Mgt 8803 Exam 1 With 100% Correct Question And Answer

Incremental Cost {Ans: extra rev/profit of one alternative over another}Operating Income {Ans: Gross Margin - Operating Expenses}Which of the following is not included as an expense on the Income Statement? Dividend Expense, Marketing Expense, Cost of Goods Sold, Depreciation Expense, Bad Debt Expense {Ans: Dividend Expense}What is the difference between a long=term debt balance & current portion of long term debt? {Ans: Current portion is deducted from long term (companies need cash to pay current liabilities)}Quick Ratio {Ans: (Cash + Marketable Securities + Receivables) / Total Current Liabilities}Liabilities + Owner's Equity {Ans: Claims against Assets}Premium {Ans: Stated interest rate > Market interest rate}Distinguish between common, preferred, and treasury stocks. {Ans: Common: issued by all orgs, has main voting rights Preferred: rarely issued, dividends issued first, liquidation preference Treasury: stock bough back from shareholders, no dividends}Owners Equity {Ans: Residual interest of owners to assets}Bad Debts Expense Estimation Method: Percentage of Credit Sales Method {Ans: percentage of credit sales (ignores amount already in allowance account)}FIFO {Ans: First in, First out. Better measure of ending inventory. Important for Balance Sheet.}Corporations {Ans: public or privately held businesses with limited liability and taxes