MCQs

Question 1

Which of the following forms of economic activity is considered in macroeconomics, but not in microeconomics?
A. Individuals providing economic resources to business entities.
B. Individuals paying taxes to the federal government.
C. Individuals paying business entities for goods/services.
D. Individuals receiving payments from business entities.

Answer 1

Ans. B Individuals paying taxes to the federal government

Individuals paying taxes to the federal government is not considered in MICROECONOMICS WHICH CONSIDERS ONLY THE RELATIONSHIP BETWEEN INDIVIDUALS AND BUSINESSES but is considered in macroeconomics, which includes the government sector (as well as the financial sector and imports/exports).

Question 2

R-squared

Answer 2

The coefficient of determination, indicates the degree to which the behavior of the independent variable(s) predicts or explains the dependent variable

Question 3

Which of the following, if either, would serve to mitigate risks associated with outsourcing?

I. Negotiate for payment to the foreign supplier be made in the foreign currency.

II. Include an arbitration clause in the contract with the foreign supplier.

Answer 3

Ans. I & II

Question 4

Are dividends on preferred stock tax deductible?

Answer 4

No.

Therefore no adjustment to pre-tax cost needs to be made

Question 5

Using the variable costing method, which of the following costs are assigned to inventory?

Variable SG&A Y/N
Variable Factory OH Y/N

Answer 5

Variable SG&A: N
Variable Factory OH Y

Variable costing assigns only variable manufacturing costs to inventory. Variable manufacturing costs include direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as a period expense. Variable selling and administrative costs, although deducted to arrive at a contribution margin, are not included as inventoriable costs, but are expensed in full each period.

Question 6

Profitability Index Formula

Answer 6

NPV / Cost

Question 7

Steps in determining cash budget when given COGS, AP, and Inventory Levels

Answer 7

1. Determine Budgeted Annual Purchases

Beginning Inventory + Purchases = Ending Inventory + Cost of Goods Sold

2. Determine the budgeted payment amount

Budgeted Cash Payment = Beginning AP + Purchases (* Percentage of the Year Payments will be Made)

Question 8

COBIT

Answer 8

Control Objectives for Information and Related Technology

Model of IT Governance and Management