americans?”
Which of the following is a well-stated subproblem that follows from this research problem?
a. Which group is more discriminated against by the public at large in each of the selected areas: African Americans, Latino Americans, or Asian Americans?
b. What is the most valid existing measure of In-Group Preference?
c. What is the relationship between an index of Need for Structure and an index of prejudice targeting attitudes about Asian Americans among the selected social workers?
d. Which analytic technique is best suited to addressing the research problem, multiple regression or path analysis?
*13. In regard to research questions and hypotheses, a high-quality research study will:
a. articulate only research questions, not hypotheses, so as not to constrain the possible findings.
b. articulate only hypotheses, not research questions, in order to preserve the scientific rigor of the investigation.
c. focus only on those questions that can support the correctness of current hypotheses or theoretical positions.
d. articulate either research questions or hypotheses depending on the nature of the study.
**14. Which of the following represents a null hypothesis?
a. Class A high school basketball teams who employ a sports psychologist will have a higher proportion of wins over the course of the season than comparable teams who do not employ a sports psychologist.
b. There will be no difference in rate of skill improvement between college gymnasts who practice meditation and those who do not.
c. Does incorporating relaxation exercises into the daily practice routine of college vocal majors enhance their performance confidence?
d. None of the above
**15. Which of the following represents a research hypothesis?
a. Class A high school basketball teams who employ a sports psychologist will have a higher proportion of wins over the course of the season than comparable teams who do not employ a sports psychologist.
b. There will be no difference in rate of skill improvement between college gymnasts who practice meditation and those who do not.
c. Does incorporating relaxation exercises into the daily practice routine of college vocal majors enhance their performance confidence?
d. None of the above
*16. The recommended order of tasks in preparing a research proposal is:
a. state the problem and subproblems, note the assumptions, note the delimitations, define the terms, note the research questions/hypotheses.
b. state the problem and subproblems, note the delimitations, note the research questions/hypotheses, note the assumptions, define the terms.
c. state the problem and subproblems, note the research questions/hypotheses, note the assumptions, define the terms, note the delimitations.
d. state the problem and subproblems, note the research questions/hypotheses, note the delimitations, define the terms, note the assumptions.
*17. Three of the following comprise the setting of the research problem. Which one does NOT?
a. A clear description of all measurement tools to be used in the research project
b. A clear statement of what the researcher will and will not do in the course of the study
c. A clear statement of the assumptions on which the research problem rests
d. A clear definition of all terms related to the research problem that might be misunderstood by a reader
Essay Questions
18. Why is it important that the researcher articulate, as clearly as possible, all assumptions that affect the research problem?
19. Your textbook authors recommend explicitly defining any term that might be misunderstood by someone reading the research proposal. If the research proposal is being written chiefly for use and review by researchers, why is such a step necessary?
20. Daphne has been a member of a research team studying interpersonal aggression among preschoolers for more than a year. In that time, her team has repeatedly employed a consistent set of techniques and procedures to study preschoolers as they interact in a number of settings. The procedures revolve around volunteer mothers bringing their children to the university child development lab for a “play session” that is the basis of the formal observations. Settings they have studied so far include: the university pre-school, affluent local day-care centers, and a pre-kindergarten program being offered in the neighborhood school district. All of these settings were fairly racially homogenous.
Daphne has just learned that a friend of a friend can help her gain research access, in the near future, to preschoolers in an unusually racially diverse though impoverished preschool setting. Daphne decides she has no time to prepare a formal research proposal before embarking on the study. “Besides,” she thinks, “this study should go just like all the others we’ve done.”
Is Daphne leaving herself open to problems in this situation, or is she safe moving ahead with no formal proposal, given how familiar she is with the study techniques and procedures?
Chapter 4
REVIEW OF THE RELATED LITERATURE
Multiple-Choice Questions
*1. Generally speaking, the best time to begin the literature review associated with a specific research project is:
a. after the research problem has been clearly articulated.
b. after the data have been collected, but before they are analyzed.
c. based on personal preference; there is no single best time.
d. before or during the formulation of the research problem.
*2. If you want to find information about books available in your local library, ______ will probably be your best resource.
a. the library catalog
b. government publications
c. an online database
d. the World Wide Web
*3. If you want to conduct a keyword or author search of research reports published in professional journals, ______ will probably be your best resource.
a. the library catalog
b. government publications
c. an online database
d. the World Wide Web
*4. If you want to find statistics on health care spending broken down by state, ______ will probably be your best resource.
a. the library catalog
b. government publications
c. an online database
d. the reference lists of important papers in your area
**5. If an important reference you want to include in your literature review is checked out to another library patron, you might:
a. obtain it through interlibrary loan.
b. obtain it by asking the library to recall the reference.
c. obtain it through an online document delivery service.
d. decide to make do without it.
**6. If an important recent research article that you want to include in your literature review is not owned by your library, you might:
a. cite it anyway for the benefit of the reader.
b. obtain it by asking the library to recall the reference.
c. obtain it through an online document delivery service.
d. decide to make do without it.
**7. If an important book that you want to include in your literature review is not owned by your library, your best move would probably be to:
a. obtain it through interlibrary loan.
b. obtain it by asking the library to recall the reference.
c. obtain it through an online document delivery service.
d. cite it anyway for the benefit of the reader.
*8. ______ is an example of a search engine.
a. Altavista
b. Books in Print
c. ERIC (Educational Resources Information Center)
d. Humanities Index
*9. ______ is an example of an electronic database.
a. Altavista
b. Books in Print
c. ERIC (Educational Resources Information Center)
d. Humanities Index
**10. Jane wants to search for information about the variety of attention disorders that are seen in childhood. Which of the following sets of keywords would best get Jane started on an effective and efficient search?
a. “attention disorders”
b. “ADHD,” “ADD,” and “children”
c. “disorders” and “children”
d. “attention disorders” and “children”
*11. If a researcher has completed a thorough search of the World Wide Web:
a. the literature search can be concluded.
b. it may also be fruitful to search an electronic database.
c. it may also be fruitful to search the Internet.
d. he/she will find largely redundant information on an electronic database.
*12. The main purpose of the review of the literature is to:
a. acknowledge the work of others by listing their findings prior to proposing your own project.
b. show how your study is superior to other work done in the area.
c. publicly demonstrate your mastery of the research literature in your area.
d. show how your study is related to, and extends, other work in the area.
*13. A well-structured literature review:
a. contains highly detailed descriptions of each work chosen for inclusion in the review.
b. begins with those studies most closely related to the research problem, then opens up to a broader perspective.
c. begins with broad/general information, then narrows the focus to those studies most closely related to the research problem.
d. contains general summaries of each work chosen for inclusion in the review.
*14. The review of the literature can be curtailed when:
a. you are no longer encountering new ideas or information.
b. all of the work done by top researchers in the area has been reviewed.
c. all published work related to a topic has been reviewed.
d. two to four weeks have been devoted to the search.
*15. A well-written literature review:
a. avoids evaluation or critique of the literature reviewed, so as not to bias the opinion of the reader.
b. emphasizes critique and synthesis of the work of others that is related to your own research problem.
c. avoids summarizing the work of others so that details of the original work are not lost in the reviewing process.
d. emphasizes detailed reporting of each piece of research included in the literature review.
*16. Typically, the literature review should:
a. include few or no works more than five years old to avoid having the work become prematurely obsolete.
b. be limited to work coming out of the very best labs and universities in the country.
c. give a broad overview of the area, without getting bogged down in the details of particular studies or theoretical perspectives.
d. emphasize how the studies being reviewed are related to the research problem under consideration.
Essay Questions
17. Describe three benefits of conducting a thorough review of existing literature before writing a research proposal.
18. Kirby is conducting a literature review in preparation for his study of “expectations regarding the sharing of financial and practical responsibilities among married and cohabiting couples in which both partners are between the ages of 20 and 29.” Conducting a keyword search on “couples” and “responsibility,” Kirby has generated a lengthy list of research articles. He decides to shorten the list of potential articles by eliminating all articles that were not published in prestigious research journals. He will include all the remaining articles in his literature review. What is your opinion of Kirby’s approach to selecting articles for the literature review? Explain.
19. You are reading a literature review written by a novice researcher in your field. You notice that the researcher seems to have relied heavily on the World Wide Web in preparing the literature review. Your hunch is supported when you glance at the reference page and find a long list of Internet addresses. What goes through your mind regarding the quality and adequacy of the literature review in this situation?
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HRM 510 Week 11 Final Exam – Strayer New
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Chapters 8 Through 19
CHAPTER 8AFFIRMATIVE ACTION
Online Quiz Questions
MULTIPLE CHOICE QUESTIONS
1. Affirmative action is:
a. a quota system for minorities to overcome past discrimination
b. illegal
c. legal only if court ordered
d. none of these
2. Executive Order 11246 requires:
a. compliance with all other Executive Orders
b. inclusion of an anti-discrimination clause in a contractor’s contract
c. that publicly-traded companies hire women and persons of color
d. none of these
3. If the parties to a discrimination suit agree to settle, they may enter into:
a. a long term supplier contract
b. a court battle
c. conciliation services
d. a consent decree
4. Regarding “reverse” discrimination, it is correct to say that:
a. It is a controversial subject.
b. Usually a white person believes he was passed over because of affirmative action.
c. It has been the subject of lawsuits.
d. All of these
5. According to the EEOC guidelines, a good Affirmative Action Plan requires all of these EXCEPT:
a. a reasonable basis for concluding that action is appropriate
b. a reasonable self-analysis
c. reasonable action
d. a reasonable review of applicant files
6. Match each term to its correct definition.
Affirmative action a management tool designed to ensure equal employment opportunity
Strict scrutiny the most stringent form of judicial review of government actions
Self-analysis analyzing one’s workforce and identifying problem areas
Compelling governmental interest an abiding interest which stands as a defense to a constitutional challenge
Underutilization this is demonstrated when the percentage of women and minorities in the employer’s workforce is less than the percentage of such persons with the necessary skills for the job
CHAPTER 8
AFFIRMATIVE ACTION
MULTIPLE CHOICE QUESTIONS
1. When individual job titles are listed for each department in order of pay level and demographic information is provided for each job, this is called a/an:
a. workforce analysis
b. organizational profile
c. job group analysis
d. organizational display
2. Affirmative action:
a. is primarily applied to hiring decisions
b. is limited to African-Americans and women
c. includes any formal or informal efforts to improve the employment opportunities of African-Americans and women
d. all of the above
e. none of the above
3. Written affirmative action plans, submitted to the OFCCP, are required of contractors or
subcontractors:
a. with 10 employees and $10,000 in federal contracts
b. with 25 employees and $25,000 in federal contracts
c. with 50 employees and $50,000 in federal contracts
d. with 100 employees and $100,000 in federal contracts
e. none of the above, all companies doing federal contract work must have written affirmative action plan that is submitted to the OFCCP
4. Which of the following is a law requiring certain employers to engage in affirmative action?
a. Title VII of the Civil Rights Act
b. The Rehabilitation Act
c. California’s Proposition 209
d. all of the above
e. none of the above
5. Which of the following is not considered to be a reasonable part of a valid affirmative
action plan?
a. all employment test scores are validated
b. a stated plan to hire a particular number of black, white, male, female…etc. employees in order to remedy an existing imbalance or injustice
c. wide communication of job availability
d. active enforcement of anti-discrimination policies
e. active enforcement of anti-harassment policies
6. Consent decrees:
a. sometimes require affirmative action as a part of the settlement in a discrimination case
b. are issued by judges after a jury verdict following a lawsuit
c. require employers to agree to hire specified numbers of women and/or persons of color
d. all of the above
e. none of the above
7. In Johnson v. Transportation Agency, Santa Clara County, a female employee was promoted to the position of road dispatcher, despite the fact that a male candidate had scored two points higher on an interview. The county had an affirmative action plan and the plan was taken into account in making the promotion decision. The Supreme Court ruled that:
a. the employer did not violate Title VII because it had an affirmative action plan requiring it to hire a woman for the position
b. the employer did not violate Title VII because it had an affirmative action plan that addressed the proven underutilization of women in a moderate, flexible way
c. the employer violated Title VII because, despite its affirmative action plan, it was not free to hire a less qualified candidate because of her sex
d. the employer violated Title VII because there was no evidence of underutilization of women in the county workforce, requiring affirmative action
e. none of the above
8. A school district had to decide which of two equally qualified, equally senior employees to lay off. Invoking its affirmative action plan, the district retained an African-American and laid off the white teacher. The court would rule that:
a. Title VII was violated because there was no evidence that African-Americans were underutilized as teachers and affirmative action cannot be used to make layoff decisions
b. Title VII was violated because diversity is not a compelling government interest necessitating consideration of race
c. Title VII was not violated because using race as a “tie-breaker” is a lawful form of affirmative action
d. Title VII was not violated because the school district demonstrated that the layoff was the only way to maintain a faculty that reflected the racial composition of the student body
e. Title VII was not violated because the layoff was only temporary and did not excessively burden the white teacher
9. To survive a constitutional challenge, a public employer’s affirmative action plan that uses racial preferences must:
a. explain why the racial inequities occurred
b. be permanently implemented
c. be narrowly tailored
d. be approved by Congress
e. all of the above
10. In order to prove that underutilization exists, it must be shown:
a. by the four-fifths rule, that women or persons of color are disproportionately absent from a position
b. that women or persons of color are underrepresented in the employer’s workforce relative to their availability in the relevant labor market
c. that intentional discrimination is the reason that women and persons of color are not adequately represented in the employer’s workforce
d. all of the above
e. none of the above
11. Vietnam era veterans are included as a protected group under affirmative action:
a. when employers enter into federal contracts or subcontracts worth $10,000 or more
b. when employers enter into federal contracts or subcontracts worth $25,000 or more
c. when employers enter into federal contracts or subcontracts worth $50,000 or more
d. automatically in any federal contract regardless of size
12. In Lomack v. City of Newark, the newly elected mayor decided to eliminate all single-race fire companies to improve morale. Dozens of firefighers were involuntarily transferred based on their race, and several sued, alleging a violation of Title VII. At the time, the city was operating under a consent decree requiring that it undertake certain measures to hire minority firefighters. What did the court decide, and what was its reasoning?
a. because of the consent decree, the city was compelled to diversify its fire companies, so the transfers complied with affirmative action, and did not violate Title VII
b. because its overall goal was to treat all firefighters equally, the transfers did not violate Title VII
c. even though the consent decree required certain affirmative steps to hire minority firefighters, it was permissible under Title VII
d. the decisions to transfer were based on race, in violation of Title VII, and the consent decree did not require or condone such transfers
13. In Reilly v. TXU Corp, an employee sought promotion to manager. Requirements for the job included a graduate business degree and 5 to 7 years of sourcing-related experience. The employee met the requirements, and received the highest score on a panel interview. Shortly after, the promoting manager received an inquiry from an African American woman. The HR Department determined that the woman was qualified, even though she did not have 5 years of sourcing experience. She received the promotion, and the employee sued. Which of the following statements is true?
a. the African-American woman was qualified, and met the requirements for the position
b. the hiring manager’s decision may have been influenced by the fact that she was in charge of the firm’s diversity program, but had no minority employees working for her
c. the employee and the African-American woman scored similarly on the interview
d. all of the above
e. none of the above
f. b and c only
14. Your company sells office supplies, and your CEO has finally succeeded in acquiring a contract to provide supplies to the federal government for the next year. This is a huge client for your company, worth in excess of $3 million dollars. Aside from increasing purchasing and production, what does your company need to do?
a. agree to hire a certain percentage of persons of color and women before the contract takes effect
b. prepare an affirmative action plan
c. not discriminate in your workplace
d. all of these
e. b and c
15. Court-imposed affirmative action is:
a. common
b. uncommon
c. non-existent; all affirmative action is voluntary
d. none of these
16. “Reverse” discrimination means:
a. establishing quotas for the hiring of women and persons of color
b. disparate treatment
c. disparate impact
d. none of these
17. Your firm’s contract to sell office supplies to the federal government requires that you hire only subcontractors who agree not to discriminate, and include a nondiscrimination clause in their contracts with you. You’ve done a thorough investigation of the firms out there who could fulfill your needs for particular office supplies, and there is one who is significantly less expensive than all of the others. However, that firm has a well-known reputation for discriminating against African-Americans. Your profit margin is already quite small for this project, and you worry about making any money at all. Which of the following is/are acceptable option(s), and why?
a. hire the firm that’s cheaper, even though they discriminate, because they’ll agree to put the clause in their contract, and that’s all you need; besides, you can’t afford to lose the government business
b. don’t hire the firm that’s cheaper, because it would disqualify your firm from the government contract if the government found out
c. talk to the firm that’s cheaper, and try to persuade them to actually comply with a non-discrimination standard; then monitor the situation to ensure that they do, because its in both your interests
d. negotiate with other, non-discriminating suppliers on their prices to see if you can match the price of the discriminating supplier
e. b, c and d
18. Your friend and former college roommate, David, has just been hired to manage a small, family-owned business because the owner has fallen ill, and none of his children are yet ready to assume leadership of the business. David has hiring and firing authority (except for the owner’s children), and wants to expand and diversify the sales staff, by hiring women and persons of color. There are 3 openings. What would be your best advice to him to accomplish his goals?
a. David should hire the only qualified women and/or persons of color, in order to achieve diversity
b. David should prepare an affirmative action plan, after doing a self-analysis which establishes an underutilization of women and persons of color in the relevant labor market, and then advertise the open positions
c. David should hire the first qualified candidates he finds, regardless of gender or race
d. none of these would be good advice
19. Affirmative action may be used on behalf of all of the following groups EXCEPT:
a. African-Americans
b. women
c. Pacific Islanders
d. disabled persons
e. none; affirmative action may be used for all of these groups
20. Regarding Affirmative Action plans, which of the following is true?
a. it may be used to remedy a “manifest imbalance”
b. the imbalance must meet the four-fifths rule
c. the imbalance must have resulted from past discrimination
d. all of these are true
ESSAY QUESTIONS
1. Why is each of the following good legal advice?
a. Federal contractors and sub-contractors with at least 50 employees and contracts worth at least $50,000 must develop written affirmative action plans addressing employment of women and minorities and submit them to the OFCCP within 120 days of their contracts commencing.
.
b. Employers wishing to consider protected class characteristics in order to enhance the utilization of women and persons of color must have valid affirmative action plans in place.
c. Employers should maximize the use of improvements in recruitment, selection, training, development, and organizational climate before considering hiring and promotion preferences.
d. Affirmative action must never be used as a basis for making discipline and termination decisions.
e. All affirmative action plans should include the results of a reasonable self-study, an analysis of underutilization establishing the basis for affirmative action, and reasonable actions to improve the utilization of women and persons of color.
2. There is a perception among some that affirmative action results in quotas and reverse discrimination. Discuss the justification for affirmative action and whether affirmative action indeed results in quotas and reverse discrimination.
CHAPTER 9HARASSMENT
Online Quiz Questions
MULTIPLE CHOICE QUESTIONS
1. Regarding harassment, which of the following statements is true?
a. Sexual harassment is the only kind of harassment.
b. Sexual harassment is the most common type of harassment.
c. The liability of the employer is the same no matter the type of harassment.
d. b and c
2. The necessary elements to establish a claim of harassment include all of the following EXCEPT:
a. The harassment was based on a protected class characteristic.
b. The harassment resulted in tangible employment action or created a hostile environment.
c. The harassment was welcome.
d. All of these are necessary elements of the claim.
3. Hostile environment claims can result from:
a. verbal conduct
b. physical conduct
c. displays of images
d. all of these
4. Employer liability for harassment may be avoided if:
a. The harassment resulted in a tangible employment action.
b. The employer took reasonable care to prevent and correct harassment.
c. The employee did not take advantage of corrective opportunities.
d. b and c
5. An employer’s remedies for a claim of harassment may include all of these EXCEPT:
a. immediate temporary action on receipt of a complaint of harassment
b. long-term remedial measures depending on the outcome of the investigation
c. a fair investigation, not one with a pre-determined outcome
d. a transfer of the harassed employee
6. Match each term to its correct definition.
severe or pervasive a hostile environment created by a serious one-time event or a frequent, continuing series of events at work
unwelcome not solicited or provoked
hostile environment this interferes with a person’s work performance
vicarious liability pursuant to this principle, the employer is liable for the acts of a harassing employee
investigation an examination of the circumstances surrounding events described in an harassment complaint
CHAPTER 9
HARASSMENT
MULTIPLE CHOICE QUESTIONS
1. Which of the following is true of harassment?
a. almost all harassment cases involve sexual harassment
b. harassment is legally actionable because it is a form of discrimination
c. harassment claims are rarely brought by men
d. a and b
e. all of the above
2. Which of the following is a necessary element of a sexual harassment claim?
a. the harasser intended to inflict emotional distress and embarrassment on the victim
b. the sex of the harasser differed from the sex of the victim
c. the harassment was unwelcome
d. the harasser made a sexual advance or requested a sexual favor
e. all of the above
3. In the case of “equal opportunity harassers” who harass both men and women, the courts tend to rule:
a. for the harasser, because the harassment is not because of sex
b. for the harasser, because harassment is not proven in that circumstance
c. for the victim of the harassment, because the harassment is because of sex
d. for the victim of the harassment, because harassment is proven generally
4. In the case in which a woman ended an affair with her male supervisor, and began to receive poor performance appraisals from him, the court ruled on her Title VII harassment claim:
a. for the woman, based on sexual harassment
b. for the woman, because of the affair
c. for the employer and supervisor because the poor performance appraisals were not the result of harassment, but of the relationship having gone sour
d. for the employer and supervisor because the poor performance appraisals were the result of the woman’s poor work performance
5. Regarding the “severe” or “pervasive” standard for assessing harassment cases, which of the following statements is NOT true?
a. to prove harassment, the plaintiff must show that the conduct complained of was both severe and pervasive, unless it occurred outside work
b. to prove harassment, the plaintiff must show that the conduct complained of was severe or pervasive
c. the degree of severity required is in inverse proportion to its pervasiveness
d. none of these
6. Which of the following is true regarding the role of conduct outside of the workplace in harassment cases?
a. employers cannot be held liable based on harassing conduct that occurs outside of the workplace
b. the sexual activities of persons who allege harassment will be examined in order to determine whether the treatment received was unwelcome
c. the marital statuses of the plaintiff and the alleged harasser will be taken into account in determining whether harassment occurred
d. all of the above
e. none of the above
7. Employers are vicariously liable for harassment when:
a. a hostile environment is created by a top official
b. harassment by a supervisor results in a tangible employment action
c. a supervisor creates a hostile environment and the employer does not have a sexual harassment policy or reporting procedure
d. all of the above
e. none of the above
8. Which of the following is part of the “affirmative defense” available to employers in certain hostile environment cases
a. the employer exercised reasonable care to prevent and correct promptly any harassment
b. the employer knew or should have known about the harassment
c. the employee failed to take advantage of preventive or corrective measures provided by the employer
d. a and c
e. b and c
9. The primary difference between harassment that results in tangible employment action and harassment that creates a hostile working environment is:
a. the level of proof required in the prima facie case for harassment that results in tangible employment action
b. the availability of a rebuttal to the plaintiff if the employer proves a reason for the hostile environment
c. the criteria for proving harassment that results in a tangible employment action is less stringent
d. the criteria for finding employers liable differs depending on the outcome of the harassment
e. none of the above
10. Which of the following should be included in an employer’s policy prohibiting harassment?
a. assurance that employees reporting harassment will be protected from retaliation
b. assurance of strict confidentiality in handling harassment complaints
c. a clear and accessible procedure for reporting harassment
d. a and c
e. all of the above
11. Regarding harassment, which of the following statements is NOT true?
a. harassment is a serious problem in the workplace
b. the definition of harassment under Title VII includes mistreatment and abuse of employees generally
c. the definition of harassment under Title VII does not include workplace bullying
d. all of these are true
12. If an employee is subject to severe harassment, and quits his position to escape it, the court will likely rule:
a. that because he quit, no tangible employment action can be proven
b. that the quit is a constructive discharge, which constitutes a tangible employment action if it results from a demotion or pay cut
c. that a hostile environment is presumed, but that the employee waived the right to sue when he left
d. none of these
13. In a case in which the employee claimed harassment by her supervisor in which he altered her work her work hours with the knowledge that doing so would adversely affect her hypoglycemia; frequently stood at her desk and stared angrily at her; startled her by pounding on her desk with his fist; criticized her work unfairly; and yelled at her in front of co-workers, the court ruled that:
a. no sexual harassment was proven, because no demand for sexual favors was made
b. no sexual harassment was proven, because no hostile environment was created
c. a hostile environment was created by the supervisor’s conduct
d. no harassment could be proven without verbal or physical conduct of a sexual nature
14. The plaintiff in a harassment case must prove:
a. the harassment was because of sex
b. the harassment was directed toward a protected class
c. the harassment was unwelcome
d. all of these
e. only b and c
15. When a female supervisor demands sexual favors from a male employee so that he can keep his job or get a raise, it is called this:
a. same sex harassment
b. quid pro quo harassment
c. severe or pervasive harassment
d. cruel and unusual harassment
16. As the Assistant Human Resources Manager, you have learned from another employee that a co-worker is being harassed by her supervisor. Assuming your firm has no anti-harassment policy, what should you do?
a. nothing unless the victim herself files a claim, because there is no anti-harassment policy, so you have no authority in the matter
b. investigate the claim and report the harassment to your superiors
c. create and enforce an anti-harassment policy for your firm
d. offer to transfer the employee to another job
e. b and c
f. b, c and d
17. Your co-worker, a new employee, is painfully shy. She works, as you do, as a clerical assistant to an architect in the firm you both work for. Her architect, a boorish male with a foul mouth and grabby hands, has had trouble keeping an assistant, and you know why. But even though this fellow has continued in his usual behavior, applying it now to her, she seems to be unable to decide what to do, and seeks your advice. Knowing how these cases are decided, what would be the best advice you could give her?
a. she should say nothing; just keep working, and do a good job
b. she should act friendly, but refuse his advances
c. she should tell him she’s not interested, and just wants to work
d. the next time he tries something, she should just punch him in the eye
18. You are a salesperson for a pharmaceutical company, a job it was difficult to get. After you’d been there a while, there was another opening, and you recommended your friend, Paul. He was hired, and the two of you have enjoyed working together ever since. Recently, the secretary for the sales team has confided in you that Paul has been acting inappropriately, and most recently, cornered her in the supply room, and pushed her up against the wall with his body, and caressed her with his hands. She does not know that you recommended Paul to the firm. Of the following choices, what should you do?
a. tell her not to worry, that it will pass, because Paul is not normally like this
b. tell her not to worry, that you’ll talk to Paul, and tell him to stop it
c. tell her to report Paul to Human Resources, and you’ll tell them you saw it
d. talk to Paul, and tell him that if he doesn’t stop it immediately, and apologize, you will report him to Human Resources
19. Imagine that you are the judge hearing a case for sexual harassment filed by a woman who reports that she was forced to have sex in the workplace with her supervisor. She admits that for some months prior to the event, she displayed her body through seminude photos, lifted her skirt to verify an absence of undergarments, made highly salacious comments, and offered sexual gratification “to employees, customers, and competitors alike.” Knowing what you know about harassment, what should you decide?
a. for the woman, because the forced sex proves harassment
b. for the woman, because her flirting did not justify the forced sex
c. for the employer, because the harassment was not unwelcome
d. for the employer, because she had a reputation for being “easy”
20. A male customer of a sports bar has taken a particular liking to one of the waitresses, and always asks to be seated at her station, so that she will wait on him. He has spoken to the manager of the bar, and generously tipped him to insure that he will get her station. But the waitress does not want to wait on the customer, because he grabs and pinches her rear, tries to tuck money down her top, and frequently pulls her down onto his lap. She asks the bar manager not to let him sit at her station any more, but the manager tells her it’s good money (he does tip her well), and she should be nice to him. If she files suit for harassment, what will the court most likely rule?
a. for the employer, because the customer does not have the power to affect her employment status, so that his conduct cannot result in a tangible employment action against her
b. for the employer, because the customer has not committed harassment
c. for the employee, because the customer has committed harassment
d. for the employee, because the customer has committed harassment, the employer knew about it, and did nothing
ESSAY QUESTIONS
1. Why is each of the following good legal advice?
a. Employers are strongly advised to establish, communicate, and enforce policies prohibiting harassment.
b. Complaint procedures should provide employees with multiple, accessible parties to whom reports of harassment can be made.
c. Employers must respond to complaints of harassment promptly and in a manner reasonably calculated to end the harassment.
d. Terminations or other discipline imposed against harassers must be conducted in the same careful manner as any other terminations or disciplinary actions.
e. Care should be exercised in using transfers or reassignments to deal with harassment.
