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BUS 475 Week 4 Knowledge Check

Instructions

Complete the Week 4 Knowledge Check.

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

Concept: CONFIDENCE INTERVAL FOR THE MEAN

Materials on the concept

• Confidence Intervals

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)

Concept: PROBABILITY RULES

Materials on the concept

• Conditional Probability

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

Concept: LINEAR REGRESSION PREDICTION

Materials on the concept

• Linear Patterns

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

Concept: INTERPRETING P VALUE

Materials on the concept

• Statistical Tests

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

Concept: VISION

Materials on the concept

• Strategic Management

6.

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

Concept: EXTERNAL AND INTERNAL ENVIRONMENTS

Materials on the concept

• The Five Generic Competitive Strategies. Which One to Employ?

7.

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

Concept: OBJECTIVES AND GOALS

Materials on the concept

• Business Strategy

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

Concept: SOCIAL RESPONSIBILITY

Materials on the concept

• Organizational Structure
• Ethical Marketing in a Consumer–Oriented World: Appraisal and Challenges

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

Concept: STRATEGIC CONTROL

Materials on the concept

• Strategic Control

10.

Which of the following types of strategic control has a low degree of formalization?

Special alert control

Implementation control

Strategic surveillance

Premise control

Concept: FINANCIAL STATEMENTS

Materials on the concept

• Introduction to Financial Statements

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

Concept: GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)

Materials on the concept

• Accrual Accounting Concepts

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.

Concept: BALANCE SHEET

Materials on the concept

• Merchandising Operations and the Multiple-Step Income Statement

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

Concept: FIFO AND LIFO

Materials on the concept

• Reporting and Analyzing Inventory

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

Concept: INTERNAL CONTROLS

Materials on the concept

• Reporting and Analyzing Inventory

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

Concept: DEPRECIATION AND AMORTIZATION

Materials on the concept

• Reporting and Analyzing Long-Lived Assets

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

Concept: CALCULATING INTEREST EXPENSE

Materials on the concept

• Reporting and Analyzing Liabilities

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

Concept: PREFERRED STOCK VERSUS COMMON STOCK

Materials on the concept

• Reporting and Analyzing Stockholders’ Equity

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

Concept: ANALYSES OF FINANCIAL STATEMENTS

Materials on the concept

• Financial Analysis: The Big Picture

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

Concept: INTERNAL CONTROLS AFTER THE SARBANES OXLEY ACT

Materials on the concept

• Fraud, Internal Control, and Cash

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