Kelley's Baskets makes handmade baskets for distribution to upscale retail outlets.

The firm is
currently considering making handmade wreaths as well. Which one of the following is the best
example of an incremental operating cash flow related to the wreath project?
A. storing supplies in the same space currently used for materials storage
B. utilizing the basket manager to oversee wreath production
C. hiring additional employees to handle the increased workload should the firm accept the
wreath project
D. researching the market to determine if wreath sales might be profitable before deciding to
proceed
E. planning on lower interest expense by assuming the proceeds of the wreath sales will be used
to reduce the firm's currently outstanding debt

Danielle's is a furniture store that is considering adding appliances to its offerings. Which of the
following should be considered incremental cash flows of this project?
I. utilizing the credit offered by a supplier to purchase the appliance inventory
II. benefiting from increased furniture sales to appliance customers
III. borrowing money from a bank to fund the appliance project
IV. purchasing parts for inventory to handle any appliance repairs that might be necessary
A. I and II only
B. III and IV only
C. I, II, and IV only
D. II, III, and IV only
E. I, II, III, and IV

Which one of the following is an example of a sunk cost?

A. $1,500 of lost sales because an item was out of stock
B. $1,200 paid to repair a machine last year
C. $20,000 project that must be forfeited if another project is accepted
D. $4,500 reduction in current shoe sales if a store commences selling sandals
E. $1,800 increase in comic book sales if a store commences selling puzzles

Which one of the following best illustrates erosion as it relates to a hot dog stand located on the
beach?
A. providing both ketchup and mustard for its customer's use
B. repairing the roof of the hot dog stand because of water damage
C. selling fewer hot dogs because hamburgers were added to the menu
D. offering French fries but not onion rings
E. losing sales due to bad weather

Which of the following should be included in the analysis of a new product?

I. money already spent (quá khứ) for research and development of the new product (this is sunk
cost and sunk cost are irrelevant in decision making)
II. reduction in sales for a current product once the new product is introduced
III. increase in accounts receivable needed to finance sales of the new product
IV. market value of a machine owned by the firm which will be used to produce the new product
A. I and III only
B. II and IV only
C. I, II, and III only
D. II, III, and IV only
E. I, II, III, and IV

Which one of the following is a correct method for computing the operating cash flow of a
project assuming that the interest expense is equal to zero?
A. EBIT + D
B. EBIT - T
C. NI + D
D. (Sales - Costs) × (1 - D) × (1- T)
E. (Sales - Costs) × (1 - T)

Which one of the following types of securities has no priority in a bankruptcy proceeding (thủ
tục phá sản)?
A. Convertible bond
B. Senior debt
C. Common stock
D. Preferred stock
E. Straight bond

Mary owns 100 shares of stock. Each share entitles her to one vote per open seat on the board of
directors. Assume there are 3 open seats in the current election and Mary casts all 300 of her
votes for a single candidate. What is the term used to describe this type of voting?
A. Proxy
B. Aggregate
C. Cumulative
D. Straight
E. Condensed

There are two open seats on the board of directors. If two separate votes occur to elect the new
directors, the firm is using a type of voting that is best described as _____ voting.
A. simultaneous
B. straight
C. proxy
D. cumulative
E. sequential

Dividends are best defined as:

A. cash payments to shareholders.
B. cash payments to either bondholders or shareholders.
C. cash or stock payments to shareholders.
D. cash or stock payments to either bondholders or shareholders.
E. distributions of stock to current shareholders.
Which one of the following generally pays a fixed dividend, receives first priority in
dividend payment, and maintains the right to a dividend payment, even if that payment is
deferred?
A. Cumulative common
B. Noncumulative common
C. Noncumulative preferred
D. Cumulative preferred
E. Senior common

The costs of preparing, issuing, and paying purchase orders, plus receiving and inspecting the
items included in orders is:
A) purchasing costs
B) ordering costs
C) stockout costs
D) carrying costs

The costs that result when a company holds an inventory of goods for sale:
A) purchasing costs
B) carrying costs
C) opportunity costs
D) interest costs

The annual relevant total costs are at a minimum (optimal) when relevant:
A) ordering costs are greater than the relevant carrying costs
B) carrying costs are greater than the relevant ordering costs
C) carrying costs are equal to relevant ordering costs
D) None of these answers is correct.

The following information applies to Labs Plus, which supplies microscopes to laboratories
throughout the country. Labs Plus purchases the microscopes from a manufacturer which has a
reputation for very high quality in its manufacturing operation. (ko biết làm khó vãi nho)
Annual demand: 20,800 units
Orders per year: 20
Lead time in days: 15 days
Cost of placing an order: $100
What is the reorder point?
A) 1,040 units
B) 857 units
C) 1,560 units
D) 2,080 units
 Just-in-time purchasing requires:
A) larger and less frequent purchase orders
B) smaller and less frequent purchase orders
C) smaller and more frequent purchase orders
D) larger and more frequent purchase orders

Owen-King Company sells optical equipment. Lens Company manufactures special glass lenses.
Owen-King Company orders 5,200 lenses per year, 100 per week, at $20 per lens. Lens
Company covers all shipping costs. Owen-King Company earns 30% on its cash investments.
The purchase-order lead time is 2.5 weeks. Owen-King Company sells 125 lenses per week. The
following data are available:
Relevant ordering costs per purchase order $21.25
Relevant insurance, materials handling, breakage, and so on, per year $ 2.50
What is the economic order quantity for Owen-King Company?
A) 325 lenses
B) 297 lenses
C) 210 lenses
D) 161 lenses

1. All else being equal, if some inventory is sold on credit, the quick ratio will decrease.

2. A financial benefit of a just-in-time system is that inventory carrying costs are reduced.

3. Carrying costs arise when an organization experiences an ability to deliver its goods to its
customers.

4. The simplest version of the Economic Order Quantity model incorporates only ordering costs,
carrying costs, and purchasing costs into the calculation.

5. From a legal perspective, preferred stock is a form of corporate equity.

6. All classes of stock must have equal voting rights per share.

7. Common shareholders elect the corporate directors while the preferred shareholders vote on
mergers and acquisitions.

8. Dividends are tax-free income for individual investors.

9. Shareholders prefer noncumulative dividends over cumulative dividends.