2007 DECAOntario Provincials FMDM
Test 898 FINANCIAL SERVICES TEAM EVENT 1
1.When preparing a balance sheet, which of the following should match if the business is using a double-entry system of accounting:
A.Assets must match retained earnings and accounts payable.
B.Owner's equity must match liability and assets.
C.Liabilities must match assets and owner's equity.
D.Assets must match liabilities and owner's equity.
2.What figure does a business start with when preparing a profit-and-loss statement?
A.Net sales C.Gross income
B.Operating expenses D.Gross margin
3.What type of property is a business protecting when it registers its trademark?
A.Administrative C.Statutory
B.Tangible D.Intellectual
4.Under the Clean Water Act, the Environmental Protection Agency has the authority to
A.monitor water levels in rivers and streams.
B.set wastewater standards for industry.
C.decide where you must get your water supply.
D.determine how much water you can use for your industry.
5.What do federal regulations concerning workplace issues require businesses to provide to qualified individuals with disabilities?
A.Preferential treatment C.Compensation packages
B.Reasonable accommodations D.Psychological counseling
6.A recommended way to find out why the caller has phoned your business is to
A.ask the caller, "How may I help you?" C.ask the caller, "What did you want?"
B.wait for the caller to ask questions.D.answer promptly with a friendly greeting.
7.What is the main form of written communication between companies?
A.Business letters C.Meetings
B.Memorandums D.Telephone calls
8.A business letter that has easy-to-understand information is said to possess
A.consensus. C.courtesy.
B.caution. D.clarity.
9.Economic goods are best defined as
A.intangible activities that are performed by people for money.
B.physical objects that have monetary value and can satisfy wants and needs.
C.products that are distributed only in certain parts of the country.
D.services that are provided at no cost to consumers.
10.Why are human resources limited?
A.Some people are unable to work. C.Countries lack needed technology.
B.New equipment is expensive.D.World population continues to grow.
11.If there is a large demand for a product and a small supply, the price will usually
A.go down. C.stay the same.
B.go up. D.go down, then up.
12.Businesses are being socially responsible to their customers when they
A.offer employees job training. C.test the safety of their products.
B.provide safe working environments. D.contribute to community causes.
13.Which of the following statements is true about private enterprise:
A.Supply and demand determine prices. C.Property and income are equally distributed.
B.Competition is limited. D.Businesses are free from government control.
14.When a business owner invests money, time, and effort in a business, what kind of monetary reward does the owner expect to receive in return?
A.Satisfaction C.Pride
B.Experience D.Profit
15.A manufacturer that wants to reduce the cost of producing a product should strive to improve the firm's
A.profits. C.productivity.
B.capital. D.sales.
16.The labor organization that is made up of several different kinds of national unions is called a(n)
A.merger. C.federation.
B.open shop. D.corporation.
17.When a business cycle is affected by international relations, new discoveries, and social or political changes, it is said to have been changed by ______factors.
A.intrinsic C.internal
B.extraneous D.external
18.Frederick has been criticized by his supervisor and knows the criticism is justified, but he still feels defensive. This physiological response to stress is the ______response.
A.fight or flight C.eustress
B.over-reaction D.stimulus
19.What might an employee receive from a business for routinely helping customers with their problems and satisfying their needs?
A.A gratuity C.A promotion
B.An honorarium D.A suspension
20.A key factor in successful human relations involves treating others with
A.respect. C.reverence.
B.indifference. D.admiration.
21.Which of the following is an example of an employee reinforcing a service orientation through communication:
A.Telling customers they are misinformed C.Agreeing that customers are always right
B.Offering to find information for customers D.Selecting certain customers to help
22.What kind of customer would make the following statement: "I just don't know which of these my girlfriend would like best. I had better come back at another time."
A.Disagreeable C.Slow/Methodical
B.Suspicious D.Dishonest
23.When handling customer complaints, no matter what action is taken, employees must be
A.courteous and display concern.
B.willing to make an adjustment.
C.willing to try the customer's solution.
D.able to agree with the customer's point of view.
24.When processing a sales return today for a purchase made on credit yesterday, a business accounts for the price of the item that was returned by decreasing
A.current liabilities. C.accounts receivable.
B.perpetual inventory. D.depreciation rates.
