86. A company had net cash flows from operations of $341,000, net income of $286,000 and average total assets of $1,850,000. The cash flow on total assets ratio equals: A. 83.9% B. 542.5% C. 15.5% D. 18.4% E. 646.9% 87. A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total […]
121. Triple Company’s accountant made an entry that included the following items: debit postage expense $12.42, debit office supplies expense $27.33, credit cash over/short $2.19. If the original amount in petty cash is $320, how much is in petty cash before the reimbursement? A. $320.00 B. $282.44 C. $37.56 D. $39.75 E. $41.94 122. Triple Company’s accountant made an entry that included the following items: debit postage […]
35. Alma Corp. issues 1,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, a credit or credits are made to: A. Common Stock $16,000. B. Common Stock $10,000 and Additional Paid-in Capital $6,000. C. Common Stock $6,000 and Additional Paid-in Capital $10,000. D. Common Stock $10,000 and Retained Earnings $6,000. 36. A corporation issues 1,500 shares of common stock for […]
1) The document issued by a seller for a credit to a customer’s Accounts Receivable is the Debit Memo 2) Transactions entered in the general journal are posted to the general ledger, not the subsidiary ledgers. 3) Landon Company sold a piece of land for $60,000, accepting a 10-year note receivable in that amount. Assuming the use of special journals, this entry would […]
Question Ellen is an auditor working on a single audit of a program for underprivileged children. During the audit, she finds several cashed checks in large amounts made out to the program controller without supporting documentation. What should Ellen do? Select one: a. Contact the IRS. b. Find as many similar checks as she can. c. Confront the controller. d. Hand the inquiry over to […]
121. A corporation issued 6,000 shares of its $10 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include: A. A debit to Common Stock for $60,000. B. A debit to Land for $60,000. C. A credit to Land for $60,000. D. A credit to Paid-in Capital in Excess of Par Value, Common Stock for $24,000. […]
181. Variable costing is useful to managers for all but the following: A. cost controlB. product pricingC. reporting to the public in certified financial statementsD. production planning 182. The Harold Corporation just started business in January of 2010. They had no beginning inventories. During 2010 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per […]
88.Lisa informed her church that she had named the church in her will and later provided a written copy of the will to the church. At what point should the church record the contribution? A)At the time when the church was informed of her will. B)At the time the church receives a written copy of the will. C)At Lisa’s death. D)At the date the […]
131. Carmel Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. What journal entry would be needed to record the expense for the first year assuming 418,000 tons were mined? A. Debit Depletion Expense $1,233,100; credit Accumulated Depletion $1,233,100. […]
61. Accountants sometimes refer to the equity method as a one-line consolidation because A. the revenues less the expenses of the subsidiary appear in the one account, Equity in Earnings of Subsidiary. B. the assets and liabilities of the subsidiary appear on one line, Investment in Subsidiary. C. the application of the equity method therefore rests on the guiding principle to treat the items in such […]
12.5 Integrative Questions
1) Moral hazard typically occurs because
A) people are dishonest.
B) agreements sometimes create incentives that are costly to monitor so people can act in their self interest.
C) workers possess diminishing marginal productivity.
D) screening leads to informed people revealing their relevant private information.
E) workers possess adverse selection.
2) Moral hazard results from _____ information and adverse selection results from _____ information.
A) private; private
B) private; public
C) public; private
D) public; public
E) None of the above answers are correct because both are the result of the lemons problem.
3) If a salesperson is paid by the volume of sales he or she makes, then the
A) moral hazard problem is diminished.
B) lemons problem can be screened.
C) moral hazard problem is enhanced.
D) adverse selection problem is enhanced.
E) None of the above answers is correct.
4) Which of the following is an example of moral hazard?
A) I hire you to work in my garden for a fixed fee, and you work hard all day.
B) I hire you to work at an hourly rate and you work as slowly as possible.
C) You apply for the job only because I pay a fixed wage per day, no matter how much or little you do.
D) You agree to be paid by the weed to work in my garden, and then you work hard.
E) You agree to be paid by the weed to work in my garden, and then you don't work hard.
5) The lemons problem is caused by
A) health-care providers' incentive to order unnecessary tests..
B) used car buyers' inability to determine the quantity of used cars offered for sale.
C) auto insurance companies inability to adequately screen drivers.
D) the missing health care market.
E) government regulations than make some information private.
6) In the used car market, adverse selection creates the lemon problem when
A) sellers cannot judge buyers' creditworthiness.
B) buyers believe that sellers will offer only high-priced "good" used cars for sale..
C) buyers believe that sellers will sell only lemons.
D) sellers offer warranties on all used cars.
E) None of the above answers are correct because it is moral hazard that creates the lemon problem.
7) In the used car market, ________ is(are) a way of signaling.
A) high-deductibles
B) warranties
C) low interest rates
D) high prices for high-quality used cars
E) screening, using low prices for low quality used cars and high prices for high quality used cars,
8) ________ occurs when an informed person takes an action to send information to an uninformed person and ________ occurs when an uninformed person creates an incentive for an informed person to reveal private information.
A) Moral hazard; adverse selection
B) Adverse selection; moral hazard
C) Signaling; screening
D) Screening; signaling
E) Pooling; separating
9) Private information
A) can create adverse selection but plays no role in creating moral hazard.
B) explains why drivers screen auto insurance companies.
C) means that unless it is overcome, the equilibrium in the market will be a separating equilibrium.
D) plays a role in the markets for health-care insurance and auto insurance.
E) cannot explain why the U.S. expenditures on health care per person exceed those in other major nations.
10) Even if your college degree is irrelevant to an employer's needs, your high GPA might still get you the job because
A) the firm is not a profit maximizer.
B) your GPA screens some of your private information.
C) your GPA sends a signal about your quality as a worker.
D) the firm will most likely make an adverse selection.
E) the high GPA eliminates the possibility of moral hazard.
11) Which of the following can create inefficiency and deadweight loss?
A) Moral hazard can create inefficiency and deadweight loss but adverse selection cannot.
B) Adverse selection can create inefficiency and deadweight loss but moral hazard cannot.
C) Both moral hazard and adverse selection can create inefficiency and deadweight loss .
D) Neither moral hazard nor adverse selection can create inefficiency and deadweight loss .
E) None of the above answers are correct because whether inefficiency and deadweight loss are created depends on whether the moral hazard and adverse selection affect demanders or suppliers.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more