Financial Analysis (24)
Which account is increased by a debit?
a. Sales Revenue
b. Owner's Equity
c. Cash
d. Accounts Payable
c.
Assets such as cash increase with debits. Liabilities, equity, and revenue increase with credits.
The primary purpose of a resume is to
a. substitute for a job application
b. provide a complete employment history
c. secure an interview by showing relevant fit
d. list every skill the applicant has
C. A resume is a marketing document aimed at getting an interview, so it selects for relevance rather than completeness.
Showing empathy toward a customer who has just described a frustrating experience means
a. apologizing repeatedly for the company
b. explaining why the problem occured
c. acknowledging how the experience affected them before moving to a solution
d. offering a discount right away
C.
Empathy is acknowledging the other person's experience. Explanations and remedies land better once the customer feels heard.
The main purpose of an internal control system is to
a. reduce the number of accounting staff
b. safeguard assets and ensure the reliability of financial records
c. increase reported profit
d. satisfy customer inquiries
B.
Internal controls protect assets, prevent and detect error and fraud, and secure record reliability.
A customer slips on an unmarked wet floor in a store and is injured. The store's likely exposure is a claim of
a. defamation
b. negligence
c. breach of contract
d. copyright infringement
B.
Negligence is failure to exercise reasonable care. Failing to warn of a known hazard is a classic example.
A firm has fixed costs of $60,000, sells at $50 per unit, and has variable costs of $30 per unit. The break-even point in units is
a. 1200
b. 2000
c. 3000
d. 6000
C. Contribution margin is $50 − $30 = $20. Break-even = $60,000 / $20 = 3,000 units.
Innovation skills matter in established companies because
a. they reduce the importance of customer research
b. they replace the need for process discipline
c. they lower the cost of existing operations
d. competitive advantage erodes unless offerings and methods keep improving.
D. Advantages decay as competitors copy them. Continuous innovation is what sustains position.
Emotional intelligence is best described as the ability to
a. Persuade others to adopt your point of view
b. recognize and manage your own emotions and respond to others' emotions effectively
c. stay optimisic in difficult circumstances
d. avoid emotional reactions at work
B.
EI covers self-awareness, self-regulation, social awareness, and relationship management — not the suppression of emotion.
A financial audit's primary purpose is to
a. provide independent assurance that statements fairly present financial position
b. set the budget for the coming year
c. calculate the company's tax liablility
d. find employees who made errors
A. An audit provides independent assurance on fair presentation. It is not a tax, budgeting, or disciplinary exercise.
A software firm wants to protect the name and logo it uses to identify its products in the marketplace. Which protection applies?
a. Trade Secret
b. trademark
c. patent
d. copyright
B.
Trademarks protect identifying marks such as names, logos, and slogans. Patents protect inventions and copyrights protect original creative works.
A company shows a large net income but is unable to pay suppliers this month. The most likely explanation is
a. excess owner's equity
b. overstated expenses
c. an error in the income statement
d. revenue recognized on credit that has not yet been collected
D.
Accrual accounting records revenue when earned, not when collected. Profitable firms fail on cash flow, which is why the cash flow statement exists separately.
To further understand (from gemini)
Because suppliers must be paid with real cash—not paper net income or book equity—revenue recognized on credit that has not yet been collected (Option D) is the exact reason a highly profitable company can find itself unable to pay its bills.
A cover letter should primarily:
a. restate the resume in paragraph form
b. connect the applicant's specific experience to the employer's specific needs
c. list references and their contact information
d. explain gaps in employment history
B. The cover letter argues fit for this role at this employer — the case the resume cannot make on its own.
Developing tolerance for ambiguity is valuable in business because
a. It prevents disagreements among team members
b. most decisions have one correct answer that emerges over time
c. it reduces the need for planning
d. decisions frequently must be made with incomplete information
D.
Business decisions rarely wait for complete data. Tolerance for ambiguity allows timely action under uncertainty.
Separation of duties in cash handling means that the person who receives cash should not also
a. greet customers
b. count the register at shift end
c. record the transactions in the accounting records
d. issue receipts
C.
Splitting custody of assets from recordkeeping prevents one person from both taking and concealing.
Which element is required for a contract to be legally binding?
a. The agreement is notarized
b. the agreement is in writing
c. consideration is exchanged
d. both parties are represented by counsel
C.
Consideration — something of value moving each way — is essential. Many valid contracts are oral, uncounselled, and unnotarized.
A firm with high operating leverage will experience
a. profit changes only when fixed costs change
b. larger swings in profit as sales change
c. smaller swings in profit as sales change
d. no relationship between sales and profit
B. High fixed costs magnify the profit effect of any sales change in either direction.
Ongoing education matters throughout a business career mainly because:
a. skills and techniques change faster than a single credential can cover
b. it guarantees promotion
c. it is required for professional association membership
d. employers require annual certification
A.
Skill obsolescence is continuous. Ongoing learning maintains relevance rather than guaranteeing advancement.
A manager criticizes your work sharply in a meeting and you believe the criticism is unfair. Demonstrating self-control means you
a. ask a coworker raise the issue for you
b. respond calmly, then request a private conversation to discuss it
c. defend yourself immediately and firmly
d. say nothing and avoid the manager afterward
B.
Self-control means managing the immediate reaction while still addressing the issue — at the right time, in the right forum.
Which technology risk is most acute when financial data moves to cloud-based systems?
a. Loss of formula functionality
b. unauthorized access and data breach
c. slower processing speed
d. inability to produce reports
B.
Access control and breach exposure are the primary risks when financial records are hosted externally.
A manager finds a way to technically satisfy a safety regulation while defeating its purpose. Complying with the spirit and intent of the law means the manager should
a. meet the outcome the regulation was written to achieve
b. proceed, since the letter of the law is met
c. document the approach and proceed
d. request a written exemption before acting
A.
Compliance with spirit and intent means honoring the regulation's protective purpose, not just its literal wording.
Which is a source of equity financing?
a. A corporate bond issue
b. A bank term loan
c. Issuing common stock
d. A line of credit
C. Equity financing sells ownership. Loans, bonds, and credit lines are debt financing and create repayment obligations.
In a structured problem-solving process, which step directly follows defining the problem?
a. Generating possible alternatives
b. implementing the solution
c. Evaluating results
D. assigning responsibility
A. After definition comes alternative generation, then evaluation and selection, then implementation, then assessment.
Challenging the status quo constructively means
a. waiting until results prove the current approach wrong
b. raising an alternative with reasoning and a proposed path forward
c. voicing concerns to peers before raising them with leadership
d. objecting to changes that lack a clear rationale
B.
Constructive challenge pairs the objection with reasoning and an alternative, directed at the people who can act on it.
Financial accounting differs from managerial accounting in that financial accounting
a. is used only by internal managers
b. allocates costs among department
c. forecasts future performance
d. reports to external users under standardized rules
D. Financial accounting serves external users under GAAP or IFRS. Managerial accounting is internal and unstandardized.
Gemini:
A purchasing manager signs a supply contract for her employer. The employer is bound because of
a. a debtor-creditor relationship
b. an implied warranty
c. an agency relationship
d. administrative law
C.
Agency law lets an agent bind a principal to contracts made within the scope of the agent's authority.