Revenue Management Midterm Assessment

Revenue Management Midterm Assessment
Below are questions that form the midterm assessment.

  1. Discuss the relationship between value and fair price. Consider the following questions in your discussion. What is meant by a fair price? How is a fair price determined? When is a price unfair? When is a price too high? Discuss why a customer might find a price too high?
  2. Discuss the topic of pricing. In your discussion address how revenue managers should price their products? Should increased costs automatically justify an increase in selling price? Explain why or why
    not.
  3. What is differential pricing? Why is it an effective strategy to use in optimizing revenue? Discuss factors revenue managers can use to differentiate prices in a hotel.
  4. Why are measures such as ADR and occupancy rate not appropriate as standalone measures of a revenue manager’s performance? Explain. If these are not appropriate what is/are better measures of a hotels performance?
  5. The discipline of revenue management has undergone dramatic change. Historically, the role was that of “inventory management.” Today it is dramatically different. What is the future role of the revenue manager? Discuss changes in the discipline of professional revenue management.
  6. Coca-Cola has developed dynamic pricing technology that will allow automated pricing of its beverages based on daily weather conditions. For example, the normal price of a coke product on campus is $1.50 per 20-ounce bottle. This technology monitors ambient temperatures so that on a hot and humid day when consumers have a higher desire for cold beverages from a vending machine the price can increase to, let’s say, $2.50. Is this fair? Why or why not? Do similar examples of dynamic pricing exists

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Research and Statistical Methods Exam answers

Research and Statistical Methods Exam answers

________ allows a researcher to receive news in an area of special interest and discuss that news with others.

A list server
The recommended order of tasks in preparing a research proposal is:
state the problem and subproblems, note the research questions/hypotheses, note the assumptions, define the terms, note the delimitations.
A common weakness of research problems is that they:
implicitly rest on common assumptions.
“What do underemployed U.S. workers (i.e., those workers who are employed, but not in positions for which they have specialized training or expertise) identify as the primary reason for their inability to find suitable employment?”
The chief weakness of this research problem is that:
it lacks clarity or completeness in the problem statement.
The main purpose of the review of the literature is to:
show how your study is related to, and extends, other work in the area.
If you want to conduct a keyword or author search of research reports published in professional journals, ________ will probably be your best resource.
an online database
Typically, the literature review should:
emphasize how the studies being reviewed are related to the research problem under consideration.
Three of the following are associated with quantitative research methods. Which one is NOT?
Deductive reasoning is applied to data analysis and interpretation.
Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report their highest level of education by choosing from these options: “some high school,” “completed high school,” “some college,” or “completed 4-year college degree.” This is an example of a/an:
ordinal scale.
A good research plan, according to your textbook, includes:
includes specific sampling plan, procedures, data sources, and analysis plan.
When explaining how the data are to be analyzed and interpreted:
it is best to be as detailed as possible so all contingencies related to analysis and interpretation can be anticipated.
Research proposals that ________ are commonly judged to be of higher quality than proposals that do not.
favor straightforward vocabulary
In regard to the style you will use for headings and subheadings in the research proposal:
disciplines often dictate the use of specific formal styles, so you must find out what the expectations are.
Three of the following are techniques that strengthen the objectivity of a qualitative study. Which one is NOT?
The researcher should rely as much as possible on a single well-informed respondent
When conducting observations to be used as data in a qualitative study, it is:
always necessary to obtain informed consent from those being observed.
Carl Compost has been living and working on a communal organic farm for the past six months. He wants to understand the political, environmental, and social perspectives shared by the members of the commune. Dr. Compost is probably employing a/an ________ methodology.
ethnographic
Polly Petunia is Chief Horticulturalist for the Southwest region, encompassing Arizona, New Mexico, and Texas. She wants to survey amateur gardeners in her region to determine what, if any, water conservation practices they employ in their home gardening. Polly sends her survey to 150 randomly selected gardeners in each state. Polly is using:
stratified random sampling.
Correlational research allows the researcher to answer questions such as:
What is the relationship between Variable A and Variable B?
A researcher wishes to study developmental changes in the music people prefer to listen to. The researcher locates 50 people who are about 20 years old. She sends these people a questionnaire every year for the next 10 years asking about the types of music they prefer to listen to. This is an example of a ________ design.
longitudinal
Fran Freedom is trying to determine what the phrase “with liberty and justice for all” from the Pledge of Allegiance meant at the time it was penned. She suspects there were actually some limits on “all.” Dr. Freedom is attempting to establish ________ regarding the validity of the letter.
internal evidence
In regard to bias in historical research, the researcher:
must be vigilant in regard to bias in both primary and secondary data.
Historical researchers can count on authoritative sources such as the Anglo-Saxon Chronology or the Cambridge Ancient History as accurate and complete accounts of history.
False
Experimental research differs from descriptive research in that it:
attempts to determine causality.
Dr. Dow Jones wants to know whether a problem-based approach to teaching economics will result in higher academic performance than his traditional method. Of the six sections of Economics 101 at his university, Dr. Jones randomly assigns three sections to the traditional method and three sections to the problem-based method. At the end of semester all students complete the same final exam. In this design, students studying under the problem-based method constitute the:
treatment group.
“There will be differences in degree of mood elevation seen in depressed clients after receiving either cognitive-behavioral or psychoanalytic therapy.”
In this hypothesis, type of therapy is the:
dependent variable.
Which of the following is the major advantage of mixed-methods research?
It incorporates the strengths of both quantitative and qualitative methods
Rodrigo wanted to investigate students’ feeling about reading for pleasure. First, he interviewed students and then he used insights from the interviews to construct a survey to collect quantitative data. Which design has Rodrigo employed?
Exploratory
Zlata explores how engagement in the arts in early age affects the development of problem solving skills of young children. She distributes surveys among parents of children who participate in a local theatre production, and follows up the survey with selected interviews. Which of the following best illustrates Zlata’s study?
QUAN-qual
On the basis of statistical findings, Becky determines that the difference between males and females on a test of abstract mathematical reasoning is merely due to chance. If, in fact, there are gender differences in the population, Becky will have made a:
Type II error.
Here is a set of scores: 5, 3, 7, 3, 6, 2, 5, 3. The mode of this set of scores is ________.
3

Quiz Module 3 Homework: HMG6477

Module 3 Homework: HMG6477

Which of the following equations represents a simple and effective way to think about anticipated external funding?

External funds required = assets – liabilities – equity
External funds required = assets + liabilities + equity
External funds required = assets + liabilities – equity
External funds required = assets + liabilities + equity


Managers often begin with an estimate of ________ when beginning to develop pro forma financial statements.

equity
assets
net income
sales


When constructing pro forma income statements which of the following is the last item to be estimated?

the change in retained earnings
sales
taxes
depreciation expense


When constructing a pro forma income statement, which of the following is likely to be calculated first among the items listed?

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When constructing pro forma balance sheets, ________ becomes the “plug” figure to make the balance sheet balance.

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Dunweiler Inc., is developing a pro forma income statement for the coming year.
The chief financial officer estimates that sales will be $150,000,000. If gross
profits are historically 36% of sales, what is the expected cost of goods sold (in
dollars)?

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Dunweiler Inc., is developing a pro forma income statement for the coming year.  The chief financial officer estimates that sales will be $150,000,000. If selling, general, and administrative expenses (SGA) are historically 18% of sales, what are the expected SGA expenses (in dollars)?

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Cantanna Inc., is developing a pro forma income statement for the coming year. The chief financial officer estimates that fixed assets are $70,000,000 and that sales will be $300,000,000. If depreciation is historically 20% of fixed assets, what is the expected amount of depreciation for the upcoming year (in dollars)?

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Jensen Inc. has net earnings of $24,000,000 this year and a dividend payout policy of 40% of earnings. If the firm follows its regular payout policy what will be the addition to retained earnings this year?

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Pro forma financial statements are an accountant’s way of looking back to see what “might have been.”

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Past relationships among variables on the balance sheet and income statement are typically POOR predictors of the future.

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Pro forma income statements are primarily based on forecasted sales and assumed relationships related to sales.

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In constructing a pro forma balance sheet a manager can estimate the accounts receivable because:

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When developing a pro forma balance sheet which of the following is typically the LAST item to be estimated?

total assets
cash
inventory
external financing

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The ________ is the critical connection between the pro forma income statement and the pro forma balance sheet.

change in cost of goods sold
change in retained earnings
change in net working capital
change in dividends

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In constructing a pro forma balance sheet, which of the following fills the role of being the “plug” figure to balance the balance sheet?

accounts payable
the change in retained earnings
external financing
accounts receivable

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A pro forma balance sheet typically begins with the assets and then we estimate the liabilites and equity

True
False

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A firm’s ending equity equals the firms beginning equity less any change in long- term debt.

True
False

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A firm’s ending equity equals the firms beginning equity plus any change in retained earnings.

True
False

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A pro forma ________ forecasts the timing and amount of cash inflows and cash outflows.

income statement
balance sheet
annual report
cash budget

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When estimating a cash budget, which of the following items should the firm NOT include in the process?

taxes paid by the firm

All responses should be included
wages
dividends

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Which of the following is the primary source of cash inflows in a pro forma cash budget?

anticipated sales
anticipated dividends
anticipated equity
anticipated net earnings

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Which of the following choices would NOT be considered a cash outflow?

capital expenditures
operational expense
anticipated sales
selling, general, and administrative expenses

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On-The-Level
Manufacturing

January February March
Purchases $40,000 $45,000 $60,000
Sales Billed $75,000 $85,000 $95,000
On -The-Level Manufacturing buys materials on credit at the start of the month and pays in 60 days. They also sell on credit, bill customers at the beginning of the month, and receive payment 30 days later. Using the table, what is the net cash flow from purchases and sales for the month of March?

$45,000
$40,000
There is NOT enough information to answer this question.
-$45,000

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On-The-Level
Manufacturing

January February March

Purchases $40,000 $45,000 $60,000
Sales Billed $75,000 $85,000 $95,000
On -The-Level Manufacturing buys materials on credit at the start of the month and pays in 60 days. They also sell on credit, bill customers at the beginning of the month, and receive payment 30 days later. Using the table, what is the net cash flow from purchases and sales for the month of February?

-$45,000
$45,000
There is NOT enough information to answer this question.
$40,000

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A cash budget is often more valuable as a SHORT-term rather than a LONG-TERM financial forecasting vehicle.

True
False

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Forecasted net cash flows are the difference between forecasted cash inflows and forecasted cash outflows.

True
False

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The generation of cash budgets and pro forma financial statements are equivalent ways of forecasting financial needs.

True
False

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The process of determining the effects of one key variable on the overall outcome of a pro forma income statement, for example, is known as:

ratio analysis
form analysis
sensitivity analysis
scenario analysis

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Because key variables are often related rather than isolated we often change our estimates for selected variables simultaneously when examining pro format statements. We call this type of activity:

scenario analysis
ratio analysis
sensitivity analysis
form analysis

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Pro forma financial statements may be valuable for which of the following reasons?

To help determine if and how much debt financing is required
To help us estimate how profitable a firm is expected to be
All responses are true.
To help banks determine if firms are likely to meet lending standards

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Your firm’s sales are estimated to increase by 10% in the next year. However, soon after the beginning of the year it becomes apparent that the growth in salesbis more likely to be 20%. If your cost of good sold consists of only variable expenses, and the relationship between revenues and costs remain the same, which of the following situations would you expect to be true?

The percentage change in gross profit should be less than the percentage change in sales.

The percentage change in gross profit should be greater than the percentage change in sales.

The percentage change in gross profit should be the same as the percentage change in sales.

The percentage change in gross profit should be zero because gross profit is not a function of sales if all CGS are variable.

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Which of the following choices will lead to a DECREASE in loan requirements

a shortened days in inventory
All response will lead to a decrease
an increase payables period
an increased collection period

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Sensitivity analysis highlights the impact of a change in one key variable on another key variable.

True
False

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Felton Financial Inc, had net earnings last year of $487,000. If the firm has a dividend payout policy of 30%, what was the addition to retained earnings?

$146,100
$487,000
There is not enough information to answer this question.
$340,900

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BSA 435 (Final Exam Answers)

BSA 435 (Final Exam Answers)

  1. Which is not one of the major challenges currently facing HR managers?
    a. motivating employees without pay raises and promotions
    b. changing federal, state and local legal requirements
    c. adjusting benefit programs due to increasing costs
    d. replacing “baby boomers” as they exit the workplace
  2. Human resource management is
    a. supervising, monitoring, controlling, and disciplining employees in order to achieve organizational goals efficiently and effectively.
    b. the designing of organizational systems to ensure that human talent is used effectively and efficiently to accomplish organizational goals.
    c. the efficient and effective use and coordination of human capital to ensure the profitability and long-term sustainability of the organization.
    d. the design of the interface between the human capital of the firm and its technological and financial capital in order to efficiently and effectively reach organizational goals..
  3. When the human resources function creates a unique capability in a firm that creates high value and differentiates the organization from its competition, human resources is a/an ____ for the firm.
    a. intangible asset
    b. core competency
    c. critical capability
    d. strategic contributor
  4. The collective value of the capabilities, knowledge, skills, life experiences and motivation of an organizational workforce is called
    a. the organization’s talent inventory.
    b. total human resources.
    c. human capital.
    d. the organization’s intellectual assets.
  5. Through the ____ function, HR management provides the organization with a sufficient supply of qualified individuals to fill the jobs in the organization.
    a. staffing
    b. equal employment opportunity
    c. talent management
    d. employee and labor relations
  6. Which of the following activities would NOT fall into the risk management function of HR?
    a. Sending all employees a text message requiring them to report in to a designated individual after an earthquake affects the city in which the company’s plant is located.
    b. Negotiating with a representative of the Occupational Safety and Health Administration (OSHA) about appropriateness of a measure to reduce harmful gases in a mine.
    c. Requiring employees to purchase a minimal level of life insurance when they are deployed overseas.
    d. Designing policies and procedures for a shipping firm to handle episodes of piracy and employee hostage-taking..
  7. Compensation and benefits managers in almost all organizations face a major and growing concern regarding the cost of
    a. equalization of pay between men and women.
    b. incentive pay for hourly employees.
    c. health-care benefits.
    d. outsourcing to lower-wage countries.
  8. Talent management includes which of the following activities?
    a. job-skill training
    b. wage and salary administration
    c. diversity assessment and analysis
    d. environmental scanning
  9. ____ identifies paths and activities for individual employees as they develop within the organization.
    a. Staffing
    b. HR development
    c. Equal Employment Opportunity
    d. Career planning
  10. A large Japanese semiconductor manufacturer is building a manufacturing plant in rural Texas. The Japanese firm has developed a highly-effective system of motivating employees which results in high productivity and high worker satisfaction. As an HR consultant to the Japanese firm, what should your advice be?
    a. The Japanese firm should study the local Texas culture and redesign its motivation system for the U.S. plant.
    b. The Japanese firm can implement the same motivation system in Texas and expect high productivity and high employee satisfaction.
    c. The rural Texas and Japanese cultures are so different, that there is little likelihood that a Japanese-operated plant in Texas could be successful.
    d. As long as the Japanese company’s motivation system is based on pay-for-performance, the Texas employees will be as productive and satisfied as their Japanese counterparts.

Chapter 2

  1. Which of the following statements is FALSE?
    a. The organization’s existing employees limit the organization’s choice of strategy.
    b. Although HR is a staff function, it can add value by helping the organization improve its performance.
    c. Most HR professionals are not full strategic partners in their organizations.
    d. In order to have a clear strategic vision, it is best for management to have sole authority to select the organization’s competitive strategy..
    2. In order to add value to the human capital of the organization,
    a. HR must have good metrics about the HR side of the business.
    b. HR managers must be focused on reducing the total cost of labor.
    c. the HR function must form the interface between the external environment of the organization and its internal environment.
    d. HR policies and practices should result in the workforce with the minimum quantity and maximum quality needed to achieve productivity goals.
    3. In order for any organizational strategy to be successful, the HR function must
    a. align with the “one best practice” to achieve worker productivity.
    b. move beyond the traditional HR focus on effectiveness and efficiency.
    c. develop the needed human competencies within the organization’s existing workforce.
    d. having the right people in the right place at the right time.
    4. Georgiana, the vice president of HR in an Ohio-based firm, is in a meeting with the other top level corporate executives. They are discussing whether it is a good strategy for the firm to open a branch in Amsterdam. In her role as head of HR, Georgiana must
    a. concentrate on being a team player and raise no objection to this expansion.
    b. raise the ethical issues of opening a branch in a country known for legalization of soft drugs, prostitution, and other “alternative lifestyles..”
    c. frankly explain that the firm’s current human talent pool does not have the capabilities to handle the expansion.
    d. meet the strategy’s requirement no matter what the current state of the company’s human talent pool.
  2. Perspectivo, Inc., is implementing formal strategic planning for the first time. The organizational mission has been clarified, and now the next step in the process will be
    a. developing supporting functional strategies.
    b. formulating the organizational strategy.
    c. analyzing strengths, weaknesses, opportunities and threats.
    d. establishing goals and objectives.
  3. __________ is the use of human resource management practices to gain or keep a competitive advantage.
    a. Manpower planning
    b. Strategic HR management
    c. HR business integration
    d. Competitive HRM.
    7. Which of the following is NOT a focus of strategic HR?
    a. “macro” view of the organization
    b. transactional skills
    c. high-risk planning outlook
    d. proactive HR systems and practices
    8. Cliff has about 10 years of HR experience and has recently earned his professional certification. He is searching for a job in an organization that takes a strategic approach to HR. Key phrases that Cliff is looking for in organizational informational materials describing the competencies the hiring organization wants in new HR professionals include all of the following EXCEPT
    a. administrative expert.
    b. change steward.
    c. business ally.
    d. talent manager.
    9. Which of the following is TRUE in forming HR strategy?
    a. The world changes so rapidly that the past is irrelevant.
    b. The past is important only as it can predict the future.
    c. The present is the best guide to the future.
    d. The impact of strategy is limited to the present, because the future is unpredictable.
  4. As an ambitious young HR professional, you want to advance to the top HR executive position in your organization by having the perspective and expertise to contribute to the strategic planning process. You should
    a. understand the financial aspects of your organization and its key drivers of business success.
    b. hone your skills in a technical HR area such as compensation or HR information systems.
    c. become an expert in legal analysis because most HR functions are driven by employment and labor law.
    d. ask to be transferred into areas of the organization that are proven training grounds for top executives, such as finance and marketing.

Chapter 6
1. A “passive” job seeker is one who
a. is seeking a job merely because it is a requirement of receiving unemployment compensation.
b. is conducting a haphazard and unplanned job search.
c. has a good job and is not actively looking to change.
d. an employed individual who cruises job boards looking for better-paying jobs.
2. The process of generating a pool of qualified applicants for organizational jobs is called
a. requisitioning.
b. pre-screening.
c. recruiting
d. selection.
3. Clement is the recruiting specialist for an online retailing company in a mid-sized Missouri town. He has used every type of recruiting technique available to him to fill nineteen job openings. After all his efforts have been exhausted, exactly nineteen applicants with the minimum qualifications have been found. In this case,
a. the yield ratio will be 50%.
b. a selection process is not necessary.
c. Clement’s efforts have been successful because he managed to find an applicant for each opening.
d. the labor market in this area can be described as “loose.”
4. ____ are the external supply pool from which organizations attract prospective employees.
a. The ranks of the unemployed
b. Applicant populations
c. Applicant pools
d. Labor markets
5. Which of the following would be the LEAST important topic of training for a recruiter who will be conducting interviews on a university campus?
a. EEO regulations
b. details of the jobs and job specifications
c. the company’s desired image and “brand”
d. the company’s job posting software
6. The ____ includes all individuals available for selection, if all possible recruitment strategies are used.
a. labor force population
b. external labor market
c. recruitment pool
d. applicant population
7. Priam Designs, Inc., is recruiting for designers using LinkedIn. The ____________ is the group of designers that is available for selection using this recruiting approach.
a. applicant pool
b. primary labor force
c. labor market
d. applicant population
8. As director of recruiting for a large bank, Stacy has decided to restrict her recruiting efforts for loan officers to placing advertisements on the web site of the American Banking Association. This will determine the ____ for the job of loan officer.
a. applicant population
b. labor force population
c. applicant pool
d. talent pool
9. The ____ pool consists of all persons who are actually evaluated for selection.
a. applicant
b. selection
c. labor
d. talent

  1. Decisions that affect the applicant population include all of the following EXCEPT
    a. the required yield ratio from recruiting efforts.
    b. recruiting method.
    c. timing of recruiting efforts.
    d. applicant qualifications required.

Chapter 7

  1. Some organizations are using virtual online communities to screen possible hires. All of the following are potential aspects of using avatars and a virtual setting that are different from traditional recruiting methods EXCEPT
    a. protected class applicants could mask their status by creating an avatar with “traditional” characteristics.
    b. applicants may be more relaxed in responding to recruiters’ questions.
    c. more tech-savvy applicants would have advantages over less technologically-skilled applicants.
    d. virtual reality interviewing could replace traditional selection methods in coming years.
    2. The process of choosing individuals who have needed qualifications to fill jobs in an organization is called
    a. recruitment.
    b. selection.
    c. job matching.
    d. placement.
    3. Lack of a fit between the person and the job is most likely to result from
    a. mistakes in evaluating the person’s KSAs.
    b. improper employee training.
    c. negligent hiring.
    d. a lack of a positive company “brand” that attracts qualified applicants.
    4. Mark is unhappy with his new job as a first line supervisor at the call center. He dislikes trying to motivate his subordinates to increase their productivity. He is dreading having to give the upcoming performance appraisals to his subordinates. Mark finds the job boring and watches the clock all afternoon, longing for the end of his shift. He is planning to apply for another job either within the organization or outside the organization. Mark is experiencing
    a. poor person-organization fit.
    b. burnout.
    c. the result of negligent hiring.
    d. poor person-job fit.
    5. ____ involves fitting a person to the right job.
    a. Placement
    b. Orientation
    c. Selection
    d. Staffing
    6. More than anything else, placement of human resources should be seen as a/an
    a. public relations activity.
    b. operating management responsibility.
    c. matching process.
    d. marketing tool.
  2. Measurable or visible indicators of the selection criteria are called
    a. reliable estimators..
    b. predictors.
    c. essential elements.
    d. validators.
    8. Voltra, Inc., is planning to fill a number of openings for entry-level professionals. The selection process is quite extensive and includes several levels of individual interviews, team interviews, and psychological tests, as well as general ability tests. Much of the interview time is spent on the applicant’s philosophy of life and work. Voltra, Inc., is highly concerned with
    a. defining who is an applicant.
    b. complying with EEO and ADA requirements.
    c. person-organization fit.
    d. matching the person to the job.
    9. Jill graduated with her MBA during a severe economic recession in the region. The only acceptable job she could find was in a bank officer training program for a major national bank. Jill was one of the top candidates when she was hired by the bank. She has been with the bank for three months and has become disillusioned with it. Jill feels that the individual bank customers are not valued, that the bank refuses loans to small business borrowers who are good risks, and that the bank engages in misleading advertising. Jill is experiencing
    a. poor person-organization fit.
    b. a realistic job preview.
    c. the result of negligent selection by the bank.
    d. poor person-job fit.
    10. Mary Ann is the recruiter for a large lighting products company, Aurora Borealis Lighting, Inc. Not only does Aurora Borealis Lighting have retail stores, it also supplies lighting for new residential and commercial facilities. Lighting designers for commercial facilities are scarce. Mary Ann and the company managers have decided to hire an individual who has the ability to learn the field. They estimate it will be two years before the new hire will be fully productive. Consequently, they are looking to hire a person who will be with the company for at least four or five years. Mary Ann suggests that they only hire applicants who have been with their previous employer at least two years, and who have not “job-hopped” in the last ten years. Mary Ann’s suggestion is an example of a/an
    a. KSA.
    b. element of job performance.
    c. selection criterion.
    d. predictor.

