1. BUS 475 BUS/475 Final Exam Answers
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BUS 475 Final Exam – Set 1 100/100 Correct answers
1) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____
became the United States' second largest trading partner.
A. Mexico, Venezuela
B. Canada, Venezuela
C. Great Britain, Paraguay
D. Mexico, Canada
E. Canada, Mexico
2) "Generally accepted" in the phrase generally accepted accounting principles means that the
principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service
C. have substantial authoritative support
D. are proven theories of accounting
30) Building a dynamic organization is another way of describing which function of management?
A. Staffing
B. Organizing
C. Leading
D. Controlling
E. Planning
4) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam
purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for
$9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross
profit for March?
A. $8,250
B. $750
C. $4,500
D. $5,250
5) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400
and sales for the current year of $100,000. How much is Hess’s break even point?
A. 2,133 units
B. 6,200 units
C. $25,600
D. 4,600 units
6) As Plant Controller, you are trying to determine which costs over which you have the most control on
a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests
that overhead is the easiest area to directly reduce costs. Which of the following items would be
classified as manufacturing overhead?
A. The western division’s vice president’s salary
B. Cost of landscaping the corporate office

2. C. General corporate liability insurance
D. Factory janitor
7) What is the preparation of reports for each level of responsibility in the company’s organization chart
called?
A. Master budgeting analysis
B. Exception reporting
C. Responsibility reporting
D. Static reporting
8) Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign
that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net
income increase?
A. $6,000
B. $12,000
C. $28,000
D. $18,000
9) The cost of an asset and its fair market value are __________.
A. never the same
B. irrelevant when the asset is used by the business in its operations
C. the same on the date of acquisition
D. the same when the asset is sold
10) Which one of the following is a product cost?
A. Indirect labor
B. Sales person’s salaries
C. Advertising costs
D. Office salaries
AND 90 MORE
BUS 475 Final Exam – Set 2 100/100 Correct answers
1) Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign
that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net
income increase?
A. $12,000
B. $18,000
C. $6,000
D. $28,000
2) Multinational corporations __________.
A. are firms that conduct their operations in more than one country through subsidiaries, divisions, or
branches in foreign countries
B. are U.S. companies that sell goods and services in other countries
C. are required to use international accounting standards
D. are U.S. companies that trade their securities on the exchanges in other countries
3) Balance sheet accounts are considered to be __________.
A. capital accounts
B. nominal accounts
C. temporary stockholders’ accounts
D. permanent accounts

3. 4) What is value chain management best defined as?
A. The incremental value of costs associated with hiring a new production floor leader
B. All activities associated with providing a product or service
C. A large chain that keeps the machines from falling on the production floor
D. Management decisions that affect how quickly the production run occurs
5) The primary purpose of the statement of cash flows is to __________.
A. provide information about the cash receipts and cash payments during a period
B. facilitate banking relationships
C. provide information about the investing and financing activities during a period
D. prove that revenues exceed expenses if there is a net income
6) In what situations will a static budget be most effective in evaluating a manager's effectiveness?
A. The planned activity levels match actual activity levels.
B. The company has no fixed costs.
C. The company has substantial fixed costs.
D. The company has substantial variable costs.
7) Which one of the following is a product cost?
A. Sales person’s salaries
B. Advertising costs
C. Indirect labor
D. Office salaries
8) These are selected account balances on December 31, 2008.
Land (location of the corporation's office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
A. $1,600,000
B. $950,000
C. $1,300,000
D. $1,100,000
9) Of the following companies, which one would not likely employ the specific identification method for
inventory costing?
A. Antique shop
B. Music store specializing in organ sales
C. Hardware store
D. Farm implement dealership
10) If a company reports a net loss, it __________.
A. will not be able to get a loan
B. may still have a net increase in cash
C. will not be able to make capital expenditures
D. will not be able to pay cash dividends
AND 90 MORE
BUS 475 Final Exam – Set 3 100/100 Correct answers

