- Description
BUS/475
INTEGRATED BUSINESS TOPICS
The Latest Version A+ Study Guide
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BUS 475 Final Exam Link
https://hwsell.com/category/bus-475/
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- The management team at Cryser Electronics Inc., manufacturer of electrical generators, aims to increase the company’s market share by 20% by the end of 2017. To achieve this target, Marcus, the marketing manager, assigns specific sales targets to individual salespeople and retailers. In this scenario, the sales target is a(n) __________.
objective goal
project goal
behavioral goal
task goal
- Earnings per share (EPS) is an indicator of a company’s profitability and how its stocks are valued. EPS of a company is directly proportional to its net income. The net income of Tolut Inc. for this year has decreased by 10 percent from last year’s figures. Therefore, the company’s EPS would be less than what it was last year.
Which of the following statements, if true, strengthens the argument?
Tolut Inc. has issued additional common shares in the current year.
Tolut Inc.’s stocks were undervalued in the market last year.
A high EPS indicates that the company has a high potential for growth in the future.
Earnings per share do not necessarily fall every time there is a rise in the taxes paid by the company.
- CodeGiant Inc. is a startup company that specializes in software development. The government levies a sales tax of 7.5% on the sale of the company’s services. Mathew, the company’s CTO, decides to introduce a new functional structure that will reduce the time taken to develop each software. He believes that this will reduce the company’s costs and compensate for the taxes. When he presents his idea to the company’s investors, they become apprehensive that such changes may lead to internal conflicts. The respective department heads are also apprehensive because they do not know whether they will fit into the new structure. They question the validity of Mathew’s suggestion. Which of the following stages of the group development process does this scenario portray?
Norming
Forming
Storming
Adjourning
- Telda Corp. is a large accounting firm. It has an office in each of the 27 states of Kavenia.
The chairperson of Telda Corp.: I believe that if employees work in the same office for a long time, issues like favoritism, complacency, and misuse of authority are likely to develop. Therefore, I propose a policy that requires at least the employees in managerial positions and above to be transferred to a different office every five years. This policy will be well received by our employees and discourage them from leaving our company.
Which of the following statements, if true, would strengthen the chairperson’s argument?
The technical skills required to work vary from team to team in Telda.
Rotating employees among different office locations leads to greater employee cohesion in companies.
Cultural differences may lead to different working styles in the different office locations of Telda Corp.
Introducing policy changes without consulting the relevant stakeholders is against the work culture of Telda Corp.
- The HR manager of Delta Corp.: According to our rewards and recognition program, employee achievements are acknowledged and employees are given gift vouchers through emails on reaching milestones and targets. I feel this is not enough to make employees feel appreciated. In my previous company, work anniversaries and professional achievements were celebrated in organization-wide meetings, where the concerned employee would be publicly rewarded. After all, I would love it if my efforts were recognized like this! Therefore, such an idea would be a great success in our company.
The HR manager’s argument is flawed because it:
fails to prove that employees of Delta Corp. feel unappreciated.
fails to recognize the effort put in by his team to implement the existing rewards and recognition program.
fails to consider that other people might perceive appreciation differently than him.
dismisses the possibility of increasing the value of the gift vouchers that are given to the employees at present.
- Reinek Company sold a fixed asset for $25,000. The asset was originally purchased at a cost of $64,000. On the date of sale, the accumulated depreciation was $53,000. Calculate the gain or loss on the sale of the asset.
Gain of $14,000
Gain of $25,000
Loss of $39,000
Loss of $36,000
- Calculate the revenue for the year ending December 31, 2016, based on the information given below.
2016 2017
Retained earnings, January 1 $14,500 $ X
Revenue for the year Y 48,500
Expenses for the year 44,800 42,700
Dividends paid 3,500 5,700
The ending balance of retained earnings on December 31, 2017, is $18,500.
$15,400
$18,400
$33,800
$52,200
- From the information given below, calculate the net cash flows from operating activities using the indirect method.
Net income $170,000
Depreciation 5,750
Loss on disposal of plant asset 4,000
Increase in inventory 7,500
Increase in prepaid expenses 5,460
Decrease in accounts payable 6,750
$173,540
$160,040
$152,040
$176,460
- The HR manager of Delta Corp.: According to our rewards and recognition program, employee achievements are acknowledged and employees are given gift vouchers through emails on reaching milestones and targets. I feel this is not enough to make employees feel appreciated. In my previous company, work anniversaries and professional achievements were celebrated in organization-wide meetings, where the concerned employee would be publicly rewarded. After all, I would love it if my efforts were recognized like this! Therefore, such an idea would be a great success in our company.