Chapter 8

  1. ____ provides employees with specific, identifiable knowledge and skills for use in their present jobs.
    a. Executive education
    b. Organizational learning
    c. Employee development
    d. Training
    2. In order to comply with OSHA regulations, Henry is scheduling a program on handling hazardous materials for production employees at the chemical plant. This type of program is classified as ____ training.
    a. job/technical
    b. required and regular
    c. developmental
    d. problem-solving
    3. Ben, a new manager, is being sent to a series of seminars to bring his communication, meeting management, and team-building skills to the higher level needed for his new duties. Ben is being trained in ____ skills.
    a. emotional
    b. soft
    c. tangible
    d. concrete
    4. Development is distinguished from training, in that
    a. development is broader in scope, focusing on individuals gaining new capabilities useful for both present and future jobs.
    b. EEO laws and regulations apply primarily to training not development.
    c. training is usually provided internally whereas development takes place in external learning environments.
    d. development provides people with specific, identifiable knowledge and skills for use on their present jobs.
    5. A fitness center is planning to invest in specialized pieces of exercise equipment. This equipment is highly effective, but the club members could be injured if the equipment is used incorrectly. So, the fitness center is sending its exercise instructors to a certified training program to learn how to use these machines correctly. This would be classified as
    a. required and regular training.
    b. job/technical training.
    c. problem-solving training.
    d. developmental training.
    6. Training must comply with employment laws and regulations. A primary discrimination concern centers on
    a. methods by which mentors are selected and allocated.
    b. whether the trainers are representative, as a group, of the diversity of the workforce.
    c. the amount of expenditures on training of minority and disabled employees versus training of majority and able-bodied employees.
    d. criteria used to select individuals for inclusion in training programs.
    7. Which of the following statements is TRUE?
    a. It is illegal to require hourly employees to take work-related training during non-work hours.
    b. If hourly employees are required to take work-related training during their free time, they must be compensated for the time spent in training.
    c. If an hourly employees takes a college course that applies directly to his/her current job and will increase his/her performance, the employer is required to pay the employee’s tuition.
    d. An employer is not required to pay hourly employees for training they can take at home, only for training which takes place at a work location or training facility.
    8. Amanda has just completed her MBA for which her company paid all tuition and book expenses. Amanda signed a training contract with her employer that runs for four years. A headhunter has contacted Amanda with an offer of a position that would be a significant promotion. Which of the following statements is TRUE?
    a. Amanda cannot legally leave to go to another firm for four years because of this contract.
    b. The headhunter is legally responsible for buying out Amanda’s contract with her original employer.
    c. Amanda could ask the offering company for a signing bonus that would cover her financial obligation to her employer for her MBA expenses.
    d. If Amanda took the job offer from the other company, Worldwide Food Services could sue the new employer for the cost of Amanda’s educational expenses under the non-piracy law.
    9. A growing number of companies have recognized that training and HR development are
    a. most effective and efficient when targeted at short-term, measurable outcomes.
    b. primarily associated with orienting new employees to the organization and their jobs.
    c. integral to competitive business success.
    d. generate high ROI when used tactically.
    10. Lyle has been hired as the first director of training at SISI, Inc. Lyle has been spending his first few weeks meeting with operating managers and learning the business at SISI. Lyle has told the managers he wants to partner with them to help solve their problems. Lyle
    a. probably believes that training can solve most organizational problems.
    b. is displaying a strategic training mindset.
    c. is taking a tactical approach to training.
    d. is focusing on knowledge management.

Chapter 10

  1. An effective performance management system must have all the following characteristics EXCEPT
    a. it must link organizational strategy to ultimate results.
    b. it must allow individual employees flexibility in how they will achieve ultimate results.
    c. it must translate organizational strategies into unit-level actions.
    d. it must assign unit-level actions to individual employees.
    2. Which of the following statements is TRUE?
    a. If ethical behavior were evaluated in a performance appraisal system and rewarded, employees would sometimes be rewarded for causing immediate or long-term financial losses to the organization.
    b. Performance appraisal systems are most effective when the behaviors evaluated are objectively measurable or observable. This is the main reason why most performance appraisal systems do not incorporate specific evaluations of the ethical aspect of employee performance.
    c. An organization’s ethical culture is independent of its performance management system.
    d. A performance-driven organization culture, especially one using management-by-objective performance appraisal, is incompatible with strict ethical standards for employee behavior.
    3. ____ is the process of determining how well employees do their jobs relative to a standard and communicating that information to the employee.
    a. Employee development
    b. Performance management
    c. Process improvement
    d. Performance appraisal
    4. Ultimately, performance management links organizational strategy to organizational
    a. culture.
    b. goal setting.
    c. rewards.
    d. results.
  2. In order to translate organizational strategies in to employee behaviors that support these strategies, performance management systems use a variety of techniques at the individual employee level. These techniques include all of the following EXCEPT
    a. informing the employee of the expected performance levels.
    b. rewarding the individual employee based on his/her performance.
    c. ensuring that the individual employee is satisfied with his/her performance appraisal.
    d. providing feedback on individual employee performance.
    6. In comparison to some Asian countries such as China and Japan, U.S.
    a. managers are brutally honest in communicating negative information to employees in performance appraisals.
    b. performance appraisal systems over-emphasize traits rather than behaviors.
    c. performance appraisal systems are based on fewer sources of information.
    d. managers tend to be so tactful in communicating performance decrements to employees that employees often do not know where they stand.
    7. Which of the following statements is TRUE regarding performance management in a global setting?
    a. Because human psychology is the same worldwide, a well-designed performance management system will work in any cultural setting.
    b. Business organizations in every culture include some type of formal performance feedback for employees.
    c. U.S.-style performance management systems are becoming more widely used overseas because of their effectiveness in increasing employee performance.
    d. U.S. companies may need to eliminate their performance management processes in certain countries.
  3. Research has shown that performance-driven organizational cultures
    a. are based on eliminating differentiations among employees and commitment to equality of rewards for employees.
    b. is typically welcomed by employees when it is instituted in a formerly entitlement-based organizational culture.
    c. require behavior-based performance measures.
    d. tend to have significantly higher financial results compared with other types of organizational cultures.
    9. Which of the following statements is TRUE?
    a. Pay-for-performance systems do not work well for CEOs because most CEO performance is not objectively measurable.
    b. Performance-based pay systems for CEOs typically build in penalties for unethical behavior.
    c. Performance-based pay systems for CEOs are a key factor in an organization’s development of a performance-driven culture.
    d. Pay-for-performance systems do not work well for CEOs because organizational performance is strongly affected by economic factors beyond the CEO’s control
  4. At SafeGreen, Inc., there is little variation in pay among employees within the existing job categories. Raises are essentially the same for average and excellent performers. Although performance appraisals are performed regularly, everyone views the process as paper-shuffling. The from the point of view of its performance appraisal system, the culture of SafeGreen, Inc., can best be described as
    a. entitlement-based.
    b. bureaucratic.
    c. performance-driven.
    d. equity-driven.

Chapter 3

  1. Which of the following statements is FALSE?
    a. Some cities and states have made discrimination on the basis of sexual orientation illegal.
    b. Veterans of the Vietnam War have additional employment protections over veterans of other wars.
    c. An individual whose mother is Polynesian and whose father is Native American would not be a member of a protected class.
    d. Individuals under 40 are not protected from age discrimination.
    2. In its broad sense, discrimination means
    a. ethnocentrism.
    b. viewing people with different characteristics negatively.
    c. recognizing differences among items or people.
    d. illegal employment practices.
    3. The most fundamental anti-discrimination employment law, the one that is considered the keystone for following legislation, is the
    a. Fourteenth Amendment of the U.S. constitution.
    b. Civil Rights Act of 1964.
    c. Executive Order 11246.
    d. Equal Pay Act of 1963.
    4. Individuals who fall within a group identified for special treatment under equal employment laws and regulations, are members of a/an
    a. oppressed minority.
    b. protected class.
    c. employment caste.
    d. special treatment class.
    5. A large commercial landscaping service in the Southwest requires all Hispanic applicants for crew boss positions to have a U.S. high school diploma. Native English speakers are not required to have a high school diploma. The stated business purpose of this requirement is to insure that the Hispanic applicants speak English well enough to perform the job. This is an example of
    a. disparate treatment.
    b. a bona fide occupational requirement.
    c. disparate impact.
    d. a business necessity.

Chapter 11

  1. Behemoth Industries has experienced huge losses for the last three years due to collapsing sales of their outdated product line. Behemoth’s stock has plummeted on Wall Street because it has not met projected profits for the 24th straight quarter. Behemoth has moved to a pure pay-for-performance system that is tied to achievement of organizational profit goals. Which of the statements below are most likely to be TRUE?
    a. Only high performers at Behemoth can be certain that they will receive a pay increase.
    b. No Behemoth employee can expect he/she will receive a pay increase, regardless of his/her performance.
    c. All employees except those who are the worst performers can expect that they will receive a pay increase.
    d. Behemoth will be able to attract high performing employees from its competitors.
    2. If an organization’s competitive strategy relies on long-term relationships with the clients who purchase the organization’s goods and services, the organization should reward its employees from its executives to its sales staff with incentives based on
    a. quarterly sales.
    b. annual profits.
    c. prices of its stocks in daily trading.
    d. a rolling five-year measure of financial performance.
    3. Compensation is one of the organization’s largest expenditures. Compensation philosophies and systems vary from one organization to the next. Why is that?
    a. There is no “one right way” to compensate employees. Many systems will work equally well in any organization.
    b. Different organizations have different organizational objectives and strategies.
    c. Legal requirements mandate different types of compensation systems depending on the organization’s industry.
    d. Organizations depend heavily on consultants to design their compensation systems, and each consulting firm has its own system.
    4. Which of the following is NOT a non-monetary reward?
    a. training and development programs.
    b. matching stock purchase plans.
    c. career management services.
    d. employee recognition.
    5. All of the following are compensation objectives of the organization EXCEPT
    a. legal compliance with relevant laws and regulations.
    b. internal, external and individual equity for employees.
    c. the lowest total cost of compensation among direct competitors.
    d. performance enhancement for the organization.

Chapter 12

  1. In a true pay-for-performance system, which of the following employees would qualify for incentive reward?
    a. Jack has met his sales quota even though he was hospitalized for appendicitis during the year.
    b. Otto manages to meet the minimum required sales on his store location despite the fact that the business building next door, where he receives most of his customer traffic, has closed.
    c. Charlene performs up to expectations as a science teacher at a magnet high school.
    d. Chris brings in 20 percent more new clients for the branch bank than is required.
    2. All of the following are potential outcomes of a successful pay-for-performance plan EXCEPT
    a. greater predictability of employee pay.
    b. retention of high performers.
    c. improved safety records.
    d. aligning employee behavior with organizational business goals.
    3. What are variable pay plans?
    a. methods of tying compensation to the Consumer Price Index (CPI) in order to keep up with inflation
    b. additional tangible rewards given to employees for performance beyond normal expectations
    c. compensation that increases as employees gain new job-related knowledge, skills, and abilities
    d. incentives to meet required performance standards
    4. Traditional compensation systems pay employees differently based on their job responsibilities and base employee increases mainly on
    a. meeting organizational objectives.
    b. growth in capabilities and competencies.
    c. years of seniority.
    d. changes in the Consumer Price Index.
    5. Which of the following is an assumption of variable-pay systems?
    a. Some jobs contribute more to organizational success than others.
    b. Cooperation and teamwork can be enhanced when individuals are rewarded for extra efforts.
    c. Equality in pay is a strong motivator of exceptional employee performance.
    d. Both good and poor performing employees will perceive a pay system that rewards high performance as satisfying and equitable.

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Molecular Biology Problem Set Answers

Molecular Biology Problem Set Answers

ATP is an important molecule in metabolism because

  • It is readily obtained from an organism’s environment

 

  • It is extremely stable
  • It contains valuable nutrients
  • It has high-energy phosphate bonds
  • Its phosphate bonds are very easily formed but not easily broken

 

All of the following processes involve hydrogen bonding except:

  1. DNA replication
  2. Formation of ice crystals

 

  1. Binding of enzyme and substrate
  2. Protein folding
  3. All of the above

 

In Pompe’s disease, the liver is damaged due to the accumulation of glycogen. What organelle is most

 

likely malfunctioning?

  1. endoplasmic reticulum

 

  1. golgi apparatus
  2. lysosome
  3. nucleus
  4. vacuole

 

Transport of which nutrient across the intestinal epithelium is by passive diffusion?

  1. alanine
  2. fructose

 

  1. glucose
  2. glutamine
  3. all of the above

 

 

Listed are three statements about lipids.

  1. Lipids are made up of polymers of fatty acids
  2. Lipids are hydrophobic

 

  1. Lipids that are made up of fatty acids with a high degree of saturation are more likely to be solids at room temperature

 

Choose the most accurate statement from below: A. Statements 1 and 2 are true

 

  1. Statements 1 and 3 are true
  2. Statements 2 and 3 are true D. Only statement 2 is true

 

  1. All three statements are true

 

Of the cellular compartments listed below, which has the lowest pH?

  1. Mitochondrial matrix
  2. Endoplasmic reticulum
  3. Lysosome
  4. Cytoplasm
  5. Nucleus

 

 

Terminally differentiated cells are most often found in which phase of the cell cycle?

  1. G0
  2. G1
  3. G2

 

  1. M
  2. S

 

A mutation in the gene encoding cyclin D:

  1. may cause the production of a mutated protein
  2. may cause the production of a non-mutated protein
  3. may prevent transcription of the cyclin D gene
  4. A and B only

 

  1. A, B or C

 

The velocity of carrier-mediated diffusion across cellular membranes:

  1. can increase up to a maximum value
  2. is always proportional to substrate concentration
  3. is greater in uniporters than symporters
  4. does not depend on saturation of the carrier
  5. varies with substrate concentration in the same way as that observed for simple diffusion

 

 

What is the concentration of hydrogen ions at pOH 8.3? (You do NOT need a calculator.)

 

  1. 0 x 10-5 M H+
  2. 0 x 10-6 M H+
  3. 0 x 10-5 M H+
  4. 0 x 10-6 M H+
  5. 0 x 10-5 M H+

 

An amphipathic molecule is a molecule that has

  • 2 different forms that are mirror images of each other
  • An amino group
  • A hydrophilic end and a hydrophobic end
  • A positively charged end and a negatively charged end

 

The quaternary structure of a protein is determined by

 

  • Interactions between distant amino acids of the same polypeptide
  • Interactions between close amino acids of the same polypeptide
  • Interactions between amino acids of different polypeptide chains
  • The arrangement of the alpha helices and beta sheets in the protein
  • Binding of a coenzyme or cofactor to the protein

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The molecular weight of fumarate is 160.0. How many grams of fumarate are there in 200 mL of a 0.1 M fumarate solution?

 

  1. 0.32 grams
  2. 3.20 grams
  3. 8.00 grams
  4. 80.00 grams
  5. 3.20 kg

 

Replacement of a lysine with a glycine in a protein could result in all of the following EXCEPT:

  1. a change in the quaternary structure of the protein

 

  1. a change in the secondary structure of the protein
  2. a loss of catalytic activity of the protein
  3. a loss of a negatively charged side chain
  4. a loss of the protein’s ability to interact with other proteins

 

A strain of bacteria living in a hospital is found to have a plasmid containing two genes: one for sex pilus construction, and one for tetracycline resistance. If these bacteria were to undergo conjugation with bacteria lacking this plasmid, and thereby transferred the plasmid to the other bacteria, the most likely result would be:

 

  1. a genetically identical clone of bacteria containing the same plasmid.
  2. a possible spread of tetracycline resistance to other bacteria in the hospital.
  3. the subsequent loss of tetracycline resistance in the initially resistant strain.
  4. production of endospores in the bacterial progeny.
  5. temporary tetraploidy of the conjugating bacteria.

 

 

The function of a molecular chaperone is to

  • Act as an energy source during the polymerization of amino acids into a polypeptide
  • Act as a carrier molecule and bring “activated” monomers to a polymer for incorporation
  • Bind to specific structures on the polypeptide in order to assist the folding of a protein into its correct threedimensional

 

shape

  • Unfold proteins with the incorrect three-dimensional shape and refold them into the proper shape

 

  • Transport rRNA from the nucleus to the cytoplasm

 

 

Ethidium Bromide is used in electrophoresis of DNA fragments because:

  • It makes the fragments visible under UV light
  • It makes the DNA fragments more mobile in the gel
  • It increases the conductivity of electricity through the gel
  • It helps determine the size of the fragments

 

  • It maintains a stable pH

 

Suppose the lac repressor of E. coli is mutated so that it never binds to the operator. Which of the following is true?

 

  • Glucose digesting enzymes are never produced
  • Lactose digesting enzymes are never produced
  • Lactose digesting enzymes are always produced
  • The result depends on the concentration of glucose

 

 

[e] The result depends on the concentration of lactose

 

 

 

 

Tobacco mosaic virus has RNA rather than DNA as its genetic material. If the RNA genome from a tobacco mosaic virus is mixed with proteins from a human rhinovirus, the result is a mixed virus. If that virus could infect a cell and reproduce, what would you expect the resulting viruses to be like?

  • A hybrid including genetic material from tobacco mosaic virus and proteins from the rhinovirus
  • A hybrid including proteins from tobacco mosaic virus and genetic material from the rhinovirus
  • Rhinovirus
  • Tobacco mosaic virus
  • No viruses would result because no viral DNA was present

 

A protein is usually tagged for degradation by proteasome activity by which of the following proteins?

 

  • Caspase
  • Kinase
  • Protease
  • Ubiquinone
  • Ubiquitin

 

Insulin injected by diabetics to control blood sugar levels is derived from bacteria whose DNA has been modified by the addition of the human gene for insulin, which is then produced by the prokaryotes. This is an example of:

 

  1. acid therapy
  2. cloning
  3. genetic engineering
  4. gene therapy
  5. pluripotency

 

Isolated RNA molecules are generally less stable than DNA at physiological pH because:

  1. RNA has ribose
  2. RNU is always linear
  3. RNA has U instead of T
  4. RNA is usually single stranded
  5. there are many more RNAse enzymes

 

Which of the following would act as an “uncoupler” of electron transport and ATP synthesis in the mitochondrion?

 

  1. NH4Cl
  2. Urea
  3. The F0 base piece of the ATP synthase (without the F1 subunit)
  4. All of the above
  5. A and C only

 

 

If the rate constant of a first order reaction that converts substrate S into product P is

 

0.693 min-1 then what is the half life of the reaction?

 

  1. 0.346 min

 

 

  1. 0.693 min
  2. 1.000 min
  3. 1.440 min

 

Suppose a plant cell had a mutation that prevented the Golgi apparatus from functioning. Which of the following processes would not occur in the cell?

 

  1. Cellular respiration
  2. Photosynthesis
  3. DNA replication
  4. Mitosis
  5. Cell wall formation

 

 

The local swimming pool is contaminated with an organism that is causing “swimmers itch.” You think you have identified cyanobacteria in your sample. Which features would you expect this organism to LACK?

 

  1. chlorophyll
  2. cell membrane
  3. differentiated cell types such as spores, vegetative cells, and heterocysts
  4. nucleoid

 

  1. nucleolus

 

Suppose radioactive thymine was added to an actively dividing culture of E.coli bacteria. What would happen if a cell replicated once in the presence of this radioactive base?

 

  1. one of the daughter cells, but not the other, would have radioactive DNA B. neither of the two daughter cells would be radioactive C. all four bases of the DNA would be radioactive

 

  1. radioactive thymine would pair with nonradioactive guanine

 

  1. DNA in both daughter cells would be radioactive

 

 

Which of the following molecules is able to cross the lipid bilayer?

  1. antibodies
  2. ATP
  3. insulin
  4. Na+

 

  1. steroid hormones

Amino acids and nucleotides form complex polymers. Select ALL the statements that are TRUE (Select all that apply).

 

  1. Both contain peptide bonds
  2. Both contain nitrogen
  3. Both may form helical structures
  4. Nucleotides and amino acids form branched polymers

 

  1. Both contain phosphate groups

 

You extract RNA from liver cells and then carry out an agarose gel electrophoresis of the liver RNA. The RNA fragments are then transferred to an RNA-binding membrane (nitrocellulose or nylon) using capillary action. Next, you hybridize a probe for gene X to the RNA on the membrane. Which of the following statements regarding your experiment is true?

 

  • You are trying to determine how many copies of Gene X are in liver cells
  • You are trying to determine if the Gene X protein is present in liver cells

 

 

  • You are trying to determine if Gene X is expressed in liver cells
  • You are trying to determine the chromosomal location of Gene X
  • You are trying to determine whether Gene X has a mutant sequence

 

Which of the following would be most effective for sequencing the exact 5’- end of an mRNA transcript?

 

  1. PCR
  2. Primer extension
  3. Cloning
  4. Southern blot
  5. Linkage mapping

 

A toxin exists that inhibits the enzyme succinate dehydrogenase. If this were used in an experiment to stop respiration, how many net NADH+ and ATP molecules would be generated from each glucose molecule up to that stage?

