ALC EXAM 3 QUESTIONS & ANSWERS LATEST UPDATE
1. Declaring and paying cash dividends affects .
a. Cash only
b. Stockholders’ equity only
c. Both cash and stockholders’ equity
d. Both cash and capital stock
2. The primary advantages of the average rate of return method are i...
1. Declaring and paying cash dividends affects .
a. Cash only
b. Stockholders’ equity only
c. Both cash and stockholders’ equity
d. Both cash and capital stock
2. The primary advantages of the average rate of return method are its ease of
computation and the fact that .
a. It is especially useful to managers whose primary concern is liquidity
b. There is less possibility of loss from changes in economic conditions
and obsolescence when the commitment is short-term
c. It emphasizes the amount of income earned over the life of the proposal
d. Rankings of proposals are necessary
3. An important control over cash received from sales in a retail environment is a .
a. Cash register
b. Voucher
c. Debit memorandum
d. Credit memorandum
4. is NOT used in assessing a company’s ability to pay current liabilities.
a. The quick ratio
b. Current position analysis
c. Return on equity
d. Working capital
5. Capital investment proposals involving different amounts of investment can be placed on
a comparable basis for purposes of net present value analysis by using .
a. A price-level index
b. A present value factor
c. An annuity
d. A present value index
6. A credit memorandum from the bank .
a. Always decreases a bank customer’s account
b. Is used to show a bank service charge
c. Can be used when a company has deposited a customer’s NSF check
d. Can be used when the bank has collected a note receivable for the customer
7. When analysis of an investment proposal by the net present value method indicates that
the present value exceeds the amount to be invested, .
a. The proposal is desirable and the rate of return expects from the proposal
exceeds the minimum rate used for the analysis
, b. The proposal is desirable and the rate of return expected from the proposal is
less than the minimum rate used for the analysis
c. The proposal is undesirable and the rate of return expected from the proposal is
less than the minimum rate used for the analysis
d. The proposal is undesirable and the rate of return expected from the proposal
exceeds the minimum rate used for the analysis
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