BUS 475 Week 4 Knowledge Check

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1. A fast-food restaurant asks customers to evaluate the drive-thru service as good, average, or
poor. What level of data measurement is this classification?
Nominal
Ordinal
Interval
Ratio
2. In order to determine the average amount spent in November on Amazon.com a random sample
of 144 Amazon accounts were selected. The sample mean amount spent in November was $250
with a standard deviation of $25. Assuming that the population standard deviation is unknown,
what is a 95% confidence interval for the population mean amount spent on Amazon.com in
November?
($245.88, $254.12)
($247.47, $260.09)
($250.64, $256.92)
($251.34, $256.22)
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3. A shipment of 20 DVDs has arrived at a video rental store. Based on past experience, the manager
knows that 10% of all new DVDs sent to the store have a visible defect. The manager tells you to
begin inspecting the new DVDs one at a time at random until you find the first DVD that has a
defect. If 10% of the DVDs have a visible defect in the new shipment, what is the probability that the
first DVD that has a defect is the 3rd one that you inspect? (Round your answer to 3 decimal places.)
•.081
•.268
•.089
•.716
4. An insurance agent has selected a sample of drivers that she insures whose ages are in the range
from 16–42 years old. For each driver, she records the age of the driver and the dollar amount of
claims that the driver filed in the previous 12 months. A scatterplot showing the dollar amount of
claims as the response variable and the age as the predictor shows a linear regression line with:
y^=3710 – 55.4x. If the age of a driver increases by 1 year, by how much and in what direction
would the dollar amount of claims be predicted to change for the driver?
•Increase by 55.4 dollars
•Decrease by 55.4 dollars
•Increase by 3710 dollars
•Increase by 3,654.6 dollars
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5. A researcher claims that the proportion of employees who play video games in the workplace is
higher than it was 10 years ago. You might be willing to reject the null hypothesis of no change with a =
0.10 or larger. The p-value for this test is 0.15. In this case the researcher should
•not reject the null hypothesis
•reject the null hypothesis
•continue with further testing because the result is inconclusive
•change the testing from nonparametric to parametric
6. How valuable a low-cost leader's cost advantage is depends on
•whether it is easy or inexpensive for rivals to copy the low-cost leader's methods or otherwise match its low
costs
•how easy it is for the low-cost leader to gain the biggest market share
•the aggressiveness with which the low-cost leader pursues converting the cost advantage into the absolute
lowest possible costs
•the leader's ability to combine the cost advantage with a reputation for good quality
7. The general plan of major actions through which a firm intends to achieve is long-term objectives is
called its
•corporate plan
•long-term goal
•grand strategy
•mission
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8. Which of the following represent marketing capabilities at the growth stage of industry evolution?
•Skills in aggressively promoting products to new markets and holding existing markets and pricing flexibility
•Ability to establish brand recognition, find niche, reduce price, solidity strong distribution relations and
develop new channels
•Cost effective means of efficient access to selected channels and markets and strong customer loyalty or
dependence
•Resources or skills to create widespread awareness and find acceptance from customers; advantageous access
to distribution
9. __________ is an organization structured around the idea of sharing knowledge, seeking knowledge, and
creating opportunities to create new knowledge.
•A global company
•A modular organization
•An ambidextrous organization
•A learning organization
10. Which of the following types of strategic control has a low degree of formalization?
•Special alert control
•Implementation control
•Strategic surveillance
•Premise control
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11. Investors and creditors are particularly interested in this financial statement because it tells
them what is happening to the company’s most important resource?
Statement of cash flows
Income statement
Retained earnings statement
Balance sheet
12. The cash basis of accounting is prohibited under GAAP for the following reason:
It divides the economic life of a business into artificial time frames.
It violates the revenue recognition principle and the expense recognition principle.
It fails to provide for adjusting entries.
It records revenues only in the time period in which they are received.
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13. Use the following data to determine the total dollar amount of assets to be classified as property,
plant, and equipment. Eddy Auto Supplies Balance Sheet December 31, 2014 Cash $84,000 Accounts
payable $110,000 Accounts receivable $80,000 Salaries and wages payable $20,000 Inventory
$140,000 Mortgage payable $180,000 Prepaid insurance $60,000 Total liabilities $310,000 Stock
investments $170,000 Land $190,000 Buildings $226,000 Common stock $240,000 Less:
Accumulated Retained earnings $500,000 depreciation ($40,000) $186,000 Total stockholders’
equity $740,000 Trademarks $140,000 Total liabilities and Total assets $1,050,000 Stockholders’
equity $1,050,000
•$686,000
•$516,000
•$556,000
•$376,000
14. The manager of Weiser is given a bonus based on net income before taxes. The net income after
taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How
much higher is the manager's bonus if FIFO is adopted instead of LIFO?
•$9,000
•$12,600
•$1,800
$6,300
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15. The Sarbanes–Oxley Act of 2002 requires publicly traded U.S. companies to take the following
actions to defect and prevent fraud:
•Adopt accrual basis of accounting, maintain an adequate system of internal controls, and create
penalties for noncompliance
•Maintain an adequate system of internal controls, ensure that internal controls are reliable and effective,
and hire independent auditors to attest adequacy of internal controls
•Ensure internal controls are reliable and effective, corporate executives must independently review
internal controls, and submit all financial statements to the Public
•Company Accounting Oversight Board
•Maintain an adequate system of internal controls, provide additional training to managers and
accountants regarding internal controls, and publish internal controls on the company’s public website
16. On July 1, 2014, Linden Company purchased the copyright to Norman Computer Tutorials for
$140,000. It is estimated that the copyright will have a useful life of 5 years. The amount of
amortization expense recognized for the year 2014 would be
•$28,000
•$13,125
•$25,900
•$14,000
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17. ABC Corp. receives a 7-month interest-bearing promissory note in the amount of $360,000
on February 1. The interest rate is 15%. What is the total interest expense ABC Corp will record
assuming ABC makes all of its payments?
•$54,000
•$31,500
•$4,500
•$36,000
18. Logan Corporation issues 50,000 shares of $50 par value preferred stock for cash at $60 per
share. The entry to record the transaction will consist of a debit to cash for $3,000,000 and a
credit or credits to
•preferred stock of $3,000,000
•preferred stock for $2,500,000 and paid-in capital in excess of par value—preferred stock for
$500,000
•preferred stock for $2,500,000 and retained earnings for $500,000
•paid-in capital from preferred stock for $3,000,000
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19. Which of the following tools of analysis is used to evaluate financial statement information by
expressing financial statement data as a percentage over a base amount?
•Vertical analysis
•Horizontal analysis
•Ratio analysis
•Industry averages
20. The Sarbanes–Oxley Act of 2002 requires publically-traded U.S. companies to provide great
internal controls. The five primary components of an internal control system include: a control
environment, risk assessment, information and communication, monitoring, and
•Establishment of responsibility
•Segregation of duties
•Control activities
•Human resource controls
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