 

  • 4, 4
  • 4, 6
  • 4, 8
  • 6, 2
  • 6, 4

 

  • Mistyped answer choice, the correct answer should be 8,4

 

If radioactive sulfur (35S) is used in the culture medium of bacteria that harbor bacteriophage viruses, it will later appear in:

  1. bacterial RNA
  2. bacterial cell walls

 

  1. viral DNA
  2. viral RNA
  3. viral coats

 

Which of the following would probably be LEAST DAMAGED by a lipid-dissolving enzyme (lipase)?

 

  1. endoplasmic reticulum
  2. mitochondria

 

  1. ribosomes
  2. nuclei
  3. plasma membrane

 

Five events occur in a cell constituting a cause-and-effect sequence:

  1. an enzyme is manufactured at the ribosomes
  2. cellulose is deposited in a cell wall
  3. a molecule of RNA is transcribed

 

  1. a carbohydrate polymer is synthesized
  2. a nucleic acid migrates from nucleus to ribosome The order in which these events occur is:

 

  1. 1,3,5,4,2
  2. 2,1,4,5,3
  3. 3,5,1,4,2
  4. 4,2,1,3,5
  5. 5,3,4,1,2

 

 

 

The concentration of ions inside an amoeba is expressed below as ion-units per milliliter. The composition of the extracellular environment (ECE) is given for comparison. Assume the amoeba has been in the environment for some time.

 

 

Na+ K+ Cl- HCO3-
Amoeba 1 42 3 119
ECE 21 16 41 119

 

As the number of (+) and (-) ions in the amoeba and in the ECE are not equal, one might assume that:

 

  1. the amoeba and the ECE are very acidic
  2. the amoeba and the ECE are very basic

 

  1. either K+ or Na+ has a different valence

 

  1. a mistake in measurements had been made
  2. other ions are also involved

 

The differences in concentration of K+ and Na+ inside and outside of the amoeba indicate that:

 

  1. diffusion is not occurring
  2. energy has been increased
  3. energy has been expended
  4. osmosis has occurred

 

When bacterial cells multiply maximally during the logarithmic phase, the total number of cells (b) after some time interval (t) is equal to the original number of cells (B) multiplied by 2n, where n is the number of generations formed during the time interval: n = t/g and b = (B)(2n). The generation time (g) for type A cells is 28 minutes (assume no cell death).

 

Estimate the LEAST amount of time required for a population of type A cells to increase by 300 percent.

 

  1. approximately 42 minutes
  2. approximately 48 minutes
  3. approximately 52 minutes
  4. approximately 58 minutes

 

  1. more than 62 minutes

 

Researchers found that the arginine code AGG is poorly represented in genes of E.coli. Interestingly, they also found that this triplet, when present, binds to the ribosome 7-9 base pairs upstream from the starting ATG triplet (methionine). What does this information suggest in regard to the AGG codon?

 

  1. it is a codon rarely found in this bacterium
  2. it is conserved in most prokaroytic organisms

 

  1. it may have a regulatory function in the cell
  2. both B and C
  3. A, B and C

 

 

 

 

 

 

 

 

The strongest evidence for the endosymbiotic origin of eukaryotic organelles is the similarity between:

 

  1. eukaryotic and prokaryotic ribosomes
  2. prokaryotic and eukaryotic flagella

 

  1. prokaryotic and eukaryotic cell walls
  2. some prokaryotes and mitochondria
  3. some prokaryotes and ribosomes

 

The fluidity of a lipid bilayer is enhanced with:

  1. decreased temperature
  2. increased unsaturation in fatty acid tails
  3. increased unsaturation in polar head groups

 

  1. increased saturation in fatty acid tails
  2. increased fatty acid chain length

 

Which of the following are NOT imbedded in the thylakoid membrane?

  1. Enzymes associated with carbon dioxide fixation
  2. Molecules of chlorophyll a and chlorophyll b
  3. P700 and P680 molecules
  4. Proton channels of the ATP synthase

 

  1. Ferredoxin-NADP+

 

In the actual USABO exams, E may also be accepted, but A must be marked.

 

Which of the following fibers binds to the cytoplasmic site of the cell-matrix adherens junctions?

  1. Elastin
  2. Actin
  3. Tubulin

 

  1. Reticular
  2. Collagen

 

Which of the following statements about the energy yield of aerobic respiration is NOT true? A. Less than 50% of the chemical energy stored in glucose is converted to ATP.

 

  1. Glycolysis and pyruvate oxidation together provide more NADH per glucose molecule than does the Krebs cycle.

 

  1. Each pair of electrons donated by an FADH2 or NADH molecule during electron transport results in the synthesis of more than one molecule of ATP.
  2. ATP is needed to transport NADH produced during glycolysis into the mitochondria.
  3. Most of the ATP derived during aerobic respiration results from the utilization of an electrochemical gradient.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In the transcription of DNA to RNA the nitrogenous base cytosine will pair with: (note: the answers A, B, C, D, E are listed in columns.)

 

 

 

 

 

 

 

 

A.

 

 

 

 

 

 

 

 

B.

 

C is the correct answer.

 

 

 

 

 

 

C.

 

 

 

 

 

 

 

 

 

 

 

D.

 

 

 

 

 

 

 

Which of the following is NOT a second messenger?

[a] Calcium ion

[b] Magnesium ion

  • Diacyl glycerol

 

  • Inositol trisphosphate (IP3)
  • Cyclic AMP

 

Hemoglobin, an iron-containing protein in erythrocytes, binds oxygen molecules. Myoglobin, a protein in muscle cells, is used for oxygen storage. What can be deduced about the relative oxygen affinities of hemoglobin and myoglobin?

 

  • Myoglobin has greater oxygen affinity than hemoglobin
  • Hemoglobin has greater oxygen affinity than myoglobin

 

  • Both have roughly the same oxygen affinity
  • Neither has a significant oxygen affinity

 

A spectrophotometer is used to measure concentrations of proteins, DNA and many other chemical compounds. Assume the input light intensity at a particular wavelength λ is I0, and the intensity of the light transmitted through the second cuvette is I1. If the concentration is doubled which of the following statements are TRUE.

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. The percent transmission of the first sample will be two times greater than the second sample
  2. The absorbance, Aλ, of the second sample will be twice the absorbance of the first sample
  3. The increase in concentration will shift the wavelength of maximum absorbance to a longer wavelength
  4. The percent transmission of the second sample will be twice the first sample
  5. There is insufficient information to determine the correct answer

 

A variety of different techniques are used to separate, analyze, and purify different chemical compounds. Select ALL of the following techniques that can be used to estimate the molecular weight of a protein? (Select all that apply)

 

 

  1. Isoelectric focusing.
  2. Size exclusion gel chromatography.

 

  1. Ion-exchange chromatography.
  2. Affinity chromatography.

 

 

 

 

 

 

 

 

 

 

Both amino acids and nucleotides form complex chains. Select all the answers below that are accurate.

 

  1. The chains formed by both have polar phosphate groups.
  2. Both contain peptide bonds.
  3. Both contain nitrogen.
  4. The chains formed by both can be lysed by trypsin.
  5. The sequence of chains both form from preexisting templates.

 

 

 

Which of the following is NOT an accurate description of protein synthesis and folding? A. All protein synthesis is initiated in the cytoplasm.

 

  1. Many copies of a protein can be synthesized simultaneously from the same mRNA.
  2. The 3D shape of a protein is determined largely by its amino acid sequence.
  3. The entire chain of amino acids exits the ribosome before it begins folding into its 3D shape.
  4. The first encoded amino acid in every protein is methionine.

 

 

Which of the following carbohydrates contain α-1, 4-linkages?

 

  1. amylose
  2. Cellulose
  3. Deoxyarabinose
  4. Glucose
  5. Hexose

 

Which of the following would act as an “uncoupler” of electron transport and ATP synthesis in the mitochondrion?

 

  1. dinitrophenol
  2. urea
  3. the F0 base piece of the ATP synthase (without the F1 subunit)
  4. all of the above
  5. A and C only

 

 

Using accelerator mass spectrometry, the 14C atoms in a 2 mg bone fragment were directly counted and found to be 1/8 of those that would be present in a 2 mg bone fragment in 1950. What is the approximate age of this specimen? The half-life of 14C is 5,730 years.

 

  1. 1,540 years BP (before present)
  2. 5,730 years BP
  3. 17,190 years BP
  4. 22,920 years BP

 

  1. 45,840 years BP

 

 

 

 

 

 

 

 

 

The membrane potential across a cell membrane is determined by the relative permeabilities and concentration gradients of electrolytes across its cell membrane. The intracellular/extracellular concentration of sodium ions is 14 mM/140 mM.

 

The intracellular/extracellular concentration of potassium ions is 120 mM / 4 mM.

 

The chemical potential or equilibrium potential = (RT/zF) ln ([x]o/[x]i).

Given the gas constant, R = 8.31 JK-1mol-1, the temperature, T, needs to be in Kelvin, °K.

The Faraday constant, F = 9.65 coulombs mol-1m, and z is the valency of the cation or ion.

At 25°C, the ___________________ equals +58 mVs.

  1. calcium equilibrium potential
  2. chloride equilibrium potential
  3. membrane potential
  4. potassium equilibrium potential

 

  1. sodium equilibrium potential

 

Sunflower chromosomes have been isolated and their DNA/NT analyzed. It was found that chromosome 2 has unusually high content of Adenine (40%). How many percent of Guanine is present in chromosome 2?

 

  1. 10%
  2. 20%
  3. 30%

 

  1. 40 %
  2. 50%

 

Assume that the entire sequence of the chromosome is transcribed. Which of the following is true for the content of Adenine in the transcribed RNA?

 

  1. Adenine is 40% of the RNA.
  2. Adenine is 20% of the RNA.
  3. Adenine is at least 20% of the RNA.

 

  1. Adenine is at least 40% of the RNA.
  2. The content of Adenine is not possible to determine based on the information provided.

 

A strain of bacteria living in a hospital is found to have a plasmid containing two genes: one for sex pilus construction, and one for tetracycline resistance. If these bacteria were to undergo conjugation with bacteria lacking this plasmid, and thus transferred the plasmid to the other bacteria, the most likely result would be:

 

  1. a genetically identical clone of bacteria containing the same plasmid

 

  1. rapid spread of tetracycline resistance to other bacteria in the hospital
  2. the subsequent loss of tetracycline resistance in the initially resistant strain
  3. production of endospores in the bacterial progeny
  4. temporary diploidy of the conjugating bacteria

 

 

Why can glycolysis proceed under anaerobic or aerobic conditions while the citric acid cycle only proceeds under aerobic conditions?

 

  1. Oxygen is a byproduct of the conversion of the glycolytic intermediate glucose-6-phosphate to fructose-6-phosphate.

 

  1. Enzymes of glycolysis do not use oxygen as cofactors, while enzymes of the citric acid cycle require oxygen for proper folding.

 

  1. Enzyme catalysis during the citric acid cycle is regulated by allosteric effectors, which include oxygen.
  2. NAD+ is produced during three steps of glycolysis and only one step of the citric acid cycle.
  3. Under anaerobic conditions, NAD+ (for glycolysis) can be regenerated through the conversion of pyruvate into lactate.

 

 

 

 

If a strand of coding DNA has the following nucleotide sequence —ATTCGCTAGACC — what will be the nucleotide sequence of micro RNA (miRNA) be?

 

  1. UAAGCGAUCUGG
  2. AUUCGCUAGACC
  3. TAAGCGATCAGG
  4. ATTCGCTAGACC
  5. None of the above

 

 

 

Use the pathway for the next two questions. Many metabolic pathways involve multi -step reactions. Consider the following pathway, where E represents different enzymes, and A, B, C, D and F represent substrates and products of the pathway.

 

E1    E2   E3    E4

A→B→C→D→F

 

 

Feedback inhibition of this pathway may involve

  1. The product of the final reaction, F, interacting with and inhibiting E1
  2. F interacting with and inhibiting product B
  3. Product B interacting with and inhibiting E4
  4. Product C interacting with and inhibiting E4
  5. E3 interacting with and inhibiting E2

 

In the example above, assume that D is an allosteric inhibitor of the enzyme E2. D would

 

  1. Compete with B for binding to the E2 active site
  2. Compete with F for binding with E2
  3. Bind directly to the substrate B and prevent it from entering the E2 active site
  4. Bind E2 at a site different from the active site but change the shape of the active site so B can no longer bind

 

  1. Bind E2 at the active site, change its shape and prevent B from binding the active site

 

The primary energy source of the brain is

 

  1. L-serine.

 

Glycogenesis and glycogenolysis are controlled primarily by two hormones.

  1. Fructose kinase and glucose hydrolyase
  2. Glucagon and glucose hydrolyase
  3. Glycogen synthetase and insulin
  4. Insulin and glucagon
  5. Pentose kinase and insulin

 

 

 

 

 

Eukaryotic transcription seems to be a wasteful process because so many proteins need to assemble on a large array of DNA sequences to initiate transcription. What might be the evolutionary advantage that allows such a complex process to be maintained throughout all eukaryotic organisms?

 

  1. Since eukaryotes are larger than prokaryotes, you need a larger transcription process for initiation.

 

  1. There are more genes that need to be transcribed in a eukaryote than in a prokaryote.

 

  1. The use of large number of proteins and regulatory sequences in DNA is essential for alternative splicing in eukaryotes.

 

  1. The use of large numbers of proteins and regulatory sequences in DNA opens many possibilities for sophisticated gene regulation by eukaryotes.

 

  1. Since transcription happens in the cytoplasm, you need so many proteins to prevent it from being broken up.

 

The chemical EDTA is routinely used in many experiments. For example, EDTA is used in electrophoresis buffer solutions. Which of the following statements is not true?

 

  1. EDTA has a strong binding affinity for divalent and some trivalent cations.

 

  1. EDTA is a catalyst for polymer formation and essential for protein and nucleic acid polymerization.

 

  1. EDTA is a chelator.

 

  1. EDTA is used to help denature proteins and weaken cell membranes.

 

  1. EDTA protects DNA from restriction enzymes by removing magnesium ions from the solution.

 

 

Positive cooperativity is an emergent property of what type of enzymatic regulatory mechanism? A. Allosteric interactions.

 

  1. Cellular compartmentalization.

 

  1. Genetic regulatory mechanisms.

 

  1. Second messenger systems.

 

  1. None of the above.

 

 

Select ALL of the following associations that are accurate.

  1. Tryptophan, tyrosine and phenylalanine – aromatic amino acids which absorb UV light.
  2. L-Isoleucine – most hydrophobic.
  3. L-Histidine – side chain can shift pKs, at physiologic pH can act as either an acid or a base.
  4. L-Lysine -amphipathic
  5. L-Proline is known as an “a-helix breaker” and is found in tight turns.

 

All of the above statements are indeed true.

 

Select ALL statements that are true concerning the Photosynthesis Reaction Center (Photosystem II)?

 

  1. The Photosynthesis Reaction Center contains chlorophyll and sometimes Fe-heme groups.

 

  1. It is a globular protein found in the cytoplasm where it acts as an antenna protein.
  2. It oxidizes carbon dioxide and produces H2O.

 

  1. It transfers high-energy electrons to an acceptor nearby in the thylakoid membrane.
  2. The Photosynthesis Reaction Center is usually a heterotetramer, but may be a heterotrimer in some species of cyanobacteria.

 

 

 

 

Rank the following biological molecules in order of how readily they diffuse across the plasma membrane from the most diffusible to the least diffusible.

 

  1. CO2 II. Cl-

III. Sucrose IV. Glycerol A. I, III, IV, II B. II, IV, III, I C. III,II, IV, I

 

  1. I, IV, III, II E. II, I, III, IV

 

Ciprofloxacin is an antibiotic frequently prescribed for traveler’s diarrhea and urinary tract E. coli infections. It acts by binding to and interfering with bacterial topoisomerases. Which of the following is the most accurate explanation of ciprofloxacin’s mechanism of action?

 

  1. Ciprofloxacin prevents the unwinding of double-stranded DNA and thus both DNA transcription and replication.

 

  1. Ciprofloxacin prevents the relief of supercoiling caused by unwinding of double-stranded DNA and thus DNA replication.

 

  1. Ciprofloxacin prevents the conversion of RNA primers to DNA and thus accurate DNA replication.

 

  1. Ciprofloxacin prevents replication of the lagging strand.

 

  1. Ciprofloxacin prevents the binding of DNA polymerases to DNA and thus both DNA transcription and replication.

 

Due to the widespread use of ciprofloxacin, many bacterial populations are now resistant to ciprofloxacin. You are studying a ciprofloxacin-resistant clinical isolate of E. coli. You have a hunch that this population does not harbor any plasmids. Given this information, which of the following best explains your isolate’s resistance mechanism?

 

  1. Your resistant bacteria pump ciprofloxacin out of the cell and thus minimize its effect.

 

  1. Your resistant bacteria produce an enzyme that modifies the binding site of ciprofloxacin.

 

  1. Your resistant bacteria have mutant topoisomerases that have less affinity for ciprofloxacin.

 

  1. Your resistant bacteria produce a chemical compound that reacts with ciprofloxacin and reduces its affinity for topoisomerases.

 

  1. Your resistant bacteria do not require the activity of topoisomerases

 

All amino acids except lysine and leucine can be broken down into precursors for gluconeogenesis. What are the products produced by the breakdown of lysine and leucine that prevent them from functioning in that pathway?

 

  1. Oxaloacetate and acetyl-CoA

 

  1. Pyruvate and succinate

 

  1. Acetyl-CoA and acetoacetate
  2. Succinyl-CoA and acetoacetate

 

  1. Acetaldehyde and pyruvate

 

Pollen grains were treated with colchicine in culture. The resulting plants were

  1. No more than large calluses
  2. Dihaploid and fertile
  3. Dihaploid and sterile
  4. Haploid and sterile

 

 

  1. Haploid and fertile

 

The presence of which of the following amino acids in the channel region of aquaporins contributes to the electrostatic selectivity to allow water, but not other molecules, to pass through?

 

  1. Valine
  2. Tryptophan
  3. Asparagine
  4. Methionine
  5. Leucine

 

Select the chemical property that is shared by all types of lipids forming the plasma membrane. A. Polar head

  1. Sugar component
  2. Glycerol backbone
  3. Phosphate group
  4. Hydrophobic region

 

The following photograph shows filamentous growth of a kind of cyanobacteria, Nostoc sp. The bacteria form heterocysts (thick-walled cells), when nitrogen sources such as ammonia or nitrates are deficient in the environment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Which of the following statements describing these heterocysts is/are true?

  1. Nitrogen is fixed in the heterocyst.
  2. Photosystem I does not function in the heterocyst.

III. Photosystem II does not function in the heterocyst.

 

 

  1. Only I

 

  1. Only II
  2. Only I and II
  3. Only I and III
  4. Only II and III

 

When a mammal ingests a carbohydrate-rich meal after a long fast, the metabolic behavior of its hepatocytes undergoes many changes. Which of the following responses would not occur after a large influx of glucose?

 

  1. Dephosphorylation and activation of PFK-2

 

  1. Increased glucokinase activity

 

  1. Glycogen phosphorylase R → T transition

 

  1. Decreased phosphoglucomutase activity

 

 

  1. Rise in concentration of NADPH

 

The mitochondrion has more than three stop codons. Which biological principle does this violate? A. Central dogma

 

  1. Endosymbiotic theory

 

  1. Conservation DNA replication

 

  1. Complementary base-pairing

 

  1. Universal genetic code

 

A1. Endorphin is a natural analgesic secreted by the pituitary gland. Upon binding to its receptor in brain cells, endorphin can relieve pain and create a sense of euphoria. Morphine can achieve similar pain relief effects by binding to the endorphin receptor. Why do both endorphin and morphine bind to the endorphin receptors in brain cells?

 

  • Sizes of both molecules are similar.
  • Molecular weights of both molecules are similar.

 

  • Both are isomers.
  • Shapes of both molecules are similar.
  • Net charges of both molecules are identical.

 

 

Most biological macromolecules are made by the polymerization of small principal components. The major structural polysaccharide of the insect exoskeleton is a polymer. Which of the following statements regarding this kind of polysaccharide is NOT correct?

 

  • It is made by polymerization of glucose.
  • It contains C, H, O and N atoms.
  • Its structure is similar to that of cellulose.
  • It can be used to produce chitosan and glucosamine in industry.

 

  • This polymer can also been found in the cell wall of fungi.

 

In some cells, synthesis of isoleucine from threonine is catalyzed by the sequential action of five enzymes a, b, c, d and e which produce 4 intermediates A, B, C, D, and the end product isoleucine, respectively. What is most likely to happen when isoleucine is overproduced and there is an ample supply of threonine in cells?

 

  • Isoleucine associates with threonine to inhibit the activity of enzyme a.
  • Isoleucine associates with intermediate D to inhibit the activity of enzyme e.
  • Isoleucine binds to enzyme a and inhibits its activity.
  • Isoleucine binds to enzyme e and inhibits its activity.
  • Threonine is converted into isoleucine continuously through the 5 enzymes.

 

In some prokaryotic organisms, SO42- is used as the final electron receptor at the end of electron transport chain during cellular respiration. Which of the following statements regarding cellular respiration in these prokaryotic organisms is NOT correct?

  • It is anaerobic respiration.
  • The reception of electron by SO42- is accompanied by the production of H2O.
  • Operation of the electron transport chain builds up a proton motive force.
  • ATP can be produced.
  • Production of ATP is correlated with the mobility of H+.

 

 

 

 

 

 

 

 

 

Three stages in bacteria growth are:

  1. Lag phase

 

  1. Log phase

III. Stationary phase

In which phase or phases can penicillin inhibit the synthesis of the bacterial cell wall?

  • Only I
  • Only II
  • Only III
  • Only I and II
  • Only I and III

 

  • I, II and II

 

Which structural or physiological feature of bacteria can be used as a target for developing drugs to kill bacteria effectively but with no harm to human cells?

 

  • Glycolysis
  • Components of plasma membrane

 

  • Components of ribosome
  • Components of the electron transport chain in aerobic respiration
  • Requirement of oxygen

 

 

Histones are small basic proteins that assemble with DNA molecules to form chromosomes. There are five histones, including H1, H2A, H2B, H3 and H4, in eukaryotic cells. Which of the following structural features of chromosomes is associated with Histone H1?

  • Telomere
  • Nucleosome fiber (10-nm fiber)
  • 30-nm fiber

 

  • Looped domains
  • Centromere

 

 

DNA is a double helix molecule containing four different types of nitrogen bases. Which of the following statements regarding both the replication and chemical composition of DNA is correct?