Which of the following statements, if true, weakens the HR manager’s argument?
Delta Corp. does not have sufficient funds to organize frequent town halls.
Delta Corp.’s policy requires the CEO of the company to be present in every town hall.
Employees are not motivated to perform well at their jobs if their work is not appreciated and rewarded.
The HR manager’s previous company did not offer promotions to its employees easily.
- Calculate the operating profit or (loss) from the information given below.
Sales revenue $320,000
Sales returns 11,000
Cost of goods sold 210,000
Selling expense 23,520
Administrative expense 46,270
Marketing expense 26,880
Research and development 6,300
($3,970)
$3,970
$7,030
($7,030)
- A company declared a cash dividend of $8,560 on December 5, 2015. The company made a cash dividend payment on January 8, 2016. What is the cumulative effect of the declaration and payment of the cash dividend on the company’s financial statements?
Total liabilities will remain the same, and total assets will increase by $8,560.
Stockholders’ equity will increase by $8,560, and total assets will remain the same.
Total assets and liabilities will increase by $8,560.
Stockholders’ equity and total assets will decrease by $8,560.
- Rilm Corporation has been recording investment income as revenue for the past year with the aim of making the financial condition of the company appear better than it actually is. Jon, one of the company’s employees, becomes aware of this fraudulent activity and immediately reports it to the appropriate authorities. After conducting several investigations, the authorities book the company under the Sarbanes-Oxley Act. Which of the following statements best explains why Jon did not hesitate to alert the authorities about the company’s fraudulent activity?
Under the Sarbanes-Oxley Act, whistleblowers who suffer retaliation are allowed to recover criminal damages but not civil damages.
There are no limitations to the protections offered by the Sarbanes-Oxley Act to whistleblowers.
The Sarbanes-Oxley Act requires accounting firms to separate their auditing and consulting functions.
The Sarbanes-Oxley Act provides for the reinstatement of whistleblowers in cases of improper termination.
- Gharial LLC is a company that manufactures and leases cars. To increase its production capacity, the CEO of Gharial LLC has decided to build a new manufacturing plant. The company requires a loan from a bank, and submits its financial statements to the bank. The CEO believes that the loan will be approved because of the company’s liquidity.
Which of the following, if true, weakens the CEO’s argument?
The current ratio of Gharial LLC is higher than one.
A majority of Gharial LLC’s current assets are in the form of inventory.
Gharial LLC specializes in high-end cars.
The price of Gharial LLC’s shares has remained constant over the past year.
- The management team at Cryser Inc., manufacturer of wind turbines, aims to increase the company’s market share by 20% by the end of 2017. The respective functional heads in the company inform their teams that they will get a substantial bonus if they are able to achieve this target. Which of the following stages of the goal-setting process is the company in?
Creating action plans
Setting goals
Promoting goal commitment
Providing support and feedback
- Jeremia joins as the new marketing manager in a leading multinational company. The company usually advertises its products through newspapers, television, or trade fairs. Jeremia invites different product managers within the company to discuss and find out new ways of creating consumer awareness for the company’s products. Several members of the group are inclined toward Jeremia’s idea of using social media, while others are content with the present promotional strategies. Which of the following stages of the group development process are the managers experiencing?
Performing
Forming
Storming
Norming
- Gharial LLC is a company that manufactures and leases cars. To increase its production capacity, the CEO of Gharial LLC has decided to build a new manufacturing plant. The company requires a loan from a bank, and submits its financial statements to the bank. The CEO believes that the loan will be approved because of the company’s liquidity.
Which of the following strengthens the CEO’s argument?
Gharial LLC’s earnings per share are equal to that of other similar companies.
Gharial LLC’s financial statements show a positive working capital.
The cost of building the manufacturing plant will be offset by the profit Gharial LLC earns.
The manufacturing plant will be amortized over the next thirty years.
- Financial analyst: Linksus Tech is a company that manufactures drill bits and screwdrivers. Over the last year, its sales have not shown a significant increase. The company has a large quantity of inventory on hand, its accounts receivable have doubled, and its accounts payable have increased threefold. Given this, the company should try to realize its current assets at the earliest to stay afloat.
Which of the following, if true, would strengthen the argument?
The current liabilities are expected to be due within the next three months.
The demand for the products sold by the company is expected to increase.
