Question

1. Identify the correct statement:

A. Managers naturally seek to maximize shareholders' wealth

B. Managers act in their own interests, and so there is no way to align their interests with those of the owners

C. To motivate managers in non-profit firms, no employee incentives are needed

D. To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that increases the firm's profits

2. Internal control systems:

A. are the responsibility of the external auditor

B. include anti-fraud measures

C. are designed to allow financial misrepresentation

D. require that one person perform all aspects of a task

3. Which of the following can be an opportunity cost?

A. The decline in an asset's value

B.   Cost of idle capacity

C. Cost of underutilized labor

D. All of the above

4. Identify the correct statement:

1. Variable costs are constant on a per unit basis
2. Fixed costs are constant on a per unit basis
3. Variable costs are constant in total
4. Fixed costs increase as volume increases

5. Which of the following is not a method that can be used to analyze a potential investment?

1. Net Present Value
2. Internal Rate of Return
3. Opportunity Cost Analysis
4. Payback method

6. Which of the following statements about different budgeting techniques is not true?

A. Budget ratcheting tightens targets when performance fails to meet the target by a predetermined percentage

B. Budget lapsing prevents managers from hoarding funds

C. Master(static) budgets are prepared for a single level of activity

D.   Budget lapsing encourages managers to spend money regardless of cost or value

7. The organizational process of budgeting performs several important functions. Which is true?

A. Assigns decision rights

B. Shares knowledge

C. Measures performance

D. All of the choices are correct

8) You are going to dinner with three friends, one who likes steak, another who is a wine connoisseur, and the third who is a vegetarian (which is assumed to be the least expensive). Which is true?

A. How the bill is shared has no effect on what and how much people choose to eat

B. Equal sharing of the bill ensures that people order a similar dollar amount of food

C. The wine-drinker will argue for equal shares, and will drink as fast (and/or as much) as possible

D. The vegetarian will be better off with equal shares

Answer 1

Question - (1)

Answer -

Particulars	Explanation
Option - (D) is Correct.	To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that increases the firm's profits.

.

Question - (2)

Answer -

Particulars	Explanation
Option - (B) is Correct.	Internal control systems include anti-fraud measures.

.

Question - (3)

Answer -

Particulars	Explanation
Option - (D) is Correct.	The following can be an opportunity cost - The decline in an asset's value Cost of idle capacity Cost of underutilized labor Hence, Option - (D), All of the above, is Correct.

.

Question - (4)

Answer -

Particulars	Explanation
Option - (A) is Correct.	Variable costs are constant on a per unit basis.