 

  • Base sequences of both strands are the same.
  • The amount of purine is equal to that of pyrimidine in a double-stranded DNA.
  • Both strands are synthesized continuously in 5’→3’ direction.
  • The first base of the newly synthesized DNA is catalyzed by DNA polymerase.
  • The proof-reading activity of DNA polymerase proceeds in the 5’→3’ direction.

 

 

Miss Ling-Ling conducts DNA synthesis and transcription reactions in two separate test tubes. Which of the following substances needs to be added to both reactions?

 

  • ATP
  • DNA template
  • RNA primer
  • DNA polymerase
  • DNA ligase

 

 

 

 

 

 

The Nobel Prize in Physiology or Medicine 2009 was awarded jointly to Blackburn, Greider and Szostak for the discovery that chromosomes are protected by telomeres and the enzyme telomerase is highly correlated with aging and cancer in animals. Which of the following statements regarding telomere and telomerase is correct?

 

  • Telomerase is a DNA exonuclease.
  • Telomerase is an RNA polymerase.
  • Embryonic cells possess long telomeres and high telomerase activity.
  • Telomeres are longer and telomerase is inactive in cancer cells.

 

  • Telomeres are longer and telomerase is highly active in somatic cells.

 

 

EcoRI restriction enzyme is a DNA endonuclease that can recognize the sequence GAATTC. It was first discovered in E. coli, therefore it was named EcoRI. To produce a large quantity of the endonuclease, the DNA fragment encoding the gene was subcloned into an expression plasmid and the resultant recombinant plasmid was transformed into E. coli cells to produce recombinant enzyme for a study. Why is the host DNA not cleaved by the recombinant EcoRI?

 

  • The host DNA does not contain EcoRI cleavage sites.
  • EcoRI is secreted out of the host cells.

 

  • Environmental factors such as temperature and pH value inhibit EcoRI activity.
  • The coli host produces inhibitors to block EcoRI activity.
  • The EcoRI cleavage sites within the host DNA are modified.

 

Which of the following structures and processes can exist in eukaryotic cells and in all prokaryotic cells?

 

  1. Nuclear envelope

 

  1. Ribosomes III. Introns
  2. ATP synthesis V. rRNA 18S

 

  1. Cell membrane VII. DNA polymerase VIII. Cytoskeletal elements

 

  1. I, II, III and VIII

 

  1. II, IV, VI and VIII
  2. I, III, V and VII

 

  1. II, IV, V and VI

 

  1. II, III, VI and VIII

 

 

Comparing the effect of an inhibitor with an uncoupler of oxidative phosphorylation, the:

  1. inhibitor would allow electrons to pass through the electron transport chain

 

  1. inhibitor would increase the pumping of protons by the electron transport chain C. uncoupler would increase heat production by the mitochondria

 

  1. uncoupler would inhibit the reduction of oxygen by the electron transport chain E. uncoupler would stop the oxidation of NADH by the electron transport chain

 

 

A yeast extract contains all the enzymes required for alcohol production. The extract is incubated under anaerobic conditions in 1 liter of media containing: 200 mM glucose, 20 mM ADP, 40 mM ATP, 2 mM NADH, 2 mM NAD+ and 20 mM Pi (inorganic phosphates). What is the maximum amount of ethanol that can be produced in these conditions?

 

  • 2 mM
  1. 20 mM C. 40 mM D. 200 mM E. 400 mM

 

Three different genes (B, D, and W) are found on a small region of chromosome 1. Each gene has two alleles. In order to determine the recombination frequency between these three genes, sperm were isolated from a male heterozygous for all three genes. The male had all dominant alleles on his maternal copy of chromosome 1, but only recessive alleles on his paternal copy of chromosome 1. Each sperm was isolated individually and PCR amplified in the BDW region. The amplified products were spotted on a nitrocellulose membrane and radioactive allele specific probes were hybridized with the samples. The resulting audioradiograph is shown below where a dark spot indicates successful hybridization of the probe with the membrane.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is the recombination frequency between B and W?

  1. 1:2

 

  1. 1:3

 

  1. 1:4

 

  1. 5:6

 

  1. 1:1

 

 

The function of an electron in the electron transport chain is to:

  1. transfer energy from complex II to complex I.
  2. pump hydrogen ions using complex II.
  3. use its free energy to pump protons against the concentration gradient.

 

  1. combine with phosphate when ATP is synthesized.
  2. react with ATP synthase.

 

 

 

 

Fatigue in iron deficiency anemia may be explained in part by all of the following EXCEPT:

  1. a lack of functional hemoglobin in the blood.
  2. an inability to transport oxygen.
  3. a lack of functional cytochromes in the electron transport chain.
  4. the inability to synthesize ATP.
  5. a lack of functional Coenzyme Q.

 

Concerning the generation of ATP by oxidative phosphorylation, all of the following are true

EXCEPT:

  1. NADH produced in the cytosol of the cell will generate approximately 2.5 ATPs.
  2. NADH produced in the mitochondria will generate approximately 2.5 ATPs.
  3. NADH produced by the succinate thiokinase reaction will generate approximately 1.5 GTPs.
  4. FADH2 produced in the mitochondria will generate approximately 1.5 ATPs.
  5. acetyl CoA entering the TCA cycle will produce approximately 10 ATPs.

 

Some pathogens produce exotoxins that can cause human diseases. One type of exotoxins consists of two polypeptides, subunits A and B. Subunit B can bind to surface receptors on the target cells and cause the transport of the subunit A or associated molecules across the plasma membrane into the cell. Once the subunit A enters the cell, it inhibits protein synthesis and destroys the cells. Which of the following statements regarding exotoxins is/are correct?

 

  • Subunit A alone can cause disease.

 

  • Subunit B alone can bind to target cells.

 

  • Subunit A may carry other molecules to kill target cells.
  • Subunit B may carry other molecules and assist these molecules to enter target cells.

 

  • When conjugated with an antibody against breast cancer cells, subunit A can kill breast cancer cells.

 

B5. Tom isolated phagocytes from a blood sample. He cultured these phagocytes in a test tube for a period of time. To observe phagocytosis, E. coli was co-cultured with phagocytes. What will be the consequence if an antacid is added to the culture?

 

  • Phagocytes can ingest and kill E. coli.
  • Ingestion of E. coli by phagocytes is inhibited.
  • coli is viable in phagolysosome.

 

  • If phagolysosomes are formed, the digestive enzymes in them are inactive.

 

  • Phagocytes can secrete ingested debris out of the cells.

 

 

What enzyme does a retrovirus primarily rely on to create a copy of its genome that is ready for integration into the host genome?

 

  1. DNA gyrase
  2. RNA polymerase
  3. Reverse transcriptase

 

  1. DNA polymerase
  2. DNA helicase

 

 

 

 

 

 

 

 

Integral transmembrane proteins are proteins embedded in the cell membrane. Which of the following amino acids would you MOST expect to find in the transmembrane region of such proteins?

 

  1. Tryptophan

 

  1. Lysine
  2. Arginine

 

  1. Serine
  2. Glutamate

 

A gene regulatory protein X controls cell proliferation. Protein X is found in the cytosol and has

no typical nuclear localization signal (NLS). When cells are treated with a specific growth hormone, protein X re-localizes from the cytoplasm into the nucleus where it activates the transcription factors involved in cell proliferation.

 

Recently, a protein (Y) that interacts with protein X has been identified in unstimulated cells. To investigate the function of protein Y, a mutant lacking the gene encoding protein Y was generated. Fractionation of cells from the wild type and mutant produced membrane (M), cytoplasmic (C), and nuclear (N) fractions for each cell type. Proteins extracted from each fraction were separated by SDS-PAGE and analyzed by Western blotting for the presence of proteins X and Y.

 

 

 

 

 

 

 

 

 

 

 

 

On the basis of the results shown above, which of the following statements is the most plausible characterization of protein Y?

 

  1. In the absence of growth hormone, protein Y associates with protein X, and the X/Y complex is subjected to a degradation pathway.

 

  1. In the presence of growth hormone, protein Y interacts with protein X, and the complex remains in the cytoplasm.
  2. Protein X interacts with protein Y in the absence of growth hormone. Upon growth hormone treatment, protein X is released from protein Y and re-localizes to the nucleus.
  3. Protein Y is a membrane-associated protein and re-localizes with protein X to the nucleus upon the growth hormone treatment.

 

  1. Protein Y is one of the nuclear import proteins and the growth hormone does not induceprotein Y to translocate protein X to the nucleus.

 

The expansion of plant cells occurs differently from that of animal cells. The primary reason for this difference is associated with:

 

  1. the presence of a central vacuole in a plant cell.

 

  1. the presence of a cell wall in plant cells.

 

  1. a difference in protein synthesis in plant cells.
  2. the absence of golgi apparati in plant cells.
  3. a difference in microtubular organization in plant cells.

 

 

 

One reason phospholipids are well suited to be the main structural component of membranes is:

  1. they are completely insoluble in water.
  2. they provide energy for transport through the membrane.

 

  1. they form a structure in which the hydrophobic portion faces outward.
  2. they form a single sheet in water.
  3. they form a selectively permeable structure.

 

Certain amino acids are considered essential in an animal’s diet because they cannot be produced within the organism. Which of the following cellular processes would be most DIRECTLY affected by a dietary deficiency in essential amino acids?

 

  1. Cell division

 

  1. Cellular respiration
  2. Translation of mRNA
  3. Replication of DNA
  4. Oxygen transport

 

Cancer is a collective disease associated with uncontrollable cell growth. Mutation in which of the following types of genes is LEAST likely to result in higher chances of developing cancer. A. Tumor necrosis factor gene

 

  1. Tumor suppressor gene
  2. Oncogene
  3. Proto-oncogene
  4. Anti-oncogene

 

Which of the following cell types would you expect to be abundant in ER and Golgi Bodies?

  1. Adipose cells
  2. Islet of Langerhans cells III. Plasma B cells

 

  1. Red blood cells

 

  1. I only

 

  1. III only
  2. I and II only
  3. II and III only

 

  1. I, II, III, and IV

 

A day in the sun will expose your skin to UV light. Which is not true about the resulting DNA damage/repair pathway?

 

  1. UV exposure will cause single bonded cross-linked thymine-thymine dimers which severely distort the phosphate backbone.

 

  1. UV exposure will cause double bonded perpendicular thymine-thymine dimers which kink the phosphate backbone.

 

  1. Photolyase will repair DNA damage by using energy from UV light to break open thymine dimers.
  2. During replication of damaged DNA, a single base pair deletion will be found on the newly synthesized DNA strand opposite to the thymine dimer site.

 

 

 

 

 

 

 

 

 

Which of the following interactions is most responsible for the structural stability of soluble globular proteins?

 

  1. Dipole-dipole interactions.
  2. Electrostatic interactions.
  3. Hydrogen bonds.

 

  1. The Hydrophobic Effect.
  2. Van der Waal force.

 

This is indeed the correct answer; the folding of all proteins is primarily determined by the hydrophobic effect.

 

For the next four questions use the data in the two diagrams below. You identify a mutant protein of transferrin. After purifying both mutant and wild-type proteins, you run two SDS PAGE gels loading equal amounts of protein. One gel is stained with Cerulean Blue, the other is blotted and hybridized with an antibody to transferrin.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutant transferrin is _____ than wild-type transferrin. (1 point)

  1. longer
  2. shorter

 

What is the approximate molecular weight of mutant tranferrin? (2 points)

  1. About 180 KDa
  2. About 130 KDa
  3. About 300 KDa

 

  1. About 90 KDa
  2. Impossible to determine from the information provided.

 

 

 

The sample in lane 4 is called a _____ marker. (1 point)

  1. reference
  2. rate of diffusion

 

  1. molecular weight
  2. degree of polarity
  3. degree of bonding

 

Which of the following reasons most likely explains why the transferrin band in lane 2

is darker than the band in lane 3? (2 points)

  1. The mutant band in lane 3 is not transferrin.
  2. HRP binds more efficiently to wild-type transferrin than to mutant transferrin.

 

  1. Mutant transferrin has a similar, but not identical epitope to the primary antibody.
  2. You added too much HRP in lane 2.
  3. There is less mutant transferrin than wild-type transferrin.

 

 

You develop your western blot and see purple coloring covering the entirety of the nitrocellulose. Which step in the western blotting procedure probably was forgotten? Why? (2 points)

 

  1. Improper buffer used thus causing a secondary reaction that colored the nitrocellulose. B. Contamination during separation with SDS-PAGE by a purple-colored compound

 

  1. Milk proteins not added thus no protective coating formed over the nitrocellulose D. Primary antibodies not added thus the specific protein is not bound

 

  1. Secondary antibody-enzyme conjugate not added thus the primary antibody is not recognized.

 

 

Use the the following answers for the next question. A choice is used only once.

  1. neurons

 

  1. liver cells
  2. cardiac myocytes
  3. neutrophils
  4. sperm cell midpiece

 

 

 

 

In terms of interaction between function and structure, in which cells would you expect the greatest number/amount of:

 

rough endoplasmic reticulum-C

peroxisomes-B

gap junctions-A

Lysosomes-D

Mitochondria-E

 

 

 

 

Which of the following is(are) part of RNA processing and synthesis? Select Acceptable (A) or

Unacceptable (B)

Polyadenylation -A

Transport to the nucleolus-A

Catalytic function of small nuclear RNA -A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consider the following data for a green plant

 

Maximum photosynthesis rate @ 20 mg glucose/dm-2/hr-1 Glucose heat of combustion @ 686 Kc/mole

 

Glucose gram molecular weight = 180gm

How much energy (Kcal/m) could be made over a 12-hr lighted period by a green plant having a

 

total leaf surface area of 2000 dm-2?

  1. 183.2 Kc

 

  1. 1832 Kc
  2. 1524.4 Kc

 

  1. 916 Kc

 

  1. 9.16 Kc

 

There is a large difference in pH across the thylakoid membrane between the thylakoid compartment and the stroma. From the list given below, choose those that are appropriate in explaining the difference. (Choose A, B, C, or D) 3 points

 

  1. the transport of protons into the thylakoid compartment by the electron transfer system
    1. the transport of protons out of the thylakoid compartment into the stroma by the electron transfer system

 

  • protons splitting from water remaining in the thylakoid compartment

 

  1. protons splitting from water exiting the thylakoid compartment
  2. the removal of hydrogen from the stroma during the reduction of NADP to NADPH
  3. the retention of hydrogen in the stroma during the reduction of NADP to NADPH

 

  1. i, iv, and vi only

 

  1. ii, iv and vi only

 

  1. i, iv and v only

 

  1. i, iii and v only

 

Why is it necessary to store harvested fruits in ventilated packaging?

 

  1. Cells from harvested fruit need oxygen, because they are alive and still undergoing respiration.
  2. Cells from harvested fruit need oxygen, because they are alive and still undergoing fermentation.

 

  1. Cells from harvested fruit need atmospheric nitrogen, because they are alive and still synthesizing amino acids.

 

  1. Cells from harvested fruit need atmospheric nitrogen, because they are alive and still synthesizing nucleic acids.

 

  1. Cells from harvested fruit need atmospheric nitrogen, because they are alive and still undergoing respiration.

 

 

 

 

Photosynthesis is a process in which light energy is converted to chemical energy and used to produce organic compounds within the chloroplasts. It consists of two stages, the light reactions and the dark reactions. Which of the following processes would NOT occur if carbon dioxide was removed from a plant’s growth chamber?

 

  1. ATP energy forms from the conversion of light energy B. NADP+ is reduced to NADPH

 

  1. 5-carbon sugars, RuBP, is produced
  2. photons are absorbed by photosynthetic pigments

 

  1. oxygen is produced

 

How do polypeptides find their way from the site of synthesis on the cytoplasmic ribosome to the place of their destination in the peroxisome?

 

  1. Without signals

 

  1. By specific transport along the cytoskeleton

 

  1. By specific carboxy-terminal targeting signals
  2. By specific vesicular transport

 

  1. By transport within the ER

 

In the lab, you are running an SDS-PAGE, but you realize that you forgot to add DTT, a reducing agent, when you were loading the gel. Which amino acid residue will this affect?

 

  1. Cysteine
  2. Serine

 

  1. Glutamate

 

  1. Lysine

 

  1. Methionine

 

You are given an unknown organism to study. Upon examination, you find that it does not have a nuclear membrane or mitochondria, which structure(s) below would it possess?

 

  1. Chloroplast

 

  1. Endoplasmic reticulum

 

  1. Ribosomes
  2. Lysosome

 

  1. 9+2 Cilia

 

 

A human liver cell and a plant cell from the cortex of a root are placed in a beaker of distilled water. What will most likely occur?

 

  1. Both cells will be in osmotic balance with the water and neither will swell or shrink

 

  1. The liver cell will shrivel, while the plant cell will become flaccid and the plasma membrane will pull away from the cell wall

 

  1. The liver cell will shrivel, while the plant cell will become very turgid

 

  1. The plant cell will become flaccid and the plasma membrane will pull away from the cell wall, while the liver cell will swell and may even burst

 

  1. The plant cell will become very turgid, while the liver cell will swell and may even burst

 

The majority of proteins exist as homo-oligomers rather than hetero-oligomers. That is, their quaternary structure is composed of two or more identical polypeptides rather than two or more different polypeptides. Which of the following is not a reason that quaternary structures are homo-oligomers?

 

  1. Aggregation of identical subunits gives rise to symmetry and possible allosteric interactions.

 

 

  1. A slow post-translational process favors a quaternary structure with the homo-oligomers held together by covalent bonds.

 

  1. Homodimers may increase binding specificity and stability.

 

  1. Homo-oligomerization results in a genetic savings with lower energy demand.

 

  1. The presence of two identical catalytic subunits in a single protein may lower the activation energy of the reaction.

 

 

 

 

 

 

 

Some bacteria possess an additional mechanism to regulate the production of enzymes involved in tryptophan (Trp) biosynthesis. The (Trp) operon possesses, prior to the actual genes (trpA- E), a leader sequence (trpL), coding for a leader peptide. trpL contains two tryptophan codons next to each other.

 

At high tryptophan concentrations, the ribosome translates the mRNA of the leader peptide and stalls at its stop codon, thereby masking segment 2 of the mRNA and allowing segments 3 and 4 to form a stem loop. A stem loop followed by poly-U is a termination signal for the RNA polymerase (RNA pol), which falls off the DNA.

 

However, at low tryptophan concentrations, the ribosome gets stalled at the tryptophan codons allowing 2 and 3 to form a stem loop. The whole tryptophan operon can be transcribed by the RNA polymerase.

 

Indicate if each of the following statements is true or false.

 

  • The same regulation mechanism also works for nuclear genes in eukaryotes.

 

  • With reduced concentration of the aminoacyl-tRNA synthetase (attaches tryptophan to tRNATrp), transcription of the trpA-E genes will be inactivated at a lower tryptophan concentration.

 

  • After deletion of one of the two tryptophan codons in the gene coding for the leader peptide, transcription of the trpA-E genes will be inactivated at a lower tryptophan concentration.

 

  • In the case of a mutation destabilizing the stem loop 2-3, transcription of the trpA-E genes will be inactivated at a lower tryptophan concentration.

 

 

 

 

 

 

 

In a living organism, cells die either through apoptosis (programmed cell death) or necrosis (cells swell and burst).

 

Indicate if each of the following statements is true or false.

 

  • Apoptosis is induced in immature T-cells that recognize self-antigens.

 

 

 

  • Intestinal epithelial cells losing contact with the basal lamina undergo apoptosis.

 

  • Neural stem cells undergoing apoptosis expose on their surface a signal promoting phagocytosis.

 

  • Necrosis often induces an inflammatory immune response.

 

 

 

 

 

 

 

 

 

 

 

Some substances need to be transported (actively or passively) from their site of synthesis to the location where they are active.

 

 

Indicate for each of the following substances if they are transported from the cytoplasm to the nucleus.

 

  • tRNAs
  • Histone proteins

 

  • Nucleotides
  • ATP-synthase subunits

 

 

 

High levels of triglycerides in the bloodstream have been linked to higher risks of heart diseases. An agonist (activating molecule) S of receptor Y was observed to reduce the triglycerides levels.

 

How could one convincingly prove that the effect of S is mediated specifically via receptor Y?

 

  • Generate genetically modified mice which overexpress (more than physiological) receptor Y.

 

  • Generate genetically modified mice in which receptor Y is knocked out (deleted).

 

  • Treat the mice with an antagonist (inactivating molecule) specific for receptor Y.

 

  • Treat the mice with an antibody that sequesters (removing from circulation) S.

 

 

 

 

In genetic engineering, it is often desired to increase the yield of secreted proteins.

 

 

 

Indicate if each of the following strategies is expected to increase the yield in a mammalian cell.

 

  • Overexpression of chaperones (proteins assisting others to fold) present in the endoplasmatic reticulum.

 

  • Deletion of the genes coding for glycosylating enzymes present in the endoplasmatic reticulum.

 

  • Overexpression of proteins facilitating the fusion of secretory vesicles with the cell membrane.

 

  • Duplicating the gene encoding the desired protein.

 

 

 

 

 

 

Which of the following is the primary interaction accounting for the majority of proteins in aqueous solution?

 

 

  1. Salt bridges

 

  1. Hydrogen bonding

 

  1. Dipole-dipole

 

  1. Disulfide bonds

 

  1. Hydrophobic interactions – Hydrophobic interactions determine the structure of all proteins, including globular ones.

 

You are given four unlabeled samples of polysaccharides and told that each contains either

amylopectin, amylose, cellulose, or glycogen, (one of each). Given the following information, which

sample contains which type of polysaccharide?

Sample #1: Many 1-6 linkages of α-glucose monomers

Sample #2: Composed of β-glucose monomers

Sample #3: Many 1-4 linkages of α-glucose monomers

 

Sample #4: Some 1-6 linkages of α-glucose monomers

  1. #1 – amylose, #2 – cellulose, #3 – amylopectin, #4 – glycogen B. #1 – cellulose, #2 – glycogen, #3 – amylose, #4 – amylopectin

 

  1. #1 – amylopectin, #2 – cellulose, #3 – amylopectin, #4 – glycogen D. #1 – glycogen, #2 – amylopectin, #3 – cellulose, #4 – amylase
  2. #1 – glycogen, #2 – cellulose, #3 – amylose, #4 – amylopectin

 

Which of the following amino acids has an R-group that can “shuttle” hydrogen ions?

  1. Alanine

 

  1. Leucine

 

  1. Valine

 

  1. Histidine

 

  1. Isoleucine

 

 

You attempt to isolate two different subunits from a protein by running a denaturing protein gel electrophoresis. To your dismay, you only find one band on the gel that corresponds roughly to the total size of the protein. What did you most likely forget to add?

