1. If a corporation wants a guarantee that all of its shares of stock will be sold, it should use which of the following distribution methods? (Points : 1) Competitive bid purchase Privileged subscription with no standby agreement Commission or best efforts contract Direct sale

2. PDQ Corp. Has sales of $3,000,000; the firm’s cost of good sold is $ 1,425,000; and its total operating expenses are $ 700,000. What is PDQ’s EBIT? (Points : 1) $ 825,000 $ 875,000 $ 1,575,000 $ 2,300,000

3. Company A reports sales of $100,000 and net income of $15,000. Company B reports sales of $100,000 and net income of $10,000. Therefore, __________ (Points : 1) Company A’s cash flow may be higher or lower than Company B’s cash flow even though A’s net income is higher. Company A’s cash flow is $ 5,000 more than Company B’s cash flow. Company B is creating less value for its shareholders than Company A Company B’s accounts receivable must be higher than Company A’s accounts receivable.

4. Which of the following statements is an example of a futures market transaction? (Points : 1) An investor purchases 100 shares of IBM hoping to sell it in two years for a profit. A company purchases an option to buy 1,000 barrels of oil anytime between now and the end of the year. A company agrees to purchase 1,000 barrels of oil for delivery in six months at a price of $ 70 per barrel. An executive has a portion of his current year salary deferred until he retires.

5. The December 31, 2007 balance sheet shows net fixed assets of $100,000 and the December 31, 2008 balance sheet shows net fixed assets of $140,000. Depreciation expense for 2007 is $15,000 and depreciation expense for 2008 is $20,000. Based on the information, the cost of fixed assets purchased during 2008 is ________ (Points : 1) $ 60,000 $ 20,000 $ 40,000 $ 75,000

6. Which of the following transactions will increase a corporation’s operating return on assets? (Points : 1) Sell stock and use the money to pay off some long term debt Sell 10 year bonds and use the money to pay off current liabilities Negotiate a new contract that lowers raw materials cost by 10 % Increase sales by 10 %