8-10 - 10 EQs (B) - 60%

Question 1

Financing some current assets with long-term debt is considered to be

An unsound financing policy.
A conservative financing policy.
An aggressive financing policy.
A policy used to maximize net income.

Answer 1

Ans. B A conservative financing policy

Question 2

Detective control

Answer 2

serves to detect errors in processing

Question 3

Preventive control

Answer 3

prevents an error from occurring

Question 4

Corrective control

Answer 4

corrects errors that have been detected

Question 5

Governance

Answer 5

a high level control

Question 6

Sight Draft

Answer 6

Calls for immediate payment upon delivery of the shipping documents to the bank’s customer and acceptance of goods by the buyer

Question 7

Open Account (for any buyer/seller relationship)

Answer 7

Involves an invoice being signed by the banker upon receipt of goods, after which both the banker and the seller record the transaction on their respective books.

Question 8

Banker’s acceptance

Answer 8

A time draft, payable on a specified future date, with the bank guaranteeing the payment.

Question 9

Conditional Sales Contract

Answer 9

a method of sales financing in which the seller retains title to the goods until the buyer has completed the payment.

Question 10

Purpose of boundary protection

Answer 10

prevent the mixing of data on a magnetic memory disc and a core storage unit.

Question 11

File integrity control

Answer 11

Deals with maintaining the entire file

Question 12

Paging

Answer 12

A technique used in virtual storage to segment programs and data files which are being used

Question 13

Validity Check

Answer 13

comparison of input to a list of valid items

Question 14

Definition of prime costs

Answer 14

Direct materials plus direct manufacturing labor

Question 15

Calculate equivalent units produced using FIFO

Answer 15

Units Completed
- EU in Beg Inventory
+ EU in End Inventory

= EU

Question 16

In the long run, a firm may experience increasing returns due to

Law of diminishing returns.

Opportunity costs.

Comparative advantage.

Economies of scale.

Answer 16

Ans.

Economies of scale.

As firms grow they often experience economies of scale that increase their returns.