Linksus Tech has applied for a short-term loan to meet its working capital requirements.
The company will introduce a much-awaited new product into the market in the following year.
- CoolWindows Corp. produces 2,000 air conditioners per week in three plants: Plant I, Plant II, and Plant III. Plant I produces 800 air conditioners per week, Plant II produces 500 air conditioners per week, and Plant III produces 700 air conditioners per week. The probability of an air conditioner being defective is 7% for Plant I, 5% for Plant II, and 6% for Plant III, respectively. In a random check, a defective air conditioner is found. What is the probability that the air conditioner was produced in Plant II?
0.75
0.18
0.20
0.25
- Aaron has recently been recruited as the managing director of Ikara Corp., which is a leading accounting firm with a global presence. He learns that the employees of Ikara felt that the previous managing director was unapproachable and did not encourage employees to express their problems or ideas to him. Aaron does not want to be perceived the same way. To appear friendlier toward his employees, he decides to use a bit of humor in his electronic communication. This will surely enable him to build a good rapport with the employees of Ikara Corp.
Which of the following, if true, most seriously undermines Aaron’s argument?
Aaron has previously worked in companies where communication between employees was informal.
Some employees of Ikara belong to cultures where humor is likely to be perceived as ridicule.
Aaron’s electronic communication is mostly directed to the senior management of the company.
Managers must seem approachable to their teams, especially when their teams are spread across the globe.
- Calculate the expected return for a stock based on the following information.
Expected dividend $2.20
Current price $47.82
Expected growth rate 5.67%
16.46%
4.6%
10.27%
7.87%
- Leadership roles require the display of classic extrovert behavior such as speaking confidently in public, building large social networks, and allowing your successes as well as failures to be scrutinized by your stakeholders. These abilities are so integral to leadership roles that people who step into such roles learn to master extrovert behavior regardless of their actual personalities.
Which of the following can be inferred from the given passage?
One can acquire extrovert behavior by becoming a leader.
People who are extroverted become successful leaders.
Having large social networks helps in the development of public-speaking skills.
Leaders should learn from both their successes and their failures.
- Telda Corp. is a large accounting firm. It has an office in each of the 27 states of Kavenia.
The chairperson of Telda Corp.: I believe that if employees work in the same office for a long time, issues like favoritism, complacency, and misuse of authority are likely to develop. Therefore, I propose a policy that requires at least the employees in managerial positions and above to be transferred to a different office every five years. This policy will be well received by our employees and discourage them from leaving our company.
Which of the following statements, if true, would most seriously weaken the chairperson’s policy?
The employees of Telda Corp. would have to be paid a relocation allowance if they are transferred to a different city.
There is a high rate of attrition among Telda Corp.’s employees who are not in managerial positions.
The cost of living in Kavenia varies from state to state.
Employees are more likely to switch jobs within their city than to relocate to a new city for their current jobs.
- Calculate the net income of Tinekal Corporation from the following information.
Depreciation expense $ 850
Rent expense 500
Salaries expense 700
Supplies expense 650
Interest expense 400
Revenue from sales 5,000
Profit from sale of assets 1,000
Dividend 700
$1,900
$3,600
$2,600
$2,900
- As a common practice, Rova Inc. mostly collects upfront payments for goods that will be delivered to customers in the future. Unearned revenues contribute significantly to the company’s current liabilities.
Commentator A: The advance cash received from customers can be used to finance the company’s operations, and the corresponding liabilities that are recorded will appear as sales in future financial statements. Therefore, this practice is beneficial to Rova Inc. and should be continued.
Which of the following statements, if true, weakens commentator A’s argument?
Rova Inc.’s ability to deliver exactly as per its commitments to its customers is frequently impacted by its unreliable suppliers.
A majority of the orders received by Rova Inc. from its customers are for customized products.
Rova Inc.’s long-term liabilities are not offset by its current assets.
Rova Inc.’s cash flow statement shows that the company does not have enough cash to scale up its operations in the next year.
- Calculate the cash flows from financing activities based on the information given below.
Depreciation $ 770
Purchase of machinery 4,000
Increase in fixed asset 900
Payment of dividend 600
Issuance of short-term debt 1,500
Repayment of long-term debt 5,700
Increase in bank borrowings 6,200
$2,000
$1,400
$630
$4,130
- Secaucuss Co. has been in the business of manufacturing office supplies for the last five years. Recently, the company issued more shares to the public to raise capital for its expansion. Expanding its operations into office maintenance helped it generate additional cash inflows. Since the company expanded and issued more shares, the stockholders’ equity should also have increased. However, the stockholders’ equity went down this year.
