MBA 503 Final Examination-40 Questions

MBA 503 Final Examination-40 Questions

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(1.) The inventory system that uses computer software to keep a running record of inventory on hand is the:

A- Hybrid inventory system

B- Periodic inventory system

C- Costs of goods inventory system

D- Perpetual inventory system

(2.) When a LIFO liquidation occurs:

A- The company must dip into the older layers of inventory cost to compute the cost of goods sold

B- And prices are rising, newer, higher, costs are shifted into cost of goods sold

C- Net income decreases

D- Income taxes decrease

(3.) Given the following data, calculate the dollar amount of ending inventory using the average cost method. Round ending inventory to the nearest dollar.

Date Item Unit

1/1 Beginning Inventory 40 units @ $12 per unit

3/5 Purchase of Property 18 units @ $14 per unit

5/30 Purchase of Inventory 24 units @ $18 per unit

12/31 Ending Inventory 20 units

A- $1,419

B- $852

C- $1,164

D- $284

(4.) The inventory turnover ratio:

A- Will be lower for companies that have many low-priced items in the inventory.

B- Shows how many times the company sold its average level of inventory.

C- Should be high for a company that sells high-priced inventory items.

D- Is determined by dividing costs of goods sold by net sales.

(5.) Company B purchased some land and is preparing the land for a new building. Company B should include which of the following in the cost of the land?

A- Cost of sprinkler system for the shrubbery.

B- Grading and cleaning the land.

C- Costs of driveways.

D- Cost of fencing.

(6.) Which of the following should be included in the costs of equipment?

A- Freights costs to deliver the equipment.

B- Installation costs for the equipment.

C- Testing costs to get the equipment ready for use.

D- All of the above.

(7.) Costs that do not extend the assets capacity or it’s useful life, but merely maintain the asset or restore it to working order are recorded as:

A- Additions

B- Improvements

C- Expenses

D- Capital Expenditures

(8.) The process of allocating the cost of a plant asset to expense over the period in which the asset is used is called:

A- Allocation

B- Disclosure

C- Depreciation

D- Amortization

(9.) At the end of an asset’s useful life, the balance in accumulated depreciation will be the same as the:

A- Salvage value

B- Cumulative depreciation expense

C- Book value

D- Tax liability

(10.) Thomas company trades in a printing press for a newer model. The cost of the old printing press was $61,500, and accumulated depreciation up to the date of the trade-in amounts to $38,000. The company also pays $41,200 cash for the newer printing press. The journal entry to acquire the new printer, press will require a debit to Equipment for:

A- $41,200

B- $64,700

C- $102,700

D- $61,500

(11.) The future value of 1 will always be:

A- Less than 1

B- Equal to 1

C- Equal to the interest rate

D- Greater than 1

(12.) Which of the following discount rates will produce the smallest present value?

A- 8%

B- 10%

C- 6%

D- 4%

(13.) Failure to record an accrued liability causes a company to:

A- Overstate assets

B- Understate liabilities

C- Understate income

D- Understate owner’s equity

(14.) Sales taxes collected by a retailer as reported are:

A- Current liabilities

B- Current assets

C- Revenues

D- Contingent liabilities

(15.) The market interest rate is also referred to as the:

A- Start rate

B- Contractural rate

C- Coupon rate

D- Effective rate