Posted: December 8th, 2015

Accounting

Accounting

Question 8 of 40

2.5 Points

Which of the following is NOT an advantage of using standard costs and variances?

A. Use as a performance benchmark for evaluation of actual costs

B. Use as a basis for components of the master budget

C. Simplification of bookkeeping

D. Change in behavior of managers to obtain desired variances

Question 17 of 40

2.5 Points

The entry to allocate manufacturing overhead costs to production involves which of the following?

A. Debit to work-in-process inventory for the actual cost of overhead

B. Credit to work-in-process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual output

C. Credit to work-in-process inventory for the actual cost of overhead

D. Debit to work-in-process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual output

Question 21 of 40

2.5 Points

Which of the following areas does NOT make significant use of time value of money concepts?

A. Capital investment analysis

B. Lending and borrowing

C. Personal finance planning

D. Marketing research

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Question 22 of 40

2.5 Points

A manager wants to know which investment decision will affect the bottom line of the financial statements according to Generally Accepted Accounting Principles. Which capital budgeting method would he choose?

A. Payback method

B. Accounting rate of return method

C. Net present value method

D. Profitability index

Question 23 of 40

2.5 Points

What is an attribute of the internal rate of return?

A. It is the interest rate that makes the NPV of the investment equal to zero.

B. It is the interest rate that makes the cost of the investment equal to the present value of the investment’s net cash inflows.

C. It is used in the capital rationing process.

D. All of the above are attributes of the internal rate of return.

Question 24 of 40

2.5 Points

Which of the following is NOT a factor when considering the time value of money?

A. The interest rate

B. The principal amount

C. The payback period

D. The number of periods

Question 26 of 40

2.5 Points

Which of the following decision rules is a correct statement?

A. If the net present value is positive, do not invest in the capital asset.

B. If the internal rate of return is less than the required rate of return, invest in the asset.

C. Investments with longer payback periods are more desirable, all else being equal.

D. If the net present value is positive, invest in the capital asset.

Question 30 of 40

2.5 Points

The internal rate of return is:

A. the interest rate at which the net present value of the investment equals the cost of the investment.

B. the interest rate at which the net present value of the investment exceeds the company’s desired rate of return.

C. equal to the accounting rate of return.

D. None of the above

Question 37 of 40

2.5 Points

Eagle Corporation is considering the purchase of a new machine. The machine costs $550,000 and will generate an annual net cash inflow of $100,000. What is the payback period?

A. 4 years and 6 months

B. 5 years

C. 5 years and 6 months

D. 6 years and 1 month

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