 

  1. an oxidizing agent

 

 

  1. a reducing agent

 

  1. loading dye

 

  1. polyacrylamide

 

  1. SDS, a detergent

 

 

In an experiment, mice were injected intravenously with uniformly

 

labeled [14C] – glucose. The molecules in the body where the 14C would be found are:

 

  1. essential amino acids and proteins.
  2. lipids and all vitamins.
  3. proteins and lipids.
  4. proteins and all vitamins

 

 

A given DNA sample has 60% purines. The source of this DNA is most likely to be:

 

  1. a eukaryotic cell.
  2. a bacterial cell.
  3. a bacteriophage with double-stranded DNA.
  4. a bacteriophage with single-stranded DNA.

 

 

 

 

 

 

Which of the primer pairs is the correct one to amplify the gene sequence below with PCR?

 

5”-GCGTTGACGGTATCAAAACGTTAT… …TTTACCTGGTGGGCTGTTCTAATC-3”

 

  1. 5‟-GCGTTGACGGTATCA-3‟ and 5‟-TGGGCTGTTCTAATC-3‟
  2. 5‟-CGCAACTGCCATAGT-3‟ and 5‟-TGGGCTGTTCTAATC-3‟

 

  1. 5”-GCGTTGACGGTATCA-3” and 5”-GATTAGAACAGCCCA-3”
  2. 5‟-TGATACCGTCAACGC-3‟ and 5‟-GATTAGAACAGCCCA-3‟

 

 

 

Equal concentrations of urea, ethyl urea, and dimethyl urea were

separately added to a suspension of red blood cells (RBC). The relative rates of diffusion of these molecules into RBCs will be:

 

 

 

 

 

 

 

  1. 1 > 2 > 3
  2. 1 > 2 = 3
  3. 3 > 2 > 1

 

 

  1. 3 = 2 > 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There are some rare organisms that do not have lipid bilayers, but instead have lipid monolayers. Which of these is a plausible structure for the lipids they use to make up their lipid monolayers?

 

 

 

 

 

 

 

 

 

 

B.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D is the correct answer, has

 

hydrophilic groups on both sides.

 

C.

 

D.

 

 

 

 

 

 

 

A highly mutated protein is isolated from a line of lab rats. A number of charged amino acids are shown to have been replaced by non-polar amino acids in its polypeptide sequence when compared to the wild-type protein. Which of the following changes in the protein might have occurred as a result?

 

  1. There is a greater amount of α-helix found in the mutated protein.

 

  1. The mutated protein does not fold at all because some of the charged amino acids that were replaced were very important to the shape of the wild-type protein.

 

III. The mutated protein has a very different quaternary structure compared to the wild-type.

 

  1. When inserted into a cell membrane, a smaller portion of the mutated protein is found inside the lipid bilayer.

 

  1. I only.

 

  1. III only.

 

  1. I and III only.

 

  1. I, II, and IV only.

 

  1. I, III, and IV only.

 

For a constant concentration of an enzyme, which of the following is true of a noncompetitive inhibitor?

 

  1. km is lowered; vmax remains constant
  2. km is increased; vmax remains constant
  3. km remains constant; vmax is lowered
  4. km remains constant; vmax is increased
  5. km remains constant; vmax remains constant

 

While preparing to teach an organic chemistry class, Professor Dacb has managed to mix up several beakers. He has taken samples from each beaker and enlisted your help in identifying them. Below are the results of a series of reagent tests.

 

Which of the following correctly matches each beaker to its possible contents?

 

 

Beaker Biuret Benedict’s Ninhydrin Iodine Sudan
1 Blue Blue Blue Orange Rather Pale
2 Blue Blue Pale yellow Red-orange Red-orange
3 Purple Blue Pale yellow Orange Rather pale
4 Blue Red Precipitate Pale yellow Orange-yellow Rather Pale
5 Blue Blue Pale yellow Orange Rather Pale

 

  1. 1: Gelatin, 2: Corn oil, 3: A solution of asparagine, 4: A solution of glucose, 5: A solution of sucrose

 

  1. 1: Gelatin, 2: Triglycerides, 3: A solution of asparagine, 4: A solution of sucrose, 5: A solution of glucose

 

  1. 1: A solution of asparagine, 2: Triglycerides, 3: Gelatin, 4: A solution of glucose, 5: A solution of sucrose
  2. 1: A solution of sucrose, 2: Corn oil, 3: A solution of glucose, 4: A solution of asparagine, 5:

Gelatin

  1. 1: A solution of glucose, 2: Triglycerides, 3: A solution of sucrose, 4: A solution of

asparagine, 5: Gelatin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You have been hired as a consultant for a halitosis support group. Assume that stinky breath is an autosomal recessive disorder whose gene has been cloned and is expressed in the blood. You obtain blood samples from affected individuals and controls, and send them off to the lab for analysis. The results come back, with the diagnoses and raw data for each person but the autoradiographs have been mixed up. Many of your clients in the support group are scientists who want to see the raw data, so you have to figure out what goes with what. Assume that each halitosis patient is homozygous for one of four restriction endonucleases. The map shows

 

 

the location of each mutation, how the normal sequence is altered, and diagnostic probes and oligos used.

Use the above diagram the following 15 questions.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Of the three tests above, one represents a Southern blot, one a Northern blot, and one a gel of the PCR products of a PCR reaction . Each has two specimens, one from a patient and one of control.

 

 

 

What is the allele detected in test result I?

 

  1. W
  2. X
  3. Y

 

What lane represents the patient in test result I?

  1. Left
  2. Right

 

What material is being analyzed in test result I?

  1. DNA
  2. RNA
  3. DNA and RNA
  4. Protein

 

What type of analysis is represented in test I?

  1. Northern

 

  1. Southern
  2. PCR gel

 

What probe(s) or primer(s) could have been used for the analysis of test result I?

  1. Probe J
  2. Probe K
  3. Primers A and C
  4. Primers A and B

 

  1. Primers B and C

 

What is the allele detected in test result II?

  1. W
  2. X

 

 

  1. Y

 

What lane represents the patient in test result II?

  1. Left

 

  1. Right

 

What type of analysis is represented in test II?

  1. Northern
  2. Southern
  3. PCR gel

 

What material is being analyzed in test result II?

 

  1. DNA
  2. RNA
  3. DNA and RNA
  4. Protein

 

What probe(s) or primer(s) could have been used for the analysis of test result I?

  1. Probe J
  2. Probe K

 

  1. Primers A and C
  2. Primers A and B
  3. Primers B and C

 

What is the allele detected in test result III?

  1. W
  2. X
  3. Y

 

 

  1. Left
  2. Right

 

What type of analysis is represented in test result III?

  1. Northern
  2. Southern

 

  1. PCR gel

 

 

  1. DNA
  2. RNA
  3. DNA and RNA
  4. Protein

 

What probe(s) or primer(s) could have been used for the analysis of test result III?

  1. Probe J
  2. Probe K
  3. Primers A and C
  4. Primers A and B
  5. Primers B and C

 

You perform a Western blot on two proteins of similar molecular weights (~50kDa) and find

 

only one band developed on your SDS-PAGE gel. How would you modify your assay to distinguish the two proteins?

 

  1. Use a lower concentration of acrylamide to raise the resolution of your gel
  2. Use a non-ionic detergent to denature your protein

 

  1. Focus your sample isoelectrically on a pH gradient
  2. Remove reducing agents like mecaptoethanol or dithiothreitol
  3. Switch the anode and cathode on your gel

 

In classical Michaelis-Menten enzyme kinetics, the two constants Vmax and Km determine the activity of an enzyme that acts on one substrate. You are studying the effects of various chemicals on these constants for your favorite enzyme, and find one molecule that increases its Km but leaves Vmax constant. Your molecule is most likely to be:

 

  1. a substrate analog
  2. the enzyme’s substrate

 

  1. a coenzyme that increases catalytic efficiency

 

  1. an allosteric inhibitor that decreases the enzyme’s affinity for the substrate E. an allosteric enhancer that increases the enzyme’s affinity for the substrate

 

 

 

 

 

The tiny hairs on a gecko’s toes enable it to climb walls. The hairs are made of hydrophobic keratin and adhere to surfaces via van der Waals interaction. At the tiny interface where the gecko’s toe hairs touch the surface it climbs, which amino acid are you LEAST likely to find?

 

  1. Isoleucine

 

  1. Leucine

 

  1. Phenylalanine

 

  1. Serine
  2. Alanine

 

When found on the extracellular side of the cell, which of the following classes of membrane molecules is a marker for the phagocytosis of apoptotic cells?

 

  1. Glycolipid
  2. Sphingomyelin
  3. Phosphatidylethanolamine
  4. Phosphatidylserine
  5. Phosphatidylcholine

 

A rare genetic disease is characterized by immuno-deficiency, developmental and growth delay, and microcephaly. Suppose you extract DNA from a patient with this syndrome and find almost equal quantities of long and very short DNA strands, which enzyme is likely to be defective in this patient?

 

  1. DNA ligase
  2. Topoisomerase
  3. DNA polymerase

 

  1. Helicase

 

 

 

 

You perform a western blot for a 42kD peptide. To your surprise, you find the protein running at the speed of an 84kD protein. What reagent did you leave out?

 

Beta mercaptoethanol

 

 

Acetaldehyde dehydrogenase is an enzyme required for the oxidation of acetaldehyde to acetic acid. Given that acetaldehyde exhibits no cooperativity and functions as a monomer, what is the most likely inheritance pattern of a loss of function allele for acetaldehyde dehydrogenase?

 

recessive

 

 

Collagen consists of three identical peptides wound in a triple helix. On the peptide, each third residue is glycine, which is small enough to fit in the center of the triple helix. What is the most likely inheritance pattern of a G837W mutant allele?

 

dominant

 

 

 

A scientist has suggested that a homolactic fermenting organism grows anaerobically on glycerol 3-phosphate as the sole source of carbon, exclusively using the following pathway:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

However, the scientific community rejected this suggestion because:

 

  1. the number of ATP molecules produced is insufficient to support growth.
  2. the number of NAD+ that are reduced is not same as the number of NADH

 

 

that are oxidized in the pathway.

  1. the carbon source is not as reduced as glucose and hence, cannot support growth.

 

  1. the number of negative charges on lactic acid (which is being produced) is not the same as that on glycerol 3-phosphate (which is being consumed). .

 

 

 

 

If active transport is inhibited, the passive sodium and potassium ion fluxes across the plasma membrane are still coupled. What makes these two passive ion fluxes dependent on each other?

 

  1. The membrane potential.

 

  1. The potassium channels.
  2. The pumping ratio of the Na+/K+ ATPase.
  3. The ratio of cholesterol to phospholipids in the membrane.
  4. The ratio of the extracellular sodium ion concentration to the intracellular potassium ion concentration.

 

 

 

 

 

 

 

 

 

The Henderson Hasselbalch equation describes the relationship between pH, pK and the ratio of base to acid concentration, pH = pK + log ([B]/[A]). It is useful when determining the amount of weak acid and weak base to weigh out for a buffer system. It is also useful to determine percent of a functional group in it’s ionized state. If a carboxylic acid has a pK of 3.9, what percentage of the functional group will carry a negative charge at pH 4.9?

 

  1. 10%
  2. 9%
  3. 09%
  4. 50%

E.18.18%

 

With proofreading, which of the following is the error rate of DNA polymerase?

 

  1. One error in 1x 101 bases.
  2. One error in 1 x 102 bases.
  3. One error in 1 x 103 bases.
  4. One error in 1 x 106 bases.
  5. One error in 1 x 109 bases.

 

Use the gel diagram below to answer Questions 62 and 63. The positively-charged electrode of the electrophoresis gel is shown at the bottom of the diagram; the negatively-charged electrode is at the top. The mixture in each well included the original DNA fragment, all four dNTPs, one type of ddNTP as labeled in the diagram, and other necessary components of the dideoxy chain-termination reaction. The results are below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is the sequence of the template strand? (Short Answer)

5” GGCCATAGCCTCAGTAC 3”

 

 

According the ABC model of flower development, if the B gene is knocked out, the development of which flower parts would be interrupted? Check all that apply.

 

A.Calyx

 

  1. Corolla
  2. Gynoecium
  3. Androecium

Imagine that you are a molecule of RNA polymerase that is sliding along DNA and encountering a gene with typical structure (promoter, coding sequence and terminator) depicted below. Which of the choices below presents the most accurate order of DNA segments (labeled 1, 2, 3……) in which

the affinity of the RNA polymerase binding to DNA progressively diminishes?

A.2,1,4

 

B.2,5,3

C.6,5,2

D.2,4,5

E.2,3,6

 

5’

 

 

 

 

3’1                           2             3                  4                                                           5    6

 

 

 

During translation in prokaryotes, the ribosome binds to

  • The TATA box
  • The mRNA cap
  • The terminator sequence
  • An enhancer sequence
  • The Shine-Dalgarno sequence

 

Compartmentalization is a hallmark of eukaryotic cells. For each metabolic pathway, choose the intracellular compartment or organelle from the list below in which it takes place.

 

  1. Cytosol

 

  1. Mitochondrial Matrix

 

  1. Mitochondrial Membranes

 

  1. Peroxisomes

 

  1. Endoplasmic Reticulum

 

Gluconeogenesis-A

Beta-Oxidation -B

Pentose Phosphate Pathway-A

Glyoxylate Cycle -D

Steroid Synthesis-E

 

 

 

 

 

 

A macrophage cell notifies other cells of an immunological invader by:

  1. Up-regulating expression of MHC I molecules upon activation.

 

  1. Up-regulating expression of MHC II molecules upon activation.

 

III. Interacting with the complement system.

 

  1. Acting as an antigen presenting cell.

 

  1. Inactivating viruses through release of antibodies.

 

  1. Decreasing enzymatic production.

 

VII. Increased cytokine production.

 

  1. I, III, IV, and VI

 

  1. I, IV, V, and VII
  2. II, III, IV, and VII
  3. II, III, IV, and V
  4. I, II, IV, and VI

 

A confluent layer of macrophage cells are grown in two 25 cm2 tissue culture flasks with appropriate medium containing 10% plasma serum. For the experiment all medium is removed from the flask and the cells are washed with appropriate buffers to remove all traces of serum and media. E. coli bacteria, suspended in serum free media, are then added or “fed” to the macrophages. The process of E. coli death from phagocytosis was then studied. It is necessary in a phagocytosis study to remove the serum because:

 

 

  1. The complement proteins could have independently killed the bacteria.
  2. The B cells could have independently killed the bacteria.
  3. The natural killer cells could have independently phagocitized the bacteria.
  4. Serum proteins could have inhibited the Membrane Attack Complex (MAC).

 

After 30 minutes the cells in tissue culture Flasks 1 and 2 are washed with appropriate buffers to remove all free E. coli. Serum free media is added and the flasks incubated. During incubation the macrophages and microbes are at war. Which statement is true?

 

  1. The macrophage digests the E. coli through the oxidative burst.

 

  1. The E. coli protects itself through the oxidative burst.

 

  1. The oxidative burst is characterized by an increased production of hydrogen peroxide.

 

  1. The oxidative burst results in the formation of a membrane attack complex.

 

  1. A and C

 

After 45 minutes, the macrophages in Flask 1 are lysed by adding ice cold water. The macrophages and water are centrifuged and the bacteria isolated from the macrophage debris. The bacteria are suspended, diluted and plated on agar. After 90 minutes, the same procedure was followed for tissue culture Flask 2 and these bacteria were plated. Bacterial Plates 1 and 2 were incubated for 24 hours. What would be your prediction of the bacterial growth on Plate 1 (45 minutes) compared to the bacterial growth on Plate 2 (90 minutes)?

 

  1. Plates 1 and 2 have equal colonies

 

  1. Plate 1 has no colonies

 

  1. Plate 2 has no colonies

 

  1. Plate 1 has more colonies than Plate 2

 

  1. Plate 2 has more colonies than Plate 1

 

 

 

Which of the following cellular proteins make direct contact with chromosomes?

  1. Centrosomes and microtubule-associated proteins

 

  1. Kinesins, myosins, and actin microfilaments

 

  1. Histones, condensins, and synaptonemal complexes

 

  1. All of the above

 

  1. None of the above

 

Your colleague’s PCR reaction failed to amplify the human rhodopsin gene. Her lab notebook indicates that she added dNTPs, the Rhodopsin template gene, complementary DNA primers, buffer, and an E. coli DNA polymerase and ran the reaction under the proper conditions. How would you advise her to fix the reaction?

 

  1. Add a bacterial promoter to the Rhodopsin template

 

  1. Add extra ATP so there is enough energy to catalyze the reaction C. Add dNTPs to facilitate elongation

 

  1. Use a different polymerase

 

  1. Use RNA primers instead

 

Redsoxase catalyzes the reaction WI2N2 -> L(OSS)3. The reaction progress can be measured by the loss of red color

 

If the reaction is progressing forward, over time you would expect optical density (OD) readings to:

  1. Increase

 

 

  1. Decrease

 

You have a mutant of Redoxase that does not bind substrate as well as the wuild type. Which of the following do you expect to change?

 

  1. Vmax
  2. Km
  3. kcat
  4. Both A and C
  5. All of the above

 

You have an additional mutant which does not convert WI2N2 to L(OSS)3 as efficiently. Which of the following do you expect to change?

 

  1. Vmax
  2. Km
  3. kcat
  4. Both A and C
  5. All of the above

 

You calculate the Vmax and Km for a 0.5M Redsoxase at 37 degree Celsius in 10 mM NaCl, pH 8.5 using a Michaelis-Menten plot. You want to use these constants for comparison in future experiments. Which of the following parameters does NOT need to be kept constant in your new experiments for your comparisons to remain valid?

 

  1. Constant pH
  2. Constant concentration of substrate
  3. Constant temperature
  4. Constant salt
  5. Constant concentration of enzyme

 

 

Use the following Lineweaver-Burke plot to calculate Km and Vmax(Short Answer).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Vmax is 50 while Km is 25

 

Many proteins are transported around cells in vesicles. Which of the following determines the specificity or directionality of vesicle transport?

 

  1. Clathrin coat proteins.
  2. v-SNARES and t-SNARES.
  3. Hydrophobic domains.

 

Which one of the following graphs shows the relative change in the amount of mitochondrial DNA of a cell undergoing mitosis?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A is the correct answer, mitochondria divide constantly.

 

A GFP (green fluorescent protein) tagged form of protein P was expressed in fibroblast cells. The subcellular distribution of protein P can be observed using fluorescence microscopy. To determine the precise movement mechanism of protein P in the cells, fluorescence recovery after photobleaching (FRAP) was performed. As shown below, protein P is expressed in the nucleus (ROI

 

  • and in the cytoplasm (ROI 2). Protein P in the ROI 1 area was photobleached using a laser beam. Photobleaching causes an irreversible loss of flouorescence. Changes in the fluorescence intensity of protein P in ROI 1 and ROI 2 following photobleaching are shown in the graph and figures below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Which of the following is the best explanation for the distribution and movement of protein P?

 

 

  1. P is a nuclear membrane protein.
  2. P is imported to the nucleus through a nuclear pore.
  3. P binds to the nuclear pore complex.
  4. P is imported to the nucleus via vesicular trafficking through Golgi and ER.
  5. P is capable of moving from the nucleus to the cytoplasm.

 

 

 

 

 

 

 

 

 

 

You use dideoxy termination sequencing to sequence a short fragment of DNA. The results are shown in the gel below, visualized using ethidium bromide.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Read 5’ to 3’, what is the sequence immediately following the primer? Write X for each base pair which can’t be determined. What reagent was most likely left out in the reaction for G? What reagent was most likely left out in the reaction for C?

 

 

GTXXAXTAXAXXTTTAX. G was missing dGTP, and always terminated at the first G. C was missing ddCTP, so elongation continued to the end of the DNA fragment. Note this means the band we see in lane C doesn’t necessarily indicate that the last base is C.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Protein A is expressed in the brain, but not the lung. Proteins B and C iare expressed in the lung, but not the brain. You perform a western blot for proteins A, B, and C to study their regulation. Based on the data below, how are proteins AB, and C regulated?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Protein A is polyubiquitinated in lung and degraded, B is phosphorylated and activated in lung, protein

C is cleaved and inactivated in brain.

 

 

You extract a plasmid known to contain a single BamHI from E. coli. Bacteria normally maintain plasmids in slightly negatively supercoiled states. You run on a gel: unaltered plasmid, DNAse 1 digest (nicks DNA), BamHI digest, gyrase incubated (supercoils DNA). Draw the expected results.

 

 

From fastest to slowest: gyrase, unaltered, BamHI, DNAse 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You wish to express p53, the product of the TP53 gene, using an expression vector. You currently have a cloning vector containing cDNA for TP53. The cloning and expression vectors are shown below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The expression vector also codes for penicillin resistance, while the cloning vector doesn’t. You digest both plasmids with EcoRI, transfect into E. coli, and plate with penicillin. You select a resulting colony, and perform a western blot for p53. Unfortunately, you detect no p53. What might be wrong?

 

No insert, backwards insert, wrong insert (e.g. other half of cloning vector), p53 misfolded and degraded in E. coli.

 

 

You decide to use PCR to determine if your expression vector has the cDNA inserted properly. Which primers should you use, so that PCR yields product only if the TP53 cDNA is inserted properly?

A and D or B and C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You do a complete digest of Plasmid IH7JX with BamHI and EcoRI separately and together.

Determine the restriction enzyme map of the plasmid.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Check with me on your picture of the restriction graph, it is very difficult to insert a picture with the correct answer.

 

 

 

Your labmate was given a piece of DNA and told to make a map of the BamHI restriction enzyme sites. The labmate digested the DNA with BamHI to completion and also did a partial digest. He then isolated fragments specifically created by the partial digest. These fragments were digested with BamHI to completion and the resulting products were run on a new gel. Below are pictures of the two gels (note: the size of each band in kilobases is indicated above the band), visualized with ethidium bromide. Help your labmate interpret the gel by drawing the resulting map. Show the relative location of each of the restriction enzyme sites, the number of nucleotides between the sites and indicate if the DNA molecule is circular or linear.