Which of the following statements best explains why the stockholders’ equity went down?
The company employed a predatory pricing strategy to increase its market share.
The company collected revenue from services provided on an accrual basis.
The company declared a 2-for-1 stock split during the current year.
The company purchased some new machines to speed up its manufacturing process.
- The senior management of Reska Corp. realizes the importance of encouraging employees to be creative. In the previous year, the company organized quarterly town hall meetings, where employees were given the opportunity to share innovative ideas to tackle the issues faced by the company and to improve the company’s overall performance. However, this plan did not yield the desired result.
The CEO of Reska Corp.: This plan failed because employees tended to be apprehensive about expressing their ideas in public as they did not know how the ideas would be received. We must change our strategy and give employees the opportunity to express their ideas to their managers in person. This will make the employees feel comfortable expressing their creativity.
Which of the following is assumed by the CEO?
Reska’s employees want to be creative at their jobs.
Unless the employees of Reska share their creative ideas, the company’s overall performance is unlikely to improve.
Employees feel less apprehensive about expressing their ideas to their managers than about expressing them in public.
Companies with a creative workforce are less resistant to change than those lacking creativity.
- Luisana runs a clothing boutique that sells designer clothes. In order to expand the clothing collection in the boutique, Luisana wants to buy some clothes from a fashion designer. After examining Luisana’s audited financial statements, the fashion designer concludes that she is assured a collection from Luisana.
Which of the following statements will weaken the argument?
Luisana has owned the boutique for only three years and has no prior experience of running a business.
Luisana’s liquid assets are just enough to meet her current liabilities.
Luisana’s boutique faces increased competition from other designer boutiques.
The fashion designer makes her collections within two months of sale.
- Elanke, an owner of a restaurant, has the following financial information for the year ending December 31, 2016.
Revenue earned $410,000
Cash received from customers 300,000
Expenses incurred in the purchase of ingredients 250,000
Depreciation incurred during the year 700
Cash paid for miscellaneous expenses incurred in the year 2015 120,000
Based on the accrual basis of accounting, Elanke’s net income for the year is __________.
$459,300
$39,300
$159,300
$339,300
- In an apparel store, one individual is assigned the task of recording the cash received from customers. Another individual is responsible for the creation and handing over of credit memos to customers. These measures are taken to avoid the risk of fraud. Which of the following principles of internal control activities does this scenario best illustrate?
Physical controls
Independent internal verification
Segregation of duties
Documentation procedures
- Calculate the cash flows from investing activities based on the following information.
Cash received from customers $67,550
Cash paid to suppliers 24,000
Purchase of equipment 230,000
Income tax paid 2,800
Payment of dividends 115,000
Proceeds from sale of machinery 105,000
Interest paid 1,500
Proceeds from issue of long-term debt 84,000
Purchase of stocks 87,500
Receipts from sale of equity instruments 177,300
$(31,000)
$39,250
$(35,200)
$125,000
- Maertge Airlines purchases an aircraft for $84,000,000 on January 1, 2016. The residual value of the aircraft is estimated at $7,500,000, and its useful life is estimated at 25 years. Applying the double-declining-balance method of depreciation, the depreciation expense recognized for the year ended December 31, 2018 will be __________.
$3,096,576
$6,182,400
$5,687,808
$6,720,000
- Cryser Inc. specializes in manufacturing wind turbines. In order to increase the efficiency of its manufacturing process, the management decides to restructure its shop floor into several workshops. Each workshop specializes in a specific function. The engineers working in the company raise concerns that their jobs will become monotonous if each employee performs only one of those functions. Which of the following is a soft tactic that the management can use to influence the engineers?
Convincing the union leader to persuade other engineers
Demanding the engineers to comply with the authority
Promising monetary benefits
Explaining the benefits of the new structure
- Calculate the cost of goods sold based on the following information.
Inventory at the beginning of 2016 $ 54,000
Purchases 450,000
Purchase returns 12,800
Inventory at the end of 2016 60,000
$431,200
$443,200
$491,200
$444,000
- Cero Inc. is an oil and gas company that operates in the nation of Lumnia. Cero has incurred unforeseen expenses this year because of an environmental lawsuit filed against the company for accidentally causing an oil spill in a marine area in Lumnia. Therefore, despite Cero’s earnings being high, the company’s net income is much lower than what the company anticipated.
