1) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.
A. Mexico, Venezuela
B. Canada, Venezuela
C. Great Britain, Paraguay
D. Mexico, Canada
E. Canada, Mexico

2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service C. have substantial authoritative support D. are proven theories of accounting

3) Building a dynamic organization is another way of describing which function of management?
A. Staffing B. Organizing
C. Leading D. Controlling
E. Planning

4) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam's gross profit for March?
A. $8,250
B. $750 C. $4,500
D. $5,250

5) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess's break even point?
A. 2,133 units
B. 6,200 units
C. $25,600 D. 4,600 units

6) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?
A. The western division's vice president's salary
B. Cost of landscaping the corporate office C. General corporate liability insurance D. Factory janitor

7) What is the preparation of reports for each level of responsibility in the company's organization chart called?
A. Master budgeting analysis
B. Exception reporting C. Responsibility reporting
D. Static reporting

8) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?
A. $6,000 B. $12,000
C. $28,000
D. $18,000

9) The cost of an asset and its fair market value are __________.
A. never the same B. irrelevant when the asset is used by the business in its operations
C. the same on the date of acquisition D. the same when the asset is sold

10) Which one of the following is a product cost?
A. Indirect labor B. Sales person's salaries
C. Advertising costs D. Office salaries

11) What exists when budgeted costs exceed actual results?
A. A budgeting error B. An unfavorable difference
C. An excess profit D. A favorable difference

12) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:
Income Statement Balance Sheet
Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000

Closing entries are necessary for __________.
A. permanent accounts only B. both permanent and temporary accounts
C. permanent or real accounts only D. temporary accounts only

13) Managerial accounting __________.
A. is concerned with costing products B. pertains to the entity as a whole and is highly aggregated
C. places emphasis on special-purpose information D. is governed by generally accepted accounting principles

14) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers?
A. Beer B. Selling either results in the same additional income for the company
C. It should sell an equal quantity of both D. Wine

15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
A. saver who demands money from the financial system B. borrower who demands money from the financial system
C. borrower who supplies money to the financial system D. saver who supplies money to the financial system

16) Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is __________.
A. the value to Maurice of the option he would have chosen had Option B not been available
B. $100 C. $300 D. the value to Maurice of Options A, C and D combined

17) A production possibilities frontier will be a straight line if __________.
A. the economy is producing efficiently B. the economy is engaged in trade with at least one other economy C. increasing the production of one good by x units entails no opportunity cost in terms of the other good
D. increasing the production of one good by x units entails a constant opportunity cost in terms of the other good

18) In economics, the cost of something is __________.
A. what you give up to get it B. often impossible to quantify, even in principle C. the dollar amount of obtaining it D. always measured in units of time given up to get it

19) A tax on an imported good is called a __________.
A. supply tax
B. trade tax C. quota D. tariff

20) Which of the following statements about GDP is correct?
A. GDP is to a nation's economy as household income is to a household. B. GDP increases if the total population increases. C. GDP measures two things at once: the total income of everyone in the economy and the unemployment rate.
D. Money continuously flows from households to government and then back to households, and GDP measures this flow of money.

21) In computing GDP, market prices are used to value final goods and services because __________.
A. if market prices are out of line with how people value goods, the government sets price ceilings and price floors
B. Market prices are not used in computing GDP C. market prices reflect the values of goods and services D. market prices do not change much over time, so it is easy to make comparisons between years

22) Which of the following statements about GDP is correct?
A. Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process.
B. Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.
C. Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
D. Nominal GDP values production at constant prices, whereas real GDP values production at current prices.

23) Which of the following is not correct?
A. The U.S. debt per-person is large compared with average lifetime income.
B. In 2005, the U.S. government had a deficit. C. A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.
D. Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.

24) The part of the balance of payments account that lists all long-term flows of payments is called the:
A. balance of trade. B. financial and capital account.
C. government financial account.
D. current account.

25) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.
A. the sacrifice ratio dilemma B. the monetary policy reaction lag
C. the time inconsistency of policy
D. inflation targeting

26) In general, the longest lag for __________.
A. fiscal policy is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand
B. both fiscal and monetary policy is the time it takes for policy to affect aggregate demand
C. monetary policy is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand
D. both fiscal and monetary policy is the time it takes to change policy

27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
A. Only item (2) is included in GDP and it is included in the investment component.
B. Item (1) is included in the consumption component, while item (2) is included in the investment component.
C. Item (1) is included in the investment component, while item (2) is included in the consumption component.
D. Both item (1) and item (2) are included in the consumption component of GDP.

28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.
A. Professional B. Interpersonal and communication
C. Technical D. Professional E. Conceptual and decision