Archives: Quiz

20 47) Sydney just found out that her dog needs an expensive operation. Sydney is a trusted employee in a small firm, and she knows that nobody double checks her deposits. However, her moral beliefs do not allow her to […]

11 6.3 Define fraud and describe the different types of fraud in business 1) In a broad sense, fraud is the use of deception or trickery for personal gain. Answer: TRUE Diff: 1 Question Type: Concept 2) Fraud is always […]

1 Financial Accounting, 4e (Kemp) Chapter 6 The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics 6.1 Understand the importance of US GAAP and how it differs from accounting standards in other countries (IFRS) 1) For inventory costing […]

29 16) If a misstatement of inventory occurs, the net income for ________ periods will be misstated. A) 0 B) 1 C) 2 D) 3 Answer: C Diff: 1 Question Type: Concept 17) Which of the following would NOT cause […]

21 10) The LCM rule must be applied to inventory: A) on an item–by-item basis. B) by categories of items. C) as a whole. D) as a company decides, for there is no requirement to apply LCM. Answer: D Diff: […]

11 18) Lionworks Enterprises had the following inventory data: Date Quantity Unit Cost July 1 Beginning inventory 5 $53 July 4 Purchase 10 $52 July 7 Sale 12 July 11 Purchase 9 $57 July 14 Sale 8 Assuming FIFO, what […]

1 Financial Accounting, 4e (Kemp) Chapter 5 Inventory 5.1 Describe the four different inventory costing methods 1) Merchandise inventory represents the goods that a merchandiser has available to sell to its customers. Answer: TRUE Diff: 1 Question Type: Concept 2) […]

27 23) Kramer and Associates has the following account balances listed in alphabetical order: Accumulated Depreciation, $23,000; Accounts Payable, $8,500, Accounts Receivable, $10,000; Cash, $3,000; Equipment, $41,000, Land, $22,000, Mortgage Payable, $42,000; Prepaid Insurance, $9,500; Supplies, $1,000; Unearned Revenue, $4,000; […]

21 9) Which of the following indicates that the shipment is free on board and the buyer pays all of the shipping and freight costs? A) Cash on delivery B) FOB shipping point C) FOB destination D) 2/10, n/30 Answer: […]

11 22) Discounts allowed for customers who pay their invoices early: A) reduce the cost of the purchased inventory. B) increase the cost of the purchased inventory. C) are called manufacturers’ discounts. D) are called allowances. Answer: A Diff: 2 […]

1 Financial Accounting, 4e (Kemp) Chapter 4 Accounting for a Merchandising Business 4.1 Describe the relationships among manufactureres, wholesalers, retailers, and customers 1) Wholesalers purchase large quantities of product from manufacturers and then sell the product to retailers. Answer: TRUE […]

27 17) Revenues are: A) additions to Retained Earnings. B) subtractions from Retained Earnings. C) additions to dividends. D) subtractions from net income. Answer: A Diff: 1 Question Type: Concept 18) Respectively, Cash, Rent Expense and Accounts Payable are: A) […]

21 28) The unadjusted trial balance for Prepaid Insurance shows a $1,850 balance. $600 of the balance was unexpired at year‘s end. On the adjusted trial balance, the balance for Prepaid Insurance is a: A) $600 debit. B) $600 credit. […]

11 36) The difference between the cost of office equipment and accumulated depreciation–office equipment is called: A) market value. B) salvage value. C) book value. D) original value. Answer: C Diff: 1 Question Type: Concept 37) The total dollars in […]

1 Financial Accounting, 4e (Kemp) Chapter 3 Adjusting and Closing Entries 3.1 Understand the revenue recognition and matching principles 1) Under accrual accounting, the most important GAAP concepts to remember are the recognition principle for expenses and the matching principle […]

21 30) Sky Co. collected $600 from one of its customers for payment on their account. The journal entry would include a: A) debit to Accounts Receivable and a credit to Cash. B) debit to Cash and a credit to […]