2. How does employer liability for harassment by a co-worker or third party compare or differ with the company’s liability for harassment by supervisors, managers or other top officials?
CHAPTER 10
REASONABLY ACCOMMODATING DISABILITY & RELIGION
Online Quiz Questions
MULTIPLE CHOICE QUESTIONS
1. An employer’s obligation to “reasonably accommodate” is unique to which protected classes?
a. gender and age
b. national origin and color
c. disability and religion
d. disability and race
2. The disability law which applies to private employers and state and local governments is:
a. The Rehabilitation Act of 1973
b. The Americans with Disabilities Act of 1990
c. The Private Employer Disability Act of 1988
d. none of these
3. Regarding disability claims, which of the following statements is NOT true?
a. The ADA applies to someone who is not disabled, but is perceived as disabled.
b. The ADA applies to someone who is not disabled, but has a record of a disability.
c. The ADA applies to someone who is currently disabled.
d. The ADA does not apply to someone who is not disabled, but is perceived as disabled.
4. Under the Title VII definition of religious beliefs, all of these are true EXCEPT:
a. a belief in God or other deity is required
b. a belief in atheism and agnosticism is protected
c. the religion need not be popular or organized
d. b and c
5. If an employee states a prima facie case of failure to reasonably accommodate religion, then the employer must prove:
a. that a reasonable accommodation was offered, but refused
b. that the accommodation would impose an undue hardship on the business
c. that the employee does not really believe in the religion
d. a or b
6. Match each term to its correct definition.
Americans with Disabilities Act the disability law that applies to private employers
The Rehabilitation Act the disability law that applies to federal public employers
major life activities for example, seeing, speaking, breathing, lifting
essential functions the core duties which few others can perform
religious organization exemption this permits a church to hire only members of its faith
CHAPTER 10
REASONABLY ACCOMMODATING DISABILITYAND RELIGION
MULTIPLE CHOICE QUESTIONS
1. The American’s with Disabilities Act (ADA):
a. applies to private sector employers with 15 or more employees
b. amends and supercedes the Rehabilitation Act
c. protects all disabled persons against discrimination in employment by covered employers
d. all of the above
e. none of the above
2. Which of the following is necessary to establish the existence of a disability under the ADA?
a. having a physical basis for one’s impairment
b. being diagnosed with an impairment that is included on the ADA’s list of recognized disabilities
c. receiving regular medical treatment for one’s condition
d. all of the above
e. none of the above
3. In Ekstrand v School District of Somerset, a teacher who taught kindergarten successfully for 5 years was assigned to a classroom without windows. She advised the principal that she suffered from seasonal affective disorder, a form of depression, and that she needed the natural light from a window to counteract the disorder. She submitted a letter from her psychologist advising of the condition and the need for natural light, but the school refused. There was an empty classroom with a window, and another teacher had offered to switch classrooms since she had one with a window, but the school would not allow it. The District Court granted summary judgment to the school district, and the teacher appealed. The Appellate Court ruled:
a. for the school district, since the teacher had not documented her need for an accommodation.
b. for the school district, since the school district had no accommodation to offer which did not involve an undue hardship
c. for the teacher, because she had documented her need for an accommodation, and the school district could have made a reasonable accommodation
d. for the teacher, because she suffered severe consequences as a result of the school district’s failure to accommodate her disability
4. In Cloutier v. Costco, Cloutier was fired for violation of a no facial jewelry (other than earrings) provision of the dress code. Costco was successful because:
a. Costco had no duty to accommodate because it could not do so without undue hardship
b. Costco made an offer to accommodate after Cloutier’s adverse employment action and was therefore shielded from liability under Title VII
c. the Church of Body Modification was not a recognized church so Cloutier’s beliefs did not fall under religious discrimination requiring accommodation
d. Cloutier’s beliefs did not include worship or recognition of a supreme being or deity so they could not be considered religious thereby requiring accommodation
e. none of the above
5. An employee can be considered disabled under the ADA if:
a. she has an existing disability
b. she is erroneously regarded as being disabled
c. she is not currently disabled, but has a record of a prior disability
d. a and b
e. all of the above
6. In order to be a “qualified individual with a disability,” a disabled person must:
a. meet the same, job-related education, skill, and background requirements as other job candidates or employees
b. not pose a direct threat others but may pose a threat to his or her own health
c. be able to satisfactorily perform all of the functions of a job
d. all of the above
e. none the above
7. Under the ADA, it is important that job descriptions:
a. clearly identify the essential functions of jobs
b. clearly specify how job tasks are to be carried out
c. list reasonable accommodations that are available to an employee in this job
d. all of the above
e. none of the above
8. Which of the following would usually be considered a reasonable accommodation of disability?
a. providing a part-time or modified work schedule
b. relaxing a production
c. relaxing a performance standard
d. transferring essential job functions to others
9. In responding to requests for reasonable accommodation, employers should NOT:
a. engage in an interactive process with disabled employees
b. limit medical inquiries to information needed to assess functional limitations
c. discuss the disabled employee’s need for accommodation with other employees
d. all of the above
e. none of the above
10. In order to be substantially limiting, a condition must:
a. render an employee unable to perform her previous job
b. be chronic or expected to have a long-term impact on functioning
c. without the aid of any corrective devices used by the employee, make it impossible to perform one or more major life activities
d. all of the above
e. none of the above
11. In order to conclude that a proposed accommodation of disability would impose undue hardship on an employer, it must be shown that:
a. the proposed accommodation would not be a reasonable one
b. the cost of the accommodation exceeds the benefits it would produce
c. the cost exceeds the general $2000 threshold specified in the ADA
d. a and c
e. none of the above
12. Under Title VII, the concept of “religion” is limited to:
a. membership in or affiliation with an established church or denomination
b. beliefs or practices that a church or denomination requires of its members
c. beliefs or practices centering on the worship of a God or other deity
d. all of the above
e. none of the above
13. As the new Human Resources Manager for Bell’s Dollar Store, you are still getting to know your employees. One in particular has come to your attention, because he always seems to be out in the aisles of the store, rather than at the cashier’s desk or in the stockroom. During a routine cleaning of lockers, you discover that several small items from store inventory were in his locker. The items were of little value. After considering the matter, you correctly conclude:
a. the employee has been guilty of theft, and should be fired immediately
b. the employee probably has a disorder known as kleptomania, which compels him to take and hoard small objects; since this is a disability under the Americans with Disabilities Act, you must decide whether you can make a reasonable accommodation
c. the employee probably has a disorder known as kleptomania, which compels him to take and hoard small objects; you decide to speak to him privately, tell him he is fired, and urge him to seek help for his condition
d. none of the above
14. Which of the following laws applies to federal employees?
a. The Disability Act
b. The Protection of Major Life Activities Act
c. The Americans with Disabilities Act
d. The Rehabilitation Act
15. Which of the following is an element of a prima facie case of failure to reasonably accommodate religion?
a. that a specific reasonable accommodation was requested by the plaintiff
b. that a conflict exists between a sincere religious belief or practice and an employment requirement
c. that the requested accommodation would not impose undue hardship
d. all of the above
e. none of the above
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ECO 550 Final Exam – Strayer New
ECO 550 Week 10 Chapter 9 through 17 Final Exam
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ECO 550 Final Exam Solution
Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
a.
existence of a non-linear cubic total cost function
b.
hypothesis that marginal costs first decrease, then gradually increase over the normal operating range of the firm
c.
hypothesis that total costs increase quadratically over the ranges of output examined
d.
hypothesis that total costs increase linearly over the range of output examined
e.
none of the above
ANS: PTS: 1
2. The short-run cost function is:
a.
where all inputs to the production process are variable
b.
relevant to decisions in which one or more inputs to the production process are fixed
c.
not relevant to optimal pricing and production output decisions
d.
crucial in making optimal investment decisions in new production facilities
e.
none of the above
ANS: PTS: 1
3. Theoretically, in a long-run cost function:
a.
all inputs are fixed
b.
all inputs are considered variable
c.
some inputs are always fixed
d.
capital and labor are always combined in fixed proportions
e.
b and d
ANS: PTS: 1
4. 4. Break-even analysis usually assumes all of the following except:
a. a. in the short run, there is no distinction between variable and fixed costs.
b. b. revenue and cost curves are straight-lines throughout the analysis.
c. c. there appears to be perfect competition since the price is considered to remain the same regardless of quantity.
d. d. the straight-line cost curve implies that marginal cost is constant.
e. e. both c and d
ANS: PTS: 1
4. 5. What is another term meaning the degree of operating leverage?
a. a. The measure of the importance of fixed cost.
b. b. The operating profit elasticity.
c. c. The measure of business risk.
d. d. D.O.L.
e. e. All of the above.
ANS: PTS: 1
4. 6. In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called:
a. a. regression to the mean analysis.
b. b. breakeven analysis.
c. c. survivorship analysis.
d. d. engineering cost analysis.
e. e. a Willie Sutton analysis.
ANS: PTS: 1
a. 7. George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.
b. a. 10,000 customers
c. b. 20,000 customers
d. c. 30,000 customers
e. d. 40,000 customers
f. e. 50,000 customers
ANS: PTS: 1
8. In determining the shape of the cost-output relationship only ____ depreciation is relevant.
a.
direct
b.
indirect
c.
usage
d.
time
e.
scheduled
ANS: PTS: 1
9. Which of the following is not a limitation of the survivor technique for measuring the optimum size of firms within an industry?
a.
since the technique does not employ actual cost data in the analysis, there is no way to assess the magnitude of the cost differentials between firms of varying size and efficiency.
b.
the managerial and entrepreneurial aspects of the production process are not included in the analysis
c.
because of legal factors, the long-run cost curve derived by this technique may be distorted and may not measure the cost curve postulated in economic theory
d.
a and b
e.
b and c
ANS: PTS: 1
10. The primary disadvantage of engineering methods for measuring cost functions is that they deal with the managerial and entrepreneurial aspects of the production process or plant.
a.
true
b.
false
ANS: PTS: 1
11. A linear total cost function implies that:
a.
marginal costs are constant as output increases
b.
average total costs are continually decreasing as output increases
c.
a and b
d.
none of the above
ANS: PTS: 1
12. A ____ total cost function implies that marginal costs ____ as output is increased.
a.
linear; increase linearly
b.
quadratic; increase linearly
c.
cubic; increase linearly
d.
a and b
e.
none of the above
ANS: PTS: 1
13. A ____ total cost function implies that marginal costs ____ as output is increased.
a.
linear; increase linearly
b.
quadratic; are constant
c.
cubic; increase linearly
d.
linear; are constant
e.
none of the above
ANS: PTS: 1
14. A ____ total cost function yields a U-shaped average total cost function.
a.
cubic
b.
quadratic
c.
linear
d.
a and b only
e.
a, b, and c
ANS: PTS: 1
15. In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
a.
variable margin per unit
b.
variable cost ratio
c.
contribution margin per unit
d.
target margin per unit
e.
none of the above
ANS: PTS: 1
16. Which of the following is not an assumption of the linear breakeven model:
a.
constant selling price per unit
b.
decreasing variable cost per unit
c.
fixed costs are independent of the output level
d.
a single product (or a constant mix of products) is being produced and sold
e.
all costs can be classified as fixed or variable
ANS: PTS: 1
17. In the linear breakeven model, the breakeven sales volume (in dollars) is equal to fixed costs divided by:
a.
unit selling price less unit variable cost
b.
contribution margin per unit
c.
one minus the variable cost ratio
d.
a and b only
e.
a, b, and c
ANS: PTS: 1
18. The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____.
a.
percentage; sales; percentage; EBIT
b.
unit; sales; unit; EBIT
c.
percentage; EBIT; percentage; sales
d.
unit; EBIT; unit; sales
e.
none of the above
ANS: PTS: 1
19. The linear breakeven model excludes ____ from the analysis.
a.
financing costs
b.
taxes
c.
contribution margin
d.
a and b only
e.
a, b, and c
ANS: PTS: 1
20. In the linear breakeven model, the relevant range of output is that range where the linearity assumptions of the model are assumed to hold.
a.
true
b.
false
ANS: PTS: 1
21. In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:
a.
one minus the variable cost ratio
b.
contribution margin per unit
c.
selling price per unit
d.
standard deviation of unit sales
e.
none of the above
ANS: PTS: 1
22. In the linear breakeven model, a firm incurs operating losses whenever output is less than the breakeven level.
a.
true
b.
false
ANS: PTS: 1
PROBLEMS
1. For each of the following cost-output relationships, describe the shape (U-shape, decreasing, increasing, constant) of the average total cost and marginal cost functions (C = total cost, Q = output):
(a)
C = 42,500,000 + 2550Q
(b)
C = 8.48 + 0.65Q + .00220Q2
ANS:
PTS: 1
2. Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment requirements are $1,000,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10.
(a)
Determine the breakeven output (in dollars).
(b)
Determine the number of barrels of oil that offshore must produce and sell in order to earn a target (operating) profit of $1,500,000.
(c)
Determine the degree of operating leverage at an output of 400,000 barrels.
(d)
Assuming that sales of oil are normally distributed with a mean of 362,500 barrels and a standard deviation of 100,000 barrels, determine the probability that Offshore will incur an operating loss.
ANS:
PTS: 1 NOTE: Part (d) requires the use of statistical tables.
Chapter 10—Prices, Output, and Strategy: Pure and Monopolistic Competition
MULTIPLE CHOICE
1. The main difference between perfect competition and monopolistic competition is:
a. The number of sellers in the market
b. The ease of entry and exit in the industry
c. The degree of information about market price
d. The degree of product differentiation
e. Whether it is the short run or the long run
ANS: PTS: 1
2. Long distance telephone service has become a competitive market. The average cost per call is $0.05 a minute, and it’s declining. The likely reason for the declining price for long distance service is:
a. Governmental pressure to lower the price
b. Reduced demand for long distance service
c. Entry into this industry pushes prices down
d. Lower price for a barrel of crude oil
e. Increased cost of providing long distance service
ANS: PTS: 1
3. What is the profit maximization point for a firm in a purely competitive environment?
a. The output where P = MC
b. The output where P < MC
c. The output where P > MC
d. The output where MR = MC
e. The output where AVC < P
ANS: PTS: 1
4. All of the following are true for both competition and monopolistic competition in the long run, except one of them. Which is it?
a. P = MC
b. P = AC
c. Economic profits become zero in the long-run
d. The barriers to entry and exit are relatively easy
e. None of the above is an exception
ANS: PTS: 1
5. Which of the following statements is (are) true concerning a pure competition situation?
a.
Its demand curve is represented by a vertical line.
b.
Firms must sell at or below market price.
c.
Marginal revenue is equal to price.
d.
both b and c
e.
both a and b
ANS: PTS: 1
6. In pure competition:
a.
the optimal price-output solution occurs at the point where marginal revenue is equal to price
b.
a firm's demand curve is represented by a horizontal line
c.
a firm is a price-taker since the products of every producer are perfect substitutes for the products of every other producer
d.
a and b only
e.
a, b, and c
ANS: PTS: 1
7. In the short-run for a purely competitive market, a manufacturer will stop production when:
a.
the total revenue is less than total costs
b.
the contribution to fixed costs is zero or less
c.
the price is greater than AVC
d.
operating at a loss
e.
a and b
ANS: PTS: 1
8. In the purely competitive case, marginal revenue (MR) is equal to:
a.
cost
b.
profit
c.
price
d.
total revenue
e.
none of the above
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Chapter 1 Through 14
Chapter 1 Decision Support Systems and Business Intelligence
1) When faced with a turbulent business environment, organizations are best able to survive or even excel by minimizing changes until the environment stabilizes.
Diff: 2 Page Ref: 2
2) The management of Norfolk Southern, a large freight railroad company, invested in data warehousing technologies. Even though railroad transportation is a mature industry, Norfolk Southern gained a competitive advantage by using its data warehousing technologies to squeeze additional efficiency from its operations.
Diff: 2 Page Ref: 4
3) Globalization has significantly reduced the complexity of the business environment. For example, companies can find suppliers and customers in many countries where materials are cheaper, which reduces competition and complexity.
Diff: 3 Page Ref: 5
4) One of the major objectives of computerized decision support is to minimize the gap between the current performance of an organization and its desired performance.
Diff: 2 Page Ref: 6
5) One measure of productivity is the ratio of inputs to outputs.
Diff: 2 Page Ref: 7
6) Managers, especially those at high managerial levels, are primarily hands-on problem solvers.
Diff: 2 Page Ref: 7
7) Because managerial decision making is complex, it is more important to emphasize methodical, analytical decision making rather than interpersonal communication skills.
Diff: 3 Page Ref: 7
8) Government regulations, political instability, competition, and changing consumer demands cause uncertainty that makes it difficult to predict the consequences of a decision.
Diff: 2 Page Ref: 8
9) Computer applications have progressed from transaction processing and monitoring to problem analysis and solution applications, and much of the activity is supported by spreadsheet technologies.
Diff: 2 Page Ref: 9
10) Computerized systems enable people to overcome their cognitive limits by quickly accessing and processing vast amounts of stored information.
Diff: 2 Page Ref: 10
11) Accounts receivable and accounts payable processes are highly structured, which makes them easy to program.
Diff: 2 Page Ref: 11
12) Research and development (R & D) planning and social responsibility planning are unstructured decisions, which cannot be supported by computerized decision support systems.
Diff: 3 Page Ref: 11
13) The first phase in the decision-making process is design which involves inventing, developing, and analyzing possible alternative courses of action or solutions.
Diff: 2 Page Ref: 12
14) Automated decision systems (ADS) are rule-based systems that provide solutions to repetitive managerial problems, usually in one functional area (e.g., finance, manufacturing).
Diff: 3 Page Ref: 14
15) The term Decision Support Systems (DSS) can be used as an umbrella term to describe any computerized system that supports decision making in an organization.
Diff: 1 Page Ref: 16
16) The two major DSS types are the model-oriented DSS, in which quantitative models are used to generate a recommended solution to a problem, and data-oriented DSS, which support ad hoc reporting and queries.
Diff: 2 Page Ref: 17
17) A BI system has three major components: a data warehouse with source data; business performance management (BPM) for monitoring and analyzing performance; and a user interface such as a dashboard.
Diff: 2 Page Ref: 20
18) Most DSS are constructed to directly support specific decision making. In contrast, BI systems, in general typically provide accurate and timely information to support decision support indirectly. This difference is diminishing because decision support tools are being added to BI software packages.
Diff: 3 Page Ref: 24
19) Dashboards and information portals are data visualization tools.
Diff: 2 Page Ref: 26
20) The objective of computerized decision support, regardless of its name or nature, is to help managers solve problems and assess opportunities faster and better than would be possible without computers.
Diff: 2 Page Ref: 27
21) Norfolk Southern Railroad built a ________ application that pulls data from the data warehouse and then graphically depicts actual performance against planned performance.
A) dashboard
B) graphical interface
C) transaction processing
D) forecasting
Diff: 2 Page Ref: 3
22) Norfolk Southern Railroad invested in a Teradata ________, which is a central repository of historical data that is organized for easy access and manipulation to support decision making.
A) database
B) data warehouse
C) data repository
D) data disk
Diff: 2 Page Ref: 3
23) Numerous types of business ________ result from today's business climate.
A) decisions
B) responses
C) support
D) pressures
Diff: 1 Page Ref: 5
24) Companies are facing each of the following impacts of globalization except:
A) Easier to find suppliers and customers in many countries
B) Less complex business environment
C) Cheaper materials
D) More and stronger competitors
Diff: 2 Page Ref: 5
25) Which of the following is an organizational response to a business environmental factor?
A) customer demand
B) government regulations
C) new business models
D) globalization
Diff: 3 Page Ref: 5
26) Business environment factors that create pressures on organizations include all of the following except:
A) workforce that is younger and shrinking
B) need for real-time, on-demand transactions
C) booming electronic markets on the Internet
D) innovative marketing methods
Diff: 1 Page Ref: 6
27) One of the major objectives of ________ is to facilitate closing the gap between the current performance of an organization and its desired performance, as expressed in its mission, objectives, and goals.
A) business alliances
B) customer relationships
C) business models
D) computerized decision support
Diff: 3 Page Ref: 6
28) Management is a process by which organizational goals are achieved by using resources. The resources are considered ________, and attainment of goals is viewed as the ________ of the process.
A) expenses; profits
B) inputs; output
C) pressures; opportunities
D) scarce; success
Diff: 2 Page Ref: 7
29) Mintzberg's (1980) classic study of top managers suggests that managers perform ten major roles that can be classified into three major categories. Each of the following is one of those major categories except:
A) relational
B) interpersonal
C) decisional
D) informational
Diff: 2 Page Ref: 7
30) For years in the past, managers considered decision making a(n) ________, that is, a talent acquired over a long period through experience and by using intuition.
A) science
B) strategy
C) art
D) methodology
Diff: 2 Page Ref: 7
31) According to Mintzberg's ten managerial roles, a ________ is responsible for the motivation and activation of subordinates.
A) leader
B) figurehead
C) liason
D) spokesperson
Diff: 2 Page Ref: 7
32) According to Mintzberg's ten managerial roles, a ________ is symbolic head; or someone who is obliged to perform a number of routine duties.
A) leader
B) figurehead
C) liason
D) spokesperson
Diff: 2 Page Ref: 7
33) Today's computerized systems possess capabilities that can facilitate decision support in a number of ways, including each of the following except:
A) Increased productivity of group members
B) Improved communication and collaboration
C) Agility support
D) Reduced environmental pressures
Diff: 2 Page Ref: 9
34) Decision-making processes fall along a continuum that ranges from ________ to ________.