25.Which of the following types of insurance do businesses frequently offer as part of their employee benefit plan:
A.Health C.Property
B.Automobile D.Liability
26.What is the total amount due on an invoice for six items that cost $263.50 each if the terms are 3/10, n30 and the customer pays within five days?
A.$1,533.57 C.$1,549.38
B.$1,517.76 D.$1,581.00
27.Calculate a business's cash flow given the following information: cash sales of $4,500, receivables of $1,250, cost of goods sold of $2,100, and total expenses of $2,675.
A.$950 C.$925
B.$975D.$995
28.Calculate the total amount of assets that would appear on a balance sheet if a business has $25,000 in cash, $42,500 in accounts receivable, $82,300 in equipment, $4,000 in investments, and a mortgage of $36,500.
A.$190,300 C.$117,300
B.$124,800 D.$153,800
29.To make sure that their budgets are effective, what should businesses do with budget information?
A.Provide it to all top managers. C.Post it on bulletin boards.
B.Communicate it to all employees. D.Send it to all stockholders.
30.Which of the following is a function of an operating budget:
A.To monitor accounting C.To control expenditures
B.To record financial data D.To regulate inflation
31.Information about a business's total sales and net profit could be obtained by checking the business's
A.balance sheet. C.cash flow.
B.accounts receivable. D.profit-and-loss statement.
32.Which of the following is the basic accounting equation:
A.Expenses - Revenues = Profit C.Capital - Liabilities = Assets
B.Profit = Revenues - Expenses D.Assets = Liabilities + Capital
33.Which of the following is an example of an unethical situation in accounting:
A.Making a business seem more liquid than it is
B.Reporting the current rate of depreciation
C.Attempting to collect accounts receivable
D.Preparing a credit memorandum for a customer
34.One reason businesses develop a chart of accounts is to reduce the possibility of
A.crediting payment to the wrong customer. C.overpaying the utility expense.
B.making errors in recording financial data. D.depreciating new equipment.
35.Businesses keep a variety of source documents to use as evidence of
A.sales procedures. C.financial transactions.
B.credit agreements. D.operating activities.
36.Which of the following is an internal procedure that many businesses use to control cash:
A.Give receipts to all customers C.Track dividends paid to owners
B.Monitor intangible assets D.Evaluate projected budgets
37.Which of the following is a technique for handling cash that businesses might evaluate to determine if it is effective:
A.Invoice preparation C.Accounts receivable
B.Line of credit D.Petty cash fund
38.A customer purchases a product priced at $70 with a 10% discount, discovers that the product is slightly damaged, and returns the product to the business. If the customer accepts an additional 25% allowance to keep the product, the business will prepare a credit memorandum in the amount of
A.$19.00. C.$15.75.
B.$17.50. D.$13.25.
39.When processing accounts payable checks, businesses factor in the invoice terms in order to calculate the
A.amount to pay. C.sales tax.
B.rate of interest. D.gross profit.
40.Why is it important for businesses to maintain check registers?
A.To compare with bank statements C.To fill out deposit slips
B.To verify endorsements D.To count the number of checks
41.Some businesses prepare an accounts payable schedule based on available
A.discount terms. C.tax deductions.
B.interest rates. D.credit balances.
42.What do businesses often use to track and calculate the expense involved in producing products?
A.Selling methods C.Ordering techniques
B.Purchasing policies D.Costing procedures
43.Which of the following expenses do businesses consider when implementing costing procedures:
A.Net profit and loss C.Interest rates and dividends
B.Direct and indirect labor D.Sales returns and allowances
44.When a business issues bonds, it agrees to repay the amount borrowed as well as
A.profit. C.interest.
B.dividends. D.revenues.
45.In which of the following situations does a business use the equity method of accounting for investments in other companies:
A.Owns 10% to 15% of common stock C.Owns more than 50% of common stock
B.Owns less than 20% of common stock D.Owns 20% to 50% of common stock
46.What credit legislation gives businesses specific deadlines to follow in responding to customers' complaints about errors in their credit statements?
A.Fair Credit Reporting Act C.Truth-in-Lending Act
B.Equal Credit Opportunity ActD.Fair Credit Billing Act
47.When processing customer payments, businesses compare the payment notice with the
A.account number. C.check amount.
B.discount terms. D.interest rates.
48.When preparing customer statements, what do businesses usually include with the statement?