11 17) A T-account has a $789 debit balance. This account is most likely NOT: A) Common Stock. B) Land. C) Advertising Expense. D) Dividends. Answer: A Diff: 2 Question Type: Application 18) A T-account has a $426 debit balance. […]

1 Financial Accounting, 4e (Kemp) Chapter 2 Analyzing and Recording Business Transactions 2.1 Define accounts and understand how they are used in accounting 1) Account titles such as Salaries Expense and Rent Expense would be numbered starting with a 3. […]

21 34) A company purchases supplies for cash. What is the net result on the accounting equation? A) Total Assets will increase and total Liabilities will decrease. B) Total Assets will increase and Stockholders’ Equity will increase. C) Total Assets […]

11 7) According to the cost principle, if an appraised value is known – it should be used for recording purposes. Answer: FALSE Diff: 1 Question Type: Concept 8) Accountants should be highly ethical and must do everything they can […]

1 Financial Accounting, 4e (Kemp) Chapter 1 Business, Accounting, and You 1.1 Understand the nature of business and the role of accounting in business 1) By taking accounting classes, the student is learning the “language of business.” Answer: TRUE Diff: […]

28 12) Which one of the following statements concerning financial futures is correct? A) Speculators in the currency markets are generally firms involved with international trading of goods and services. B) Portfolio managers wishing to provide downside protection to their […]

21 13) George purchased a futures contract at 349. The contract is on 2500 units, requires a 10% margin deposit and is priced in cents per unit. George sold the contract at 278. What is George’s return on invested capital? […]

11 17) Which of the following is(are) correct statements about the buyer of a futures contract? I. The contract buyer is short on the position. II. The contract buyer wants the price of the item to increase. III. The buyer […]

1 Fundamentals of Investing, 13e (Smart) Chapter 15 Futures Markets and Securities 15.1 Learning Goal 1 1) All futures contracts trade continuously between 7:30 a.m. and 2:00 p.m., Monday through Friday. Answer: FALSE Learning Outcome: F-01 Describe the different financial […]

31 7) Justin owns 400 shares of ORNG stock which he bought 10 months ago at $20 per share and has now risen to $35 per share. He is afraid the stock price will fall before he has owned it […]

21 27) Which of the following variables are part of the Black-Scholes option pricing model? I. the market price of the underlying stock II. the volatility of the underlying security III. the strike price of the option IV. the risk-free […]

11 14) The option premium is A) the market price of the option. B) the amount by which the stock price is expected to move before the option expires. C) the fee charged by the options exchanges for executing transactions. […]

1 Fundamentals of Investing, 13e (Smart) Chapter 14 Options: Puts and Calls 14.1 Learning Goal 1 1) Because puts and calls derive their value from the behavior of some other real or financial asset, they are known as derivative securities. […]

29 19) Which of the following is ideally suited to automatic investing through a payroll deduction plan? A) a dollar cost averaging plan B) a constant dollar plan C) a constant ratio plan D) a variable ratio plan Answer: A […]

21 18) A portfolio has a total return of 14.4%, a standard deviation of 18.5% and a beta of 1.43. The risk free rate is 2.5%, the market rate of return is 11.4%, and the market’s Treynor measure is 6.3. […]

11 4) A rational investor will require the same return from a corporate security as from a government security. Answer: FALSE Learning Outcome: F-11 Explain the relationship between risk and return in capital markets AACSB: 3 Analytical thinking Question Status: […]

1 Fundamentals of Investing, 13e (Smart) Chapter 13 Managing Your Own Portfolio 13.1 Learning Goal 1 1) Before analyzing needs and objectives, investors should first construct a portfolio. Answer: FALSE Learning Outcome: F-11 Explain the relationship between risk and return […]

37 7) Investors are generally well advised to avoid mutual funds with A) highly rated fund managers. B) low fees and high tax efficiency. C) consistently poor historical performance. D) good performance in both up and down markets. Answer: C […]