A) highly structured; highly unstructured
B) semistructured; unstructured
C) managerial; strategic
D) ad hoc; nonprogrammed
Diff: 2 Page Ref: 11
35) Phases in the decision-making process include each of the following except:
A) intelligence
B) analysis
C) design
D) choice
Diff: 2 Page Ref: 12
36) Solving semistructured problems may involve a combination of both standard solution procedures and human judgment. Management science can provide models for the portion of the decision-making problem that is ________.
A) controlled
B) semistructured
C) unstructured
D) structured
Diff: 2 Page Ref: 13
37) A(n) ________ is a rule-based system that provides a solution, usually in one functional area, such as finance or manufacturing, to a specific repetitive managerial problem.
A) decision support systems (DSS)
B) transaction processing system (TPS)
C) online analytical processing (OLAP) system
D) automated decision system (ADS)
Diff: 2 Page Ref: 14
38) Which of the following is one of the two major types of Decision Support Systems?
A) Number-oriented
B) Text-oriented
C) Model-oriented
D) Application-oriented
Diff: 2 Page Ref: 17
39) Which of the following is not a component of DSS architecture?
A) Data
B) Model
C) Knowledge
D) Web
Diff: 2 Page Ref: 17
40) The major benefit of ________ to the company is the ability to provide accurate information when needed.
A) data warehouse
B) analytical models
C) management information systems
D) business intelligence
41) Management is a process by which organizational goals are achieved using ________.
42) Making a decision means selecting the best alternative from two or more ________ solutions.
43) The level of organization's ________, or the success of management, depends on the performance of managerial functions, such as planning, organizing, directing, and controlling.
44) ________ indicates that an individual's problem-solving capability is limited when a wide range of diverse information and knowledge is required.
45) ________ defines long-range goals and policies for resource allocation.
46) ________ is the efficient and effective execution of specific tasks.
47) Gorry and Scott-Morton suggested, for example, that for semistructured decisions and unstructured decisions, conventional ________ and management science (MS) tools are insufficient.
48) ________ involves transforming the real-world problem into an appropriate prototype structure.
49) Structured problems, which are encountered repeatedly, have a high level of ________.
50) ________ is the application of scientific approach and mathematical models to the analysis and solution of managerial decision situations.
51) Automated Decision Systems (ADS) is a business ________ system that uses intelligence to recommend solution to repetitive decisions (such as pricing).
52) Decision support systems are computer-based support systems for management decision makers who deal with ________ problems.
53) ________ is the first component of the DSS architecture.
54) The process of business intelligence is based on the ________ of data to information, then to decisions, and finally to actions.
55) Business intelligence's major objective is to enable ________ access to data, enable manipulation of these data, and to provide business managers and analysts the ability to conduct appropriate analysis.
56) ________ is a process of searching for unknown relationships or information in large databases or data warehouses, using intelligent tools such as neural computing, predictive analytics techniques, or advanced statistical methods.
57) ________ which is also referred to as corporate performance management (CPM), is an emerging portfolio of applications and methodology that contains evolving BI architecture and tools in its core.
58) ________ are a type of user interface that provides a comprehensive visual view of corporate performance measures, trends, and exceptions.
59) A ________ is a system in which human participants and/or machines perform a business process, using information, technology, and other resources, to produce products and/or services for internal or external customers.
60) List four major business environmental factors in today's business environment.
61) List and define the three interpersonal roles of a manager as described by Mintzberg.
62) List and define the three informational roles of a manager as described by Mintzberg.
63) List and define the four decisional roles of a manager as described by Mintzberg.
64) Describe the four phases in the decision-making process.
65) Distinguish between structured and unstructured problems.
66) Describe the three categories that comprise Anthony's taxonomy of management.
67) List the steps involved in the management science (MS) approach to problem solving.
68) List the components of the architecture of business intelligence.
69) Describe the nine elements of a work system.
Chapter 2 Decision Making, Systems, Modeling, and Support
1) When trying to solve a problem, developers at the manufacturer HP consider the three phases in developing a
model. Their first phase is problem analytics.
Diff: 2 Page Ref: 39
2) If a problem arises due to misalignment of incentives or unclear lines of authority or plans, then no model can help solve that root problem.
Diff: 2 Page Ref: 39
3) When developers design and develop tools, the first guideline is to develop a prototype to test the designs and get early feedback from the end users to see what works for them and what needs to be changed.
Diff: 2 Page Ref: 39
4) It is important to remove unneeded complexity from a model before handoff because as a tool becomes more complex it requires more automation.
Diff: 3 Page Ref: 39
5) Groupthink among decision makers can help lead to the best decisions.
Diff: 3 Page Ref: 41
6) Experimentation with a real system is possible only for one set of conditions at a time and can be disastrous.
Diff: 2 Page Ref: 41
7) Collecting information and analyzing a problem are the fastest and least expensive parts of decision-making.
Diff: 2 Page Ref: 41
8) Fast decision-making requirements tend to reduce decision quality.
Diff: 1 Page Ref: 41
9) According to Simon, managerial decision making is synonymous with managers using decision support systems.
Diff: 1 Page Ref: 42
10) Most Web-based DSS are focused on improving decision efficiency.
Diff: 1 Page Ref: 42
11) Personality temperament tests are often used to determine decision styles.
Diff: 2 Page Ref: 43
12) Problem identification is the conceptualization of a problem in an attempt to place it in a definable category, possibly leading to a standard solution approach.
Diff: 3 Page Ref: 48
13) One approach to solving a complex problem is to divide it into simpler subproblems and then solve those subproblems.
Diff: 2 Page Ref: 49
14) A problem exists in an organization only if someone or some group takes on the responsibility of attacking it and if the organization has the ability to solve it.
Diff: 2 Page Ref: 50
15) The process of modeling involves determining the (usually mathematical, sometimes symbolic) relationships among the variables.
Diff: 1 Page Ref: 51
16) "Humans are economic beings whose objective is to maximize the attainment of goals" is one of the assumptions of rational decision makers.
Diff: 2 Page Ref: 52
17) The idea of "thinking with your gut" is a heuristic approach to decision making.
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Chapters 7 Through 12
Chapter 7 – Development Strategies
MULTIPLE CHOICE
1. Although the traditional model of software acquisition still accounts for more software acquisition, a new model, called ____, is changing the picture dramatically.
a.
Hardware as a Help
c.
Processing as a Product
b.
Software as a Service
d.
Storage as a Solution
2. ____ is a model of software deployment where an application is hosted as a service provided to customers over the Internet.
a.
Hardware as a Help
c.
Processing as a Product
b.
Software as a Service
d.
Storage as a Solution
3. ____ reduces the customer's need for software maintenance, operation, and support.
a.
Hardware as a Help
c.
Processing as a Product
b.
Software as a Service
d.
Storage as a Solution
4. ____ promotes a broader vision of Software + Services, which refers to the company's strategy for cloud computing -- integrating software applications, platforms, and infrastructure.
a.
Oracle
c.
IBM
b.
Hewlett-Packard
d.
Microsoft
5. Gartner, Inc. predicts that by 2015 SaaS revenue will grow to ____.
a.
$7.1 billion
c.
$14.5 billion
b.
$8.6 billion
d.
$22.1 billion
6. Microsoft’s ____ is one of the major Web-based development environments.
a.
WebSphere
c.
NetSphere
b.
.NET
d.
.WEB
7. Building an application in a ____ environment can offer greater benefits, and sometimes greater risks, compared to a traditional environment.
a.
GUI
c.
cloud
b.
Web-based
d.
multinational
8. Web-based software usually requires additional layers, called ____, to communicate with existing software and legacy systems.
a.
freeware
c.
middleware
b.
shareware
d.
public domain software
9. When companies acquire Web-based software as a(n) ____, they can limit in-house involvement to a minimum.
a.
product
c.
service
b.
value-add
d.
outsource
10. Some industry leaders predict that ____ computing will offer an overall online software and data environment supported by supercomputer technology.
a.
interpolated
c.
outsourced
b.
mainframe
d.
cloud
11. ____ is the transfer of information systems development, operation, or maintenance to an outside firm that provides these services, for a fee, on a temporary or long-term basis.
a.
Outsourcing
c.
Subscription
b.
Commission
d.
External provision
12. A firm that offers outsourcing solutions is called a ____ provider.
a.
subscription
c.
service
b.
software
d.
resource
13. Oracle Corporation offers a service called ____, which provides e-business applications on a fixed fee basis.
a.
WebSphere
c.
Business Process Outsourcing
b.
.NET
d.
Oracle On Demand
14. Outsourcing a basic business process is often called ____.
a.
RFO
c.
BPO
b.
TFO
d.
TCO
15. The ____ environment enhances interactive experiences, including wikis and blogs, and social networking applications.
a.
outsourcing
c.
Web 2.0
b.
SaaS
d.
Web 3.0
16. Some ____ providers concentrate on specific software applications; others offer resources like order processing and customer billing.
a.
subscription
c.
service
b.
software
d.
resource
17. A(n) ____ is a firm that delivers a software application, or access to an application, by charging a usage or subscription fee.
a.
ASP
c.
ISP
b.
OSP
d.
USP
18. Some firms offer ____, which provide powerful Web-based support for transactions such as order processing, billing, and customer relationship management.
a.
ASP
c.
fixed usage
b.
IBS
d.
fixed-fee transfer
19. When determining outsourcing fees, a ____ uses a set fee based on a specified level of service and user support.
a.
fixed fee model
c.
subscription model
b.
usage model
d.
transaction model
20. When determining outsourcing fees, a ____ has a variable fee based on the number of users or workstations that have access to the application.
a.
fixed fee model
c.
subscription model
b.
usage model
d.
transaction model
21. A(n) ____ model is an outsourcing fee model that charges a variable fee based on the volume of transactions or operations performed by the application.
a.
method
c.
transaction
b.
administrative
d.
interpolated
22. The choice between developing versus purchasing software often is called a ____ decision.
a.
build or make
c.
transactional
b.
subscription
d.
build or buy
23. The software that a company’s IT department makes, builds, and develops is called ____ software.
a.
in-house
c.
external
b.
internal
d.
indexed
24. A software ____ is software that is obtained from a vendor or application service provider.
a.
package
c.
subscription
b.
cluster
d.
aggregate
25. Companies that develop software for sale are called software ____.
a.
VARs
c.
vendors
b.
resellers
d.
packages
26. A firm that enhances a commercial package by adding custom features and configuring it for a particular industry is called a(n) ____.
a.
BRE
c.
OSP
b.
IRH
d.
VAR
27. Typically, companies choose in-house software development for all of the following reasons EXCEPT to ____.
a.
minimize changes in business procedures and policies
b.
meet constraints of existing systems and existing technology
c.
develop internal resources and capabilities
d.
obtain input from other companies who already have implemented the software
28. Advantages of purchasing a software package over developing software in-house include all of the following EXCEPT ____.
a.
satisfaction of unique business requirements
b.
lower costs and less time to implement
c.
proven reliability and performance benchmarks
d.
less technical development staff
29. Buyers can customize a software package by ____.
a.
negotiating directly with the software vendor to make enhancements to meet the buyer’s needs by paying for the changes
b.
purchasing a basic package that vendors will customize to suit the buyer’s needs
c.
purchasing the software and making their own modifications, if this is permissible under the terms of the software license
d.
all of the above
30. A user ____ utilizes standard business software, such as Microsoft Word or Microsoft Excel, which has been configured in a specific manner to enhance user productivity.
a.
application
c.
interface
b.
configuration
d.
interpolation
31. In addition to configuring software, the IT staff can create a user ____, which includes screens, commands, controls, and features that enable users to interact more effectively with the application.
a.
montage
c.
interface
b.
index
d.
package
32. Some data files should be hidden totally from view, while others should have ____ so users can view, but not change, the data.
a.
no-access properties
c.
full-access properties
b.
read-only properties
d.
write-only properties
33. The ____ team must include users, who will participate in the selection process and feel a sense of ownership in the new system.
a.
prototyping
c.
JAD
b.
evaluation and selection
d.
assessment
34. Nearly ____ percent of total costs occur after the purchase of hardware and software.
a.
15
c.
80
b.
45
d.
95
35. A ____ is a document that describes a company, lists the IT services or products needed, and specifies the features required.
a.
request for quotation (RFQ)
c.
request for proposal (RFP)
b.
net present value (NPV)
d.
return on investment (ROI)
36. When companies use a ____, they already know the specific products or service they want and need to obtain price quotations or bids from vendors.
a.
request for quotation (RFQ)
c.
request for proposal (RFP)
b.
net present value (NPV)
d.
return on investment (ROI)
37. Many IT ____ offer specialized services that help companies select software packages.
a.
proxies
c.
consultants
b.
forums
d.
managers
38. ____ is an example of a nonprofit organization that publishes standards and reports for its members and the general public.
a.
IEEE
c.
The TPC
b.
RFP
d.
Oracle
39. A ____ measures the time a package takes to process a certain number of transactions.
a.
newsgroup
c.
benchmark
b.
parameter
d.
default
40. When planning a slide presentation to management at the end of the systems analysis phase, systems analysts should keep all of the following suggestions in mind EXCEPT ____.
a.
summarize the primary viable alternatives
b.
ignore time for discussion and questions and answers
c.
explain why the evaluation and selection team chose the recommended alternative
d.
obtain a final decision or agree on a timetable for the next step in the process
MULTIPLE RESPONSE
Modified Multiple Choice
1. Which of the following is true of a traditional systems development environment?
a.
systems design is influenced by compatibility issues
b.
systems are designed to run on local and wide-area company networks
c.
systems often utilize Internet links and resources
d.
scalability is not affected by network limitations and constraints
2. Which of the following is a path that development can follow?
a.
in-house development
b.
construct a legacy system
c.
purchase of a software package with possible modification
d.
use of outside consultants
3. Which of the following is true of Web-based development?
a.
Web-based systems are easily scalable.
b.
Large firms tend to deploy Web-based systems as enterprise-wide software solutions for applications such as customer relationship management and order processing.
c.
Internet-based development treats the Web as a communication channel, rather than as the platform.
d.
Systems are developed and delivered in an Internet-based framework.
4. Which of the following is true of Web-based development?
a.
Web-based software treats the software as a service that is more dependent on desktop computing powers and resources.
b.
Web-based software usually requires middleware to communicate with existing software and legacy systems.
c.
Web-based systems can run on multiple hardware environments.
d.
When companies acquire Web-based software as a service rather than a product they purchase, they can limit in-house involvement to a minimum.
5. Outsourcing can refer to ____.
a.
relatively minor programming tasks
b.
the rental of software from a service provider
c.
the handling of a company’s entire IT function
d.
BPO
MODIFIED TRUE/FALSE
1. An ASP provides more than a license to use the software; it rents an operational package to the customer. _________________________
2. A software package that can be used by many different types of organizations is called a vertical application. _________________________
3. A software package developed to handle information requirements for a specific type of business is called a horizontal application. _________________________
4. Net present value is a percentage rate that compares the total net benefits (the return) received from a project to the total costs (the investment) of the project. _________________________
5. The ROI of a project is the total value of the benefits minus the total value of the costs, with both costs and benefits adjusted to reflect the point at which they occur. _________________________
TRUE/FALSE
1. Typically, customers purchase licenses that give them the right to use the software under the terms of the license agreement.
2. Building an application in a Web-based environment might involve greater risks and benefits, compared to a traditional environment.
3. In a traditional systems development environment, security issues usually are less complex than with Web-based systems, because the system operates on a private company network, rather than the Internet.
4. Mission-critical IT systems should be outsourced only if the result is a cost-attractive, reliable, business solution that fits the company’s long-term business strategy.
5. A subscription model charges a variable fee based on the volume of transactions or operations performed by the application.
6. A company considering outsourcing must realize that the solution can be only as good as the outsourcing firm that provides the service.
7. Mergers and acquisitions typically have no impact on clients and customers of large, financially healthy firms.
8. The main reason for offshore outsourcing is the same as domestic outsourcing: lower bottom-line costs.
9. By designing a system in-house, companies can develop and train an IT staff that understands the organization’s business functions and information support needs.
10. Compared to software developed in-house, a software package almost always is more expensive, particularly in terms of initial investment.
11. Many firms feel that in-house IT resources and capabilities provide a competitive advantage because an in-house team can respond quickly when business problems or opportunities arise.
12. Companies that use commercial software packages always must increase the number of programmers and systems analysts on the IT staff.
13. Software vendors regularly upgrade software packages by adding improvements and enhancements to create a new version or release.
14. Empowerment makes an IT department less productive because it must spend more time responding to the daily concerns of users and less time on high-impact systems development projects that support strategic business goals.
15. The decision to develop software in-house will require less participation from the systems analyst than outsourcing or choosing a commercial package.
16. The primary objective of an evaluation and selection team is to eliminate system alternatives that will not work, rank the system alternatives that will work, and present the viable alternatives to management for a final decision.
17. A request for quotation (RFQ) is less specific than an RFP (request for proposal).
18. A standard method exists for assigning the weight factors in the evaluation of responses to an RFP.
19. Some vendors limit their reference lists to satisfied clients, so you can expect mostly positive feedback from those firms.
20. Benchmark tests must precisely match the day-to-day situation at your company.
21. For large-scale systems, license agreement terms can be negotiated.
22. For desktop applications, software license terms and conditions usually can be modified.
23. If a purchased package will be used without modification, you can begin planning the systems implementation phase upon its purchase.
24. Whereas the logical design of an information system is concerned with how the system will meet requirements, physical design is concerned with what the system must accomplish.
25. In general, systems development is faster, more flexible, and more user-oriented than in the past.
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Chapters 1 Through 18
Chapter 1
Introduction to Decision Support Systems
True-False Questions
1.
The role of a DSS is to provide support to the decision-maker during the process of making a decision.
Difficulty: Easy Reference: p. 3
2.
A DSS is used only for unstructured decisions.
Difficulty: Easy Reference: p. 3
3.
The purpose of a DSS is to replace the decision maker.
Difficulty: Easy Reference: p. 4
4.
The DSS should always be under the ultimate control of the user.
Difficulty: Easy Reference: p. 3
5.
A DSS facilitates learning on the part of the decision maker.
Difficulty: Easy Reference: p. 3
6.
The most powerful classification of DSSs is the Universal DSS.
Difficulty: Medium Reference: p. 6
7.
A DSS is normally designed to be wide in its scope of application.
Difficulty: Medium Reference: p. 6
8.
A highly unstructured decision is one where the objectives of the situation are often conflicting, the alternatives available to the decision maker are difficult to isolate or determine, and the effect of a particular course of action or selection of an alternative carries with it a high degree of uncertainty.
Difficulty: Medium Reference: p. 7
9.
The user interface of a DSS performs activities related to problem recognition and generation of interim or final solutions.
Difficulty: Hard Reference: p. 9
10.
The data management component of a DSS is where the activities associated with the retrieval, storage and organization of the relevant data for the particular decision context are managed.
Difficulty: Hard Reference: p. 9
11.
The data management component of a DSS is responsible for maintaining the logical independence of the data.
Difficulty: Hard Reference: p. 12
12.
The model library stores and manages all solver algorithms within a DSS.
Difficulty: Medium Reference: p. 15
13.
Model acquisition is the process by which new information is derived from a combination of existing or previously derived information.
Difficulty: Medium Reference: p. 16
14.
Rules, heuristics and constraints are stored within a knowledge base of a DSS.
Difficulty: Medium Reference: p. 16
15.
A model is a simplification of some event or process constructed for the purpose of studying the phenomenon and thus developing a better understanding of it.
Difficulty: Medium Reference: p. 13
16.
Internal data normally comes from an organization’s transaction processing systems as a normal course of conducting the daily affairs of the organization.
Difficulty: Easy Reference: p. 11
17.
Knowledge engineers are specially trained to interact with domain experts for the purposes of acquiring all of the knowledge the expert has in a particular domain and all of the relationships among that knowledge.
Difficulty: Medium Reference: p. 18
18.
The model base contains the various statistical, financial, mathematical, and other quantitative models used in performing the variety of analytical capabilities in a DSS.
Difficulty: Medium Reference: p. 14
19.
Silver proposed a method of DSS classification based upon the attributes of the problem-solving context.
Difficulty: Hard Reference: p. 25
20.
Hypertext systems are useful for knowledge bases that are document based.
Difficulty: Medium Reference: p. 27
Multiple Choice Questions
21.
The realization of the benefits to be derived from using a DSS is dependent upon which of the following?
a. The decision maker
b. The context of the decision
c. The design of the DSS
d. All of the above.
Difficulty: Easy Reference: p. 4
22.
Which of the following contributed to the development of the concept of decision support systems?
a. J.P. Little
b. Gorry
c. Scott Morton
d. All of the above.
Difficulty: Easy Reference: p. 6
23.
Limitations of a DSS include which of the following?
a. They cannot be designed to copy human imagination.
b. The language interface does not yet allow for natural language processing.
c. They are designed to be narrow in scope.
d. All of the above
Difficulty: Easy Reference: p. 5
24.
Strategic planning refers to which of the following activities?
a. Where decisions related to the effective and efficient procurement and deployment of the organizations assets are made.
b. Where decisions related to the objectives of the organization are made.
c. Where decisions relating to the day-to-day tasks and activities of the organization are made.
d. All of the above.
Difficulty: Medium Reference: p. 7
25.
Management control refers to which of the following activities?
a. Where decisions related to the objectives of the organization are made.
b. Where decisions related to the effective and efficient procurement and deployment of the organization’s assets are made.
c. Where decisions relating to the day-to-day task and activities of the organization are made.
d. None of the above.
Difficulty: Medium Reference: p. 7
26.
Operational control is best associated with which of the following activities?
a. Making decisions related to the objectives of the organization.
b. Making decisions related to the effective and efficient procurement and deployment of the organizations assets.
c. Making decisions relating to the day-to-day tasks and activities of the organization.
d. Both b and c.
Difficulty: Medium Reference: p. 7
27.
The components of a DSS can be classified into which of the following?
a. Data management system, data repository, knowledge engine, model repository, user(s)
b. Data query facility, model management system, model execution processor, user interface, user(s)
c. Data management system, model management system, knowledge engine, user interface, user(s)
d. Data management system, model management system, knowledge engine, internal data, external data
Difficulty: Medium Reference: p. 9
28.
Which of the following is considered a subsystem within the data management system?
a. Database(s)
b. Database management system
c. The data query facility
d. All of the above.
Difficulty: Easy Reference: p. 12
29.
One of the most important characteristics of a model is that:
a. it is easy to construct.
b. it is commonly found in decision-making environments.
c. it is a simplified form of reality.
d. None of the above.
Difficulty: Easy Reference: p. 13
30.
The two primary responsibilities of the MBMS are:
a. execution and integration of the models available to the DSS and the modeling of user preferences.
b. execution and integration of the data available to the DSS and the manipulation of the user interface.
c. execution of the user interface and the modeling of user preferences.
d. acquisition of the knowledge contained within the DSS and the modeling of user preferences.
Difficulty: Medium Reference: p. 15
31.
Which of the following best describes the function and purpose of the inference engine?
a. It is the subsystem responsible for the acquisition and construction of knowledge rules.
b. It is a component of a DSS that is specifically intended to allow the user to access the internal components of that system in a relatively easy fashion and without having to know specifically how everything is put together or how it works.
c. It is a program module that activates domain knowledge and performs inferencing to work toward a solution or conclusion based upon the values for the facts given and the relationships or rules associated with them.
d. None of the above.
Difficulty: Hard Reference: p. 18
32.
The person who may work closely with the decision maker to assist in interpreting and explaining the DSS output is called the:
a. domain expert.
b. intermediary.
c. domain operator.
d. knowledge generator.
Difficulty: Easy Reference: p. 22
33.
Which of the following are the two primary support orientations for a DSS?
a. Data-centric and model-centric
b. Procedural and non-procedural
c. Programmed and non-programmed
d. Simulated and actual
Difficulty: Medium Reference: p. 8
34.
Which of the following is a characteristic of a DSS?
a. It is interactive and user-friendly.
b. It is generally developed using an iterative process.
c. I supports all phases of the decision-making process.
d. All of the above.
Difficulty: Easy Reference: p. 3
35.
Which of the following is not a benefit of DSS use?
a. It shortens the time associated with making a decision.
b. The power of the DSS is based upon the system it is running on.
c. It encourages exploration and discovery on the part of the decision maker.
d. All of the above are benefits.
Difficulty: Medium Reference: p. 5
36.
Gorry and Scott Morton’s framework for decision support classifies types of decisions as:
a. simplified and complex.
b. structured, semi-structured, and unstructured.
c. supported, semi-supported, and unsupported.
d. None of the above.
Difficulty: Easy Reference: p. 7
37.
Which of the following is a function of the presentation language of a DSS?
a. It allows for detailed report definition.
b. It allows for the creation of forms.
c. It provides for the presentation of data in multiple formats.
d. All of the above.