4. 1) These are selected account balances on December 31, 2008.
Land (location of the corporation's office building) $100,000
Land (held for future use) 150,000
Corporate Office Building 600,000
Inventory 200,000
Equipment 450,000
Office Furniture 100,000
Accumulated Depreciation 300,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
A. $950,000
B. $1,300,000
C. $1,600,000
D. $1,100,000
2) "Generally accepted" in the phrase generally accepted accounting principles means that the
principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service
C. have substantial authoritative support
D. are proven theories of accounting
3) The income statement and balance sheet columns of Pine Company's worksheet reflects the
following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
The net income (or loss) for the period is __________.
A. not determinable
B. $10,000 loss
C. $10,000 income
D. $48,000 income
4) These are selected account balances on December 31, 2008.
Land (location of the corporation's office building) $150,000
Land (held for future use) 225,000
Corporate Office Building 900,000
Inventory 300,000
Equipment 675,000
Office Furniture 150,000
Accumulated Depreciation 450,000
What is the net amount of property, plant, and equipment that will appear on the balance sheet?
A. $1,425,000
B. $1,950,000
C. $2,400,000
D. $1,650,000
5) The first step in activity-based costing is to __________.
A. identify the cost driver that has a strong correlation to the activity cost pool
B. assign manufacturing overhead costs for each activity cost pool to products
C. identify and classify the major activities involved in the manufacture of specific products
D. compute the activity-based overhead rate per cost driver

5. 6) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400
and sales for the current year of $100,000. How much is Hess’s break even point?
A. 2,133 units
B. 4,600 units
C. 6,200 units
D. $25,600
7) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam
purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for
$9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross
profit for March?
A. $8,250
B. $5,250
C. $750
D. $4,500
8) A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools
9) The income statement and balance sheet columns of Pine Company's worksheet reflects the
following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
Closing entries are necessary for __________.
A. permanent or real accounts only
B. permanent accounts only
C. both permanent and temporary accounts
D. temporary accounts only
10) As Plant Controller, you are trying to determine which costs over which you have the most control
on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager
suggests that overhead is the easiest area to directly reduce costs. Which of the following items would
be classified as manufacturing overhead?
A. The western division’s vice president’s salary
B. Factory janitor
C. Cost of landscaping the corporate office
D. General corporate liability insurance
AND 90 MORE
BUS 475 Final Exam – Set 4 100/100 Correct answers
1) Which one of the following is a product cost?
A. Indirect labor
B. Sales person’s salaries
C. Office salaries
D. Advertising costs

6. 2) Lucy starts her own psychiatric practice, but her expenditures to open the practice exceed her
income. Lucy is a __________.
A. borrower who demands money from the financial system
B. borrower who supplies money to the financial system
C. saver who supplies money to the financial system
D. saver who demands money from the financial system
3) Of the following companies, which one would not likely employ the specific identification method for
inventory costing?
A. Music store specializing in organ sales
B. Antique shop
C. Farm implement dealership
D. Hardware store
4) Which one of the following items is not generally used in preparing a statement of cash flows?
A. Adjusted trial balance
B. Comparative balance sheets
C. Additional information
D. Current income statement
5) The conceptual framework developed by the Financial Accounting Standards Board __________.
A. was approved by a vote of all accountants
B. is viewed as providing a constitution for setting accounting standards for financial reporting
C. are rules that all accountants must follow
D. is legally binding on all accountants
6) What is the preparation of reports for each level of responsibility in the company’s organization chart
called?
A. Static reporting
B. Exception reporting
C. Responsibility reporting
D. Master budgeting analysis
7) The cost principle requires that when assets are acquired, they be recorded at __________.
A. appraisal value
B. selling price
C. exchange price paid
D. list price
8) If a company reports a net loss, it __________.
A. will not be able to make capital expenditures
B. will not be able to get a loan
C. may still have a net increase in cash
D. will not be able to pay cash dividends
9) The major reporting standard for management accounts is __________.
A. generally accepted accounting principles
B. relevance to decisions
C. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial
Management

7. D. the Sarbanes-Oxley Act of 2002
10) The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. provide information about the cash receipts and cash payments during a period
C. provide information about the investing and financing activities during a period
D. prove that revenues exceed expenses if there is a net income