 

 

BamHI 5.0 2.7 2.5 3.2 7.0
partial
BamHI digest uncut fragment fragment fragment fragment fragment
DNA

 

7.0 7.7
5.0
4.5 4.5 4.5 4.5
3.2
2.7
2.5
2.0 2.0 2.0 2.0 2.0 2.0

 

 

 

 

 

0.7 0.7 0.7 0.7
0.5
0.5 0.5 0.5 0.5 0.5

 

 

 

 

 

 

BamHI
4.5 kb 0.5 kb 2.0 kb 0.7 kb
BamHI BamHI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL FACTOR MOVEMENTS AND MULTINATIONAL ENTERPRISES

CHAPTER 9

 

INTERNATIONAL FACTOR MOVEMENTS AND MULTINATIONAL ENTERPRISES

MULTIPLE-CHOICE QUESTIONS

  1. “Risk spreading” is a motive most likely to be served when firms undergo:
  2. Horizontal integration
  3. Vertical integration
  4. Conglomerate integration
  5. None of the above
  6. The source (home) location of most of the world’s leading multinational enterprises is:
  7. North America and Europe
  8. North America and Asia
  9. Europe and South America
  10. Europe and Asia
  11. Which type of multinational diversification occurs when the parent firm establishes foreign subsidiaries to produce intermediate goods going into the production of finished goods?
  12. Forward vertical integration
  13. Backward vertical integration
  14. Forward horizontal integration
  15. Backward horizontal integration
  16. Suppose that an American automobile manufacturer establishes foreign subsidiaries to mar­ket the automobiles. This practice is referred to as:
  17. Forward vertical integration
  18. Forward conglomerate integration
  19. Backward vertical integration
  20. Backward conglomerate integration
  21. Suppose that a steel manufacturer headquartered in Japan sets up a subsidiary in Canada to produce steel. This practice is referred to as:
  22. Conglomerate integration
  23. Forward vertical integration
  24. Backward vertical integration
  25. Horizontal integration
  26. During the 1970s, American oil companies acquired nonenergy companies (e.g., copper, auto components) in response to anticipated decreases in investment opportunities in oil. This type of diversification is referred to as:
  27. Horizontal integration
  28. Conglomerate integration
  29. Forward vertical integration
  30. Backward vertical integration
  31. Which of the following best refers to the outright construction or purchase abroad of pro­ductive facilities, such as manufacturing plants, by domestic residents?
  32. Direct investment
  33. Portfolio investment
  34. Short-term capital investment
  35. Long-term capital investment
  36. In recent years, the largest amount of U.S. direct investment abroad has occurred in:
  37. Central America
  38. South America
  39. Europe
  40. Japan
  41. In recent years, most foreign direct investment in the United States has come from:
  42. Western Europe
  43. Central America
  44. South America
  45. Asia
  46. Most U.S. direct investment abroad occurs in:
  47. Communications
  48. Petroleum
  49. Finance and insurance
  50. Manufacturing
  51. Most foreign direct investment in the United States occurs in:
  52. Public utilities
  53. Communications
  54. Manufacturing
  55. Mining and smelting
  56. Which of the following is not a significant motive for the formation of multinational enter­prises?
  57. Avoiding tariffs by obtaining foreign manufacturing facilities
  58. Obtaining the benefits from overseas comparative advantages
  59. The acquisition of natural resource supply sources
  60. Subsidies granted by the home government to overseas corporations
  61. Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equip­ment that could be purchased on the open market for $800,000. This practice is best referred to as:
  62. International dumping
  63. Cost-plus pricing
  64. Transfer pricing
  65. Technological transfer
  66. Multinational enterprises may provide benefits to their source (home) countries because they may:
  67. Secure raw materials for the source country
  68. Shift source country technology overseas via licensing
  69. Export products which reflect source-country comparative disadvantage
  70. Result in lower wages for source-country workers
  71. Trade analysis involving multinational enterprises differs from our conventional trade analysis in that multinational enterprise analysis emphasizes:
  72. Absolute cost differentials rather than comparative cost differentials
  73. The international movement of factor inputs rather than finished goods
  74. Purely competitive markets rather than imperfectly competitive markets
  75. Portfolio investments rather than direct foreign investments
  76. Direct foreign investment has taken all of the following forms except:
  77. Investors buying bonds of an existing firm overseas
  78. The creation of a wholly owned business enterprise overseas
  79. The takeover of an existing company overseas
  80. The construction of a manufacturing plant overseas
  81. Which of the following would best explain why foreign direct investment might be attracted to the United States?
  82. U.S. price ceilings that hold down the price of energy
  83. U.S. wage rates exceeding the productivity of U.S. labor
  84. Artificially high prices being charged for the stock of U.S. firms
  85. Anticipations of future reductions in U.S. tariff levels
  86. Both Coca-Cola Co. and Pepsi-Cola Co. are multinational firms in that their soft drinks are bottled throughout the world. This practice illustrates:
  87. Backward vertical integration
  88. Forward vertical integration
  89. Horizontal integration
  90. Conglomerate integration
  91. The market power effect of an international joint venture can lead to welfare losses for the domestic economy unless offset by cost reductions. Which type of cost reduction would not lead to offsetting welfare gains for the overall economy?
  92. R&D generating improved technology
  93. Development of more productive machinery
  94. New work rules promoting worker efficiency
  95. Lower wages extracted from workers
  96. All of the following are potential advantages of an international joint venture except:
  97. Sharing research and development costs among corporations
  98. Forestalling protectionism against imports
  99. Establishing work rules promoting higher labor productivity
  100. Operating at diseconomy-of-scale output levels
  101. Which term best describes the New United Motor Manufacturing Co.?
  102. Multinational enterprise
  103. International joint venture
  104. Multilateral contract
  105. International commodity agreement
  106. Multinational enterprises:
  107. Increase the transfer of technology between nations
  108. Make it harder for nations to foster activities of comparative advantage
  109. Always enjoy political harmony in nations where their subsidiaries operate
  110. Require governmental subsidies in order to conduct worldwide operations
  111. Firms undertake multinational operations in order to:
  112. Hire low-wage workers
  113. Manufacture in nations they have difficulty exporting to
  114. Obtain necessary factor inputs
  115. All of the above
  116. Multinational enterprises face problems since they:
  117. Cannot benefit from the advantages of comparative advantage
  118. May raise political problems in countries where their subsidiaries operate
  119. Can invest only at home, but not overseas
  120. Can invest only overseas, but not at home
  121. American labor unions have recently maintained that U.S. multinational enterprises have been:
  122. Exporting American jobs by investing overseas
  123. Exporting American jobs by keeping investment in the United States
  124. Importing cheap foreign workers by shifting U.S. investment overseas
  125. Importing cheap foreign workers by keeping U.S. investment at home
  126. American labor unions accuse U.S. multinational firms of all of the following except that such firms:
  127. Enjoy unfair advantages in taxation
  128. Export jobs by shifting technology overseas
  129. Export jobs by shifting investment overseas
  130. Operate at output levels where scale economies occur
  131. Which of the following refers to the price charged for products sold to a subsidiary of a multinational enterprise by another subsidiary in another nation?
  132. Transfer pricing
  133. International dumping
  134. Price discrimination
  135. Full-cost pricing
  136. Which business device involves the creation of a new business by two or more companies, often for a limited period of time?
  137. Multinational enterprise
  138. International joint venture
  139. Horizontal merger
  140. Vertical merger
  141. International joint ventures can lead to welfare losses when the newly established firm:
  142. Adds to the preexistent productive capacity
  143. Enters markets neither parent could have entered individually
  144. Yields cost reductions unavailable to parent firms
  145. Gives rise to increased amounts of market power
  146. Multinational enterprises:
  147. Always produce primary goods
  148. Always produce manufactured goods
  149. Produce primary goods or manufactured goods
  150. None of the above

Figure 9.1 illustrates the market conditions facing Sony Company and American Company initially operating as competitors in the domestic ball-bearing market. Each firm realizes constant long-run costs, MC0 = AC0. Answer the Questions 31–37 on the basis of this information.

Figure 9.1. International Joint Venture

  1. Consider Figure 9.1. With Sony Company and American Company behaving as competi­tors, the equilibrium price and output respectively equal:
  2. $4 and 2 units
  3. $4 and 4 units
  4. $6 and 2 units
  5. $6 and 4 units
  6. Consider Figure 9.1. At the equilibrium price that was calculated in Question #31, domestic households attain ________ of consumer surplus.
  7. $4
  8. $8
  9. $12
  10. $16
  11. Consider Figure 9.1. Suppose that Sony Company and American Company jointly form a new firm, Venture Company, whose ball bearings replace the output sold by the parents in the domestic market. Assuming that Venture Company operates as a monopoly and that its costs equal MC0= AC0, the firm’s price, output, and total profit would respectively equal:
  12. $6, 2 units, $4
  13. $4, 2 units, $2
  14. $6, 4 units, $4
  15. $4, 4 units, $2
  16. Consider Figure 9.1. Compared to the market equilibrium position achieved by Sony Company and American Company as competitors, Venture Company as a monopoly leads to a deadweight loss of consumer surplus of:
  17. $2
  18. $4
  19. $6
  20. $8
  21. Consider Figure 9.1. Assume Venture Company’s formation yields new cost reductions, indicated by MC1= AC1, which result from technological advances. Realizing that Venture Company results in a deadweight loss of consumer surplus, the net effect of Venture Com­pany’s formation on the welfare of the domestic economy is:
  22. No change
  23. Gain of $2
  24. Gain of $4
  25. Loss of $2
  26. Consider Figure 9.1. Refer to Question #35 and suppose the new cost reductions resulted from wage concessions accepted by Venture Company employees. The net effect of Venture Company’s formation on the welfare of the domestic economy is:
  27. No change
  28. Gain of $2
  29. Loss of $2
  30. Loss of $4
  31. Consider Figure 9.1. Refer to Question #35 and suppose the new cost reductions resulted from changes in work rules by Venture Company employees that led to higher worker productivity. The net effect of Venture Company’s formation on the welfare of the domestic economy is:
  32. No change
  33. Gain of $2
  34. Gain of $4
  35. Loss of $2

Figure 9.2 represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by S0 and consists entirely of native U.S. workers. The demand schedule of labor is denoted by D0. On the basis of this information, answer the Questions 38–42.

Figure 9.2. U.S. Labor Market

  1. Consider Figure 9.2. At labor market equilibrium, workers are hired at a wage rate of $________ per hour, while total wages equal ________.
  2. 2, $12, $24
  3. 2, $12, $36
  4. 3, $9, $27
  5. 3, $9, $36
  6. Consider Figure 9.2. At labor market equilibrium, the payment to U.S. capital owners equals:
  7. $3
  8. $6
  9. $9
  10. $12
  11. Consider Figure 9.2. If Mexican migration to the United States results in the labor force increasing to 3 workers, denoted by schedule S1, the:
  12. Wage rate for native U.S. workers decreases and the payments to U.S. capital owners increases
  13. Wage rate for native U.S. workers decreases and the payments to U.S. capital owners decreases
  14. Wage rate for native U.S. workers increases and the payments to U.S. capital owners increases
  15. Wage rate for native U.S. workers increases and the payments to U.S. capital owners decreases
  16. Consider Figure 9.2. As the result of the Mexican migration to the United States:
  17. U.S. capital owners lose
  18. Native U.S. workers lose
  19. U.S. capital owners and native U.S. workers lose
  20. U.S. capital owners and native U.S. workers gain
  21. Consider Figure 9.2. Policies that permit Mexican workers to freely migrate to the United States would likely be resisted by:
  22. U.S. capital owners
  23. Native U.S. workers
  24. U.S. capital owners and native U.S. workers
  25. Neither U.S. capital owners nor native U.S. workers
  26. ________ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.
  27. Direct investment
  28. Portfolio investment
  29. Transfer pricing
  30. Brain drain
  31. “Guest worker” programs generally result in temporary migration of workers from:
  32. Wealthy nations to wealthy nations
  33. Wealthy nations to impoverished nations
  34. Impoverished nations to wealthy nations
  35. Impoverished nations to impoverished nations
  36. Mexico’s ________ refer to an assemblage of U.S.–owned companies that use U.S.–owned parts and Mexican assembly to manufacture goods that are exported to the United States.
  37. Multinational corporations
  38. International joint ventures
  39. Maquiladoras
  40. Transplants
  41. Critics of U.S. trade and immigration policy maintain that:
  42. It has depressed wages for many Americans
  43. It has increased the supply of less educated workers in the United States
  44. It has an adverse impact on the employment opportunities of less-skilled, American workers
  45. All of the above
  46. American critics of U.S. multinational enterprises contend that they promote:
  47. Runaway jobs
  48. Technology transfers abroad
  49. Tax evasion
  50. All of the above
  51. Joint ventures may lead to:
  52. Welfare increases
  53. Welfare decreases
  54. No changes in welfare
  55. All of the above
  56. Foreign direct investment typically occurs when:
  57. The earnings of the parent company are invested in plant expansion overseas
  58. The parent company transfers jobs overseas
  59. The parent company closes its foreign production plants
  60. The parent company purchases bonds of foreign governments

TRUE-FALSE QUESTIONS

T        F       1.  International trade in goods and services and flows of productive factors are sub­stitutes for each other.

T        F       2.  Most multinational corporations have a low ratio of foreign sales to total sales, usually 5 percent or less.

T        F       3.  Vertical integration occurs if a parent multinational corporation establishes foreign subsidiaries to produce intermediate goods or inputs that go into the production of a finished good.

T        F       4.  Exxon Oil Co. would undertake forward vertical integration if its retailing divi­sion acquired oil wells in the Middle East.

T        F       5.  Forward vertical integration would occur if a U.S. automobile manufacturer acquired a German subsidiary.

T        F       6.  Most vertical foreign investment, as implemented by multinational corporations, is “forward” in nature rather than “backward.”

T        F       7.  Horizontal integration would occur if General Motors sets up a subsidiary in Mexico to produce automobiles identical to those that it produces in the United States.

T        F       8.  Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers which would place their products at a competitive disad­vantage in a foreign country.

T        F       9.  Foreign direct investment would occur if Mobile Inc. of the United States acquired sufficient common stock in a foreign oil company to assume voting control.

T        F     10.  Foreign direct investment would occur if Microsoft Inc. of the United States pur­chased securities of the French government.

T        F     11.  Conglomerate integration would occur if General Motors Inc. of the United States acquired a controlling interest in a British chemical company.

T        F     12.  Both economic theory and empirical studies support the notion that foreign direct investment is conducted in anticipation of future profits.

T        F     13.  Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

T        F     14.  If the size of the Canadian market is large enough to permit efficient production in Canada, a U.S. firm would profit by establishing a Canadian manufacturing subsidiary or licensing rights to a Canadian firm to manufacture and sell its prod­uct in Canada.

T        F     15.  There is virtually universal agreement among economists that foreign direct invest­ment in the United States has reduced the economic welfare of the average U.S. citizen.

T        F     16.  Foreign-owned companies in the United States operate under more strict antitrust, environmental, and other regulations than U.S.–owned companies.

T        F     17.  During the 1980s and 1990s, Japanese auto firms established manufacturing facili­ties in the United States known as “transplants.”

T        F     18.  By establishing transplant factories in the United States, Japanese automakers were able to avoid export restrictions imposed by the Japanese government, but not import restrictions imposed by the U.S. government.

T        F     19.  Mergers differ from joint ventures in that they involve the creation of a new busi­ness firm, rather than the union of two existing companies.

T        F     20.  Developing countries, such as Mexico and India, often close their borders to foreign companies unless they are willing to take on partner companies in developing countries.

T        F     21.  In natural-resource-oriented industries, such as oil and copper, joint ventures have often been formed by several companies since the cost of resource extraction may be prohibitively large for a particular company.

T        F     22.  International joint ventures tend to yield a welfare increasing market-power effect and a welfare decreasing cost-reduction effect.

T        F     23.  A joint venture leads to increases in national welfare if the cost-reduction effect is due to wage concessions and if it more than offsets the market-power effect.

T        F     24.  A joint venture leads to increases in national welfare if its cost-reduction effect is due to productivity gains and if it more than offsets the market-power effect.

T        F     25.  Joint ventures lead to losses in national welfare when the newly established busi­ness adds to preexisting production capacity and fosters additional competition.

T        F     26.  Joint ventures lead to national welfare gains if the newly established business yields productivity increases that would have been unavailable if each parent performed the same function separately.

T        F     27.  A joint venture along two large competing companies tends to yield a market-power effect, which results in a reduction in consumer surplus, that is not offset by a corresponding gain to producers.

T        F     28.  If a joint venture among competing firms is able to cut costs by extracting wage concessions from domestic workers, national welfare increases.

T        F     29.  Critics of multinational corporations maintain that they often abandon domestic workers in order to take advantage of lower wage scales abroad.

T        F     30.  The theory of multinational enterprise is totally inconsistent with the principle of comparative advantage.

T        F     31.  Due to transfer-pricing problems, multinational corporations must shift profits away from countries with low corporate tax rates to high tax-rate countries, thus absorbing a larger tax bite.

T        F     32.  Maquiladoras refer to an assemblage of U.S.–owned companies that combine Mexican parts and U.S. assembly to manufacture goods that are exported to Mexico.

T        F     33.  Opposition to Mexico’s maquiladoras has come from U.S. labor unions which claim that maquiladoras have resulted in job losses for U.S. workers.

T        F     34.  As workers migrate from low-wage Mexico to high-wage United States, wages tend to rise in Mexico and fall in the United States.

T        F     35.  The migration of workers from Mexico to the United States tends to exert downward pressure on the wages of native U.S. workers that compete against Mexican workers for jobs.

T        F     36.  The effect of workers migrating from low-wage Mexico to high-wage United States is to redistribute income from capital to labor in the United States and from labor to capital in Mexico.

T        F     37.  In the United States, labor unions have generally resisted efforts to implement restrictions on the number of foreigners allowed into the country.

T        F     38.  Developing countries have sometimes feared open immigration policies of devel­oped countries on the grounds that highly educated and skilled people may emigrate to the developed countries, thus limiting the growth potential of the developing countries.

T        F     39.  The United States has discouraged the “brain drain” problem by permitting the immigration of unskilled workers while restricting the immigration of skilled persons.

T        F     40.  Labor migration tends to increase output and decrease wages in the country of immigration while decreasing output and increasing wages in the country of emigration.

ANSWERS

Answers to Multiple-Choice Questions

 

  1. c
  2. a
  3. b
  4. a
  5. d
  6. b
  7. a
  8. c
  9. a
  10. d
  11. c
  12. d
  13. c
  14. a
  15. b
  16. a
  17. a
  18. c
  19. d
  20. d
  21. b
  22. a
  23. d
  24. b
  25. a
  26. d
  27. a
  28. b
  29. d
  30. c
  31. b
  32. b
  33. a
  34. a
  35. b
  36. c
  37. b
  38. a
  39. b
  40. a
  41. b
  42. b
  43. d
  44. c
  45. c
  46. d
  47. d
  48. d
  49. a

 

Answers to True-False Questions

 

  1. T
  2. F
  3. T
  4. F
  5. F
  6. F
  7. T
  8. T
  9. T
  10. F
  11. T
  12. T
  13. T
  14. T
  15. F
  16. F
  17. T
  18. F
  19. F
  20. T
  21. T
  22. F
  23. F
  24. T
  25. F
  26. T
  27. T
  28. F
  29. T
  30. F
  31. F
  32. F
  33. T
  34. T
  35. T
  36. F
  37. F
  38. T
  39. F
  40. T

 

SHORT ANSWER QUESTIONS

  1. What are the typical ways in which multinational enterprises have diversified their operations?

Answer: Multinational enterprises have diversified their operations along vertical, horizon­tal, and conglomerate lines.

  1. What are Mexican maquiladoras?

Answer: Maquiladoras are assemblages of foreign-owned companies that use foreign parts and Mexican assembly to produce goods that are exported to the United States.

ESSAY QUESTIONS

  1. Are there any differences between the theory of multinational enterprises and conventional trade theory?

Answer: There are major differences. The conventional model assumes that commodities are traded between independent, competitive businesses. However, multinational enterprises are often vertically integrated businesses with substantial intrafirm sales. Also, multinational enterprises may use transfer pricing to maximize overall company profits of any single subsidiary.

  1. What are the disadvantages of forming joint ventures?

Answer: A joint venture is a cumbersome organization compared with a single organiza­tion. Control is divided, creating problems of “two masters.” Success or failure depends on how well companies work together despite having different objectives, corporate cultures and ways of doing things. The action of corporate chemistry is hard to predict, but it is criti­cal because joint-venture agreements usually provide both partners an ongoing role in man­agement. When joint-venture ownership is divided equally, as often occurs, deadlocks in decision making can take place. Even when negotiated balance is achieved, it can be upset by changing corporate goals or personnel.

Chapter 08 Test Bank

Chapter 08Test Bank

 

  1. An average-risk project that has an NPV of zero when its cash flows are discounted at the weighted-average cost of capital will provide sufficient returns to satisfy both stockholders and bondholders.

 

TRUE

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. All else equal, if two competing firms in industry X are valuing the same plant in industry Y for a potential acquisition, the firm with the more volatile stock should arrive at a lower valuation for the plant.

 

FALSE

 

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Difficulty: 3 Hard

Gradable: automatic

 

  1. A beta greater than 1 is indicative of an above-average level of diversifiable (unsystematic) risk.

 

FALSE

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Failing to include real options in a project valuation could cause the NPV of the project to be overestimated.

 

FALSE

 

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Difficulty: 1 Easy

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  1. The adjusted present value (APV) method of valuation is superior to the standard WACC method of valuation because the WACC method makes no adjustment for interest tax shields.

 

FALSE

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. In reality, the cost of equity is always less than the cost of debt because firms are not obligated to pay out cash to shareholders.

 

FALSE

 

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. Asset betas measure financial risk and business risk.

 

FALSE

 

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Difficulty: 2 Medium

Gradable: automatic

 

 

  1. When projected cash flows are in nominal dollars, they should be discounted with a nominal discount rate.

 

TRUE

 

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Difficulty: 1 Easy

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  1. A firm’s WACC is the appropriate discount rate to value a project undertaken by the firm only if the project has the same risk as the firm’s existing assets.

 

TRUE

 

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  1. If a firm’s cost of debt is lower than its cost of equity, shifting the firm’s financing toward more debt will always reduce the firm’s WACC.

 

FALSE

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Gradable: automatic

  1. Total risk is measured by _____, and systematic risk is measured by ____.

 

  1. beta; alpha
  2. beta; standard deviation
  3. WACC; beta
  4. standard deviation; beta
  5. standard deviation; variance
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. When investment returns are less than perfectly positively correlated, the resulting diversification effect means that

 

  1. making an investment in two or three large stocks will eliminate all of the unsystematic risk.
  2. making an investment in three companies all within the same industry will greatly reduce the systematic risk.
  3. spreading an investment across five diverse companies will not lower the total risk.
  4. spreading an investment across many diverse assets will eliminate all of the systematic risk.
  5. spreading an investment across many diverse assets will eliminate some of the total risk.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Unsystematic risk

 

  1. can be effectively eliminated by portfolio diversification.
  2. is compensated for by the risk premium.
  3. is measured by beta.
  4. is measured by standard deviation.
  5. is related to the overall economy.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

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  1. Which of the following are examples of diversifiable risk?
  2. An earthquake damages Oakland, California.
  3. The federal government imposes an additional $1,000 fee on all business entities.