Difficulty: Easy Reference: p. 20
38.
Which of the following is not a DSS usage category?
a. Terminal mode
b. Clerk mode
c. Query mode
d. Subscription mode
Difficulty: Medium Reference: p. 23
39.
Which of the following is the DSS classification proposed by Donovan and Madnick?
a. Structured and unstructured
b. Mechanical and decisional
c. Formal and ad-hoc
d. None of the above.
Difficulty: Hard Reference: p. 25
40.
Which type of decision support system keeps track of a large amount of disparate documents?
a. Hypertext system
b. Document encyclopedia
c. Silver junction system
d. None of the above.
Difficulty: Easy Reference: p. 27
Essay Questions
41.
Describe the general functions of the Model Base Management System.
42.
What are some of the common characteristics of a decision support system?
43.
List the five components of a DSS
44.
Is a “universal DSS” possible? Why or why not?
45.
List the general functions of the DBMS.
46.
What are the benefits of DSS use?
47.
What are the two main responsibilities of the DBMS?
48.
How does knowledge get into the DSS? How can it be retrieved and organized as useful information?
49.
Compare and contrast data-centric versus model-centric systems, formal versus ad-hoc systems, and directed versus non-directed systems. What are the advantages and disadvantages of each type?
50.
Compare the benefits and limitations of highly procedural languages and low/non-procedural languages.
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ACC 304 Week 11 Final Exam – Strayer NEW
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Week 11 Final Exam: Chapter 12 Through 16
INTANGIBLE ASSETS
IFRS questions are available at the end of this chapter.
TRUE-FALSE—Conceptual
1. Intangible assets derive their value from the right (claim) to receive cash in the future.
2. Internally created intangibles are recorded at cost.
3. Internally generated intangible assets are initially recorded at fair value.
4. Amortization of limited-life intangible assets should not be impacted by expected residual values.
5. Some intangible assets are not required to be amortized every year.
6. Limited-life intangibles are amortized by systematic charges to expense over their useful life.
7. The cost of acquiring a customer list from another company is recorded as an intangible asset.
8. The cost of purchased patents should be amortized over the remaining legal life of the patent.
9. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent.
10. In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible assets, with the remainder recorded as goodwill.
11. Internally generated goodwill should not be capitalized in the accounts.
12. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received.
13. All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.
14. If the fair value of an unlimited life intangible other than goodwill is less than its book value, an impairment loss must be recognized.
15. If market value of an impaired asset recovers after an impairment has been recognized, the impairment may be reversed in a subsequent period.
16. The same recoverability test that is used for impairments of property, plant, and equipment is used for impairments of indefinite-life intangibles.
17. Periodic alterations to existing products are an example of research and development costs.
18. Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent.
19. Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.
20. Contra accounts must be reported for intangible assets in a manner similar to accumu-lated depreciation and property, plant, and equipment.
True False Answers—Conceptual
MULTIPLE CHOICE—Conceptual
21. Which of the following does not describe intangible assets?
a. They lack physical existence.
b. They are financial instruments.
c. They provide long-term benefits.
d. They are classified as long-term assets.
22. Which of the following characteristics do intangible assets possess?
a. Physical existence.
b. Claim to a specific amount of cash in the future.
c. Long-lived.
d. Held for resale.
23. Which characteristic is not possessed by intangible assets?
a. Physical existence.
b. Short-lived.
c. Result in future benefits.
d. Expensed over current and/or future years.
24. Costs incurred internally to create intangibles are
a. capitalized.
b. capitalized if they have an indefinite life.
c. expensed as incurred.
d. expensed only if they have a limited life.
25. Which of the following costs incurred internally to create an intangible asset is generally expensed?
a. Research and development costs.
b. Filing costs.
c. Legal costs.
d. All of the above.
26. Which of the following methods of amortization is normally used for intangible assets?
a. Sum-of-the-years'-digits
b. Straight-line
c. Units of production
d. Double-declining-balance
27. The cost of an intangible asset includes all of the following except
a. purchase price.
b. legal fees.
c. other incidental expenses.
d. all of these are included.
28. Factors considered in determining an intangible asset’s useful life include all of the following except
a. the expected use of the asset.
b. any legal or contractual provisions that may limit the useful life.
c. any provisions for renewal or extension of the asset’s legal life.
d. the amortization method used.
29. Under current accounting practice, intangible assets are classified as
a. amortizable or unamortizable.
b. limited-life or indefinite-life.
c. specifically identifiable or goodwill-type.
d. legally restricted or goodwill-type.
30. Companies should test indefinite life intangible assets at least annually for:
a. recoverability.
b. amortization.
c. impairment.
d. estimated useful life.
S31. One factor that is not considered in determining the useful life of an intangible asset is
a. salvage value.
b. provisions for renewal or extension.
c. legal life.
d. expected actions of competitors.
32. Which intangible assets are amortized?
Limited-Life Indefinite-Life
a. Yes Yes
b. Yes No
c. No Yes
d. No No
33. The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be
a. charged off in the current period.
b. amortized over the legal life of the purchased patent.
c. added to factory overhead and allocated to production of the purchaser's product.
d. amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product.
34. Broadway Corporation was granted a patent on a product on January 1, 2001. To protect its patent, the corporation purchased on January 1, 2012 a patent on a competing product which was originally issued on January 10, 2008. Because of its unique plant, Broadway Corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be
a. amortized over a maximum period of 20 years.
b. amortized over a maximum period of 16 years.
c. amortized over a maximum period of 9 years.
d. expensed in 2012.
35. Wriglee, Inc. went to court this year and successfully defended its patent from infringe-ment by a competitor. The cost of this defense should be charged to
a. patents and amortized over the legal life of the patent.
b. legal fees and amortized over 5 years or less.
c. expenses of the period.
d. patents and amortized over the remaining useful life of the patent.
36. Which of the following is not an intangible asset?
a. Trade name
b. Research and development costs
c. Franchise
d. Copyrights
37. Which of the following intangible assets should not be amortized?
a. Copyrights
b. Customer lists
c. Perpetual franchises
d. All of these intangible assets should be amortized.
38. When a patent is amortized, the credit is usually made to
a. the Patent account.
b. an Accumulated Amortization account.
c. a Deferred Credit account.
d. an expense account.
39. When a company develops a trademark the costs directly related to securing it should generally be capitalized. Which of the following costs associated with a trademark would not be allowed to be capitalized?
a. Attorney fees.
b. Consulting fees.
c. Research and development fees.
d. Design costs.
40. In a business combination, companies record identifiable intangible assets that they can reliably measure. All other intangible assets, too difficult to identify or measure, are recorded as:
a. other assets.
b. indirect costs.
c. goodwill.
d. direct costs.
41. Goodwill may be recorded when:
a. it is identified within a company.
b. one company acquires another in a business combination.
c. the fair value of a company’s assets exceeds their cost.
d. a company has exceptional customer relations.
42. When a new company is acquired, which of these intangible assets, unrecorded on the acquired company’s books, might be recorded in addition to goodwill?
a. A brand name.
b. A patent.
c. A customer list.
d. All of the above.
43. Which of the following intangible assets could not be sold by a business to raise needed cash for a capital project?
a. Patent.
b. Copyright.
c. Goodwill.
d. Brand Name.
44. The reason goodwill is sometimes referred to as a master valuation account is because
a. it represents the purchase price of a business that is about to be sold.
b. it is the difference between the fair value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business.
c. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation.
d. it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value.
45. Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the fair values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. Proper accounting treatment by Easton is to report the excess amount as
a. a gain.
b. part of current income in the year of combination.
c. a deferred credit and amortize it.
d. paid-in capital.
46. Purchased goodwill should
a. be written off as soon as possible against retained earnings.
b. be written off as soon as possible as an extraordinary item.
c. be written off by systematic charges as a regular operating expense over the period benefited.
d. not be amortized.
47. The intangible asset goodwill may be
a. capitalized only when purchased.
b. capitalized either when purchased or created internally.
c. capitalized only when created internally.
d. written off directly to retained earnings.
48. A loss on impairment of an intangible asset is the difference between the asset’s
a. carrying amount and the expected future net cash flows.
b. carrying amount and its fair value.
c. fair value and the expected future net cash flows.
d. book value and its fair value.
49. The recoverability test is used to determine any impairment loss on which of the following types of intangible assets?
a. Indefinite life intangibles other than goodwill.
b. Indefinite life intangibles.
c. Goodwill.
d. Limited life intangibles.
50. Buerhle Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are)
Recoverability Test Fair Value Test
a. Yes Yes
b. Yes No
c No Yes
d. No No
51. The carrying amount of an intangible is
a. the fair value of the asset at a balance sheet date.
b. the asset's acquisition cost less the total related amortization recorded to date.
c. equal to the balance of the related accumulated amortization account.
d. the assessed value of the asset for intangible tax purposes.
52. Which of the following research and development related costs should be capitalized and depreciated over current and future periods?
a. Research and development general laboratory building which can be put to alternative uses in the future
b. Inventory used for a specific research project
c. Administrative salaries allocated to research and development
d. Research findings purchased from another company to aid a particular research project currently in process
53. Which of the following principles best describes the current method of accounting for research and development costs?
a. Associating cause and effect
b. Systematic and rational allocation
c. Income tax minimization
d. Immediate recognition as an expense
54. How should research and development costs be accounted for, according to a Financial Accounting Standards Board Statement?
a. Must be capitalized when incurred and then amortized over their estimated useful lives.
b. Must be expensed in the period incurred.
c. May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.
d. �� Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable.
55. Which of the following would be considered research and development?
a. Routine efforts to refine an existing product.
b. Periodic alterations to existing production lines.
c. Marketing research to promote a new product.
d. Construction of prototypes.
56. Which of the following costs should be capitalized in the year incurred?
a. Research and development costs.
b. Costs to internally generate goodwill.
c. Organizational costs.
d. Costs to successfully defend a patent.
57. Research and development costs
a. are intangible assets.
b. may result in the development of a patent.
c. are easily identified with specific projects.
d. all of the above.
58. Which of the following is considered research and development costs?
a. Planned search or critical investigation aimed at discovery of new knowledge.
b. Translation of research findings or other knowledge into a plan or design for a new product or process.
c. Translation of research findings or other knowledge into a significant improvement of an existing product.
d. all of the above.
59. Which of the following is considered research and development costs?
a. Planned search or critical investigation aimed at discovery of new knowledge.
b. Translation of research findings or other knowledge into a plan or design for a new product or process.
c. Neither a nor b.
d. Both a and b.
60. Which of the following costs should be excluded from research and development expense?
a. Modification of the design of a product
b. Acquisition of R & D equipment for use on a current project only
c. Cost of marketing research for a new product
d. Engineering activity required to advance the design of a product to the manufacturing stage
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Chapters 7 Through 14
Prentice Hall's Federal Taxation 2015 Comprehensive, 28e (Pope)
Chapter 7 Itemized Deductions
1) For individuals, all deductible expenses must be classified as deductions for AGI or deductions from AGI.
2) In 2014, medical expenses are deductible as a from AGI deduction to the extent that they exceed 7.5 percent of the taxpayer's AGI.
3) Medical expenses paid on behalf of an individual who could be the taxpayer's dependent except for the gross income or joint return tests are deductible as itemized deductions.
4) Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if that parent also is entitled to the dependency exemption.
5) The definition of medical care includes preventative measures such as routine physical examinations.
6) Due to stress on the job, taxpayer Charlie began to experience chest pains. In order to relax and relieve the pains, he and his spouse went on an ocean cruise. The cost of the cruise to alleviate this medical condition is tax deductible.
7) Expenditures for a weight reduction program are deductible if recommended by a physician to treat a specific medical condition such as hypertension caused by excess weight.
8) In order for a taxpayer to deduct a medical expense, the amount must be paid to a certified medical doctor (M.D.).
9) Jeffrey, a T.V. news anchor, is concerned about the wrinkles around his eyes. Because it is job-related, the cost of a face lift to eliminate these wrinkles is a deductible medical expense.
10) Expenditures for long-term care insurance premiums qualify as a medical expense deduction subject to an annual limit based upon the age of an individual.
11) Capital expenditures for medical care which permanently improve or better the taxpayer's property are deductible to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure.
12) Expenditures incurred in removing structural barriers in the home of a physically handicapped individual are deductible only to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure.
13) If the principal reason for a taxpayer's presence in an institution is the need and availability of medical care, the entire cost of lodging and meals is considered qualified medical expenditures.
14) A medical expense is generally deductible only in the year in which the expense is actually paid.
15) If a prepayment is a requirement for the receipt of the medical care, the payment is deductible in the year paid rather than the year in which the care is rendered.
16) If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return, the previous year's return must be amended to eliminate the reimbursed expense.
17) Assessments or fees imposed for specific privileges or services are not deductible as taxes.
18) Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.
19) A personal property tax based on the weight of the property is deductible.
20) Assessments made against real estate for the purpose of funding local improvements are not deductible in the year paid but rather should be added to the cost basis of the property.
21) Self-employed individuals may deduct the full self-employment taxes paid as a for AGI deduction.
22) Finance charges on personal credit cards are considered interest and are, therefore, deductible.
23) In general, the deductibility of interest depends on the purpose for which the indebtedness is incurred.
24) Interest expense incurred in the taxpayer's trade or business is deductible as a for AGI deduction without limitation if the taxpayer materially participates in the business.
25) Investment interest expense which is disallowed because it exceeds the taxpayer's net investment income may be carried over and treated as incurred in subsequent years.
26) Investment interest includes interest expense incurred to purchase tax-exempt securities.
27) Taxpayers may elect to include net capital gain as part of investment income.
28) Taxpayers may not deduct interest expense on most personal debt, including credit card debt, car loans, and other consumer debt.
29) Qualified residence interest consists of both acquisition indebtedness and home equity interest.
30) Acquisition indebtedness for a personal residence includes debt incurred to substantially improve the residence.
31) A taxpayer is allowed to deduct interest expense incurred on home equity indebtedness limited to the lesser of $100,000 or the home equity (FMV of the residence less the acquisition indebtedness).
32) While points paid to purchase a residence are deductible as interest in the period paid, points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.
33) Christopher, a cash basis taxpayer, borrows $1,000 from ABC Bank by issuing a 3-month note on December 1, 2014. Christopher receives $940 but must repay $1,000 on the due date. The amount of interest expense deductible in 2014 is $20.
34) Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.
35) For charitable contribution purposes, capital gain property includes property which, if sold, would produce a long-term capital gain.
36) A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.
37) A charitable contribution in excess of the deduction limit for one taxable year can be carried forward five years.
38) If a taxpayer makes a charitable contribution to a university and in return receives the right to purchase tickets to athletic events, the taxpayer may deduct only 80% of the payment.
39) An accrual-basis corporation can only deduct contributions made by year-end.
40) Corporate charitable deductions are limited to 10% of the corporation's taxable income for the year.
41) Legal fees for drafting a will are generally deductible.
42) A taxpayer can deduct a reasonable amount for small out-of-pocket (i.e. cash) donations.
43) Van pays the following medical expenses this year:
• $1,500 for doctor bills for Van's son who is claimed as a dependent by Van's former spouse.
• $300 for Van's eyeglasses.
• $900 for Van's dental work.
• $3,800 for Van's face lift. Van, a newscaster, is worried about the wrinkles around his eyes.
How much can Van include on his return as qualified medical expenses before limitation?
A) $1,200
B) $2,400
C) $2,700
D) $6,500
44) All of the following are deductible as medical expenses except
A) vitamins and health foods that improve a taxpayer's general health.
B) payments for a vision exam and contact lenses.
C) payments to a hospital for laboratory fees and X-rays for diagnosis of a medical problem.
D) cosmetic surgery necessary to correct a deformity arising from a congenital abnormality.
45) All of the following payments for medical items are deductible with the exception of the payment for
A) insulin.
B) general appointment for teeth cleaning.
C) acupuncture for specific medical purposes.
D) nonprescription medicine for treatment of a specific medical condition.
46) In 2014 Sela traveled from her home in Flagstaff to San Francisco to seek medical care. Because she was unable to travel alone, her mother accompanied her. Total expenses included:
Hotel room en route ($150 × 2 rooms × 3 nights)
$900
Mileage, 1,000 miles
Doctors bills in San Francisco
1,600
The total medical expenses deductible before the 10% limitation are
A) $1,600.
B) $2,135.
C) $2,500.
D) $2,460.
47) Leo spent $6,600 to construct an entrance ramp and to widen doorways in his personal residence to make the home accessible for his wife, who is disabled and confined to a wheelchair. The $6,600 expenditure increased the value of the residence by $2,000. How much of the $6,600 is a deductible medical expense (before considering limits based on AGI)?
A) $0
B) $2,000
C) $4,600
D) $6,600
48) Linda had a swimming pool constructed at her house. Her physician advised and prescribed to her that the pool would slow the effects of her degenerative disease. The pool was not suitable for recreational use. Prior to the construction of the pool, the fair market value of her house was $172,000. After the construction of the pool, the appraised fair market value of the house was $181,000. The cost of the pool was $13,000. What is the amount of Linda's qualified medical expense (before considering limits based on AGI)?
A) $0
B) $4,000
C) $9,000
D) $13,000
49) Alan, who is a security officer, is shot while on the job. As a result, Alan suffers from a chronic leg injury and must use a wheelchair and undergo therapy to regain and retain strength. Alan's physician recommends that he install a whirlpool bath in his home for therapy. During the year, Alan makes the following expenditures:
Wheelchair
$ 1,200
Whirlpool bath
2,000
Maintenance of the whirlpool
250
Increased utility bills associated with whirlpool
450
Entrance ramp, various home modifications
7,200
A professional appraiser tells Alan that the whirlpool has increased the value of his home by $1,000. Alan's deductible medical expenses (before considering limitations based on AGI) will be
A) $6,000.
B) $10,100.
C) $7,000.
D) $7,700.
50) Mitzi's medical expenses include the following:
Medical premiums
$10,850
Doctors fees
2,000
Hospital fees
3,350
Prescription drugs
600
Eyeglasses
350
General purpose vitamins
100
Mitzi's AGI for the year is $33,000. She is single and age 49. None of the medical costs are reimbursed by insurance. After considering the AGI floor, Mitzi's medical expense deduction is
A) $12,900.
B) $13,850.
C) $14,675.
D) $16,325.
51) Caleb's medical expenses before reimbursement for the year include the following:
Medical premiums
$11,000
Doctors, hospitals
3,500
Prescriptions
600
Caleb's AGI for the year is $50,000. He is single and age 58. Caleb also receives a reimbursement for medical expenses of $1,000. Caleb's deductible medical expenses that will be added to the other itemized deduction will be
A) $10,350.
B) $9,100.
C) $14,500.
D) $15,100.
52) A review of the 2014 tax file of Gregory, a single taxpayer who is age 40, provides the following information regarding Gregory's 2014 tax status:
Adjusted gross income
$40,000
Medical expenses (before percentage limit)
5,000
Itemized deductions other than medical
5,400
2014 potential standard deduction
6,200
In 2015, Gregory receives a reimbursement for last year's medical expenses of $1,200. As a result, Gregory must
A) include $200 in gross income for 2015.
B) include $1,200 in gross income for 2015.
C) reduce 2015's medical expenses by $1,200.
D) amend the 2014 return.
53) Mr. and Mrs. Thibodeaux, who are filing a joint return, have adjusted gross income of $75,000. During the tax year, they paid the following medical expenses for themselves and for Mrs. Thibodeaux's mother, Mrs. Watson (age 63). Mrs. Watson provided over one-half of her own support.
Prescription drugs for Mr. Thibodeaux
$3,600
General vitamins for Mrs. Thibodeaux
$ 100
Doctor bill for Mr. Thibodeaux
$1,800
Doctor bill for Mrs. Thibodeaux
$4,000
Hospital bill for Mrs. Watson
$2,200
Mr. and Mrs. Thibodeaux received no reimbursement for the above expenditures. What is the amount of their deductible itemized medical expenses?
A) $1,900
B) $2,000
C) $4,100
D) $9,400
54) Mr. and Mrs. Gere, who are filing a joint return, have adjusted gross income of $50,000. During the tax year, they paid the following medical expenses for themselves and for Mrs. Gere's mother, Mrs. Williams. The Gere's could claim Mrs. Williams as their dependent, but she has too much gross income.
Insulin for Mr. Gere
$1,000
Health insurance premiums for Mrs. Gere
$3,100
Hospital bill for Mrs. Williams
$5,200
Doctor bill for Mrs. Gere
$4,000
Mr. and Mrs. Gere received no reimbursement for the above expenditures. What is the amount of their deductible itemized medical expenses?
A) $5,200
B) $8,300
C) $4,300
D) $13,300
55) The following taxes are deductible as itemized deductions with the exception of
A) state income taxes.
B) federal income taxes.
C) foreign real property taxes.
D) local personal property taxes.
56) Matt paid the following taxes in 2014:
Real estate taxes on rental property he owns
$4,000
Real estate taxes on his own residence
3,600
Federal income taxes
8,000
State income taxes
3,400
Local city income taxes
500
State sales taxes
700
What amount can Matt deduct as an itemized deduction on his tax return?
A) $7,500
B) $11,500
C) $15,500
D) $19,500
57) In 2014, Carlos filed his 2013 state income tax return and paid taxes of $800. Also in 2014, Carlos's employer withheld state income tax of $750 from Carlos's salary. In 2015, Carlos filed his 2014 state income tax return and paid an additional $600 of state income tax due for 2014. How much state income tax can Carlos deduct on his 2014 federal income tax return for state income tax?
A) $1,350
B) $1,400
C) $1,550
D) $2,150
58) Doug pays a county personal property tax on his automobile of $1,500. The $1,500 includes $800 based on the weight of the car and $700 based on the value of the car. How much of the tax can Doug deduct on his tax return?
A) $0
B) $700
C) $800
D) $1,500
59) During the year Jason and Kristi, cash basis taxpayers, paid the following taxes:
State gift tax
$1,000
Property tax on home in the United States
4,100
State income tax (withholdings)
3,000
Estimated federal income tax
4,500
Estimated state income tax (paid by check)
800
Special assessment by city for sidewalks and street lighting
on their street
2,000
What amount can Kristi and Jason claim as an itemized deduction for taxes on their federal income tax return in the current year?
A) $7,900
B) $8,900
C) $10,900
D) $15,400
60) In February of the current year (assume a non-leap year), Ken and Kelsey received their property tax statement for last calendar-year taxes of $1,600, which they paid to the taxing authority on March 1 of the current year. They had purchased their home on May 1 last year. What amount of property tax on this statement may they claim as an itemized deduction this year?
A) $0
B) $1,069
C) $1,074
D) $1,600
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MKT 515 Week 11 Final Exam – Strayer New
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Chapter 9 Through 19
Chapter 9
Multiple Choice
1. In global market entry, all of the following are entry decisions that must be made by
management before entering an international market EXCEPT:
a. decide on the time of entry.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the target budget.
2. When marketers are making the decision to enter an international market or not, the
first step is generally to:
a. decide on the target budget.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.
3. When marketers are making the decision to enter an international market or not, the
final step in the decision process is generally to:
a. decide on a control system to monitor the performance of the entered market.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.
4. Which of the following most accurately describes the first step in the market entry
decision process?
a. Decide on the goals of the target markets.
b. Decide on the mode of entry.
c. Decide on the time of entry.
d. Decide on the target product/market.
�� e. Decide on the marketing mix plan.
5. Which of the following is a step in the market entry decision process?
a. Forecast a corporate budget.
b. Conduct a marketing audit.
c. Decide on a mode of entry.
d. Review transportation strengths.
e. Analyze domestic demand.
6. To identify market opportunities for a given product or service, the international
marketer usually starts off with a large pool of candidate countries. To narrow down
this pool, the company will typically do a(n) _______________________.
a. internal audit.
b. external audit.
c. cross-border budget.
d. preliminary screen.
e. econometric analysis.
7. The goals of a preliminary screen to determine market opportunities are to minimize
mistakes of ignoring countries that offer viable opportunities for the product and:
a. offending local governments.
b. offending local cultures.
c. offending local merchants.
d. violating local advertising laws.
e. not wasting time on countries that offer little or no potential.
8. The four-step procedure that can be employed for the initial screening process
includes all of the following EXCEPT:
a. select indicators and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute the overall scores for each country.
9. When Colgate-Palmolive sees prospects in countries with purchasing power as a
major driver behind market opportunities and Coca-Cola looks at per capita income
and the number of minutes that it would take someone to work to be able to afford a
Coca-Cola product, they are following which of the following steps of the initial
screening process for market entry?
a. indicator and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute overall scores for each country.
10. A four-step procedure that can be employed for the initial screening process includes
the following EXCEPT:
a. select indicators and collect data.
b. determine importance of country indicators.
c. hire outside consultants to do a marketing audit.
d. rate the countries in the pool on each indicator.
e. compute overall score for each country.
11. When Coca-Cola looks at per capita income and the number of minutes that it would
take for somebody to work to be able to afford a Coca-Cola product, the company is
following which of the following steps of the initial screening process for
market entry?
a. indicator and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute overall scores for each country.