CFO of Cero Inc.: Our operations are compliant to the current environmental laws. Accidents such as the oil spill caused by Cero Inc. are extremely rare. Therefore, the consequences of the environmental impacts of our operations should be categorized as nonrecurring costs in our financial statements.
Cero’s shareholder: Cero Inc.’s earnings steadily increase every year. Since the oil spill is a onetime incident, there is no need to worry about its impact on next year’s profits.
Which of the following statements, if true, weakens the CFO’s argument?
Cero Inc. categorizes any change in accounting principles as a nonrecurring expense.
Cero Inc.’s earnings come from many other operations that are based outside Lumnia.
A change in the taxes applicable to Cero Inc. cannot be listed as a nonrecurring expense unless it is unanticipated.
In the future, Lumnia’s environmental laws are likely to undergo frequent changes because of increasing environmental activism in Lumnia.
- Vonik Solvers Inc. receives $40,000 in cash by issuing 15,000 shares of common stock at the par value of $2 per share. Which of the following is the correct journal entry to record this transaction?
Common Stock 40,000
Cash 30,000
Additional Paid-in Capital 10,000
Cash 40,000
Common Stock 30,000
Additional Paid-in Capital 10,000
Cash 80,000
Common Stock 30,000
Additional Paid-in Capital 50,000
Common Stock 80,000
Cash 30,000
Additional Paid-in Capital 50,000
- Raubac Inc. has an earnings before interest and taxes (EBIT) of $350,000. Raubac Inc.’s capital structure consists of a long-term debt of $950,000 (costing 4%) and 110,000 issued shares of common stock at a market price of $6 per share. To bring down Raubac’s dependence on debt, the company is planning to reduce its debt by $200,000 by selling additional shares of common stock. Raubac’s EBIT will not change with the change in capital structure and will remain in the 40 percent tax bracket. Which of the following is a result of the change in Raubac’s capital structure?
Raubac’s earnings per share (EPS) will increase by $0.57.
Raubac’s net income will increase by $4,800.
Raubac’s earnings before taxes (EBT) will reduce by $8,000.
Raubac’s earnings before taxes (EBT) will remain unchanged.
- A company issues 100,000 shares at $50 per share. It has a debt-equity ratio of 2:1. If the company announces a 3-for-1 stock split, what will be the result?
The total stockholders’ equity and the debt-equity ratio will remain unchanged.
The total stockholder’s equity will decrease and the debt-equity ratio will remain unchanged.
The total stockholder’s equity will increase and the debt-equity ratio will decrease.
The total stockholder’s equity and the debt-equity ratio will decrease.
- Elena Corporation owes Volmare Inc., an advertising agency, a sum of $42,000 for services rendered. When Elena Corporation goes public, it offers the agency 7,000 shares of its common stock in exchange for the payable service cost. The agency accepts the offer. The stock trades at $6 per share and the par value of the stock is $1. Which of the following is the correct journal entry to record this transaction in the books of Elena Corporation?
Service Expense 42,000
Paid-in Capital in Excess of Par—Common Stock 42,000
Cash 42,000
Common Stock 42,000
Service Expense 42,000
Common Stock 42,000
Service Expense 42,000
Common Stock 7,000
Paid-in Capital in Excess of Par—Common Stock 35,000
- The board of directors of Yudel Corp. is looking for a new managing director for the company. They find a candidate, Linda, who is hardworking, passionate, and confident. These are the characteristics that all the past leaders of Yudel Corp. had in common. Therefore, the board concludes that hiring Linda as the new managing director will contribute positively to the company’s success.
The board of directors relies on the assumption that:
Linda’s goals, as a leader, are compatible with the culture and vision of Yudel Corp.
the leaders of other companies have characteristics in common with the leaders of Yudel Corp.
Linda will not have any other job offer to consider when Yudel Corp. offers her the position of managing director.
Linda has worked in companies similar to Yudel Corp. in the past.
- Raetal Inc. acquired 2,000 shares of its own stock of par value $1 for $20 per share. Which of the following is the correct journal entry to record this transaction?
Treasury Stock 2,000
Common Stock 2,000
Treasury Stock 2,000
Cash 2,000
Treasury Stock 40,000
Cash 40,000
Cash 40,000
Treasury Stock 40,000
- The CEO of Wrenn Corporation is convicted of committing accounting fraud. After several in-depth investigations, it is found that although the CEO of the company was not aware of the fraud, he received 1.5 million dollars in the form of bonuses and stock profits during the company’s fraudulent period. The Securities and Exchange Commission orders the company to restate its financial position and furnish the correct financial statements. As per the Sarbanes-Oxley Act, which of the following is a likely consequence that will follow?