III. Employment taxes increase nationally.

  1. Toymakers are required to improve their safety standards.

 

  1. I and III only
  2. II and IV only
  3. II and III only
  4. I and IV only
  5. I, III, and IV only
  6. None of the options are correct.

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Which of the following statements are correct concerning diversifiable, or unsystematic, risks?
  2. Diversifiable risks can be largely eliminated by investing in 50 unrelated securities.
  3. There is no reward for accepting diversifiable risks.

III. Diversifiable risks are generally associated with an individual firm or industry.

  1. Beta measures diversifiable risk.

 

  1. I and III only
  2. II and IV only
  3. I and IV only
  4. I, II, and III only
  5. I, II, III, and IV
  6. None of the options are correct.

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Which of the following statements concerning risk are correct?
  2. Systematic risk is measured by beta.
  3. The risk premium increases as unsystematic risk increases.

III. Systematic risk is the only part of total risk that should affect asset prices and returns.

  1. Diversifiable risks are market risks you cannot avoid.

 

  1. I and III only
  2. II and IV only
  3. I and II only
  4. III and IV only
  5. I, II, and III only
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Which one of the following is an example of systematic risk?

 

  1. The Federal Reserve unexpectedly announces an increase in target interest rates.
  2. A flood washes away a firm’s warehouse.
  3. A city imposes an additional one-percent sales tax on all products.
  4. A toymaker has to recall its top-selling toy.
  5. Corn prices increase due to increased demand for alternative fuels.
  6. None of the options are correct.

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Difficulty: 1 Easy

Gradable: automatic

  1. The excess return earned by a risky asset, for example, with a beta of 1.4, over that earned by a risk-free asset is referred to as a

 

  1. market risk premium.
  2. risk premium.
  3. systematic return.
  4. total return.
  5. real rate of return.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. The dividend growth model can be used to compute the cost of equity for a firm in which of the following situations?
  2. Firms that have a 100-percent retention ratio
  3. Firms that pay an unchanging dividend

III. Firms that pay a constantly increasing dividend IV. Firms that pay an erratically growing dividend

 

  1. I and II only
  2. I and IV only
  3. II and III only
  4. I, II, and III only
  5. I, III, and IV only
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. The cost of equity for a firm

 

  1. tends to remain static for firms with increasing levels of risk.
  2. increases as the unsystematic risk of the firm increases.
  3. can be estimated from the capital asset pricing model or the dividend growth model.
  4. equals the risk-free rate plus the market risk premium.
  5. equals the firm’s pre-tax weighted-average cost of capital.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. The pre-tax cost of debt

 

  1. is based on the current yield to maturity of the firm’s outstanding bonds.
  2. is equal to the coupon rate on the latest bonds issued by a firm.
  3. is equivalent to the average current yield on all of a firm’s outstanding bonds.
  4. is based on the original yield to maturity on the latest bonds issued by a firm.
  5. has to be estimated as it cannot be directly observed in the market.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

 

 

 

 

 

 

  1. The after-tax cost of debt generally increases when
  2. a firm’s bond rating improves.
  3. the market-required rate of interest for the company’s bonds increases.

III. tax rates decrease.

  1. bond prices rise.

 

  1. I and III only
  2. II and III only
  3. I, II, and III only
  4. II, III, and IV only
  5. I, II, III, and IV
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

[The following information applies to the questions displayed below.]    
FM Foods, Inc.    
Facts and assumptions as of Dec. 31, 2017 4.4%  
Yield to maturity on long-term government bonds  
Yield to maturity on company long-term bonds 6.3%  
Coupon rate on company long-term bonds 7.0%  
Historical excess return on common stocks 6.5%  
Company equity beta 1.20  
Stock price $40.00  
Number of shares outstanding (millions) 240  
Book value of equity (millions) $5,240  
Book value of interest-bearing debt (millions) $1,250  
Tax rate 35.0%  

 

  1. Please refer to the information for FM Foods above. Estimate FM’s after-tax cost of equity capital.

 

  1. 4.50%
  2. 6.92%
  3. 7.93%
  4. 12.20%
  5. 17.48%
  6. None of the options are correct.

 

KE = gov’t borrowing rate + equity beta × market risk premium = 0.044 + 1.2 × 0.065 = 0.122

 

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Difficulty: 1 Easy

Gradable: automatic

 

 

 

 

 

 

 

 

 

 

 

  1. Please refer to the information for FM Foods above. Estimate FM’s after-tax cost of debt capital.

 

  1. 2.21%
  2. 4.10%
  3. 4.55%
  4. 6.30%
  5. 7.00%
  6. None of the options are correct.

 

The correct approach is to use the YTM on the firm’s bonds for the before-tax cost. Thus, after-tax cost = 6.3% × (1 − 0.35) = 4.10%.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Please refer to the information for FM Foods above. Estimate the appropriate weight of equity to be used when calculating FM’s weighted-average cost of capital.

 

  1. 11.5%
  2. 19.3%
  3. 80.7%
  4. 88.5%
  5. 100.0%
  6. None of the options are correct.

 

Market value of equity = $40 × 240 million = $9,600 million. Weight of equity = 9,600/(9,600 + 1,250) = 0.8848 or 88.5%.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Please refer to the information for FM Foods above. Estimate the appropriate weight of debt to be used when calculating FM’s weighted-average cost of capital.

 

  1. 11.5%
  2. 19.3%
  3. 80.7%
  4. 88.5%
  5. 100.0%
  6. None of the options are correct.

 

Market value of equity = $40 × 240 million = $9,600 million. Weight of debt = 1,250/(9,600 + 1,250) = 0.1152 or 11.5%.

 

 

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Difficulty: 1 Easy

Gradable: automatic

 

 

 

 

 

 

 

 

 

 

 

 

  1. Please refer to the information for FM Foods above. Estimate FM’s weighted-average cost of capital.

 

  1. 6.46%
  2. 6.58%
  3. 11.27%
  4. 11.32%
  5. 11.52%
  6. None of the options are correct.

 

KW = (1 − t)KD D + KE E  
D + E D + E  
       

 

KW  = (1−0.35) 0.063 (0.115) + 0.122 (0.885)

KW = 0.1127

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. Please refer to the information for FM Foods above. FM is contemplating an average-risk investment costing $100 million and promising an annual after-tax cash flow of $15 million in perpetuity. Which of the following statements is/are correct?

 

  1. FM should reject the project because the IRR is greater than the firm’s WACC.
  2. FM should accept the project because the IRR is greater than the firm’s WACC.

III. FM should accept the project because the NPV is greater than zero.

  1. FM should reject the project because the NPV is less than zero.

 

  1. I only
  2. II only
  3. IV only
  4. I and IV only
  5. II and III only
  6. None of the options are correct.

 

The IRR of the investment is 15/100 = 15%. FM’s WACC of 11.27% is shown in the calculations below. The NPV of the investment at the WACC = −100 + 15/0.1127 = $33.1 million.

 

KW=  (1− t)KD D + KE E  
D + E D + E  

 

KW = (1−0.35) 0.063 (0.115) + 0.122 (0.885)

KW= 0.1127

 

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Difficulty: 3 Hard

Gradable: automatic

 

 

 

 

 

 

 

 

 

 

29. Celebrity Auto Parts, Inc.    
  Facts and assumptions as of Dec. 31, 2017    
  EBIT for 2017 (millions) $ 420
  Company equity beta   1.20
  Stock price $ 30
  Number of shares outstanding (millions)   200
  Book value of equity (millions) $ 3,500
  Book value of interest-bearing debt (millions) $ 1,500
  WACC   9%
  Tax rate   25%

 

Please refer to the information for Celebrity Auto Parts above. What was Celebrity’s EVA in 2017?

 

  1. −$360 million
  2. −$135 million
  3. −$30 million
  4. $765 million
  5. None of the options are correct.

 

EVA = EBIT(1 − t) − KWC = 420(1 − 25%) − 9%(3,500 + 1,500) = −$135

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. Which of the following statements are correct?
  2. Using the same risk-adjusted discount rate to discount all future cash flows adjusts for the fact that the more distant cash flows are often more risky than cash flows occurring sooner.
  3. If you can borrow all of the money you need for a project at 5%, the cost of capital for this project is 5%.

III. The best way to obtain the cost of debt capital for a firm is to use the coupon rates on its bonds.

  1. A firm’s weighted-average cost of capital is NOT the correct discount rate to use for all projects undertaken by the firm.

 

  1. I and III only
  2. II and IV only
  3. I and II only
  4. I and IV only
  5. I, II, and III only
  6. None of the options are correct.

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. The capital structure weights used in computing the weighted-average cost of capital

 

  1. are based on the book values of total debt and total equity.
  2. are based on the market value of the firm’s debt and equity securities.
  3. are computed using the book value of the long-term debt and the book value of equity.
  4. remain constant over time unless the firm issues new securities.
  5. are restricted to the firm’s debt and common stock.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

 

  1. The discount rate assigned to an individual project should be based on

 

  1. the firm’s weighted-average cost of capital.
  2. the actual sources of funding used for the project.
  3. an average of the firm’s overall cost of capital for the past five years.
  4. the current risk level of the overall firm.
  5. the risks associated with the use of the funds required by the project.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. The weighted-average cost of capital for a firm is the

 

  1. discount rate which the firm should apply to all of the projects it undertakes.
  2. rate of return a firm must earn on its existing assets to maintain the current value of its stock.
  3. coupon rate the firm should expect to pay on its next bond issue.
  4. minimum discount rate the firm should require on any new project.
  5. rate of return shareholders should expect to earn on their investment in this firm.
  6. None of the options are correct.

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. Honest Abe’s is a chain of furniture retail stores. Integral Designs is a furniture maker and a supplier to Honest Abe’s. Honest Abe’s has a beta of 1.38 as compared to Integral Designs’ beta of 1.12. Both firms carry no debt, i.e., are 100% equity financed. The risk-free rate of return is 3.5 percent and the market risk premium is 8 percent. What discount rate should Honest Abe’s use if it considers a project that involves the manufacturing of furniture?

 

  1. 12.46%
  2. 12.92%
  3. 13.50%
  4. 14.08%
  5. 14.54%
  6. None of the options are correct.

 

KE= gov’t borrowing rate + equity beta × market risk premium = 0.035 + 1.12(0.08) = 0.1246 or 12.46%

 

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Difficulty: 1 Easy

Gradable: automatic

 

  1. A firm is considering an average-risk project with an IRR of 6%. The firm’s cost of debt (KD) is 5%, its cost of equity (KE) is 12%, and its tax rate (t) is 20%. The target debt ratio (D/(D+E)) for the project, in market values, is 0.5. The firm should

 

  1. accept the project only if it can be completely financed with equity.
  2. accept the project only if it can be completely financed with debt.
  3. accept the project regardless of the financing method.
  4. reject the project regardless of the financing method.
KW =(1− t)KD D + KE E  
D + E D + E  

 

KW = (1−0.2)0.05(0.5) + 0.12(0.5)

KW  = 0.08 = 8%

The project should be rejected because the IRR of 6% does not meet the hurdle of 8%.

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Difficulty: 2 Medium

Gradable: automatic

  1. Unitron Corp. is considering project Z, which costs $50 million and offers an annual after-tax cash flow of $7.5 million in perpetuity. The project is in an industry that has greater market risk than Unitron’s typical projects. Unitron’s company weighted-average cost of capital, based on its typical projects, is 15%. Should Unitron Corp. accept project Z?

 

  1. Yes, because the NPV of the project is positive.
  2. Yes, because a zero-NPV project is marginally acceptable.
  3. No, because a zero-NPV project is a waste of resources.
  4. No, because the NPV of the project is negative.

 

Use the equation for a perpetuity to solve for the IRR:

7.5/IRR = 50 IRR = 15%

Since the IRR is 15%, it would have an NPV of zero at a WACC of 15%. However, this project is riskier than the firm’s average projects, so the WACC would be higher than 15%, which would make the NPV negative.

 

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Difficulty: 2 Medium

Gradable: automatic

 

  1. Company X has 2 million shares of common stock outstanding at a book value of $2 per share. The stock trades for $3.00 per share. It also has $2 million in face value of debt that trades at 90% of par. What is the appropriate debt ratio (D/(D+E)) to use for calculating Company X’s weighted-average cost of capital?

 

  1. 23.1%
  2. 25.0%
  3. 31.0%
  4. 33.3%

 

D = 0.9 × $2 million = $1.8 million E = $3 ×2 million = $6 million D/(D+E) = 1.8/(1.8 + 6) = 0.231

 

Accessibility: Keyboard Navigation

Difficulty: 1 Easy

Gradable: automatic

 

  1. JKL Corporation, a company devoted primarily to paper products, is estimating the cost of equity appropriate for a vegetable processing plant it is planning to build. JKL Corp. has an equity beta of 1.0 and a debt ratio (D/(D+E)) of 0.3. A comparable (vegetable processing) firm has an equity beta of 0.8 and a debt ratio of 0.2. Assume a risk-free rate of 5% and a market risk premium of 8%. What cost of equity should JKL use in this situation?

 

  1. 7.7%
  2. 11.4%
  3. 12.3%
  4. 13.0%

 

Unlever the comparable firm’s beta: βA = (E/V)βE = (0.8)0.8 = 0.64

Then relever at JKL’s debt ratio: βE = βA/(E/V) = 0.64/(0.7) = 0.91

Cost of Equity: KE = 5% + 0.91(8%) = 12.3%

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: automatic

 

 

 

 

 

 

 

 

 

  1. Florida Corp. is calculating the appropriate rate for discounting cash flows on a project valued using the APV method. Florida’s target debt ratio (D/(D+E)) in market value terms is 50%, and the yield-to-maturity on its outstanding debt is 6%. A comparable firm has an equity beta of 1.4 and a debt ratio (D/(D+E)) of 40%. Assume a risk-free rate of 5% and a market risk premium of 8%. Florida’s tax rate is 40%. What discount rate should Florida use?

 

  1. 7.66%
  2. 11.02%
  3. 11.72%
  4. 18.44%

 

βA= (E/V)βE = (0.6)1.4 = 0.84 KE = 5% + 0.84(8%) = 11.72%

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: automatic

 

  1. Key facts and assumptions concerning Costco Company, at December 31, 2011, appear below.

 

Facts and Assumptions    
Yield to maturity on long-term government bonds   3.28%
Yield to maturity on company long-term bonds   4.62%
Coupon rate on company long-term bonds   5.50%
Historical excess return on common stocks   6.10%
Company equity beta   0.80
Stock price $ 75.08
Number of shares outstanding (millions)   449.5
Book value of equity (millions) $11,585
Book value of interest-bearing debt (millions) $ 2,524
Tax rate   35.00%

 

Use the above information to answer the following questions.

  1. Estimate Costco’s cost of equity capital.
  2. Estimate Costco’s weighted-average cost of capital.

 

  1. KE = gov’t borrowing rate + equity beta × market risk premium KE = 3.28 + 0.80 × 6.10 = 8.16%

 

  1. Market value of equity = 449.5 × 75.08 = $33,748

Weight for debt = 2,524/(2,524 + 33,748) = 0.070

 

KW =  (1− t)KD D + KE E  
D + E D + E  

 

KW = (1−0.35)0.0462(0.07) + 0.0816(0.93)

KW = 0.078 = 7.8%

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: manual

 

 

 

 

 

 

 

  1. Explain the difference between systematic and unsystematic risk and why one of these types of risks is rewarded with a risk premium while the other type is not.

 

Unsystematic, or diversifiable, risk affects a limited number of securities and can be eliminated by investing in securities from various industries and geographic regions. Unsystematic risk is not rewarded because it can be eliminated by investors. Systematic risk is risk that affects most, or all, securities and cannot be diversified away. Since systematic risk cannot be eliminated by investors it is rewarded with a risk premium. Systematic risk is measured by beta.

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: manual

 

  1. Suppose that your company’s weighted-average cost of capital is 9 percent. Your company is planning to undertake a project with an internal rate of return of 12%, but you believe that this project is not a good investment for the firm. What logical arguments might you use to convince your boss to forego the project despite its high rate of return? Is it possible that making investments with expected returns higher than your company’s cost of capital will destroy value? If so, how?

 

If the investment is above the company’s average risk, the company’s cost of capital is not an appropriate benchmark. Equivalently, you might argue that the high risk of the investment places it below the security market line. Such investments destroy value because they promise returns that, while greater than the company’s WACC, are still below those available on similar-risk investments available. Other possible arguments include that the investment is not consistent with the strategic plan or that the cash flow estimates are too optimistic.

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: manual

 

  1. The standard deviation of returns on Wildcat Oil Drilling is very high. Does this necessarily imply that Wildcat Oil Drilling is a high-risk investment when investors hold diversified portfolios? Explain why or why not.

 

The equation for beta in Chapter 8 shows that the nondiversifiable risk of an asset is the product of its standard deviation of returns and the correlation of those returns with those on a well-diversified portfolio. Wildcat Oil Drilling may have a high standard deviation of returns, but if those returns are poorly correlated with those on a well-diversified portfolio, as is likely the case, nondiversifiable risk may be low. In other words, if investors can diversify away most of Wildcat’s risk, then it is not truly a high-risk investment.

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: manual

 

  1. What is the present value of a cash flow stream of $10,000 per year annually for 11 years that then grows at 2 percent per year forever? Assume the appropriate discount rate is 12 percent.

 

Divide the cash flows into two periods: An 11-year annuity of $10,000, and a growing perpetuity beginning in the 11th year. The value of the 11-year annuity is $59,377, as shown below:

 

Input: 11 12 ? 10,000 0
n i PV PMT FV
Output: −59,377

 

In Excel:

=              PV(0.12,11,10000)

=              −59,377

The value of the growing perpetuity (using the formula provided in Chapter 8 for a growing dividend into perpetuity) at

time 11 is $10,000(1 + 0.02)/(0.12 − 0.02) = $102,000. Its value at time zero is $102,000/(1.12)11 = $29,323. Adding these values, 29,323 + 59,377 = $88,700.

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: manual

  1. Kilborn Corporation’s balance sheet is shown below. The current rate on treasury bonds is 7%. The yield to maturity on Kilborn’s bonds is 10%. Assume a market risk premium of 8%. Kilborn’s tax rate is 40%. Kilborn’s stock price is $45, and it has 2 million shares outstanding. Kilborn’s beta is unknown because it only recently went public, but it is known that a comparable firm’s stock has a beta of 1.2 and that the comparable firm’s debt ratio (D/(D+E)) is 0.4. What is the weighted-average cost of capital for Kilborn Corporation?

 

  Kilborn Corporation  
  Balance Sheet ($ millions)  
Assets     Liabilities and Equity  
Cash and securities 10 Bonds 20
Accounts receivable 50 Common stock 50
Inventory 50 Retained earnings 80
Net fixed assets   40    
Total assets 150 Total liab. and equity 150
         

 

Note that for Kilborn:

 

D = 20; E = 45 ×2 = 90; V = D + E = 110

Unlever the comparable firm’s beta: βA = (E/V)βE = (0.6)1.2 = 0.72

Then relever at Kilborn’s debt ratio: βE = βA/(E/V) = 0.72/(90/110) = 0.88

Cost of Equity: KE = 7% + 0.88(8%) = 14.04%

Cost of Debt: KD = 10%

KW = (1 − t)KD D + KE E  
D + E D + E  
       

 

KW = (1−0.4) 0.1 (20/110) + 0.1404 (90/110)

KW = 0.126 = 12.6%

 

Accessibility: Keyboard Navigation

Difficulty: 2 Medium

Gradable: manual

 

Chapter 08 Test Bank Summary

Category # of Questions
Accessibility: Keyboard Navigation 45
Difficulty:  1 Easy 26
Difficulty:  2 Medium 17
Difficulty:  3 Hard 2
Gradable: automatic 39
Gradable: manual 6

 

AUDITING THEORY TEST BANK

AUDITING THEORY TEST BANK

  1. Which of the following statements best describes assurance services?
  2. Independent professional services that are intended to enhance the credibility of information to meet the needs of an intended user.
  3. Services designed to express an opinion on the fairness of historical financial statements based on the results of an audit.
  4. The preparation of financial statements or the collection, classification, and summarization of other financial information.
  5. Services designed for the improvement of operations, resulting in better outcomes.

 

  1. Which of the following is not an assurance service?
  2. Examination of prospective financial information
  3. Audit of historical financial statements
  4. Review of financial statements
  5. Compilation of financial information

 

  1. Suitable criteria are required for reasonably consistent evaluation or measurement of the subject matter of an assurance engagement.  Which of the following statements concerning the characteristics of suitable criteria is correct?
  2. Reliable criteria contribute to conclusions that are clear, comprehensive, and not subject to significantly different interpretations.
  3. Relevant criteria allow reasonably consistent evaluation or measurement of the subject matter including, where relevant, presentation and disclosure, when used in similar circumstances by similarly qualified practitioners.
  4. Neutral criteria contribute to conclusions that are free from bias.
  5. Criteria are sufficiently complete when they contribute to conclusions that are clear, comprehensive, and not subject to different interpretations.

 

  1. In an assurance engagement, the outcome of the evaluation or measurement of a subject matter against criteria is called
  2. Subject matter information
  3. Subject matter
  4. Assurance
  5. Conclusion

 

  1. What type of assurance engagement is involved when the practitioner expresses a positive form of conclusion?
  2. Limited assurance engagement
  3. Positive assurance engagement
  4. Reasonable assurance engagement
  5. Absolute assurance engagement

 

  1. What type of assurance engagement is involved when the practitioner expresses a negative form of conclusion?
  2. Reasonable assurance engagement
  3. Negative assurance engagement
  4. Assertion-based assurance engagement
  5. Limited assurance engagement

 

  1.  Which of the following statements is true concerning evidence in an assurance engagement?
  2. Sufficiency is the measure of the quantity of evidence.
  3. Appropriateness is the measure of the quality of evidence, that is, its reliability and persuasiveness.
  4. The reliability of evidence is influenced not by its nature but by its source.
  5. Obtaining more evidence may compensate for its poor quality.