12. Wrigley, the U.S. chewing gum manufacturer, has not been interested in most Latin
American markets because many of the local governments imposed ownership
restrictions. This would be an example of ________________ in markets.
a. finding opportunities
b. “weeding out”
c. cross-fertilization
d. demand conflict
e. unfairness
13. One method of assessing whether a company should enter a foreign market or not is
to use an opportunity matrix. To use such a matrix, the marketer should assess high,
moderate, and low opportunities as measured on business and political risk and
___________________ scales or cells.
a. demand
b. financial constraints
c. market opportunities
d. market sensitivity
e. distance from home market
14. All of the following are major external criteria for making a decision as to a mode of
entry into a foreign market EXCEPT:
a. company leadership.
b. market size and growth.
c. need for control.
d. government regulations.
e. local infrastructure.
15. The key determinant in the market entry choice decisions is the:
a. risk.
b. local infrastructure.
c. flexibility.
d. internal resources and assets.
e. market size and growth potential.
16. In the mode of entry, many companies see liaison office as a low-cost
___________________.
a. joint venture
b. export management company
c. listening post
d. contract exporter
e. alliance post
17. The ____________________ of a market refers to the country’s distribution system,
transportation network, and communication system.
a. demographic environment
b. infrastructure
c. logistical
d. physical distribution
e. physical infrastructure
18. Markets can be classified in four types of countries based on their respective market
attractiveness. All of the following are part of the classification scheme EXCEPT:
a. platform countries.
b. emerging countries.
c. low-tech countries.
d. growth countries.
e. maturing and established countries.
19. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following of those types can be used to gather
intelligence and establish a network?
a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.
20. Markets can be classified in four types of countries based on their respective market
attractiveness. Hong Kong and Singapore would fall into which of the types listed
below (where the purpose would be to gather intelligence and establish a network)?
a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.
21. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following of those types can be used to build up an
initial presence (such as through a liaison office)?
a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above
22. Markets can be classified in four types of countries based on their respective market
attractiveness. Vietnam and the Philippines would fall into which of the types listed
below (where the purpose would be to build up an initial presence such as through a
liaison office)?
a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.
23. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as a
maturing/established market?
a. China.
b. Burma.
c. India.
d. Taiwan.
e. China.
24. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as an
established/maturing market?
a. China.
b. the Philippines.
c. India.
d. Vietnam.
e. Japan.
25. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as
a growth country?
a. Hong Kong.
b. Vietnam.
c. China.
d. Taiwan.
e. Japan.
26. A _________________________ perspective argues that the desirable governance
structure (high- versus low-control mode) will depend on the comparative transaction
costs (the costs of running an operation).
a. demand-delivery
b. just-in-time management
c. management-by-objectives
d. quantity-cost allocation
e. transaction-cost analysis
27. From a transaction-cost analysis perspective, market failure typically happens when
transaction-specific assets become _________________ and therefore more high-
control situations are needed.
a. optional
b. valuable
c. expendable
d. less-valuable
e. weaker
28. Most companies start their international expansion with _________________.
a. exporting
b. joint ventures
c. licensing
d. franchising.
e. contract manufacturing.
29. In the area of exporting, a middleman could be an __________________________.
a. export outsourcing company
b. export management company
c. export production company
d. export specialist company
e. export manufacturing company
30. Companies that plan to engage in exporting have a choice between indirect,
_________________, and direct exporting.
a. licensing
b. parallel
c. cooperative
d. venture
e. summation
31. _______________________ means that the firm uses a middleman based in its home
market to do the exporting.
a. Licensing
b. Contract manufacturing
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting
32. ___________________ offers several advantages. Chief among these
are the firm gets instant foreign market expertise, very little risk is involved, and
no major resource commitments are required.
a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting
33. ___________________ has disadvantages. Chief among these are that the company
has little or no control over the way their product is marketed in a foreign country,
lack of adequate sales support (among other support variables) can lead to poor sales,
and bad decisions made by an intermediary can damage the corporate image.
a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting
34. ______________________ means that the firm enters into an agreement
with another firm (local or foreign) where the partner will use its distribution network
to sell the exporter’s goods.
a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting
35. ______________________ means that the company sets up its own
export organization within the company and relies on a middleman based in a
foreign market (foreign distributor).
a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting
36. Cooperative exporting is also called:
a. specialist exporting.
b. lean exporting.
c. long-range exporting.
d. backward exporting.
e. piggyback exporting.
37. One of the most popular forms of cooperative exporting is _________________.
With this method, the company uses the overseas distribution network of another
company (local or foreign) for selling its goods in the foreign market.
a. parallel exporting.
b. venture exporting.
c. piggyback exporting.
d. make-or-buy exporting.
e. foreign export management exporting.
38. One of the main advantages of direct exporting over indirect exporting is that the
exporter has more:
a. leverage.
b. risk.
c. control over its operations.
d. budget.
e. leadership.
39. ___________________ is a contractual strategy where the firm offers some
proprietary assets to a foreign company in exchange for royalty fees.
a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting
40. The Oriental Land Company in Japan owns Tokyo Disneyland. This would be
an example of an international _________________ agreement between the
Oriental Land Company (owner) and Disneyland (receives royalties).
a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting
41. Benefits of licensing include:
a. not very demanding on company resources.
b. always protected against copying or technical theft.
c. always a strong partner relationship.
d. low profits, therefore, low taxes.
e. licensee is always enthusiastic.
42. Nurturing a future competitor is the biggest danger in ___________________.
a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting
43. One of the most popular entry modes in the international marketplace for service
firms is:
a. licensing.
b. franchising.
c. cooperative exporting.
d. direct exporting.
e. indirect exporting.
44. According to the textbook, in franchising, companies can capitalize on a _______________________________.
a. cheap business formula.
b. expensive business formula.
c. winning business formula.
d. parallel business formula.
e. hybrid business formula.
45. One of the most popular franchise plans used in international marketing is
____________________ where the franchiser gives the franchise to a local
entrepreneur who in turn sells local franchises within a territory.
a. sales franchise
b. master franchise
c. strategic franchise
d. cross-country franchise
e. border-territory franchise
46. In ____________________, the company arranges with a local manufacturer to
manufacture parts of the product or even the entire product. The marketing of the
product, however, is still the responsibility of the international firm.
a. licensing
b. franchising
c. cooperative exporting
d. contract manufacturing
e. indirect exporting
47. ___________________ are(is) the prime motivation behind contract manufacturing.
a. Advertising cooperation
b. Leadership
c. Cost savings
d. Profit expansion
e. Desire to be part of a cartel
48. Like licensing and franchising, nurturing a future competitor is one of the biggest
dangers in ___________________.
a. contract manufacturing.
b. parallel exporting.
c. cooperative exporting.
d. using an export management company.
e. indirect exporting.
49. In contract manufacturing, because of “nurture-a-future competitor” threat, many
companies prefer to make ___________________ or products that involve
proprietary design features in-house.
a. just-in-time items
b. under-value items
c. low-value items
d. high-value items
e. none of the bove
50. With a __________________, the foreign company agrees to share equity and other
resources with other partners to establish a new entity in the target country.
a. contract manufacturing agreement
b. parallel exporting agreement
c. cooperative exporting agreement
d. export management company
e. joint venture
51. A major advantage of joint ventures, as compared to lesser forms of resource
commitment such as licensing, is:
a. the return potential.
b. infrastructure enhancement.
c. expansion of stockholders.
d. division of leadership.
e. an increase in ethical standards.
52. All of the following are considered benefits of forming joint ventures EXCEPT:
a. greater return potential.
b. shared profits instead of shared royalties.
c. more control over operations.
d. increased cost controls.
e. synergies.
53. With respect to joint ventures, the ________________ argument is illustrated by
not only shared capital and risk but possible contributions brought in by the local
partner in land, raw materials, expertise on the local environment, and access to
local distribution networks.
a. demand
b. parallel management
c. consensus management
d. domestication
e. synergy
54. Lack of trust and mutual conflicts can often turn ______________ into partnerships
doomed to failure.
a. contract manufacturing agreements
b. parallel exporting agreements
c. cooperative exporting agreements
d. export management companies
e. joint ventures
55. One of the problems with joint ventures is ________________ between partners. An
example would be when one partner wants to stress reduction of political and
economic controls on decision-making and the other partner wants to accept
technology and capital but precludes foreign authority infringement on sovereignty
and ideology.
a. conflicting purchasing objectives
b. conflicting process objectives
c. control objectives
d. budget objectives
e. staffing objectives
56. There are no magic ingredients to foster the stability of joint ventures, however, all
of the following are good guidelines EXCEPT:
a. pick a partner with which control can be maintained.
b. pick the right partner.
c. establish clear objectives from the beginning.
d. bridge cultural gaps.
e. get top management commitment and respect.
57. _____________________ come about when multinational companies prefer to enter
new markets with 100 percent ownership.
a. Contract manufacturing agreements
b. Parallel exporting agreements
c. Cooperative exporting agreements
d. Wholly owned subsidiaries
e. Joint ventures
58. When a multinational company chooses to invest in foreign markets with wholly
owned subsidiaries, these subsidiaries may be acquisitions or _______________
operations.
a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback
59. A _________________ operation (with respect to wholly owned subsidiaries) is one
which is started from scratch.
a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback
60. Wholly owned subsidiaries give MNCs _______________ of their operations.
a. almost no control
b. partial control
c. moderate control
d. full control
e. strategic control only
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ACC 350 Week 11 Final Exam Quiz – Strayer
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Chapter 5 Through 10
Activity-Based Costing and Activity-Based Management
1)
A top-selling product might actually result in losses for the company.
2)
Companies that undercost products will most likely lose market share.
3)
If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.
4)
As product diversity and indirect costs increase, it is usually best to switch away from an activity based cost system to a broad averaging system.
5)
If a company undercosts one of its products, then it will overcost at least one of its other products.
6)
Direct costs plus indirect costs equal total costs.
7)
When refining a costing system, a company should classify as many costs as possible as indirect costs.
8)
In a homogeneous cost pool, all costs have a similar cause-and-effect relationship with the cost-allocation base.
9)
Indirect labor and distribution costs would most likely be in the same activity-cost pool.
10)
Activity-based costing helps identify various activities that explain why costs are incurred.
11)
Direct tracing of costs improves cost accuracy.
12)
A cost-allocation base is a necessary element when using a strategy that will refine a costing system.
13)
An activity-based costing system is necessary for costing services that are similar.
14)
Traditional systems are likely to undercost complex products with lower production volume.
15)
For activity-based cost systems, activity costs are assigned to products in the proportion of the demand they place on activity resources.
16)
Unit-level measures can distort product costing because the demand for overhead resources may be driven by batch-level or product-sustaining activities.
17)
Output unit-level costs cannot be determined unless you know how many units are in a given batch.
18)
Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system.
19)
Misleading cost numbers are larger when unit-level assignments and the alternative activity-cost-driver assignments are proportionately similar to each other.
20)
Availability of reliable data and measures should be considered when choosing a cost-allocation base.
21)
When designing a costing system, it is easiest to calculate total costs first, and then per-unit costs.
22)
ABC systems attempt to trace more costs as direct costs.
23)
ABC systems create homogeneous cost pools linked to different activities.
24)
ABC systems seek a cost allocation base that has a cause-and-effect relationship with costs in the cost pool.
25)
For service organizations, activity-based cost systems may be used to clarify appropriate cost assignments.
26)
ABC reveals opportunities for improving the way work is done.
27)
Activity-based management refers to the use of information derived from ABC analysis to analyze and improve operations.
28)
Information derived from an ABC analysis might be used to eliminate nonvalue-added activities.
29)
ABC costing systems are primarily for use in manufacturing and marketing and not for design engineering.
30)
Department-costing systems are a further refinement of ABC systems.
31)
ABC systems are useful in manufacturing, but not in the merchandising or service industries.
32)
Costing systems with multiple cost pools are considered ABC systems.
33)
Regarding department wide systems, the benefits of an ABC system must be balanced against its costs and limitations.
34)
ABC systems always provide decision-making benefits that exceed implementation costs.
35)
The primary costs of an ABC system are the measurements necessary to implement the system.
36)
Simply because activity-based costing systems employ more activity-cost drivers, they provide more accurate product costs than traditional systems.
37)
If products are alike, then for costing purposes:
A)
a simple costing system will yield accurate cost numbers
B)
an activity-based costing system should be used
C)
multiple indirect-cost rates should be used
D)
varying demands will be placed on resources
38)
Undercosting a particular product may result in:
A)
loss of market share
B)
lower profits
C)
operating inefficiencies
D)
understating total product costs
39)
Overcosting of a product is MOST likely to result from:
A)
misallocating direct labor costs
B)
overpricing the product
C)
undercosting another product
D)
understating total product costs
40)
A company produces three products; if one product is overcosted then:
A)
one product is undercosted
B)
one or two products are undercosted
C)
two products are undercosted
D)
no products are undercosted
41)
Misleading cost numbers are MOST likely the result of misallocating:
A)
direct material costs
B)
direct manufacturing labor costs
C)
indirect costs
D)
All of these answers are correct.
42)
An accelerated need for refined cost systems is due to:
A)
global monopolies
B)
rising prices
C)
intense competition
D)
a shift toward increased direct costs
43)
The use of a single indirect-cost rate is more likely to:
A)
undercost high-volume simple products
B)
undercost low-volume complex products
C)
undercost lower-priced products
D)
Both B and C are correct.
44)
Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called:
A)
overcosting
B)
undercosting
C)
peanut-butter costing
D)
department costing
45)
Refining a cost system includes:
A)
classifying as many costs as indirect costs as is feasible
B)
creating as many cost pools as possible
C)
identifying the activities involved in a process
D)
seeking a lesser level of detail
46)
Greater indirect costs are associated with:
A)
specialized engineering drawings
B)
quality specifications and testing
C)
inventoried materials and material control systems
D)
All of these answers are correct.
47)
Design of an ABC system requires:
A)
that the job bid process be redesigned
B)
that a cause-and-effect relationship exists between resource costs and individual activities
C)
an adjustment to product mix
D)
Both B and C are correct.
48)
ABC systems create:
A)
one large cost pool
B)
homogenous activity-related cost pools
C)
activity-cost pools with a broad focus
D)
activity-cost pools containing many direct costs
49)
Logical cost allocation bases include:
A)
cubic feet of packages moved to measure distribution activity
B)
machine hours to measure setup activity
C)
direct manufacturing labor hours to measure designing activity
D)
All of these answers are correct.
50)
ABC systems:
A)
highlight the different levels of activities
B)
limit cost drivers to units of output
C)
allocate costs based on the overall level of activity
D)
generally undercost complex products
51)
A single indirect-cost rate may distort product costs because:
A)
there is an assumption that all support activities affect all products
B)
it recognizes specific activities that are required to produce a product
C)
costs are not consistently recorded
D)
it fails to measure the correct amount of total costs
52)
Traditional cost systems distort product costs because:
A)
they do not know how to identify the appropriate units
B)
competitive pricing is ignored
C)
they emphasize financial accounting requirements
D)
they apply average support costs to each unit of product
53)
Which of the following statements about activity-based costing is NOT true?
A)
Activity-based costing is useful for allocating marketing and distribution costs.
B)
Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
C)
Activity-based costing seeks to distinguish batch-level, product-sustaining, and facility-sustaining costs, especially when they are not proportionate to one another.
D)
Activity-based costing differs from traditional costing systems in that products are not cross-subsidized.
54)
Activity-based costing (ABC) can eliminate cost distortions because ABC:
A)
develops cost drivers that have a cause-and-effect relationship with the activities performed
B)
establishes multiple cost pools
C)
eliminates product variations
D)
recognizes interactions between different departments in assigning support costs
55)
Product lines that produce different variations (models, styles, or colors) often require specialized manufacturing activities that translate into:
A)
fewer indirect costs for each product line
B)
decisions to drop product variations
C)
a greater number of direct manufacturing labor cost allocation rates
D)
greater overhead costs for each product line
Answer the following questions using the information below:
Merriman Company provides the following ABC costing information:
Activities Total Costs Activity-cost drivers
Account inquiry hours $400,000 10,000 hours
Account billing lines $280,000 4,000,000 lines
Account verification accounts $150,000 40,000 accounts
Correspondence letters $ 50,000 4,000 letters
Total costs $880,000
The above activities are used by Departments A and B as follows:
Department A Department B
Account inquiry hours 2,000 hours 4,000 hours
Account billing lines 400,000 lines 200,000 lines
Account verification accounts 10,000 accounts 8,000 accounts
Correspondence letters 1,000 letters 1,600 letters
56)
How much of the account inquiry cost will be assigned to Department A?
A)
$80,000
B)
$400,000
C)
$160,000
D)
None of these answers are correct.
57)
How much of the account billing cost will be assigned to Department B?
A)
$28,000
B)
$280,000
C)
$14,000
D)
None of these answers are correct.
58)
How much of account verification costs will be assigned to Department A?
A)
$30,000
B)
$37,500
C)
$150,000
D)
$10,000
59)
How much of correspondence costs will be assigned to Department B?
A)
$1,600
B)
$12,500
C)
$50,000
D)
$20,000
60)
How much of the total costs will be assigned to Department A?
A)
$158,000
B)
$80,000
C)
$224,000
D)
$880,000
61)
How much of the total costs will be assigned to Department B?
A)
$158,000
B)
$80,000
C)
$224,000
D)
$880,000
62)
Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?
A)
$0.50
B)
$1.00
C)
$1.50
D)
$2.00
63)
Activity-based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT:
A)
numerous products that consume different amounts of resources
B)
operations that remain fairly consistent
C)
a highly competitive environment, where cost control is critical
D)
accessible accounting and information systems expertise to maintain the system
64)
Each of the following statements is true EXCEPT:
A)
traditional product costing systems seek to assign all manufacturing costs to products
B)
ABC product costing systems seek to assign all manufacturing costs to products
C)
traditional product costing systems are more refined than an ABC system
D)
cost distortions occur when a mismatch (incorrect association) occurs between the way indirect costs are incurred and the basis for their assignment to individual products
Answer the following questions using the information below:
Happy Valley Land and Snow Company provides the following ABC costing information:
Activities Total Costs Activity-cost drivers
Labor hours $160,000 8,000 hours
Gas $18,000 6,000 gallons
Invoices $20,000 2,500 invoices
Total costs $198,000
The above activities used by their three departments are:
Lawn Department Bush Department Plowing Department
Labor hours 2,500 hours 1,200 hours 4,300 hours
Gas 1,500 gallons 800 gallons 3,700 gallons
Invoices 1,600 invoices 400 invoices 500 invoices
65)
How much of the labor cost will be assigned to the Lawn Department?
A)
$50,000
B)
$12,800
C)
$20,000
D)
None of these answers are correct.
66)
How much of the gas cost will be assigned to the Plowing Department?
A)
$25,000
B)
$11,100
C)
$15,000
D)
None of these answers are correct.
67)
How much of invoice cost will be assigned to the Bush Department?
A)
$3,200
B)
$4,000
C)
$12,800
D)
$20,000
68)
How much of the gas cost will be assigned to the Lawn Department?
A)
$2,400
B)
$10,000
C)
$4,500
D)
$11,100
69)
How much of the total cost will be assigned to the Plowing Department?
A)
$198,000
B)
$101,100
C)
$67,300
D)
$86,000
70)
How much of the total costs will be assigned to the Lawn Department?
A)
$50,000
B)
$29,600
C)
$100,000
D)
$67,300
71)
The MOST likely example of an output unit-level cost is:
A)
general administrative costs
B)
paying suppliers for orders received
C)
engineering costs
D)
machine depreciation
72)
The MOST likely example of a batch-level cost is:
A)
utility costs
B)
machine repairs
C)
product-designing costs
D)
setup costs
73)
Design costs are an example of:
A)
unit-level costs
B)
batch-level costs
C)
product-sustaining costs
D)
facility-sustaining costs
74)
________ costs support the organization as a whole.
A)
Unit-level
B)
Batch-level
C)
Product-sustaining
D)
Facility-sustaining
75)
It is usually difficult to find good cause-and-effect relationships between ________ and a cost allocation base.
A)
unit-level costs
B)
batch-level costs
C)
product-sustaining costs
D)
facility-sustaining costs
76)
To set realistic selling prices:
A)
all costs should be allocated to products
B)
costs should only be allocated when there is a strong cause-and-effect relationship
C)
only unit-level costs and batch-level costs should be allocated
D)
only unit-level costs should be allocated
77)
Different products consume different proportions of manufacturing overhead costs because of differences in all of the following EXCEPT:
A)
selling prices
B)
customers' customization specifications
C)
setup times
D)
product design
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ACC 401 Week 11 Quiz Final Exam– Strayer
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Quiz (Chapter 15 – 16) Final Exam (Chapter 5, 8, and 10 – 16)
Chapter 5
Allocation and Depreciation of Differences Between Implied and Book Value
Multiple Choice
1. When the implied value exceeds the aggregate fair values of identifiable net assets, the residual difference is accounted for as
a. excess of implied over fair value.
b. a deferred credit.
c. difference between implied and fair value.
d. goodwill.
2. Long-term debt and other obligations of an acquired company should be valued for consolidation purposes at their
a. book value.
b. carrying value.
c. fair value.
d. face value.
3. On January 1, 2010, Lester Company purchased 70% of Stork Corporation's $5 par common stock for $600,000. The book value of Stork net assets was $640,000 at that time. The fair value of Stork's identifiable net assets were the same as their book value except for equipment that was $40,000 in excess of the book value. In the January 1, 2010, consolidated balance sheet, goodwill would be reported at
a. $152,000.
b. $177,143.
c. $80,000.
d. $0.
4. When the value implied by the purchase price of a subsidiary is in excess of the fair value of identifiable net assets, the workpaper entry to allocate the difference between implied and book value includes a
1. debit to Difference Between Implied and Book Value.
2. credit to Excess of Implied over Fair Value.
3. credit to Difference Between Implied and Book Value.
a. 1
b. 2
c. 3
d. Both 1 and 2
5. If the fair value of the subsidiary's identifiable net assets exceeds both the book value and the value implied by the purchase price, the workpaper entry to eliminate the investment account
a. debits Excess of Fair Value over Implied Value.
b. debits Difference Between Implied and Fair Value.
c. debits Difference Between Implied and Book Value.
d. credits Difference Between Implied and Book Value.
6. The entry to amortize the amount of difference between implied and book value allocated to an unspecified intangible is recorded
1. on the subsidiary's books.
2. on the parent's books.
3. on the consolidated statements workpaper.
a. 1
b. 2
c. 3
d. Both 2 and 3
7. The excess of fair value over implied value must be allocated to reduce proportionally the fair values initially assigned to
a. current assets.
b. noncurrent assets.
c. both current and noncurrent assets.
d. none of the above.
8. The SEC requires the use of push down accounting when the ownership change is greater than
a. 50%
b. 80%
c. 90%
d. 95%
9. Under push down accounting, the workpaper entry to eliminate the investment account includes a
a. debit to Goodwill.
b. debit to Revaluation Capital.
c. credit to Revaluation Capital.
d. debit to Revaluation Assets.
10. In a business combination accounted for as an acquisition, how should the excess of fair value of identifiable net assets acquired over implied value be treated?
a. Amortized as a credit to income over a period not to exceed forty years.
b. Amortized as a charge to expense over a period not to exceed forty years.
c. Amortized directly to retained earnings over a period not to exceed forty years.
d. Recognized as an ordinary gain in the year of acquisition.
11. On November 30, 2010, Pulse Incorporated purchased for cash of $25 per share all 400,000 shares of the outstanding common stock of Surge Company. Surge 's balance sheet at November 30, 2010, showed a book value of $8,000,000. Additionally, the fair value of Surge's property, plant, and equipment on November 30, 2010, was $1,200,000 in excess of its book value. What amount, if any, will be shown in the balance sheet caption "Goodwill" in the November 30, 2010, consolidated balance sheet of Pulse Incorporated, and its wholly owned subsidiary, Surge Company?
a. $0.
b. $800,000.
c. $1,200,000.
d. $2,000,000.
12. Goodwill represents the excess of the implied value of an acquired company over the
a. aggregate fair values of identifiable assets less liabilities assumed.
b. aggregate fair values of tangible assets less liabilities assumed.
c. aggregate fair values of intangible assets less liabilities assumed.
d. book value of an acquired company.
13. Scooter Company, a 70%-owned subsidiary of Pusher Corporation, reported net income of $240,000 and paid dividends totaling $90,000 during Year 3. Year 3 amortization of differences between current fair values and carrying amounts of Scooter's identifiable net assets at the date of the business combination was $45,000. The noncontrolling interest in net income of Scooter for Year 3 was
a. $58,500.
b. $13,500.
c. $27,000.
d. $72,000.
14. Porter Company acquired an 80% interest in Strumble Company on January 1, 2010, for $270,000 cash when Strumble Company had common stock of $150,000 and retained earnings of $150,000. All excess was attributable to plant assets with a 10-year life. Strumble Company made $30,000 in 2010 and paid no dividends. Porter Company’s separate income in 2010 was $375,000. Controlling interest in consolidated net income for 2010 is:
a. $405,000.
b. $399,000.
c. $396,000.
d. $375,000.
