20 MCQ's

1. The fixed overhead rate is computed as_____.
 a. budgeted fixed manufacturing overhead / expected volume of production
 b. actual fixed manufacturing overhead / actual volume of production
 c. budgeted fixed manufacturing overhead / actual volume of production
 d. actual fixed manufacturing overhead / expected volume of production

2.  The _____ discloses the economic resources of the organization and the claims against these resources.
a. balance sheet
b. income statement
c. statement of cash flows
d. statement of retained earnings

3.Identify which one of the following statements is false.
a. Owners’ equity solely represents the profits made by an organization in the current period.
b. Assets are economic resources that are expected to benefit future cash inflows or reduce future cash outflows.
c. Liabilities are economic obligations or claims against the assets of an organization by outsiders.
d. Assets must always equal the sum of liabilities and owners’ equity.

4. The accrual basis of accounting recognizes the impact of transactions on the financial statements in the period when _____.
a. revenues are earned and expenses are incurred
b. cash is received or disbursed
c. the transaction occurs
d. the accounting equation is decreased

1.  Cash collected from the customers before goods are delivered is known as_____.
a. unearned revenue
b. deferred revenue
c. advances from customers
d. all of these answers are correct

2. The _____ is (are) largely responsible for developing generally accepted accounting principles in the United States.
a. FASB
b. IASC
c. SEC
d. FASB and IASC

3. The _____ would result in an increase in income under the cash basis but not an increase in income under the accrual basis.
a. credit sale of inventory at a sales price in excess of the inventory's cost
b. cash collection from a credit customer
c. cash sale of inventory at a sales price in excess of the inventory's cost
d. return of defective inventory purchased on account to a supplier where a full credit was given

4._____ is reported on the financial statements of publicly held companies in the
United States.
a. The current ratio
b. Earnings per share
c. The price-earnings ratio
d. All of these answers are correct

1. Christina is considering leaving her current position to open a music store. Christina’s current salary is $45,000. Annual music store revenue and costs are estimated at $250,000 and $210,000, respectively. If Christina decides to open the music store, the change in her annual income would be _____.
 a. $85,000
 b. ($5,000)
 c. $250,000
 d. $40,000

2. Deadwood Hospital has overall variable costs of 50% of total revenues and fixed costs of $40 million per year. There are 40,000 patient-days estimated for next year. The break-even point expressed in total revenue is _____.
 a. $80 million
 b. $40 million
 c. $10 million
 d. none of these answers is correct

3. The following information is for Kinsner Corporation:
Total fixed costs  $313,500
Variable costs per unit   $99
Selling price per unit   $154   
If management has a targeted net income of $46,200 (ignore income taxes), then the number of units that must be sold is _____.
a. 2,036 units
b. 2,336 units
c. 5,700 units
d. 6,540 units

4. Illinois Company reported the following information about the production and sales of its only product during its first month of operations:
Sales ($225 per unit)  $405,000
Direct materials used   $176,000
Direct labor  $100,000
Variable factory overhead  $44,000 
Fixed factory overhead  $80,000
Variable selling and administrative expenses  $20,000
Fixed selling and administrative expenses  $10,000
Ending inventories:
Direct materials   -0-
WIP  -0- Finished goods 400 units
The cost of goods sold under variable costing is_____.
a. $320,000
b. $360,000
c. $288,000
d. $272,000

Question 1

Which of the following is NOT a correct statement?

For Machiavelli, virtue, ethics, and morality are instrumental values.

If all else fails in the pursuit of power, Machiavelli would counsel that one must be prepared to use the “good” acts and “virtuous” means of manipulation, deception, coercion, and even murder.

Machiavelli draws no distinction between morality in the public arena and the private sphere.

If absolutely necessary to secure one’s business promotion, Machiavelli would advise sabotaging the career of one’s competitor by making false and anonymous accusations of immorality on the company’s ethics “hot line.”

Question 2

Someone who believes that moral duties are based on universal rules, and that the actor must abide by the same rules being applied to others, believes in which moral theory?

Ethical Relativism

Utilitarianism

Ethical egoism

Kantian ethics

Question 3

Christina, a salesperson for Delta Computer Corporation, attempts to apply ethical principles in dealing with customers and suppliers. Ethical principles are, according to Socrates:

Absolute and universal

Constantly changing

Flexible and supple

Not applicable to business entities since they exist to make money.

Question 4

Which of the following statements is NOT accurate?

Psychological egoism is an ethical and normative theory that prescribes how people should behave in certain situations.

An ethical egoist thinks primarily of what will benefit his or her self-interest in the long-run.

Public good and the general welfare are based on people fulfilling their selfish interests, according to one defense of the doctrine of ethical egoism.

“Justice is the will of the stronger” would be a characteristic Sophist statement.

Question 1

Which of the following is NOT a correct statement?

One advantage to a Natural Rights theory of ethics is that it can provide very specific and precise moral rules to guide conduct.

One problem with Rousseau’s Social Contract theory of ethics is that it is very difficult to determine with any exactitude what constitutes the General Will of the people.

According to Machiavelli, Fate or Fortune rules a good part of a person’s actions, and thus a shrewd and smart person should be prepared to adapt one’s actions to circumstances imposed by Fate.

“Soft” Determinism implies that one can make a true choice between good and bad moral alternatives.

Question 2

Consumer Products, Inc., asks its employees, many of whom are unionized, to apply the Utilitarian theory of ethics. This theory does NOT require

A choice among alternatives that will produce maximum social utility

A determination of what individuals will be affected by an action

An assessment of the positive and negative consequences of alternative actions on individuals affected

The acquiring of the means of production and distribution by the workers.

Question 3

Which of the following is NOT an accurate statement?

According to Locke, people’s rights to freedom and equality exist naturally in the state of nature even before any civil government is created.

Natural rights exist, according to Locke, but only if the rights are granted by the government to its citizens and legal residents.

Kant would condemn Utilitarianism as an immoral ethical theory because he maintains that “the ends do not justify the means.” 

According to Locke, people have the natural right to own private property. 

.0.5 points  

Question 4

Which course of action would the aggregationist view of Utilitarianism require to be taken:

The one that provides at least some good to the greatest number of people.

The one that provides the greatest overall good to society, even if the benefit of that alternative only flows to a few people.

The one that harms the smallest number of people.

The one that places the greatest number of people in a better position than they were previously.