The company will be allowed to grant personal loans to its executives provided that it can prove the creditworthiness of the executives.
The CEO will be held personally liable for the company’s misconduct during the fraudulent period.
The company will be asked to merge its auditing and consulting functions.
The CEO will be asked to return the money that he or she received during the company’s fraudulent period.
- Cardice Services Inc. employs more than 5,000 telephone operators globally to address customer complaints. To improve the response time for addressing these complaints, the management decides to automate the responses to all the frequently asked queries. The management predicts that at least 60% of the customer queries will be resolved without the need for human intervention. If the company implements the process, at least 2,500 telephone operators will lose their jobs. To oppose the management’s decision all the employees threaten go on an indefinite strike. Which of the following contingency approaches is commonly used to overcome resistance in such situations?
Participation and involvement
Facilitation and support
Explicit coercion
Negotiation and agreement
- LaBelle, a famous cosmetic brand, introduces a new skin cleanser. The product does extremely well and reaps huge profits for the company. After using the product for a few months, consumers complain of rashes and allergies. An external chemical agency accuses the company of using banned substances in its products. When investigated, the company’s CEO confesses that he knew about the substance but did not act because of the product’s initial success. Which of the following could be the cause for the CEO’s unethical behavior?
The slippery slope
Indirect blindness
Overvaluing outcomes
Ill-conceived goals
- Omega Corp. released the unaudited financial statement prepared by its accountants. According to the statement, the profit margin of the company has increased. The sales of its electronic appliances have also increased. Based on the unaudited financial statement, buying Omega Corp. shares would be a good investment.
Which of the following, if true, casts the most doubt on the conclusion?
Omega Corp. does not maintain more than a month’s supply of inventory.
The earnings reported in the audited financial statement for Omega Corp. are lower than that reported in the unaudited financial statement.
The sales of other products of Omega Corp. have not shown the increase that the sales of electronic appliances have shown.
The fixed expenses of the company have increased significantly.
- Neha is a communications manager in a reputed software company. She firmly believes that men do not prefer working with women supervisors because they think women are inferior to them. Jordon is Neha’s manager and elder to her by 10 years. Every time Neha interacts with Jordon, she downplays her dominant nature by acting naive. However, she is aggressive and dominant with younger employees. Which of the following approaches to managing diversity should be used to help Neha overcome her prejudiced attitude?
Hiring more women employees to create an environment that is more diverse
Acknowledging Neha’s beliefs but not valuing or accepting them
Educating Neha about stereotyping people of different age and sex
Isolating Neha by putting her in special projects that require minimum interaction with other employees
- Janet works as a senior software developer in a multinational IT firm. She prefers to work as an individual contributor and volunteers to work on challenging projects. The firm encourages Janet and other people like her by assigning them to projects that require a great deal of innovation. The firm motivates Janet by appealing to her need for __________.
power
achievement
affiliation
security
- WarmLiquid Corp., a manufacturer of water heaters, produces 30 water heaters per week. Past records indicate that 10% of total water heaters produced in a week are likely to be defective. Suppose a quality check was conducted on a sample of six water heaters. What is the probability that four out of six water heaters will be defective?
0.76
0.08
0.56
0.46
- BrightLife, a leading insurance company, provides incentives to salespeople based on the number of prospective customers they meet in a day. The salespeople, however, often spend time with their friends and then claim to have met the prospective customers. They are paid incentives based on their claims. The company’s CEO realizes that the number of customers the company has is significantly less compared to the number of prospective customers that the salespeople claim to have met. To rectify the unethical behavior of the salespeople, the company now pays incentives based on the number of sales each person makes. Which of the following could be a cause for the salespeople’s unethical behavior?
Motivated blindness
Overvaluing outcomes
Indirect blindness
Ill-conceived goals
- Melanie and Peter are discussing the limitations of internal control systems in organizations. Melanie believes that the human element is an insignificant factor in internal control systems. If Peter wants to refute this view, which of the following points should he put forth?
Collusion between two individuals can eliminate the protection offered by segregation of duties in an internal control system.
The size of an organization determines the expectations from an internal control system in the organization.
Small companies have more efficient internal control systems as they do not need to segregate duties or provide for independent internal verification.
A well-built internal control system has inbuilt controls to reverse the results of employee indifference and carelessness.