15. In preparing consolidated working papers, beginning retained earnings of the parent company will be adjusted in years subsequent to acquisition with an elimination entry whenever:
a. a noncontrolling interest exists.
b. it does not reflect the equity method.
c. the cost method has been used only.
d. the complete equity method is in use.
16. Dividends declared by a subsidiary are eliminated against dividend income recorded by the parent under the
a. partial equity method.
b. equity method.
c. cost method.
d. equity and partial equity methods.
Use the following information to answer questions 17 through 20.
On January 1, 2010, Pandora Company purchased 75% of the common stock of Saturn Company. Separate balance sheet data for the companies at the combination date are given below:
Saturn Co. Saturn Co.
Pandora Co. Book Values Fair Values
Cash $ 18,000 $155,000 $155,000
Accounts receivable 108,000 20,000 20,000
Inventory 99,000 26,000 45,000
Land 60,000 24,000 45,000
Plant assets 525,000 225,000 300,000
Acc. depreciation (180,000) (45,000)
Investment in Saturn Co. 330,000
Total assets $960,000 $405,000 $565,000
Accounts payable $156,000 $105,000 $105,000
Capital stock 600,000 225,000
Retained earnings 204,000 75,000
Total liabilities & equities $960,000 $405,000
Determine below what the consolidated balance would be for each of the requested accounts on January 2, 2010.
17. What amount of inventory will be reported?
a. $125,000
b. $132,750
c. $139,250
d. $144,000
18. What amount of goodwill will be reported?
a. ($20,000)
b. ($25,000)
c. $25,000
d. $0
19. What is the amount of consolidated retained earnings?
a. $204,000
b. $209,250
c. $260,250
d. $279,000
20. What is the amount of total assets?
a. $921,000
b. $1,185,000
c. $1,525,000
d. $1,195,000
21. Sensible Company, a 70%-owned subsidiary of Proper Corporation, reported net income of $600,000 and paid dividends totaling $225,000 during Year 3. Year 3 amortization of differences between current fair values and carrying amounts of Sensible's identifiable net assets at the date of the business combination was $112,500. The noncontrolling interest in consolidated net income of Sensible for Year 3 was
a. $146,250.
b. $33,750.
c. $67,500.
d. $180,000.
22. Primer Company acquired an 80% interest in SealCoat Company on January 1, 2010, for $450,000 cash when SealCoat Company had common stock of $250,000 and retained earnings of $250,000. All excess was attributable to plant assets with a 10-year life. SealCoat Company made $50,000 in 2010 and paid no dividends. Primer Company’s separate income in 2010 was $625,000. The controlling interest in consolidated net income for 2010 is:
a. $675,000.
b. $665,000.
c. $660,000.
d. $625,000.
Use the following information to answer questions 23 through 25.
On January 1, 2010, Poole Company purchased 75% of the common stock of Swimmer Company. Separate balance sheet data for the companies at the combination date are given below:
Swimmer Co. Swimmer Co.
Poole Co. Book Values Fair Values
Cash $ 24,000 $206,000 $206,000
Accounts receivable 144,000 26,000 26,000
Inventory 132,000 38,000 60,000
Land 78,000 32,000 60,000
Plant assets 700,000 300,000 350,000
Acc. depreciation (240,000) (60,000)
Investment in Swimmer Co. 440,000
Total assets $1,278,000 $542,000 $702,000
Accounts payable $206,000 $142,000 $142,000
Capital stock 800,000 300,000
Retained earnings 272,000 100,000
Total liabilities & equities $1,278,000 $542,000
Determine below what the consolidated balance would be for each of the requested accounts on January 2, 2010.
23. What amount of inventory will be reported?
a. $170,000.
b. $177,000.
c. $186,500.
d. $192,000.
24. What amount of goodwill will be reported?
a. $26,667.
b. $20,000.
c. $42,000.
d. $86,667.
25. What is the amount of total assets?
a. $1,626,667.
b. $1,566,667
c. $1,980,000.
d. $2,006,667.
Problems
5-1 Phillips Company purchased a 90% interest in Standards Corporation for $2,340,000 on January 1, 2010. Standards Corporation had $1,650,000 of common stock and $1,050,000 of retained earnings on that date.
The following values were determined for Standards Corporation on the date of purchase:
Book Value Fair Value
Inventory $240,000 $300,000
Land 2,400,000 2,700,000
Equipment 1,620,000 1,800,000
Required:
A. Prepare a computation and allocation schedule for the difference between the implied and book value in the consolidated statements workpaper.
B. Prepare the January 1, 2010, workpaper entries to eliminate the investment account and allocate the difference between implied and book value.
5-2 Pullman Corporation acquired a 90% interest in Sleeper Company for $6,500,000 on January 1 2010. At that time Sleeper Company had common stock of $4,500,000 and retained earnings of $1,800,000. The balance sheet information available for Sleeper Company on January 1, 2010, showed the following:
Book Value Fair Value
Inventory (FIFO) $1,300,000 $1,500,000
Equipment (net) 1,500,000 1,900,000
Land 3,000,000 3,000,000
The equipment had a remaining useful life of ten years. Sleeper Company reported $240,000 of net income in 2010 and declared $60,000 of dividends during the year.
Required:
Prepare the workpaper entries assuming the cost method is used, to eliminate dividends, eliminate the investment account, and to allocate and depreciate the difference between implied and book value for 2010.
5-3 On January 1, 2010, Preston Corporation acquired an 80% interest in Spiegel Company for $2,400,000. At that time Spiegel Company had common stock of $1,800,000 and retained earnings of $800,000. The book values of Spiegel Company's assets and liabilities were equal to their fair values except for land and bonds payable. The land's fair value was $120,000 and its book value was $100,000. The outstanding bonds were issued on January 1, 2005, at 9% and mature on January 1, 2015. The bond principal is $600,000 and the current yield rate on similar bonds is 8%.
Required:
Prepare the workpaper entries necessary on December 31, 2010, to allocate, amortize, and depreciate the difference between implied and book value.
Present Value
Present value of 1 of Annuity of 1
9%, 5 periods .64993 3.88965
8%, 5 periods .68058 3.99271
5-4 Pennington Corporation purchased 80% of the voting common stock of Stafford Corporation for $3,200,000 cash on January 1, 2010. On this date the book values and fair values of Stafford Corporation's assets and liabilities were as follows:
Book Value Fair Value
Cash $ 70,000 $ 70,000
Receivables 240,000 240,000
Inventories 600,000 700,000
Other Current Assets 340,000 405,000
Land 600,000 720,000
Buildings – net 1,050,000 1,920,000
Equipment – net 850,000 750,000
$3,750,000 $4,805,000
Accounts Payable $ 250,000 $250,000
Other Liabilities 740,000 670,000
Capital Stock 2,400,000
Retained Earnings 360,000
$3,750,000
Required:
Prepare a schedule showing how the difference between Stafford Corporation's implied value and the book value of the net assets acquired should be allocated.
5-5 Perez Corporation acquired a 75% interest in Schmidt Company on January 1, 2010, for $2,000,000. The book value and fair value of the assets and liabilities of Schmidt Company on that date were as follows:
Book Value Fair Value
Current Assets $ 600,000 $ 600,000
Property & Equipment (net) 1,400,000 1,800,000
Land 700,000 900,000
Deferred Charge 300,000 300,000
Total Assets $3,000,000 $3,600,000
Less Liabilities 600,000 600,000
Net Assets $2,400,000 $3,000,000
The property and equipment had a remaining life of 6 years on January 1, 2010, and the deferred charge was being amortized over a period of 5 years from that date. Common stock was $1,500,000 and retained earnings was $900,000 on January 1, 2010. Perez Company records its investment in Schmidt Company using the cost method.
Required:
Prepare, in general journal form, the December 31, 2010, workpaper entries necessary to:
A. Eliminate the investment account.
B. Allocate and amortize the difference between implied and book value.
5-6 On January 1, 2010, Page Company acquired an 80% interest in Schell Company for $3,600,000. On that date, Schell Company had retained earnings of $800,000 and common stock of $2,800,000. The book values of assets and liabilities were equal to fair values except for the following:
Book Value Fair Value
Inventory $ 50,000 $ 85,000
Equipment (net) 540,000 720,000
Land 300,000 660,000
The equipment had an estimated remaining useful life of 8 years. One-half of the inventory was sold in 2010 and the remaining half was sold in 2011. Schell Company reported net income of $240,000 in 2010 and $300,000 in 2011. No dividends were declared or paid in either year. Page Company uses the cost method to record its investment in Schell Company.
Required:
Prepare, in general journal form, the workpaper eliminating entries necessary in the consolidated statements workpaper for the year ending December 31, 2011.
5-7 Paddock Company acquired 90% of the stock of Spector Company for $6,300,000 on January 1, 2010. On this date, the fair value of the assets and liabilities of Spector Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of $2,300,000 and a book value of $1,900,000. The equipment had a fair value of $3,300,000 and a book value of $2,800,000.
The balances in Spector Company's capital stock and retained earnings accounts on the date of acquisition were $3,700,000 and $1,900,000, respectively.
Required:
In general journal form, prepare the entries on Spector Company's books to record the effect of the pushed down values implied by the acquisition of its stock by Paddock Company assuming that:
A values are allocated on the basis of the fair value of Spector Company as a whole imputed from the transaction.
B values are allocated on the basis of the proportional interest acquired by Paddock Company.
5-8 Pruitt Corporation acquired all of the voting stock of Soto Corporation on January 1, 2010, for $210,000 when Soto had common stock of $150,000 and retained earnings of $24,000. The excess of implied over book value was allocated $9,000 to inventories that were sold in 2010, $12,000 to equipment with a 4-year remaining useful life under the straight-line method, and the remainder to goodwill.
Financial statements for Pruitt and Soto Corporations at the end of the fiscal year ended December 31, 2011 (two years after acquisition), appear in the first two columns of the partially completed consolidated statements workpaper. Pruitt Corp. has accounted for its investment in Soto using the partial equity method of accounting.
Required:
Complete the consolidated statements workpaper for Pruitt Corporation and Soto Corporation for December 31, 2011.
Pruitt Corporation and Soto Corporation
Consolidated Statements Workpaper
at December 31, 2011
Eliminations
Pruitt Corp.
Soto Corp.
Debit
Credit
Consolidated Balances
INCOME STATEMENT
Sales
618,000
180,000
Equity from Subsidiary Income
36,000
Cost of Sales
(450,000)
(90,000)
Other Expenses
(114,000)
(54,000)
Net Income to Ret. Earn.
90,000
36,000
Pruitt Retained Earnings 1/1
72,000
Soto Retained Earnings 1/1
3,000
Add: Net Income
90,000
36,000
Less: Dividends
(60,000)
(12,000)
Retained Earnings 12/31
102,000
54,000
BALANCE SHEET
Cash
42,000
21,000
Inventories
63,000
45,000
Land
33,000
18,000
Equipment and Buildings-net
192,000
165,000
Investment in Soto Corp.
240,000
Total Assets
570,000
249,000
LIA & EQUITIES Liabilities
168,000
45,000
Common Stock
300,000
150,000
Retained Earnings
102,000
54,000
Total Equities
570,000
249,000
5-9 On January 1, 2010, Prescott Company acquired 80% of the outstanding capital stock of Sherlock Company for $570,000. On that date, the capital stock of Sherlock Company was $150,000 and its retained earnings were $450,000.
On the date of acquisition, the assets of Sherlock Company had the following values:
Fair Market
Book Value Value
Inventories............................................................... $ 90,000 $165,000
Plant and equipment.................................................... 150,000 180,000
All other assets and liabilities had book values approximately equal to their respective fair market values. The plant and equipment had a remaining useful life of 10 years from January 1, 2010, and Sherlock Company uses the FIFO inventory cost flow assumption.
Sherlock Company earned $180,000 in 2010 and paid dividends in that year of $90,000.
Prescott Company uses the complete equity method to account for its investment in S Company.
Required:
A. Prepare a computation and allocation schedule.
B. Prepare the balance sheet elimination entries as of December 31, 2010.
C. Compute the amount of equity in subsidiary income recorded on the books of Prescott Company on December 31, 2010.
D. Compute the balance in the investment account on December 31, 2010.
Short Answer
1. When the value implied by the acquisition price is below the fair value of the identifiable net assets the residual amount will be negative (bargain acquisition). Explain the difference in accounting for bargain acquisition between past accounting and proposed accounting requirements.
2. Push down accounting is an accounting method required for the subsidiary in some instances such as the banking industry. Briefly explain the concept of push down accounting.
Questions from the Textbook
1. Distinguish among the following concepts:(a)Difference between book value and the value implied by the purchase price.(b)Excess of implied value over fair value.(c)Excess of fair value over implied value.(d)Excess of book value over fair value.
2. In what account is the difference between book value and the value implied by the purchase
price recorded on the books of the investor? In what account is the “excess of implied over fair value” recorded?
3. How do you determine the amount of “the difference between book value and the value implied by the purchase price” to be allocated to a specific asset of a less than wholly owned subsidiary?
4. The parent company’s share of the fair value of the net assets of a subsidiary may exceed acquisition cost. How must this excess be treated in the preparation of consolidated financial statements?
5. What are the arguments for and against the alternatives for the handling of bargain acquisitions? Why are such acquisitions unlikely to occur with great frequency?
6. P Company acquired a 100% interest in S Company. On the date of acquisition the fair value of the assets and liabilities of S Company was equal to their book value except for land that had a fair value of $1,500,000 and a book value of $300,000.
At what amount should the land of S Company be included in the consolidated balance sheet?
At what amount should the land of S Company be included in the consolidated balance sheet if P Company acquired an80% interest in S Company rather than a 100%interest?
Business Ethics Question from the Textbook
Consider the following: Many years ago, a student in a consolidated financial statements class came to me and said that Grand Central (a multi-store grocery and variety chain in Salt Lake City and surrounding towns and cities) was going to be acquired and that I should try to buy the stock and make lots of money. I asked him how he knew and he told me that he worked part-time for Grand Central and heard that Fred Meyer was going to acquire it. I did not know whether the student worked in the accounting department at Grand Central or was a custodian at one of the stores. I thanked him for the information but did not buy the stock. Within a few weeks, the announcement was made that Fred Meyer was acquiring Grand Central and the stock price shot up, almost doubling. It was clear that I had missed an opportunity to make a lot of money ... I don’t know to this day whether or not that would have been insider trading. How-ever, I have never gone home at night and asked my wife if the SEC called. From “Don’t go to jail and other good advice for accountants,” by Ron Mano, Accounting Today, October 25, 1999.
Question: Do you think this individual would have been guilty of insider trading if he had purchased the stock in Grand Central based on this advice? Why or why not? Are there ever instances where you think it would be wise to miss out on an opportunity to reap benefits simply because the behavior necessitated would have been in a gray ethical area, though not strictly illegal? Defend your position.
Chapter 8
Changes in Ownership Interest
Multiple Choice
1. When the parent company sells a portion of its investment in a subsidiary, the workpaper entry to adjust for the current year’s income sold to noncontrolling stockholders includes a
a. debit to Subsidiary Income Sold.
b. debit to Equity in Subsidiary Income.
c. credit to Equity in Subsidiary Income.
d. credit to Subsidiary Income Sold.
2. A parent company may increase its ownership interest in a subsidiary by
a. buying additional subsidiary shares from third parties.
b. buying additional subsidiary shares from the subsidiary.
c. having the subsidiary purchase its shares from third parties.
d. all of these.
3. If a portion of an investment is sold, the value of the shares sold is determined by using the:
1. first-in, first-out method.
2. average cost method.
3. specific identification method.
a. 1
b. 2
c. 3
d. 1 and 3
4. If a parent company acquires additional shares of its subsidiary’s stock directly from the subsidiary for a price less than their book value:
1. total noncontrolling book value interest increases.
2. the controlling book value interest increases.
3. the controlling book value interest decreases.
a. 1
b. 2
c. 3
d. 1 and 3
5. If a subsidiary issues new shares of its stock to noncontrolling stockholders, the book value of the parent’s interest in the subsidiary may
a. increase.
b. decrease.
c. remain the same.
d. increase, decrease, or remain the same.
6. The purchase by a subsidiary of some of its shares from noncontrolling stockholders results in the parent company’s share of the subsidiary’s net assets
a. increasing.
b. decreasing.
c. remaining unchanged.
d. increasing, decreasing, or remaining unchanged.
7. The computation of noncontrolling interest in net assets is made by multiplying the noncontrolling interest percentage at the
a. beginning of the year times subsidiary stockholders’ equity amounts.
b. beginning of the year times consolidated stockholders’ equity amounts.
c. end of the year times subsidiary stockholders’ equity amounts.
d. end of the year times consolidated stockholders’ equity amounts.
8. Under the partial equity method, the workpaper entry that reverses the effect of subsidiary income for the year includes a:
1. credit to Equity in Subsidiary Income.
2. debit to Subsidiary Income Sold.
3. debit to Equity in Subsidiary Income.
a. 1
b. 2
c. 3
d. both 1 and 2
9. Polk Company owned 24,000 of the 30,000 outstanding common shares of Sloan Company on January 1, 2010. Polk’s shares were purchased at book value when the fair values of Sloan’s assets and liabilities were equal to their book values. The stockholders’ equity of Sloan Company on January 1, 2010, consisted of the following:
Common stock, $15 par value $ 450,000
Other contributed capital 337,500
Retained earnings 712,500
Total $1,500,000
Sloan Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2010. If Polk Company purchased all 7,500 shares, the book entry to record the purchase should increase the Investment in Sloan Company account by
a. $562,500.
b. $590,625.
c. $675,000.
d. $150,000.
e. Some other account.
10. Polk Company owned 24,000 of the 30,000 outstanding common shares of Sloan Company on January 1, 2010. Polk’s shares were purchased at book value when the fair values of Sloan’s assets and liabilities were equal to their book values. The stockholders’ equity of Sloan Company on January 1, 2010, consisted of the following:
Common stock, $15 par value $ 450,000
Other contributed capital 337,500
Retained earnings 712,500
Total $1,500,000
Sloan Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2010. If all 7,500 shares were sold to noncontrolling stockholders, the workpaper adjustment needed each time a workpaper is prepared should increase (decrease) the Investment in Sloan Company by
a. ($140,625).
b. $140,625.
c. ($112,500).
d. $192,000.
e. None of these.
11. On January 1, 2006, Parent Company purchased 32,000 of the 40,000 outstanding common shares of Sims Company for $1,520,000. On January 1, 2010, Parent Company sold 4,000 of its shares of Sims Company on the open market for $90 per share. Sims Company’s stockholders’ equity on January 1, 2006, and January 1, 2010, was as follows:
1/1/06 1/1/10
Common stock, $10 par value $400,000 $ 400,000
Other contributed capital 400,000 400,000
Retained earnings 800,000 1,400,000
$1,600,000 $2,200,000
The difference between implied and book value is assigned to Sims Company’s land. The amount of the gain on sale of the 4,000 shares that should be recorded on the books of Parent Company is
a. $68,000.
b. $170,000.
c. $96,000.
d. $200,000.
e. None of these.
12. On January 1, 2006, Patterson Corporation purchased 24,000 of the 30,000 outstanding common shares of Stewart Company for $1,140,000. On January 1, 2010, Patterson Corporation sold 3,000 of its shares of Stewart Company on the open market for $90 per share. Stewart Company’s stockholders’ equity on January 1, 2006, and January 1, 2010, was as follows:
1/1/06 1/1/10
Common stock, $10 par value $ 300,000 $ 300,000
Other contributed capital 300,000 300,000
Retained earnings 600,000 1,050,000
$1,200,000 $1,650,000
The difference between implied and book value is assigned to Stewart Company’s land. As a result of the sale, Patterson Corporation’s Investment in Stewart account should be credited for
a. $165,000.
b. $206,250.
c. $120,000.
d. $142,500.
e. None of these.
13. On January 1, 2006, Peterson Company purchased 16,000 of the 20,000 outstanding common shares of Swift Company for $760,000. On January 1, 2010, Peterson Company sold 2,000 of its shares of Swift Company on the open market for $90 per share. Swift Company’s stockholders’ equity on January 1, 2006, and January 1, 2010, was as follows:
1/1/06 1/1/10
Common stock, $10 par value $200,000 $ 200,000
Other contributed capital 200,000 200,000
Retained earnings 400,000 700,000
$800,000 $1,100,000
The difference between implied and book value is assigned to Swift Company’s land. Assuming no other equity transactions, the amount of the difference between implied and book value that would be added to land on a workpaper for the preparation of consolidated statements on December 31, 2010, would be
a. $120,000.
b. $115,000.
c. $105,000.
d. $84,000.
e. None of these.
14. On January 1 2010, Paulson Company purchased 75% of Shields Corporation for $500,000. Shields’ stockholders’ equity on that date was equal to $600,000 and Shields had 60,000 shares issued and outstanding on that date. Shields Corporation sold an additional 15,000 shares of previously unissued stock on December 31, 2010.
Assume that Paulson Company purchased the additional shares what would be their current percentage ownership on December 31, 2010?
a. 92%
b. 87%
c. 80%
d. 100%
15. On January 1 2010, Powder Mill Company purchased 75% of Selfine Company for $500,000. Selfine Company’s stockholders’ equity on that date was equal to $600,000 and Selfine Company had 60,000 shares issued and outstanding on that date. Selfine Company Corporation sold an additional 15,000 shares of previously unissued stock on December 31, 2010.
Assume Selfine Company sold the 15,000 shares to outside interests, Powder Mill Company’s percent ownership would be:
a. 33 1/3%
b. 60%
c. 75%
d. 80%
16. P Corporation purchased an 80% interest in S Corporation on January 1, 2010, at book value for $300,000. S’s net income for 2010 was $90,000 and no dividends were declared. On May 1, 2010, P reduced its interest in S by selling a 20% interest, or one-fourth of its investment for $90,000. What will be the Consolidated Gain on Sale and Subsidiary Income Sold for 2010?
Consolidated Gain on Sale Subsidiary Income Sold
a. $9,000 $6,000
b. $9,000 $15,000
c. $15,000 $6,000
d. $15,000 $15,000
17. P Corporation purchased an 80% interest in S Corporation on January 1, 2010, at book value for $300,000. S’s net income for 2010 was $90,000 and no dividends were declared. On May 1, 2010, P reduced its interest in S by selling a 20% interest, or one-fourth of its investment for $90,000. What would be the balance in the Investment of S Corporation account on December 31, 2010?
a. $300,000.
b. $225,000.
c. $279,000.
d. $261,000.
18. The purchase by a subsidiary of some of its shares from the noncontrolling stockholders results in an increase in the parent’s percentage interest in the subsidiary. The parent company’s share of the subsidiary’s net assets will increase if the shares are purchased:
a. at a price equal to book value.
b. at a price below book value.
c. at a price above book value.
d. will not show an increase.
Use the following information for Questions 19-21.
On January 1, 2006, Perk Company purchased 16,000 of the 20,000 outstanding common shares of Self Company for $760,000. On January 1, 2010, Perk Company sold 2,000 of its shares of Self Company on the open market for $90 per share. Self Company’s stockholders’ equity on January 1, 2006, and January 1, 2010, was as follows:
1/1/06 1/1/10
Common stock, $10 par value $ 200,000 $ 200,000
Other contributed capital 200,000 200,000
Retained earnings 400,000 700,000
$800,000 $1,100,000
The difference between implied and book value is assigned to Self Company’s land.
19. The amount of the gain on sale of the 2,000 shares that should be recorded on the books of Perk Company is
a. $34,000.
b. $85,000.
c. $48,000.
d. $100,000.
e. None of these.
20. As a result of the sale, Perk Company’s Investment in Self account should be credited for
a. $110,000.
b. $137,500.
c. $80,000.
d. $95,000.
e. None of these.
21. Assuming no other equity transactions, the amount of the difference between implied and book value that would be added to land on a work paper for the preparation of consolidated statements on December 31, 2010 would be
a. $120,000.
b. $115,000.
c. $105,000.
d. $84,000.
22. On January 1, 2010, P Corporation purchased 75% of S Corporation for $500,000. S’s stockholders’ equity on that date was equal to $600,000 and S had 40,000 shares issued and outstanding on that date. S Corporation sold an additional 8,000 shares of previously unissued stock on December 31, 2010.
Assume that P Corporation purchased the additional shares what would be their current percentage ownership on December 31, 2010?
a. 62 1/2%.
b. 75%
c. 79 1/6%
d. 100%
23. On January 1, 2010, P Corporation purchased 75% of S Corporation for $500,000. S’s stockholders’ equity on that date was equal to $600,000 and S had 40,000 shares issued and outstanding on that date. S Corporation sold an additional 8,000 shares of previously unissued stock on December 31, 2010.
