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1. In a capital budgeting decision, if a firm uses the net present value method and has a 12 % cost of capital, what does a negative net present value indicate?

Group of answer choices

The proposal's rate of return exceeds 12%

The proposal's rate of return is less than 12%

The proposal earns a rate of return between 10% and 12%

none of the above.

2. Which of the following statements is true regarding payback analysis?

Group of answer choices

the time value of money is considered when calculating the payback.

payback analysis always considers cash flows that continue after the payback period

payback analysis is more accurate than net present value analysis

the time value of money is not considered when calculating the payback.

3. In net present value (NPV) analysis, the purchase price of an asset should be:

Group of answer choices

ignored.

included as a cash outflow.

included as a cash inflow.

included as a tax deduction.

4. Opportunity costs are:

Group of answer choices

included in inventory.

foregone benefits

sunk costs.

included in cost of goods sold.

5. Costs used by companies to decide between short-term alternative courses of action are called:

Group of answer choices

relevant costs.

sunk costs.

direct costs.

variable costs.

6. Which of the following is NOT a type of responsibility center within an organization?

Group of answer choices

Service center

Profit center

Investment center

Cost center

7. Following is selected data for the belt division of Allen Corp:

Sales $2,000,000

Average operating assets $ 500,000

Net operating income $ 300,000

Turnover 4.0

Cost of capital 18%

How much is the Return on Investment (ROI) for the belt division?

Group of answer choices

60%

33%

18%

15%

8. Following is selected data for the belt division ofAllen Corp:

Sales $2,000,000

Average operating assets $ 500,000

Net operating income $ 300,000

Turnover 4.0

Cost of capital 18%

What is theResidual Income (RI) for the belt division?

Group of answer choices

$90,000

$54,000

$200,000

$210,000

9. Which of the following is an advantage of a decentralized organization:

Group of answer choices

Loss of control

Duplication of services

Quicker decisions

Conflict of interest

10. The appropriate section in a statement of cash flows for reporting the issuance of stock for cash is:

Group of answer choices

Operating activities

Investing activities

Financing activities

Cash is not involved so the activity is disclosed in a separate schedule.

11. The indirect method for preparation of the operating activities section of the statement of cash flows:

Group of answer choices

is used by every company that prepares a statement of cash flows.

starts with net income.

separately lists each major item of operating cash payments.

separately lists each major item of operating cash receipts.

12. Which of the following would be reported on the statement of cash flows as an investing activity?

Group of answer choices

Sale of equipment for cash

Depreciation expense

Issuance of common stock

Paying dividends

13. In the process of establishing standard costs, most managers will use:

Group of answer choices

attainable standards.

ideal standards.

past experience standards.

average standards.

14. When performing common-size (vertical) analysis of the income statement, each income statement item is expressed as a percent of:

Group of answer choices

total assets.

net sales.

operating income.

total expenses.

15. Ratio analysis is not used to evaluate which aspect of a company's financial health?

Group of answer choices

Market valuation

Profitability

Cash management

Long-term solvency

16. How are allocated and direct fixed costs treated in the decision to keep or drop a product line?

Group of answer choices

Direct fixed costs are directly traceable to a product line and will be eliminated with the product line.

Allocated and direct fixed costs are assigned to a product line by the company and will be re-assigned to the product lines that are not eliminated.

Allocated fixed costs are directly traceable to a product and will be eliminated with the product line.

Allocated and direct fixed costs are both sunk costs and therefore are not relevant in a product line analysis.

17. Which of the following would be a possible cause for a favorable materials quantity variance?

Group of answer choices

Poor quality materials used in production increased waste and spoilage.

Employees were poorly trained in the efficient use of materials.

Improved maintenance of production equipment reduced waste of materials.

Outdated production techniques contributed to an inefficient use of materials.