A.Sales allowance C.Balance sheet
B.Payment notice D.Audit report
49.What is one way that many businesses attempt to control accounts receivable?
A.Charging interest on unpaid balances C.Purchasing insurance policies
B.Sending statements once a month D.Requiring a credit application
50.Which of the following is an effective method to use to estimate uncollectible accounts expense:
A.Budgeting C.Aging
B.Historical D.Maturity
51.The process of writing off a bad debt as uncollectible involves eliminating the customer's
A.sales allowance. C.operating capital.
B.account receivable. D.accrued revenue.
52.Hours worked, payroll dates, and type and amount of deductions are examples of information that businesses usually maintain in ______records.
A.cash disbursement C.total liabilities
B.accounts payable D.employee earnings
53.Why do businesses process payroll time cards?
A.To comply with wage laws C.To monitor work shifts
B.To establish benefits D.To track employees' hours
54.The first step in preparing an employee's payroll check usually involves calculating
A.gross wage. C.tax liability.
B.mileage expense. D.withholding status.
55.When verifying payroll data, which of the following is usually considered time for which employees should be compensated:
A.Working at home C.Driving to work
B.Being on call D.Going to voluntary training
56.When a business allocates payroll costs, it deducts the amount of payroll from its
A.net income. C.cash assets.
B.operating expenses. D.accounts receivable.
57.How often are businesses required to prepare payroll tax reports and send tax payments to the government?
A.Quarterly C.Yearly
B.Monthly D.Semi-annually
58.In January, a business purchased $3,500 worth of goods to resell from Vendor A, $1,750 worth of goods to resell from Vendor B, and $2,100 worth of goods to resell from Vendor C. If the business received an 8% discount from each vendor, what was the cost of goods sold?
A.$7,180 B. $7,350C.$6,935 D. $6,762
59.Calculate the yearly amount of depreciation on a $30,000 piece of equipment that is depreciated by 20% a year over five years.
A.$3,000 C.$6,000
B.$5,000 D.$2,000
60.Which method of depreciation is a business using if the depreciation expense recorded on financial statements is the same each year for the life of the asset:
A.Book value C.Straight-line
B.Accelerated D.Estimated
61.What do businesses need to consider before making capital expenditure decisions?
A.Current level of inventory C.Value of existing assets
B.Future availability of funds D.Possible date of delivery
62.A business sells a product for $750 and offers a customer cash discount terms of 3/15, n/30. If the customer pays within 15 days, what amount will the business report on its income statement?
A.$675.50 B. $637.50C.$712.50 D. $727.50
63.The cost of goods sold is lower on financial statements when a business uses which of the following inventory systems:
A.LIFO B. FIFOC.FILO D. LOFI
64.What does a business begin with when preparing a profit-and-loss statement?
A.Net sales revenues C.Operating expenses
B.Cost of goods sold D.Returns and allowances
65.Which of the following is a procedure a business follows to manage its cash balance:
A.Payroll monitoring C.Asset verification
B.Income budgeting D.Bank reconciliation
66.Which of the following is a cost of doing business that impacts company expenses:
A.Interest B. TaxesC.Sales D. Margins
67.To increase their liquidity, businesses often decide to keep an amount of emergency cash in
A.savings accounts. C.mutual funds.
B.certificates of deposit. D.government bonds.
68.The budgeting process is intended to help businesses plan how to operate and achieve their goals by stating this information in
A.outlines. B. numbers.C.percentages. D. charts.
69.What do businesses develop to explain the relationships between the business's goals, resources, and expected financial results?
A.Balance sheet B. Master budgetC.Profit statement D. Liability report
70.One reason businesses prepare sales budgets is because the sales budget is the basis of the
A.net worth. C.income statement.
B.balance sheet. D.other budgets.
71.One reason many businesses prepare purchases budgets is to estimate the amount to spend on
A.buying goods for resale. C.replacing warehouse equipment.
B.entertaining suppliers. D.compensating sales employees.
72.What do businesses often do as a result of evaluating projected income statements?
A.Monitor fixed costs C.Purchase additional assets
B.Increase credit sales D.Revise operating plans
73.Businesses evaluate projected balance statements to estimate
A.uncollectible accounts expense. C.amounts it will owe to others.
B.stock dividends to pay. D.capital expenditures.
