Quiz 7 Cost Accounting

Name: ________________________ Class: ___________________ Date: __________
Quiz 7
1) Which of the following involves significant financial investments in projects to develop new products, expand production capacity, or remodel current production facilities?
A) capital budgeting
B) working capital
C) master budgeting
D) project-cost budgeting

Answer: A
Diff: 1
Terms: capital budgeting
Objective: 1
AACSB: Reflective thinking

2) The two factors capital budgeting emphasizes are:
A) qualitative and nonfinancial
B) quantitative and nonfinancial
C) quantitative and financial
D) qualitative and financial

Answer: C
Diff: 1
Terms: capital budgeting
Objective: 2
AACSB: Reflective thinking

3) The stage of the capital budgeting process in which a firm obtains funding for the project is the:
A) make decisions by choosing among alternatives stage.
B) make predictions stage.
C) obtain information stage.
D) implement the decision, evaluate performance, and learn stage.

Answer: D
Diff: 1
Terms: net present value (NPV) method
Objective: 2
AACSB: Reflective thinking

4) Discounted cash flow methods for capital budgeting focus on:
A) cash inflows
B) operating income
C) cash outflows
D) Both A and C are correct.
Answer: D
Diff: 2
Terms: discounted cash flow (DCF) methods
Objective: 2
AACSB: Reflective thinking
5) Assume your goal in life is to retire with three million dollars. How much would you need to save at the end of each year if interest rates average 5% and you have a 25-year work life?
A) $ 49,110
B) $ 55,596
C) $ 62,858
D) $67,508

Answer: C
Explanation: C) Look up annuity factor in the table or use function on a calculator or computer.
S (47.727) = $3,000,000
S = $62,857.50
Diff: 3
Terms: net present value (NPV) method
Objective: 2
AACSB: Analytical skills

6) The definition of an annuity is:
A) similar to the definition of a life insurance policy
B) a series of