Assume S sold the 8,000 shares to outside interests, P’s percent ownership would be:
a. 56 1/4%
b. 62 1/2%
c. 75%
d. 79 1/6%
Problems
8-1 Piper Company purchased Snead Company common stock through open-market purchases as follows:
Acquired
Date Shares Cost
1/1/09 1,500 $ 50,000
1/1/10 3,300 $ 90,000
1/1/11 6,600 $250,000
Snead Company had 12,000 shares of $20 par value common stock outstanding during the entire period. Snead had the following retained earnings balances on the relevant dates:
January 1, 2009 $ 90,000
January 1, 2010 30,000
January 1, 2011 150,000
December 31, 2011 300,000
Snead Company declared no dividends in 2009 or 2010 but did declare $60,000 of dividends in 2011. Any difference between cost and book value is assigned to subsidiary land. Piper uses the equity method to account for its investment in Snead.
Required:
A. Prepare the journal entries Piper Company will make during 2010 and 2011 to account for its investment in Snead Company.
B. Prepare workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31, 2011.
8-2 On January 1, 2008, Patel Company acquired 90% of the common stock of Seng Company for $650,000. At that time, Seng had common stock ($5 par) of $500,000 and retained earnings of $200,000.
On January 1, 2010, Seng issued 20,000 shares of its unissued common stock, with a market value of $7 per share, to noncontrolling stockholders. Seng’s retained earnings balance on this date was $300,000. Any difference between cost and book value relates to Seng’s land. No dividends were declared in 2010.
Required:
A. Prepare the entry on Patel’s books to record the effect of the issuance assuming the cost method.
B. Prepare the elimination entries for the preparation of a consolidated statements workpaper on December 31, 2010 assuming the cost method.
8-3 Pratt Company purchased 40,000 shares of Silas Company’s common stock for $860,000 on January 1, 2010. At that time Silas Company had $500,000 of $10 par value common stock and $300,000 of retained earnings. Silas Company’s income earned and increase in retained earnings during 2010 and 2011 were:
2010 2011
Income earned $260,000 $360,000
Increase in Retained Earnings 200,000 300,000
Silas Company income is earned evenly throughout the year.
On September 1, 2011, Pratt Company sold on the open market, 12,000 shares of its Silas Company stock for $460,000. Any difference between cost and book value relates to Silas Company land. Pratt Company uses the cost method to account for its investment in Silas Company.
Required:
A. Compute Pratt Company’s reported gain (loss) on the sale.
B. Prepare all consolidated statements workpaper eliminating entries for a workpaper on December 31, 2011.
8-4 Pelky made the following purchases of Stark Company common stock:
Date Shares Cost
1/1/10 70,000 (70%) $1,000,000
1/1/11 10,000 (10%) 160,000
Stockholders’ equity information for Stark Company for 2010 and 2011 follows:
2010 2011
Common stock, $10 par value $1,000,000 $1,000,000
1/1 Retained earnings 300,000 380,000
Net income 110,000 140,000
Dividends declared, 12/15 (30,000) (40,000)
Retained earnings, 12/31 380,000 480,000
Total stockholders’ equity, 12/31 $1,380,000 $1,480,000
�� On July 1, 2011, Pelky sold 14,000 shares of Stark Company common stock on the open market for $22 per share. The shares sold were purchased on January 1, 2010. Stark notified Pelky that its net income for the first six months was $70,000. Any difference between cost and book value relates to subsidiary land. Pelky uses the cost method to account for its investment in Stark Company.
Required:
A. Prepare the journal entry made by Pelky to record the sale of the 14,000 shares on July 1, 2011.
B. Prepare the workpaper eliminating entries needed for a consolidated statements workpaper on December 31, 2011.
C. Compute the amount of noncontrolling interest that would be reported on the consolidated balance sheet on December 31, 2011.
8-5 P Company purchased 96,000 shares of the common stock of S Company for $1,200,000 on January 1, 2007, when S’s stockholders’ equity consisted of $5 par value, Common Stock at $600,000 and Retained Earnings of $800,000. The difference between cost and book value relates to goodwill.
On January 2, 2010, S Company purchased 20,000 of its own shares from noncontrolling interests for cash of $300,000 to be held as treasury stock. S Company’s retained earnings had increased to $1,000,000 by January 2, 2010. S Company uses the cost method in regards to its treasury stock and P Company uses the equity method to account for its investment in S Company.
Required:
Prepare all determinable workpaper entries for the preparation of consolidated statements on December 31, 2010.
8-6 Penner Company acquired 80% of the outstanding common stock of Solk Company on January 1, 2008, for $396,000. At the date of purchase, Solk Company had a balance in its $2 par value common stock account of $360,000 and retained earnings of $90,000. On January 1, 2010, Solk Company issued 45,000 shares of its previously unissued stock to noncontrolling stockholders for $3 per share. On this date, Solk Company had a retained earnings balance of $152,000. The difference between cost and book value relates to subsidiary land. No dividends were paid in 2010. Solk Company reported income of $30,000 in 2010.
Required:
A. Prepare the journal entry on Penner’s books to record the effect of the issuance assuming the equity method.
B. Prepare the eliminating entries needed for the preparation of a consolidated statements workpaper on December 31, 2010, assuming the equity method.
8-7 Petty Company acquired 85% of the common stock of Selmon Company in two separate cash transactions. The first purchase of 108,000 shares (60%) on January 1, 2009, cost $735,000. The second purchase, one year later, of 45,000 shares (25%) cost $330,000. Selmon Company’s stockholders’ equity was as follows:
December 31 December 31
2009 2010
Common Stock, $5 par $ 900,000 $ 900,000
Retained Earnings, 1/1 262,000 302,000
Net Income 69,000 90,000
Dividends Declared, 9/30 (30,000) (38,000)
Retained Earnings, 12/31 301,000 354,000
Total Stockholders’ Equity, 12/31 $1,201,000 $1,254,000
On April 1, 2010, after a significant rise in the market price of Selmon Company’s stock, Petty Company sold 32,400 of its Selmon Company shares for $390,000. Selmon Company notified Petty Company that its net income for the first three months was $22,000. The shares sold were identified as those obtained in the first purchase. Any difference between cost and book value relates to goodwill. Petty uses the partial equity method to account for its investment in Selmon Company.
Required:
A. Prepare the journal entries Petty Company will make on its books during 2009 and 2010 to account for its investment in Selmon Company.
B. Prepare the workpaper eliminating entries needed for a consolidated statements workpaper on December 31, 2010.
Short Answer
1. A parent’s ownership percentage in a subsidiary may change for several reasons. Identify three reasons the ownership percentage may change.
2. A parent company’s equity interest in a subsidiary may change as the result of the issuance of additional shares of stock by the subsidiary. Describe the affect on the parent’s investment account when the new shares are (a) purchased ratably by the parent and noncontrolling shareholders or (b) entirely by the noncontrolling shareholders.
Short Answer Question from the Textbook
1. Identify three types of transactions that result in a change in a parent company’s ownership interest in its subsidiary.
2. Why is the date of acquisition of subsidiary stock important under the purchase method?
3. When a parent company has obtained control of a subsidiary through several purchases and subsequently sells a portion of its shares in the subsidiary, how is the carrying value of the shares sold determined?
4. When a parent company that records its investment using the cost method during a fiscal year sells a portion of its investment, explain the correct accounting for any differences between selling price and recorded values.
5. ABC Corporation purchased 10,000 shares(80%) of EZ Company at $35 per share and sold them several years later for $35 per share. The consolidated income statement reports a loss on the sale of this investment. Explain.
6. Explain how a parent company that owns less than100% of a subsidiary can purchase an entire new is-sue of common stock directly from the subsidiary.
7. When a subsidiary issues additional shares of stock to noncontrolling stockholders and such issuance results in an increase in the book value of the parent’s share of the subsidiary’s equity, how should the increase be reflected in the financial statements? What if it results in a decrease?
8. P Company holds an 80% interest in S Company. Determine the effect (that is, increase, decrease, no change, not determinable) on both the total book value of the noncontrolling interest and the noncontrolling interest’s percentage of ownership in the net assets of S Company for each of the following situations:
a. P Company acquires additional shares directly from S Company at a price equal to the book value per share of the S Company stock immediately prior to the issuance.
b. S Company acquires its own shares on the open market. The cost of these shares is less than their book value.
c. Assume the same situation as in (b) except that the cost of the shares is greater than their book value.
d. P Company and a noncontrolling stockholder each acquire 100 shares directly from S Com-pany at a price below the book value per share.
Business Ethics Question from Textbook
During a recent review of the quarterly financial statements and supporting ledgers, you noticed several un-usual journal entries. While the dollar amounts of the journal entries were not large, there did not appear to be supporting documentation. You decide to bring the matter to the attention of your immediate supervisor. After you mentioned the issue, the supervisor calmly stated that the matter would be looked into and that you should not worry about it.1.You feel a bit uncomfortable about the situation. What is your responsibility and what action, if any, should you take?
Chapter 10
Insolvency – Liquidation and Reorganization
Multiple Choice
1. A corporation that is unable to pay its debts as they become due is:
a. bankrupt.
b. overdrawn.
c. insolvent.
d. liquidating.
2. When a business becomes insolvent, it generally has three possible courses of action. Which of the following is not one of the three possible courses of action?
a. The debtor and its creditors may enter into a contractual agreement, outside of formal bankruptcy proceedings.
b. The debtor continues operating the business in the normal course of the day-to-day operations.
c. The debtor or its creditors may file a bankruptcy petition, after which the debtor is liquidated under Chapter 7.
d. The debtor or its creditors may file a petition for reorganization under Chapter 11.
3. Assets transferred by the debtor to a creditor to settle a debt are transferred at:
a. book value of the debt.
b. book value of the transferred assets.
c. fair market value of the debt.
d. fair market value of the transferred assets.
4. A composition agreement is an agreement between the debtor and its creditors whereby the creditors agree to:
a. accept less than the full amount of their claims.
b. delay settlement of the claim until a latter date.
c. force the debtor into a liquidation.
d. accrue interest at a higher rate.
5. In a troubled debt restructuring involving a modification of terms, the debtor’s gain on restructuring:
a. will equal the creditor’s gain on restructuring.
b. will equal the creditor’s loss on restructuring.
c. may not equal the creditor’s gain on restructuring.
d. may not equal the creditor’s loss on restructuring.
6. A bankruptcy petition filed by a firm is a:
a. chapter petition.
b. involuntary petition.
c. voluntary petition.
d. chapter 11 petition.
7. When a bankruptcy court enters an “order for relief” it has:
a. accepted the petition.
b. dismissed the petition.
c. appointed a trustee.
d. started legal action against the debtor by its creditors.
8. An involuntary petition filed by a firm’s creditors whereby there are twelve or more creditors must be signed by at least:
a. two creditors.
b. three creditors.
c. five creditors.
d. six creditors.
9. The duties of the trustee include:
a. appointing creditors’ committees in liquidation cases.
b. approving all payments for debts incurred before the bankruptcy filing.
c. examining claims and disallowing any that are improper.
d. calling a meeting of the debtor’s creditors.
10. Which of the following items is not a specified priority for unsecured creditors in a bankruptcy petition?
a. Administration fees incurred in administering the bankrupt’s estate.
b. Unsecured claims for wages earned within 90 days and are less than $4,650 per employee.
c. Unsecured claims of governmental units for unpaid taxes.
d. Unsecured claims on credit card charges that do not exceed $3,000.
11. Which statement with respect to gains and losses on troubled debt restructuring is correct?
a. Creditors losses on restructuring are extraordinary.
b. Debtor’s gains and losses on asset transfers and debtor’s gains on restructuring are combined and treated as extraordinary.
c. Debtor gains and creditor losses on restructuring are extraordinary, if material in amount.
d. Debtor losses on asset transfers and debtor gains on restructuring are reported as a component of net income.
12. When fresh-start reporting is used according to Statement of Position (SOP) 90-7, the implication is that a new firm exists. Which of the following statements is not correct about fresh-start accounting?
a. Assets are reported at fair values.
b. Beginning retained earnings is reported at zero.
c. The fair value of the assets must be less than the post liabilities and allowed claims.
d. The original owners must own less than 50% of the voting stock after reorganization.
13. A Statement of Affairs is a report designed to show:
a. an estimated amount that would be received by each class of creditor’s claims in the event of liquidation.
b. a balance sheet prepared on the going-concern assumption.
c. assets and liabilities classified as current and noncurrent.
d. assets and liabilities reported at their current book values.
14. When a secured claim is not fully settled by the selling of the underlying collateral, the remaining portion:
a. of the claim cannot be collected by the creditor.
b. remains as a secured claim.
c. is classified as an unsecured priority claim.
d. is classified as an unsecured nonpriority claim.
15. Layne Corporation entered into a troubled debt restructuring agreement with their local bank. The bank agreed to accept land with a carrying amount of $360,000 and a fair value of $540,000 in exchange for a note with a carrying amount of $765,000. Ignoring income taxes, what amount should Layne report as a gain on its income statement?
a. $0.
b. $180,000.
c. $225,000.
d. $405,000.
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ECO 405 Week 11 Quiz – Strayer
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Quiz 10 Chapter 14 and 15
Government Spending, Taxation, And The National Debt: Who Wins And Who Loses?
Multiple Choice Questions
1. The Fears Of People Concerning The Size Of Government Are
A. Always Without Any Foundation
B. Well-Founded In Some Instances And Not Well-Founded In Some Instances
C. Difficult To Appreciate
D. Due To Low Income And Low Educational Levels Of Many People
E. Based Solely On Economic Efficiency
2. The Fears Of People Concerning Distribution Of Taxes Are Related To
A. Equity Or Justice In Taxation
B. Ample Evidence That There Are Tax Inequities In The Tax System At All Levels Of Government
C. The Complete Lack Of Understanding That People Have About The Purpose Of Taxes
D. Both (A) And (B)
E. All Of The Above
3. Total Government Expenditures Currently Represent Approximately What Percentage Of Gdp?
A. 20%
B. 30%
C. 40%
D. 50%
E. 10%
4. A Cash Payment From The Government To An Individual, Based On Need, Is An Example Of A
A. Transfer Payment
B. Government Purchase Of A Service
C. Government Purchase Of A Good
D. Transaction Payment
E. Government Receipt
5. A Payment From The Government To A Federal Employee Is A
A. Transfer Payment
B. Government Purchase Of A Service
C. Government Purchase Of A Good
D. Transaction Payment
E. Government Receipt
6. An Efficient Level Of Government Expenditures Is That Level Where
A. Total Costs Are Minimized
B. Total Benefits Are Maximized
C. Marginal Benefits Are Equal To Marginal Costs
D. Marginal Benefits Are Greater Than Marginal Costs
E. Marginal Benefits Are Less Than Marginal Costs
7. Public Goods And Services Have Characteristics That Make Them
A. Possible To Exclude People From Consuming Them
B. Less Available For One Person When Another Consumes Them
C. Easy To Provide Through Private Markets
D. All Of The Above
E. None Of The Above
8. The Size Of Government Is Growing At
A. A Slower Rate Than The Rest Of The Economy
B. Approximately The Same Rate As The Rest Of The Economy
C. A Faster Rate Than The Rest Of The Economy
D. Twice The Rate Of The Rest Of The Economy
E. A Negative Rate
9. Assuming Negative Externalities In Production, The Type Of Government Action That Could Bring About An Efficient Level Of Production Would Be
A. A Tax Levied On Each Unit Produced Equal To Marginal External Costs
B. A Tax Levied On Each Unit Produced Greater Than Marginal External Costs
C. A Subsidy To Consumers Equal To Marginal External Benefits
D. A Subsidy To Consumers Greater Than Marginal External Benefits
E. None Of The Above
10. Assuming Positive Externalities In Consumption, The Type Of Government Action That Could Bring About An Efficient Level Of Production Would Be
A. A Tax Levied On Each Unit Produced Equal To Marginal External Costs
B. A Tax Levied On Each Unit Produced Greater Than Marginal External Costs
C. A Subsidy On Each Unit Consumed Equal To Marginal External Benefits
D. A Subsidy On Each Unit Consumed Greater Than Marginal External Benefits
E. None Of The Above
11. Shifting Income From Those Who Are Relatively Productive To Those Who Are Relatively Unproductive, Say Through Taxes And Subsidies, Must Be Based On
A. Sound Economic Principles
B. The Laws Of Demand And Supply
C. The Values Of People As To What Constitutes A "Fair" Distribution Of Income
D. Marginal Cost And Marginal Benefit
E. Both (A) And (D)
12. A National Crime Lab Used To Prevent Criminal Activity Nationwide Is An Example Of A
A. Negative Externality
B. Positive Externality
C. Transfer Payment
D. Public Good
E. Private Good
13. Tax Equity Means That
A. All People Should Pay Equal Taxes
B. Only The "Rich" Should Pay Taxes
C. People In The Same Economic Circumstances Should Pay Equal Taxes, And People In Different Economic Circumstances Should Pay Unequal Taxes
D. The Distribution Of Income After Taxes Should Be Equal
E. None Of The Above
14. An Efficient Tax Would Be A Tax For Which
A. The Excess Burden" From Taxes Is Zero
B. Taxes Should Have A Neutral Effect On The Operation Of The Economy
C. Taxes Should Be Levied At Progressive Rates
D. (A) And (B)
E. All Of The Above
15. According To The Equimarginal Principle, The Efficient Level Of Government Expenditures Occurs When The Benefit Of The Last Dollar Spent For Each Government Purchase Is
A. Greater Than The Benefit Of The Last Dollar Spent In The Private Sector
B. Less Than The Benefit Of The Last Dollar Spent In The Private Sector
C. Equal To The Benefit Of The Last Dollar Spent In The Private Sector
D. Paid For Out Of Current Tax Collections
E. None Of The Above
16. An Efficient Level Of Government Expenditures Is That Level At Which
A. Marginal Benefits Exceed Marginal Costs
B. Total Benefits Equal Total Costs
C. The Net Benefits To Society Are Maximized
D. The Total Costs Are Minimized
E. None Of The Above
17. Where Marginal Benefits Are Greater Than The Marginal Costs, Government Expenditures Should
A. Be Increased
B. Remain The Same
C. Be Decreased Then Increased To Their Original Level
D. Be Increased Then Decreased To Their Original Level
E. Do None Of The Above
18. Characteristics Of Public Goods And Services Include Which Of The Following?
A. The Demand For These Goods And Services Is Divisible On The Basis Of Individual Quantity Demanded
B. The Supply Of These Goods And Services Is Generally Not Divisible Into Small Units
C. These Goods And Services Are Easily Provided By The Market System
D. The Costs Of These Goods Fall On Other Than The Buyer
E. None Of The Above
19. Which Of The Following Is An Example Of A Public Good Or Service?
A. A Public Highway
B. Free Cheese Offered By The Government
C. Food Stamps
D. Social Security
E. Automobiles
Questions 20 - 24 Refer To The Graph Below.
20. Assuming No External Benefits Or Costs, The Efficient Price And Quantity Would Be
A. P2, Q2
B. P2, Q1
C. P1, Q1
D. P0, Q0
E. P0, Q2
21. Suppose There Are External Benefits Associated With The Production Of The Good. The Efficient Price And Quantity Are
A. P2, Q2
B. P2, Q1
C. P1, Q1
D. P0, Q0
E. P0, Q2
22. If External Benefits Are Associated With The Consumption Of The Good, Consumers Could Be Induced To Purchase The Efficient Quantity If The Price Were Set At
A. P2
B. P1
C. P0
D. 0
E. None Of The Above
23. To Assure Consumers Purchase The Efficient Quantity When There Are Positive External Benefits, The Government Would Lower Price To
A. P2
B. P1
C. P2- P1
D. P0- P1
E. P0
24. Marginal External Benefits Are Represented On The Graph As The Distance
A. Ab
B. Q2a
C. Ea
D. Cf
E. Af
25. Which Of The Following Is The Major Tax Source Of The Federal Government?
A. Income Taxes
B. Excise Taxes
C. Property Taxes
D. Wealth Taxes
E. Sales Taxes
26. A Progressive Tax Rate Means That The Ratio Of Tax Collections To Income
A. Falls As Income Rises
B. Rises As Income Rises
C. Remains The Same As Income Rises
D. Either (A) And (B)
E. May Fall, Rise, Or Remain The Same As Income Rises
27. In The Us, Major Sources Of Tax Revenues Are:
A. Income Taxes At The Federal Level, Property Taxes At The State Level
B. Sales Taxes At The Federal Level And Income Taxes And Property Taxes At The State Level
C. Income Taxes At The Federal Level And Income And Sales Taxes At The State Level
D. Income Taxes At The Federal Level And Payroll Taxes At The State Level
28. The Ability To Pay The Principle Of Taxation Suggests That People With More Income Should Pay More Taxes. This Means That
A. Progressive Income Rates Are Consistent With The Ability To Pay Principle
B. Proportional Income Rates Are Consistent With The Ability To Pay Principle
C. Regressive Income Rates May Or May Not Be Consistent With The Ability To Pay Principle Depending On The Rate Of Regression
D. Sales Taxes Are Consistent With The Ability To Pay Principle
E. None Of The Above
Questions 29 - 33 Refer To The Graph Below.
29. The Demand Curve For This Product Can Be Described As
A. Perfectly Elastic
B. Perfectly Inelastic
C. Unitary Elastic
D. Hyper Elastic
E. Price Elastic
30. Given Demand Curve D, If An Output Tax Per Unit Of P- P2 Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward?
A. None
B. One-Fourth
C. Half
D. All
E. It Can Not Be Determined
31. Which Of The Following Shifts Represents The Effect Of An Output Tax Levied On This Good?
A. D To D1
B. D1 To D
C. S To S1
D. S1 To S
E. None Of The Above
32. Which Of The Following Shifts Represents The Effect Of A Tax On This Good Levied Independent Of Output?
A. D To D1
B. D1 To D
C. S To S1
D. S1 To S
E. None Of The Above
33. Given Demand Curve D, If A Tax Independent Of Output Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward?
A. None
B. One-Fourth
C. Half
D. All
E. Cannot Be Determined
Questions 34 - 38 Refer To The Graph Below.
34. The Demand Curve For This Product Can Be Described As
A. Perfectly Elastic
B. Perfectly Inelastic
C. Unitary Elastic
D. Hyper Elastic
E. Price Elastic
35. Given Demand Curve D, If An Output Tax Per Unit Of P- P1 Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward?
A. None
B. One-Fourth
C. Half
D. All
E. Cannot Be Determined
36. Which Of The Following Shifts Represents The Effect Of An Output Tax Levied On This Good?
A. D To D1
B. D1 To D
C. S To S1
D. S1 To S
E. None Of The Above
37. Which Of The Following Shifts Represents The Effect Of A Tax On This Good Levied Independent Of Output?
A. D To D1
B. D1 To D
C. S To S1
D. S1 To S
E. None Of The Above
38. Given Demand Curve D, If A Tax Independent Of Output Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward?
A. None
B. One-Fourth
C. Half
D. All
E. Cannot Be Determined
39. An Output Tax Will Be Shifted Completely
A. Backward If Demand Is Price Inelastic
B. Forward If Demand Is Perfectly Price Inelastic
C. Forward If Demand Is Price Elastic
D. Backward, Regardless Of Elasticity
E. All Of The Above
40. A Tax Levied Independent Of Output, Such As A Tax Levied On Net Income Of Corporations, Will
A. Be Shifted If Demand Is More Elastic Than Supply
B. Be Shifted If Supply Is More Elastic Than Demand
C. Not Be Shifted In The Short Run If The Most Profitable Output Has Been Selected Before The Tax
D. Be Shifted In The Short Run If The Most Profitable Output Has Been Selected Before The Tax
E. Do None Of The Above
41. Government Borrowing Is Argued To Have The Effect Of Raising Interest Rates—The "Crowding-Out Effect." In Conjunction With Government Spending, Does Government Spending And Borrowing Have A Positive Or Negative Impact On The Economy?