74.What does a business often use to evaluate the business's projected performance with its actual performance?
A.Industry standard C.Master budget
B.Accounting system D.Operating method
75.Which of the following is a reason why many businesses process voucher forms:
A.To reimburse employees C.To make requests of vendors
B.To pay purchase orders D.To control operating costs
76.Calculate the cash dividends a business owes if it declares a $ .35 per-share dividend on 650,000 common shares.
A.$195,000 B. $227,500C.$260,000 D. $152,500
77.One reason businesses analyze the effects of cash dividends on the financial condition of the business before paying dividends is because it often reduces the amount of
A.accounts payable. C.operating expense.
B.working capital. D.current debt.
78.Why is it important for businesses to evaluate liabilities on a regular basis?
A.To track the value of receivables C.To have sufficient cash to pay debts
B.To calculate gross profit before taxes D.To determine level of projected sales
79.A business accounts for differences between actual and estimated expenses in order to calculate
A.exchanges. B. standards.C.conversions. D. variances.
80.A large business currently employs 1,500 people and estimates that 82 will be eligible to retire within a year. How many new employees will the business need to hire if it expects an additional 7% will leave for other reasons?
A.128 B. 187C.150D. 105
81.In order to do the most effective job of selecting a new employee, the business's first step should be to
A.take applications. C.conduct interviews.
B.conduct a job analysis. D.review resumes.
82.A tool that businesses can use to orient new employees is a(n)
A.exit interview. C.job resume.
B.employee handbook. D.performance appraisal.
83.A company's training and development program is influenced by a variety of external factors such as changes in
A.modern technology. C.company needs.
B.employees' experience. D.employees' skills.
84.When an employee's complaints are not resolved by management, the dissatisfaction felt by that employee could
A.help the company's image. C.save the company money.
B.spread to other employees. D.improve employee morale.
85.Because of customer requests, a business decides to reorder a product that it had stopped selling. The business is using the
A.marketing concept. C.production process.
B.promotional-mix concept. D.distribution process.
86.The primary purpose for record keeping is to provide information about what is happening with the
A.economy. B. country.C.business.D. industry.
87.An employee who notices the electrical cord to a neon sign is badly frayed should
A.report it to a supervisor. C.assume someone knows about it.
B.try to repair the cord. D.call an electrician to fix it.
88.Are there government regulations that apply to accidents in the workplace?
A.No, the government does not oversee work-related accidents.
B.Yes, the government requires businesses to record accidents.
C.No, businesses are protected by the Good Samaritan Law.
D.Yes, the government investigates all accidents.
89.David is meeting with a group of his employees to discuss what types of goods and services they need to successfully perform their jobs. This is often the first step in the ______process.
A.receiving B. marketingC.sellingD. buying
90.When developing a project plan, what do businesses need to identify in order to achieve the objectives of the plan?
A.Simple rules B. Realistic goalsC.Necessary steps D. Formal systems
91.Employees can manage their work in order to control expenses by
A.following leave procedures. C.staying until closing.
B.arriving on time. D.meeting project deadlines.
92.What housekeeping activity should a business's employees complete on a regular basis?
A.Straightening up personal workstation C.Cleaning receiving areas
B.Washing windows D.Vacuuming carpets
93.Which of the following is a characteristic of a good goal:
A.Convenient B. ConservativeC.SafeD. Realistic
94.Business employees who have different opinions about how a certain task should be performed often negotiate in order to
A.create opposition. C.make a statement.
B.avoid rejection. D.reach a compromise.
95.Creative people are often motivated by the desire for
A.conflict. B. recognition.C.promotion.D. money.
96.What is the main purpose of writing a follow-up letter after a job interview?
A.To ask for the job C.To thank the interviewer
B.To send a reference listD.To forward a resume
97.How do professional associations encourage their members to maintain high professional standards?
A.By providing workshops and seminars for its members
B.By maintaining professional libraries
C.By funding research projects
D.By requiring members to adhere to codes of ethics
98.The number of unit sales required to cover the business's fixed and variable costs is called
A.revenue. C.the break-even point.
B.the economies of large-scale production.D.overhead.
99.What must managers be able to do if they want employees to understand the business's goals and be productive?
A.Ask questions B. Listen carefullyC.Communicate clearly D. Obtain feedback
100.One of the reasons business planners must consider the state of the economy is because