31 12.5 Learning Goal 5 1) Mutual funds are used extensively as retirement investments. Answer: TRUE Learning Outcome: F-01 Describe the different financial markets and the role of the financial managers AACSB: 8 Application of knowledge (Able to translate knowledge […]

21 11) Value funds seek stocks I. with low dividend yields. II. with potential for growth. III. with low P/E ratios. IV. of newly discovered firms. A) I and III only B) II and III only C) II, III and […]

11 19) Which of the following characteristics apply to exchange-traded funds (ETFs)? I. unlimited number of outstanding shares II. typically track the performance of some index III. market prices reflect demand for the fund rather than NAV. IV. shares are […]

1 Fundamentals of Investing, 13e (Smart) Chapter 12 Mutual Funds and Exchange-Traded Funds 12.1 Learning Goal 1 1) Mutual funds provide an affordable way to diversify a portfolio. Answer: TRUE Learning Outcome: F-01 Describe the different financial markets and the […]

29 13) The duration of a bond will increase as the time to maturity ________ and/or as the YTM on the bond ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases Answer: B Learning Outcome: F-06 […]

21 13) If you are an income-oriented investor and you feel that interest rates are relatively high and will decline in the future, you should purchase A) zero-coupon, long-term bonds. B) long-term, non-callable bonds. C) short-term, zero-coupon bonds. D) long-term, […]

11 22) Market segmentation theory explains the typical upward sloping shape of yield curves as a function of A) normally greater demand for long-term bonds than for short-term notes. B) normally greater demand for short term notes than for long-term […]

1 Fundamentals of Investing, 13e (Smart) Chapter 11 Bond Valuation 11.1 Learning Goal 1 1) The interest rate on the 10 year Treasury Bond has rarely fallen below the rate of inflation. Answer: TRUE Learning Outcome: F-05 Explain what determines […]

30 33) The first tranche of a collateralized mortgage obligation has A) the greatest default risk and the least prepayment risk. B) the greatest prepayment risk and default risk. C) the greatest prepayment risk and the least default risk. D) […]

21 3) In an inflationary environment, the interest payments on Treasury inflation-indexed obligations increase over time. Answer: TRUE Learning Outcome: F-06 Compare and contrast different types of bonds and explain why bond prices change AACSB: 3 Analytical thinking Question Status: […]

11 19) Lee is considering buying one of two newly-issued bonds. Bond A is a twenty-year, 7.5% coupon bond that is non-callable. Bond B is a twenty-year, 8.25% bond that is callable after two years. Both bonds are comparable in […]

1 Fundamentals of Investing, 13e (Smart) Chapter 10 Fixed-Income Securities 10.1 Learning Goal 1 1) Bondholders can earn income both from interest and from capital gains. Answer: TRUE Learning Outcome: F-16 Describe the major types of debt financing AACSB: 8 […]

28 7) The advance/decline line is be used to time both the purchase and the sale of securities. Answer: TRUE Learning Outcome: F-10 Discuss the causes and consequences of imperfect markets AACSB: 3 Analytical thinking Question Status: Previous Edition Learning […]

21 9.5 Learning Goal 5 1) A principal objective of technical analysis is trying to determine when to invest. Answer: TRUE Learning Outcome: F-10 Discuss the causes and consequences of imperfect markets AACSB: 3 Analytical thinking Question Status: Previous Edition […]

11 4) Loss aversion is the behavior of excessively conservative investors. Answer: FALSE Learning Outcome: F-10 Discuss the causes and consequences of imperfect markets AACSB: 8 Application of knowledge (Able to translate knowledge of business and management into practice) Question […]

1 Fundamentals of Investing, 13e (Smart) Chapter 9 Market Efficiency and Behavioral Finance 9.1 Learning Goal 1 1) In an efficient market, the only means of achieving high returns is to invest in high-risk securities. Answer: TRUE Learning Outcome: F-10 […]