A. Negative, Since Borrowing Exceeds Spending
B. A Positive Impact, Since Expenditures Often Exceed Borrowing
C. A Neutral Effect, Since The Budget Is Always In Balance
D. Government Spending And Borrowing Have A Minimal Effect On The Economy
E. Government Spending And Borrowing Must Be Considered Separately
42. The Gasoline Tax Is Often Used To Illustrate The Benefits Received Principle Of Taxation Because
A. Everyone Benefits From The Gasoline Tax
B. Those Who Pay The Tax Receive Benefits, Since The Revenues Are Used For Road And Highway Construction And Maintenance
C. The Amount We Pay Is Consistent With Our Incomes
D. Everyone Knows When They Pay The Tax
E. The Gasoline Tax Is A Poor Example Of The Benefits Received Principle
43. Vertical Equity Implies That
A. People In Different States Should Pay The Same Taxes
B. People With Comparable Incomes Should Pay The Same Taxes
C. People In Different Economic Circumstances Should Pay Different Amounts
D. Taxes Should Rise As The Size Of Your Family Increases
E. Taxes Should Be Based Upon How Tall The Taxpayer Is
44. Proportional Tax Rates Mean That The Ratio Of Tax Collection To Income
A. Falls As Income Rises
B. Rises, As Income Rises
C. Remains The Same As Income Rises
D. Rises As Income Falls
E. Falls As Income Falls
45. Regressive Tax Rates Mean That The Ratio Of Tax Collections To Income
A. Falls As Income Rises
B. Rises As Income Rises
C. Remains The Same As Income Rises
D. Remains The Same As Income Falls
E. Falls As Income Falls
46. The Us Federal Personal Income Tax Is An Example Of A(N)
A. Regressive Tax Rate Structure
B. Proportional Tax Rate Structure
C. Progressive Tax Rate Structure
D. More Regressive Than Proportional Tax Rate Structure
E. Equitable Tax Rate Structure
47. If Demand For A Product Is Perfectly Inelastic, An Output Tax Will Be Shifted
A. Completely Backward
B. Completely Forward
C. Completely To The Poor
D. Completely To The Rich
E. Completely To The Producer
48. A Tax That Is Shifted Forward Is A Tax That Falls On
A. The Consumer In The Form Of Higher Prices
B. The Producer Through Lower Sales
C. The Government
D. Foreign Investors
E. None Of The Above
49. A Tax That Is Shifted Backward Is A Tax That Falls On
A. The Consumer In The Form Of Higher Prices
B. The Owners Of Resources In The Form Of Lower Resource Prices
C. The Government
D. Foreign Investors
E. None Of The Above
50. At The Federal Level, The Largest Revenue Generating Tax Is The
A. Corporate Income Tax
B. Personal Income Tax
C. Property Tax
D. Sales Tax
E. Customs Duty
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MGT 510 Midterm and Final Exam – Strayer NEW
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Chapters 1 Through 15
Chapter 1 Multinational Management in a Changing World
MULTIPLE CHOICE
1. Businesses of all sizes are increasingly looking for global opportunities because
a.
Trade barriers are falling.
b.
Money is flowing more freely across countries.
c.
The world is becoming one interconnected economy.
d.
All of the above.
AACSB Analytic, Strategy
PTS: 1
2. Globalization is
a.
The trend of businesses expanding beyond their domestic boundaries.
b.
Increasing average temperature over the globe.
c.
The increased use of global satellite communication systems.
d.
A strategy of developing unique products for each nation in the world.
AACSB Reflective thinking, Environmental influence
PTS: 1
3. Which of the following would not be considered a basic source of globalization?
a.
Similar customer needs
b.
Falling of trade barriers
c.
Advances in communication technology
d.
Differentiation among countries
AACSB Reflective Thinking, Environmental influence
PTS: 1
4. Multinational management is
a.
A strategy of developing similar strategies for different countries.
b.
The trend of business expanding beyond local boundaries.
c.
The formulation and design of management systems to successfully take advantage of international opportunities and respond to international threats.
d.
None of the above
AACSB Reflective thinking, Strategy
PTS: 1
5. According to the text, the multinational company
a.
Is required to be a public corporation.
b.
Is any company that engages in any business function across borders.
c.
Must sell overseas to be a true multinational.
d.
Must be large.
AACSB Reflective thinking, Strategy
PTS: 1
6. Which of the following is not a classification of economic systems noted in the text?
a.
Domestic economies
b.
Transition economies
c.
LDCs
d.
Emerging markets
AACSB Reflective thinking, Environmental influence
PTS: 1
7. Transition economies are
a.
Mature economies with substantial per capita GDP and international trade.
b.
Led by Hong Kong, Singapore, South Korea, and Taiwan.
c.
Countries changing from government-controlled or communistic economies to a more free market capitalism.
d.
None of the above
AACSB Reflective thinking, Environmental influence
PTS: 1
8. Emerging markets include
a.
OECD countries.
b.
Brazil, China, Russia, India.
c.
Korea, Japan and USA.
d.
Hungary, Poland, Slovakia.
AACSB Reflective thinking, Environmental influence
PTS: 1
9. Developing economies are
a.
Mature economies with substantial per capita GDP and international trade.
b.
Hong Kong, Singapore, and Taiwan.
c.
Countries in the process of changing their economies from government-controlled to a more free market capitalism.
d.
None of the above
AACSB Reflective thinking, Environmental influence
PTS: 1
10. Emerging markets are defined as those that are:
a.
Growing rapidly.
b.
Transitioning from a communist-controlled economy to capitalism.
c.
Seen to have impact only sporadically.
d.
Enjoying a mature economy.
AACSB Reflective thinking, Environmental influence
PTS: 1
11. Major regional trade agreements include all of the following EXCEPT
a.
EU.
b.
NAFTA.
c.
APEC.
d.
PROTEC.
AACSB Reflective thinking, Legal responsibilities
PTS: 1
12. The economic agreement that links the US, Canada, and Mexico in an economic bloc that allows freer exchange of goods and services is known as the
a.
EU.
b.
OPEC.
c.
APEC.
d.
None of the above
AACSB Reflective thinking, Legal responsibilities
PTS: 1
13. The World Trade Organization:
a.
Is a major trading company.
b.
Succeeded the GATT agreements.
c.
Collects duties for member countries.
d.
Is a consulting group for companies who wish to engage in international trade.
AACSB Reflective thinking, Legal responsibilities
PTS: 1
14. Examples of developed economies would include:
a.
The U.S. and Japan.
b.
Hungary and Poland.
c.
Argentina and Brazil.
d.
Hong Kong and Singapore.
AACSB Reflective thinking, Creation of value
PTS: 1
15. According to your text, FDI means
a.
Foreign development initiatives.
b.
Various investment policies of the U.S. government.
c.
A foreign company has an ownership position in a company in another country.
d.
A type of international negotiation strategy.
AACSB Reflective thinking, Legal responsibilities
PTS: 1
16. The two forms of risk discussed in the text include
a.
Exchange rate risk and corruption risk.
b.
Business risk and social risk.
c.
Sales risk and employment risk.
d.
Economic and political risk.
AACSB Reflective thinking, Environmental influence
PTS: 1
17. Economic risks discussed in the text include
a.
Anything a government might do or not do that might adversely affect a company.
b.
The likelihood of losing money if one invests in stocks.
c.
Exchange and interest rates.
d.
Expropriating of foreign firms by the local government without any compensation.
AACSB Reflective thinking, Environmental influence
PTS: 1
18. Anything that a government might do to affect a multinational adversely is known as
a.
Exchange rate risk.
b.
Business risk.
c.
Sales risk.
d.
Political risk.
AACSB Reflective thinking, Leadership
PTS: 1
19.. A global product or service is
a.
Adapted for each country's unique needs.
b.
A similar product or service for all customers throughout the world.
c.
A product or service that requires bilingual customers.
d.
Products developed for use outside the country.
AACSB Reflective thinking, Creation of value
PTS: 1
20. Which of the following statements about the Internet and Information Technology is true?
a.
The Internet is benefiting companies worldwide.
b.
Electronic communications does not allow companies to communicate with locations around the world.
c.
Information technology is not encouraging a borderless financial market.
d.
Information technology does not allow the sharing of information around the world.
AACSB Technology, Information technology
PTS: 1
21. The free market reforms in emerging countries are creating a potential group of
a.
new competitors.
b.
old competitors.
c.
subsidized firms.
d.
government companies.
AACSB Analytic, Environmental influence
PTS: 1
22. Which of the following statements is true about privatization?
a.
Developing nations have the highest rate of privatization.
b.
The leading privatizers in the world do not face competition.
c.
Privatization is the sale of private business to government investors.
d.
Privatization is absent in transition economies.
AACSB Analytic, Legal responsibilities
PTS: 1
23. Global customers:
a.
Search for government-controlled enterprises.
b.
Provide reduced government trade protection.
c.
Search the world for their supplies without regard to national boundaries.
d.
Encourage large firms to sell to them.
AACSB Reflective thinking, Strategy
PTS: 1
24. Global trade has this important effect on developing new competitors.
a.
It facilitates the transfer of technology, allowing former assemblers to become creators.
b.
It facilitates the transfer of knowledge, allowing former builders to become assemblers.
c.
It reduces competition.
d.
It reduces rivalry.
AACSB Reflective thinking, Creation of value
PTS: 1
25. Global standards for products
a.
Are virtually impossible in technical industries.
b.
Refer to having one product standard for all countries.
c.
Puts companies at a strategic disadvantage.
d.
All of the above
AACSB Reflective thinking, Creation of value
PTS: 1
26. According to the experts cited in your text, the next generation of global managers will need all of the following, EXCEPT:
a.
Emotional intelligence
b.
The ability to work with people from different cultural backgrounds
c.
Poor negotiation skills
d.
A local mindset
AACSB Reflective thinking, Leadership
PTS: 1
27. A global mindset requires managers to think globally but
a.
act locally.
b.
have emotional intelligence.
c.
understand national cultures.
d.
need accomplished negotiation skills.
AACSB Reflective thinking, Leadership
PTS: 1
28. The strategic approach to multinational management
a.
Involves the development of one strategy for all countries.
b.
Focuses on the skills and aptitudes that the next generation of global managers will need.
c.
Is concerned with developing strategies that deal with operating in more than one country and culture.
d.
None of the above
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HRM 522 Week 11 Final Exam – Strayer New
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Chapters 7 Through 12
Chapter 7
1.Expertpowerusuallystemsfrom
a.a superior'scredibilitywithhis orhersubordinates.
b.thebeliefthatacertainpersonhastherightto exertinfluenceandthatcertainothershaveanobligationto acceptit.
c.a person'sabilitytoinfluencethe behaviorofothersbyofferingthemsomethingdesirable. d.aperson'sabilitytopenalizetheactionsor behaviorof another.
e.aperson'sperceptionsthathisorhergoalsorobjectivesaresimilarto another's.
2.Whichofthe followingstatementsaboutpoweristrue?
a.Thefivebasesofpoweraremutuallyexclusive.
b.Peoplegenerallyuseonlyonebaseofpowertoeffectchangeinothers.
c.Expertpowerexistswhenonepersontakesactionsthatwillleadthatpersonandotherstoachievetheir mutualobjectives.
d.Powercan beusedtomotivateindividualsethicallyorunethically. e.Theuseofpoweris unethical.
3.Anorganizationthatdelegatesdecision-makingauthorityas fardownthechainof commandas possibleandhas relativelyfewformalrulesis
a.centralized.
b.decentralized. c.flat.
d.tall.
e.ethical.
4.Whichofthefollowingis notacharacteristicofanethicalcorporateculture?
a.Managementandthe boarddemonstratetheircommitmenttostrongcontrolsthroughtheircommunications andactions.
b.Everyemployeeisencouragedandrequiredtohavehands-oninvolvementinthe internalcontrolsystem. c.Managementconductsitselfin awaythatis notconsistentwiththecodeofconduct.
d.Employeesare expectedtobeinthe communicationloopthroughresolutionsandcorrectiveactions.
e.Employeeshavetheabilitytoreportpolicyexceptionsanonymouslytoany memberoftheorganization.
5.Althoughbothstructurescancreateopportunitiesforunethicalconduct,whichorganizationalstructuretendstobe moreethical?
a.Tall b.Flat
c.Centralized
d.Decentralized
e.All organizationalstructuresareequallyethical.
6.Theabilitytoinfluencethe behaviorofothersbyofferingthemsomethingdesirableisbestdescribedas a.coercivepower.
b.rewardpower. c.expertpower.
d.legitimatepower. e.referentpower.
7.Anadvantageof thedecentralizedorganizationisthat
a.thefocusison formalrules,policies,andproceduresbackedup withelaboratecontrolsystems. b.thereis ahighlevelofbureaucracy.
c.eachworkerknowshisorherjobandwhatisspecificallyexpectedaswellashowtocarryoutdesignated tasks.
d.itisadaptableandcanquicklyrespondtoexternalchange. e.thereisminimalupwardcommunication.
8.Whendevelopinganethicalculture,therehastobea(n)
elementbecauseeveryorganizationhasemployees
thatwilltrytotakeadvantageifthereisan opportunityformisconduct. a.rules-based
b.statementofmission c.ethical
d.compliance e.punitive
9.The apatheticorganizationalcultureexhibits
a.highconcernfor peoplebutminimalconcernfor performance. b.littleconcernforpeoplebutahighconcernforperformance.
c.minimalconcernforpeopleandperformance. d.highconcernforpeopleandperformance.
e.noconcernformaintaininga cohesiveorganizationalculture.
10.Theexactingorganizationalcultureisinterestedin
a.performancebuthaslittleconcernforemployees. b.investors'impressionsofprofitability.
c.maintaininga strongcorporateculture. d.employeesandperformance.
e.employees'impressions.
11.Associatingwithotherswhoareunethicalandwhohavetheopportunitytoactunethicallycanleadtoalearning processknownas
a. compliance. b. misconduct. c.opportunity.
d.differentialequations.
e.differentialassociation.
12.Whichof thefollowingstatementsaboutcorporatecultureisfalse?
a.Corporateculturerefersto thepatternsandrulesthatgovernthebehaviorofanorganizationandits employees,particularlythe sharedvalues,beliefs,andcustoms.
b.Thevaluesandethicalbeliefsthatactuallyguidethefirm'semployeestendnotto bethesameonesthat managementstatesasdefiningthefirm'sculture.
c.Corporatecultureincludesthebehavioralpatterns,concepts,values,ceremonies,andritualsthattakeplacein anorganization.
d.Thecultureofanorganizationmaybeexplicitlystatedorunspoken.
e.Failuretomonitorormanageanorganization'sculturemayfosterunethicalbehavior.
13.Noformaldresscodes,workinglate,participationinextracurricularactivities,gestures,andlegendsrepresent a.a complacentworkplace.
b.codesofethics.
c.a firm'sorganizationalchart.
d.formalexpressionsofanorganization'sculture.
e.informalexpressionsofanorganization'sculture.
14.Aculturalauditmaybeusedtoidentify a.howcultureda firm'semployeesare. b.unethicalemployees.
c.unethicalorganizations.
d.anorganization'sculture. e.organizationalstructure.
15.The2010passageof theDodd-FrankActproposedadditionalmonetaryincentivesforwhistle-blowers.Aprimary concernaboutthesenewincentivesis
a.theywillencouragetoomanyemployeestoattempttoblowthewhistleon firms,eventhosethathavedone nothingwrong.
b.peopledonotgenerallyrespondatalltomonetaryincentives.
c.whistle-blowersmightbe temptedtoreporttotheSECwiththeirreportsandnotreportthemisconducttothe
company’sinternalcomplianceprogram.
d.peoplemayexaggeratetheirclaimsinordertogeta reward.
e.thefundspaidout towhistle-blowermightbankruptcompanies.
16.Marcusisthetop-performingdevelopmentdirectorhisnon-profitorganizationhaseverhad.Hepossessescountless tricksand tips tocontinuetobringindonations,positivepublicity,and supporters.Marcuswouldlikelyhave
overnewdevelopmentdepartmentstaff. a.coercivepower
b.grouppower
c.legitimatepower d.expertpower
e.democraticpower
17.
bringtogetherthefunctionalexpertiseofemployeesfromseveraldifferentareasoftheorganizationona singleproject.
a.Qualitycircles
b.Informalgroups c.Teams
d.Workgroups e.Committees
18.Individuals,oftenfromthesamedepartment,whobandtogetherforpurposesthatmayormaynotberelevantto the organizationarecalled
a.qualitycircles.
b.informalgroups. c.teams.
d.workgroups. e.committees.
19.Inorderfor whistle-blowingtobeeffective, a.financialcompensationmustbeveryhigh.
b.employeesmustwishillontheorganizationforwhichtheywork.
c.lawmakersmustmakeaneffortto forceemployeesto discussdetailsaboutthemisconduct.
d.it requiresthatthe individualhaveadequateknowledgeofwrongdoingthatcoulddamagesociety. e.it mustoccurata verylargemultinationalcorporation.
20.Whichofthe followingstatementsaboutgroupnormsisfalse?
a.Groupnormsdefinethelimitondeviationfromgroupexpectations.
b.Groupnormshavethepowerto forceastrongdegreeofconformityamonggroupmembers.
c.Managementmustcarefullymonitorthe normsofallthe variousgroupswithinthe organization,aswellasthe organization'scorporateculture.
d.Sanctionsmaybe necessarytobringinlineagroupwhosenormsdeviatesharplyfromtheoverallculture. e.Groupnormsneverconflictwiththeoverallorganization'sculture.
21.Management'ssenseof theorganization'sculture a.is alwaysthesameasemployees'perceptions. b.isusuallyeasilyadoptedbyemployees.
c.isalwaysreadilyevidenttoemployees.
d.maybe quitedifferentfromemployees'perceptions. e.is alwaysdifferentfromemployees'perceptions.
22.Motivationis definedas
a.aperson’sincentiveordriveto work.
b.a forcewithinthe individualthatfocuseshis orherbehavioronachievingagoal. c.personalambitionwithoutregardtothe impactonothers.
d.adesireto befinishedwithaproject. e.individualgoals.
23.Whena foremanordersanassembly-lineemployeetocarryoutatask,whichtheemployeeperceivesasunethical yettheemployeefeelscompelledtocomplete,theforemanisexercising
a.legitimatepower. b.expertpower.
c.rewardpower.
d.contingentpunishmentpower.
e.noncontingentrewardbehavior.
24.Tomotivateemployees,anorganizationoffers to employeesto worktowardorganizationalobjectives. a.punishment;force
b.peerpressure;guilt
c.incentives;encourage d.rewards;bribe
e.threats;frighten
25.Whichofthe followingculturescombineshighlevelsofconcernfor peopleandperformance?
a.Apatheticculture b.Caringculture
c.Integrativeculture d.Exactingculture
e.Cooperativeculture
26.Ethicalconcernsin centralizedstructurescanoccurbecauseofverylittle a.mobility.
b.upwardcommunication. c.scapegoating.
d.downwardcommunication. e.communicationrigidity.
27.Ahighconcernforpeoplebutminimalconcernforperformancecanbestdescribethe culture. a.caring
b.apathetic c.exacting
d.shareholder e.employee
28.Theestablishmentofanethicscommitteewithinanorganization a.isusuallyhighlyinformal.
b.isusuallyorganizedaroundgeneralbusinesstopics.
c.mightraiseethicalconcernsorresolveethicaldilemmas. d.usuallyalwayssucceeds.
e.usuallyincreasesethicaltension.
29.Whichofthefollowingis nota formofretaliationcommonlyexperiencedbywhistle-blowers?
a.Relocationorreassignment b.Nopromotionorraises
c.Thecoldshoulderby coworkers d.Exclusionfromworkactivities
e.Praisebysupervisorsfortheirhonesty
30. areusedto subdividedutieswithinfunctionalareasofacompany. a.Workgroups
b.Individuals c.Experts
d.Consultants e.Committees
31.The
leaderdemandsinstantaneousobedienceandfocusesonpunishingwrongbehavior,achievement,
initiative,andself-control. a.democratic
b. coaching c. affiliative d.coercive
e.pacesetting
32.Melindaisa verypopularexecutive.Sheinspiresheremployeestofollowa commonvision,facilitateschange,and createsa stronglypositiveclimate,allwhilestressingperformance.Melindahashelpedtocreatea(n) culture. a.authoritative
b.caring
c.integrative d.exacting
e.affiliative
33.
aresatisfiedbysocialandinterpersonalrelationships,and activities.
a.Growthneeds;relatednessneeds b.Personalneeds;groupneeds
c.Coerciveneeds;ethicalneeds
d.Relatednessneeds;growthneeds e.Groupneeds;personalneeds
aresatisfiedbycreativeorproductive
34.Overtheyears,scholarshavedevelopedmorethan100definitionsofculture.Accordingtothetext,all havethe followingcommonelements:
a.Cultureisshared,relativelystable,andisformedovera longperiodoftime. b.Cultureisnotshared,stable,andisformedovera longperiodoftime.
c.Cultureisshared,notstable,andisformedovera longperiodoftime. d.Cultureisshared,stable,andisformedovera shortperiodof time.
e.Cultureisman-made,shared,notstable,andisformedoverashortperiodof time.
35.Becauseresearchershavedefinedculturesomanydifferentways, interchangeably.
a.culturalcues;management
b.culturalvalues;anthropology c.culturalvalues;culture
d.culturalcues;laws
e.culturalcues;management
and
areoftenused
36.Bothindividualethicsand organizationalethicshaveanimpactonanemployee’s
a.productivity.
b.personalhappiness. c.compensation.
d.fitnesslevel.
e.ethicalintention.
37.Avalues-basedethicsapproachtoethicalcorporateculturesreliesona(n)
howcustomersandemployeesshouldbetreated a.setoflaws
b.explicitmissionstatement c.strongCEO
d.ethicalaudit
e.relaxedcorporateculture
thatdefinesthefirmaswellas
38.Theideathatpeoplelearnethicalorunethicalbehaviorwhileinteractingwithotherswhoareapartoftheirrole-sets isreferredtoas
a.differentialdissonance.
b.cognitivememorydissonance. c.cognitiveassociation.
d.differentialassociation. e.casualinteraction.
39.TheSarbanes-OxleyAct
a.onlyappliestofirmswithover50employees. b.hasinstitutionalizedinternalwhistle-blowing.
c.hasplacedmorepowerundertheSecuritiesandExchangeCommission. d.requiresall organizationstomaketheir financialinformationpublic.
e.involvestoomanycomplicatedstepsfor it tobefeasiblefor mostorganizations.
40.The
ruleexplainsvariationinemployeeconductthroughgeneralizingonthe percentageofemployeesinany
givenorganizationwhowill seekto dorightversushowmanywill beindifferent. a.10-30-40-20
b. 20-30-30-20 c. 40-10-10-40 d. 10-40-40-10 e.80-20
41.Whydocentralizedorganizationstendtobemoreethicalthandecentralizedones?Canyouthinkofa situationor exampleinwhicha decentralizedorganizationmightbemoreethicalthana centralizedone?
42.Howdo societalexpectationsaffectcorporationsandtheirethicalinitiatives?Givean exampleof acompanythat
hadtoaltera productorservicebecauseofsociety’sconcernsaboutitshealth,moral,orsocialimpacts.
43.Describethe fourorganizationalculturesandprovidea companyexampleofeachorganizationalculture.
44.Describethedifferentkindsofpower.Aresometypesofpowermorelikelyto resultin ethicalbehaviorthanothers?
45.Howdo groupnormsinfluencetheethicalbehaviorof an organization?Whathappenswhenthenormsof a particulargroupconflictwiththe organization'scorporatecultureorobjectives?
Chapter 8
1.Fosteringethicaldecisionmakingwithinanorganizationrequiresimprovingthefirm'sethicalstandardsand a.notdoingbusinesswith suppliers.
b.implementingahiringfreeze.
c.trainingthe“badapples”sotheyarenotbadanymore.
d.terminatingethicalpersons.
e.terminatingthe“badapples”intheorganization.
2.Whichof thefollowingstatementsaboutcodesof conductisfalse?
a.Theyareformalstatementsofwhatanorganizationexpectsofitsemployees. b.Theyguaranteeanethicalbusinessclimate.
c.Theyhelpemployeesdeterminewhatbehaviorsareacceptable. d.Theyproviderulesand guidelinesforemployeestofollow.
e.Theyshouldbe specificenoughtobe reasonablycapableof preventingmisconduct.
3.A strongethicsprogramincludesallofthefollowingelementsexcept
a.aclausepromisinggoodstockmarketperformance. b.awrittencodeofconductorethics.
c.formalethicstraining.
d.auditing,monitoring,enforcement,andrevisionofstandards. e.anethicsofficertooverseetheprogram.
4.Intheabsenceofethicsprograms,employeesarelikelyto makedecisionsbasedon a.theirobservationsofhowtheircoworkersandsuperiorsbehave.
b.howtheyandtheirfamilymembersbehaveat home. c.theirconscience.
d.their religiousvalues. e.theirfamilyvalues.
5. areformalstatementsthatdescribewhatanorganizationexpectsofitsemployeesintermsofethical behavior.
a.Missionstatements b.Codesofconduct
c.Policiesonconfidentiality d.Environmentalpolicies
e.TheFederalSentencingGuidelinesforOrganizations
6.Whatisnota commonmistakewhendesigningand implementinganethicsprogram?
a.Failingtofullyunderstandthegoalsoftheprogram b.Notsettingrealisticor measurablegoals
c.Havingtopmanagementtakeownershipof theethicsprogram
d.Developingmaterialsthatdonotaddresstheneedsoftheaverageemployee
e.Transferringaprogrambetweencountriesandcultureswithoutmakingadjustments
7.A(n)
orientationcreatesorderby requiringthatemployeesidentifywithandcommittospecificrequired
conduct,whereasa(n)
a.obedience;values b.compliance;values c.legal;values
d.values;compliance
e.values;obedience
orientationstrivestodevelopsharedstandards.
8.For anethicalcomplianceprogramtoproperlyfunction,
a.consistentenforcementanddisciplinaryactionareessential. b.employeesmustbemonitoredusinganymeansnecessary. c.it isnotnecessarytosetmeasurableprogramobjectives.
d.thesameprogramshouldbe usedinall countriesof operation,regardlessof culturaldifferences. e.thecompanymustwaituntilaftermisconductoccurstodevelopameansof preventingit.
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