 

 

 

 

 

  1. Assurance engagement risk is the risk
  2. That the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.
  3. Of expressing an inappropriate conclusion when the subject matter information is not materially misstated.
  4. Through loss from litigation, adverse publicity, or other events arising in connection with a subject matter reported on.
  5. Of expressing an inappropriate conclusion when the subject matter information is either materially misstated or not materially misstated.

 

  1. Reducing assurance engagement risk to zero is very rarely attainable or cost beneficial as a result of the following factors, except
  2. The use of selective testing.
  3. The fact that much of the evidence available to the practitioner is persuasive rather than conclusive.
  4. The practitioner may not have the required assurance knowledge and skills to gather and evaluate evidence.
  5. The use of judgment in gathering and evaluating evidence and forming conclusions based on that evidence.

 

  1. The Philippine Framework for Assurance Engagements
  2. Contains basic principles, essential procedures, and related guidance for the performance of assurance engagements.
  3. Defines and describes the elements and objectives of an assurance engagement, and identifies engagements to which PSAs, PSREs, and PSAEs apply.
  4. Provides a frame of reference for CPAs in public practice when performing audits, reviews, and compilations of historical financial information.
  5. Establishes standards and provides procedural requirements for the performance of assurance engagements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUDITING AND RELATED SERVICES

 

  1. PSRE 2400 (Engagements to Review Financial Statements), as amended by the AASC in February 2008, applies to
  2. Reviews of any historical financial information of an audit client.
  3. Reviews of any historical financial information by a practitioner other than the entity’s auditor.
  4. Reviews of historical financial or other information by a practitioner other than the entity’s auditor.
  5. Reviews of historical financial or other information of an audit client.

 

  1. When performing a compilation engagement, the accountant is required to
  2. Assess internal controls.
  3. Make inquiries of management to assess the reliability and completeness of the information provided.
  4. Verify matters and explanations.
  5. Obtain a general knowledge of the business and operations of the entity.

 

  1. Inquiries and analytical procedures ordinarily form the basis for which type of engagement?
  2. Agreed-upon procedures.
  3. Audit.
  4. Examination.
  5. Review.

 

  1. A practitioner should accept an assurance engagement only if
  2. The subject matter is in the form of financial information.
  3. The criteria to be used are not available to the intended users.
  4. The practitioner’s conclusion is to be contained in a written report.
  5. The subject matter is the responsibility of either the intended users or the practitioner.

 

  1. The auditor is required to maintain professional skepticism throughout the audit.  Which of the following statements concerning professional skepticism is false?
  2. A belief that management and those charged with governance are honest and have integrity relieves the auditor of the need to maintain professional skepticism.
  3. Maintaining professional skepticism throughout the audit reduces the risk of using inappropriate assumptions in determining the nature, timing, and extent of the audit procedures and evaluating the results thereof.
  4. Professional skepticism is necessary to the critical assessment of audit evidence.
  5. Professional skepticism is an attitude that includes questioning contradictory audit evidence obtained.

 

  1. Which of the following best describes the reason why independent auditors report on financial statements?
  2. A management fraud may exist and it is more likely to be detected by independent auditors.
  3. Different interests may exist between the company preparing the statements and the persons using the statements.
  4. A misstatement of account balances may exist and is generally corrected as the result of the independent auditors’ work.
  5. Poorly designed internal control may be in existence.

 

  1. Which of the following professionals has primary responsibility for the performance of an audit?
  2. The managing partner of the firm.
  3. The senior assigned to the engagement.
  4. The manager assigned to the engagement.
  5. The partner in charge of the engagement.

 

  1. What is the proper organizational role of internal auditing?
  2. To serve as an independent, objective assurance and consulting activity that adds value to operations.
  3. To assist the external auditor in order to reduce external audit fees.
  4. To perform studies to assist in the attainment of more efficient operations.
  5. To serve as the investigative arm of the audit committee of the board of directors.

 

 

  1. Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide
  2. A measure of management performance in meeting organizational goals.
  3. The results of internal examinations of financial and accounting matters to a company’s top-level management.
  4. Aid to the independent auditor, who is conducting the examination of the financial statements.
  5. A means of assurance that internal accounting controls are functioning as planned.

 

  1. Which of the following terms best describes the audit of a taxpayer’s return by a BIR auditor?
  2. Operational audit.
  3. Internal audit.
  4. Compliance audit.
  5. Government audit.

 

  1. Which of the following statements concerning consulting services is false?
  2. The performance of consulting services for audit clients does not, in and of itself, impair the auditor’s independence.
  3. Consulting services differ fundamentally from the CPA’s function of attesting to the assertions of other parties.
  4. Consulting services ordinarily involve external reporting.
  5. Most CPAs, including those who provide audit and tax services, also provide consulting services to their clients.

 

  1. Which of the following is the most appropriate action to be taken by a CPA who has been asked to perform a consulting services engagement concerning the analysis of a potential merger if he/she has little experience with the industry involved?
  2. Accept the engagement but he/she should conduct research or consult with others to obtain sufficient competence.
  3. Decline the engagement because he/she lacks sufficient knowledge.
  4. Accept the engagement and issue a report that contains his/her opinion on the achievability of the results of the merger.
  5. Accept the engagement and perform it in accordance with Philippine Standards on Auditing (PSAs).

 

  1. An objective of a performance audit is to determine whether an entity’s
  2. Operational information is in accordance with government auditing standards.
  3. Specific operating units are functioning economically and efficiently.
  4. Financial statements present fairly the results of operations.
  5. Internal control is adequately operating as designed.

 

  1. The internal auditing department’s responsibility for deterring fraud is to
  2. Establish an effective internal control system.
  3. Maintain internal control.
  4. Examine and evaluate the system of internal control.
  5. Exercise operating authority over fraud prevention activities.

 

  1. Internal auditors review the adequacy of the company’s internal control system primarily to
  2. Help determine the nature, timing, and extent of tests necessary to achieve audit objectives.
  3. Determine whether the internal control system provides reasonable assurance that the company’s objectives and goals are met efficiently and economically.
  4. Ensure that material weaknesses in the system of internal control are corrected.
  5. Determine whether the internal control system ensures that financial statements are fairly presented.

 

 

 

 

 

 

THE ACCOUNTANCY PROFESSION

 

  1. The members of the Professional Regulatory Board of Accountancy shall be appointed by the
  2. Philippine Institute of CPAs (PICPA).
  3. Professional Regulation Commission (PRC).
  4. President of the Philippines.
  5. Association of CPAs in Public Practice (ACPAPP).

 

  1. The following statements relate to the submission of nominations to the Board of Accountancy. Which is correct?
  2. The Accredited National Professional Organization of CPAs (APO) shall submit its nominations to the president of the Philippines not later than sixty (60) days prior to the expiry of the term of an incumbent chairman or member.
  3. The APO shall submit its nominations to the PRC not later than thirty (30) days prior to the expiry of the term of an incumbent chairman or member.
  4. If the APO fails to submit its own nominee(s) to the PRC within the required period, the PRC in consultation with the Board of Accountancy shall submit to the president of the Philippines a list of five (5) nominees for each position.
  5. There should be adequate documentation to show the qualifications and primary field of professional activity of each nominee.

 

  1. The following statements relate to the term of office of the chairman and members of the Board of Accountancy (BOA). Which is false?
  2. The chairman and members of the BOA shall hold office for a term of three (3) years.
  3. Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the term only.
  4. No person who has served two successive complete terms as chairman or member shall be eligible for reappointment until the lapse of two (2) years.
  5. Appointment to fill up an unexpired term is not to be considered as a complete term.

 

  1. The Board of Accountancy has the power to conduct an oversight into the quality of audits of financial statements through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices. This power of the BOA is called
  2. Quality assurance review C.  Appraisal
  3. Peer review D.  Quality control

 

  1. Which of the following statements concerning the issuance of Certificates of Registration and Professional Identification Cards to successful examinees is correct?
  2. The Certificate of Registration issued to successful examinees is renewable every three (3) years.
  3. The Professional Identification Card issued to successful examinees shall remain in full force and effect until withdrawn, suspended or revoked in accordance with RA 9298.
  4. The BOA shall not register and issue a Certificate of Registration and Professional Identification Card to any successful examinee of unsound mind.
  5. The BOA may, after the expiration of three (3) years from the date of revocation of a Certificate of Registration, reinstate the validity of a revoked Certificate of Registration.

 

  1. Which of the following statements concerning ownership of working papers is incorrect?
  2. All working papers made by a CPA and his/her staff in the course of an examination remain the property of such CPA in the absence of a written agreement between the CPA and the client to the contrary.
  3. Working papers include schedules and memoranda prepared and submitted by the client of the CPA.
  4. Working papers include reports submitted by a CPA to his/her client.
  5. Working papers shall be treated confidential and privileged unless such documents are required to be produced through subpoena issued by any court, tribunal, or government regulatory or administrative body.

 

 

 

 

 

  1. Any person who shall violate any of the provisions of the Accountancy Act or any of its implementing rules and regulations promulgated by the Board of Accountancy subject to the approval of the PRC, shall, upon conviction, be punished by
  2. A fine of not more than P50,000.
  3. Imprisonment for a period not exceeding two years.
  4. A fine of not less than P50,000 or by imprisonment for a period not exceeding two years or both.
  5. Lethal injection.

 

  1. A partner surviving the death or withdrawal of all the other partners in a partnership may continue to practice under the partnership name for a period of not more than how many years after becoming a sole proprietor?
  2. 1 C.  3
  3. 2 D.  4

 

  1. The death or disability of an individual CPA and/or the dissolution and liquidation of a firm or partnership of CPAs shall be reported to the BOA not later than how many days from the date of such death, dissolution or liquidation.
  2. 15 C.  60
  3. 30 D.  90

 

  1. Which of the following statements concerning a CPA’s disclosure of confidential client information is ordinarily correct?
  2. Disclosure may be made to any party on consent of the client.
  3. Disclosure should not be made even if such disclosure will protect the CPA’s professional interests in legal proceedings.
  4. Disclosure should be made only if there is a legal or professional duty to make the disclosure.
  5. Disclosure may be made to any government agency without subpoena.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE CPA’S PROFESSIONAL RESPONSIBILITIES

 

  1. Which of the following statements best explains why the CPA profession has found it essential to establish ethical standards and means for ensuring their observance?
  2. Vigorous enforcement of an established code of ethics is the best way to prevent unscrupulous acts.
  3. Ethical standards that emphasize excellence in performance over material rewards establish a reputation for competence and character.
  4. A distinguishing mark of a profession is its acceptance of responsibility to the public.
  5. A requirement for a profession is to establish ethical standards that stress primarily a responsibility to clients and colleagues.

 

  1. Which of the following will not create self-interest threat for a professional accountant in public practice?
  2. The possibility of losing a significant client.
  3. Direct financial interest in the assurance client.
  4. Undue dependence on total fees from a client.
  5. Preparing the original data used to generate records that are the subject matter of the assurance engagement.

 

  1. Familiarity threat could be created under the following circumstances except
  2. A professional accountant accepting gifts from a client whose value is inconsequential or trivial.
  3. Senior personnel having a long association with the assurance client.
  4. A director or officer of the client or an employee in a position to exert significant influence over the subject matter of the engagement having recently served as the engagement partner.
  5. A member of the engagement team having a close or immediate family member who is a director or officer of the client.

 

  1. Which of the following circumstances may create advocacy threat for a professional accountant in public practice?
  2. The firm promoting shares in an audit client.
  3. A firm issuing an assurance report on the effectiveness of the operation of financial systems after designing or implementing the systems.
  4. A firm being threatened with dismissal from a client engagement.
  5. A firm being concerned about the possibility of losing a significant client.

 

  1. The following circumstances may create intimidation threats, except
  2. Being threatened with dismissal or replacement in related to a client engagement.
  3. Being pressured to reduce inappropriately the extent of work performed in order to reduce fees.
  4. Being threatened with litigation.
  5. A member of the assurance team being, or having recently been, a director or officer of the client.

 

  1. Which of the following is an example of engagement-specific safeguards in the work environment?
  2. Advising partners and professional staff of those assurance clients and related entities from which they must be independent.
  3. Disclosing to those charged with governance of the client the nature of service provided and extent of fees charged.
  4. A disciplinary mechanism to promote compliance with the firm’s policies and procedures.
  5. Published policies and procedures to encourage and empower staff to communicate to senior levels within the firm any issue relating to compliance with the fundamental principles that concerns them.

 

 

 

 

 

 

 

  1. According to Section 240 of the Code of Ethics, fees charged for assurance engagements should be a fair reflection of the value of the work involved. In determining professional fees, the following should be taken into account, except
  2. The time necessarily occupied by each person engaged on the work.
  3. The outcome or result of a transaction or the result of the work performed.
  4. The skill and knowledge required for the type of work involved.
  5. The level of training and experience of the persons necessarily engaged on the work.

 

  1. Financial interests may be held through an intermediary (for example, a collective investment vehicle, estate or trust). When control over the investment vehicle or the ability to influence investment decisions exists, the code defines that financial interest to be
  2. Direct financial interest.
  3. Material direct financial interest.
  4. Indirect financial interest.
  5. Material indirect financial interest.

 

  1. The concept of materiality is least important to an auditor when considering the
  2. Effects of a direct financial interest in the client upon the auditor’s independence.
  3. Decision whether to use positive or negative confirmations of accounts receivable.
  4. Adequacy of disclosure of a client’s illegal act.
  5. Discovery of weaknesses in a client’s internal control.

 

  1. A direct financial interest or a material indirect financial interest in the audit client of a member of the audit team or his immediate family member may create a significant self-interest threat. Which of the following safeguards would be least likely considered to eliminate the threat or reduce it to an acceptable level?
  2. Discuss the matter with those charged with governance of the audit client.
  3. Dispose of the direct financial interest prior to the individual becoming a member of the audit team.
  4. Dispose of the indirect financial interest in total or dispose of a sufficient amount of it so that the remaining interest is no longer material prior to the individual becoming a member of the audit team.
  5. Remove the member of the audit team from the audit engagement.

 

  1. When an immediate family member of a member of the assurance team is a director, an officer, or an employee of the assurance client in a position to exert direct and significant influence over the subject matter information of the assurance engagement, or was in such a position during the period covered by the engagement, the threats to independence can only be reduced to an acceptable level by
  2. Where possible, structuring the responsibilities of the assurance team so that the professional does not deal with matters that are within the responsibility of the immediate family member.
  3. Withdrawing from the assurance engagement.
  4. Removing the individual from the assurance team.
  5. Discussing the issue with those charged with governance, such as the audit committee.

 

  1. Which of the following would not generally create a threat to independence?
  2. The purchase of goods and services from an assurance client by the firm (or from a financial statement audit client by a network firm) or a member of the assurance team provided that the transaction is in the normal course of business and on an arm’s length basis.
  3. A partner or employee of the firm or a network firm serves as Company Secretary for a financial statement audit client.
  4. Determining which recommendations of the firm should be implemented.
  5. Reporting, in a management role, to those charged with governance.

 

 

 

 

 

 

 

  1. The following forms of assistance to a financial statement audit client do not generally threaten the firm’s independence, except
  2. Analyzing and accumulating information for regulatory reporting.
  3. Assisting in resolving account reconciliation problems.
  4. Authorizing or approving transactions.
  5. Assisting in the preparation of consolidated financial statements.

 

  1. The following statements relate to the provision of taxation, internal audit or IT Systems services to audit clients. Which is false?
  2. Preparing calculations of current and deferred tax liabilities (or assets) for an audit client for the purpose of preparing accounting entries that will be subsequently audited by the firm creates a self-interest threat.
  3. A self-review threat may be created when a firm, or network firm, provides internal audit services to an audit client.
  4. The provision of services by a firm or network firm to an audit client that involve the design and implementation of financial information technology systems that are used to generate information forming part of a client’s financial statements may create a self-review threat.
  5. The provision of services in connection with the assessment, design, and implementation of internal accounting controls and risk management controls does not create a threat to independence provided that firm or network firm personnel do not perform management functions.

 

  1. What threat to independence is created when the litigation support services provided to an audit client include the estimation of the possible outcome and thereby affects the amounts or disclosures to be reflected in the financial statements?
  2. Self-review threat
  3. Advocacy threat
  4. Intimidation threat
  5. Familiarity threat

 

  1. What threat to independence may be created if fees due from an assurance client for professional services remain unpaid for a long time, especially if a significant part is not paid before the issue of the assurance report for the following year?
  2. Advocacy threat
  3. Self-interest threat
  4. Intimidation threat
  5. Self-review threat

 

  1. These are fees calculated on a predetermined basis relating to the outcome or result of a transaction or the result of the work performed.
  2. Contingent fees
  3. Fixed fees
  4. Predetermined fees
  5. Commissions.

 

  1. As defined in the Code of Ethics, what is the communication to the public of information as to the services or skills provided by professional accountants in public practice with a view to procuring professional business?
  2. Advertising
  3. Publicity
  4. Solicitation
  5. Marketing professional services

 

  1. As defined in the Code of Ethics, what is the communication to the public of facts about a professional accountant which are not designed for the deliberate promotion of that professional accountant?
  2. Advertising
  3. Publicity
  4. Solicitation
  5. Marketing professional services

 

 

 

 

 

  1. Which of the following statements concerning publicity is incorrect?
  2. Booklets and other documents bearing the name of a professional accountant and giving technical information for the assistance of staff or clients may be issued to such persons, other professional accountants or other interested parties.
  3. Professional accountants who author books or articles on professional subjects may state their name and professional qualifications; give the name of their organization; and give any information as to the services that the firm provides.
  4. Appropriate newspapers or magazines may be used to inform the public of the establishment of a new practice, of changes in the composition of a partnership of professional accountants in public practice, or of any alteration in the address of a practice.
  5. A professional accountant may develop and maintain a website in the Internet in such suitable length and style which may also include announcements, press releases, publications and such other necessary and factual information.

 

  1. A professional accountant in public practice is allowed to
  2. Refer to, use or cite actual or purported testimonials by third parties.
  3. Publish services in billboard (e.g., tarpaulin, streamers, etc.) advertisements.
  4. Publish and compare fees with other CPAs or CPA firms or compare those services with those provided by another firm or CPA practitioner.
  5. Inform interested parties through any medium that a partnership or salaried employment of an accountancy nature is being sought.

 

  1. After evaluating the significance of the threat created by an actual or threatened litigation, the following safeguards should be applied to reduce the threat to an acceptable level, except
  2. Disclosing to the audit committee, or others charged with governance, the extent and nature of the litigation.
  3. If the litigation involves a member of the assurance team, removing that individual from the assurance team.
  4. Involving an additional professional accountant in the firm who was not a member of the assurance team to review the work or otherwise advise as necessary.
  5. Withdraw from, or refuse to accept, the assurance engagement.

 

  1. The following statements relate to the provision of legal services to an audit client. Which is incorrect?
  2. The provision of legal services to an audit client involving matters that would not be expected to have a material effect on the financial statements may create a self-review threat.
  3. Legal services to support an audit client in the execution of a transaction (e.g., contract support) may create a self-review threat.
  4. Acting for an audit client in the resolution of a dispute or litigation in such circumstances when the amounts involved are material in relation to the financial statements of the audit client would create advocacy and self-review threats so significant no safeguards could reduce the threats to an acceptable level.
  5. The appointment of a partner or an employee of the firm or network firm as General Counsel for legal affairs to an audit client would create self-review and advocacy threats that are so significant no safeguards could reduce the threats to an acceptable level.

 

  1. The following circumstances create advocacy threats for a professional accountant in public practice except
  2. Promoting shares in an audit client.
  3. Acting as an advocate on behalf of an audit client in litigation or disputes with third parties.
  4. Acting as campaign manager for the president of a client who is running for a public office.
  5. A member of the assurance team having a significant close business relationship with an assurance client.

 

 

 

 

  1. The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to
  2. Anticipate before performing any fieldwork whether an unqualified opinion can be expressed.
  3. Enable the CPA firm to attest to the reliability of the client.
  4. Satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.
  5. Minimize the likelihood of association with clients whose management lacks integrity.

 

  1. As defined in PSQC 1, what is a process comprising an ongoing consideration and evaluation of the firm’s system of quality control, including a periodic inspection of a selection of completed engagements, designed to provide the firm with reasonable assurance that its system of quality control is operating effectively?
  2. Monitoring
  3. Inspection
  4. Engagement quality control review
  5. Supervision

 

  1. Which element of a system of quality control is addressed by the establishment of policies and procedures designed to provide the firm with reasonable assurance that it has sufficient personnel with the competence, capabilities, and commitment to ethical principles?
  2. Monitoring
  3. Leadership responsibilities for quality within the firm
  4. Human resources
  5. Engagement performance

 

  1. For audits of financial statements of listed entities, the engagement partner should not issue the auditor’s report until the completion of the
  2. Engagement Quality Control Review
  3. Management Review
  4. Engagement Team Review
  5. Engagement Partner Review

 

  1. Who should take responsibility for the overall quality on each audit engagement?
  2. Engagement quality control reviewer
  3. Engagement partner
  4. Engagement team
  5. CPA firm

 

  1. The engagement partner should take responsibility for the direction, supervision, and performance of the audit engagement in compliance with professional standards and regulatory and legal requirements, and for the auditor’s report that is issued to be appropriate in the circumstances. Supervision includes the following, except
  2. Tracking the progress of the audit engagement.
  3. Addressing significant issues arising during the audit engagement, considering their significance, and modifying the planned approach appropriately.
  4. Informing the members of the engagement team of their responsibilities.
  5. Identifying matters for consultation or consideration by more experienced engagement team members during the audit engagement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE FINANCIAL STATEMENT AUDIT:  CLIENT ACCEPTANCE AND PLANNING

 

  1. Which of the following would an auditor most likely use in determining the auditor’s preliminary judgment about materiality?
  2. The anticipated sample size of the planned substantive tests.
  3. The entity’s annualized interim financial statements.
  4. The results of the internal control questionnaire.
  5. The contents of the management representation letter.

 

  1. Which of the following statements concerning materiality is not correct?
  2. When establishing the overall audit strategy, the auditor shall determine materiality for the financial statements as a whole.
  3. If, in the specific circumstances of the entity, there is one or more particular classes of transactions, account balances or disclosures for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements, the auditor shall also determine the materiality level or levels to those particular classes of transactions, account balances or disclosures.
  4. Determining materiality involves the exercise of professional judgment.
  5. The materiality level for the financial statements as a whole determined in the planning stage of the audit should not be affected by changes in the circumstances of the engagement.

 

  1. Analytical procedures used in planning an audit should focus on
  2. Reducing the scope of tests of controls and substantive tests.
  3. Providing assurance that potential material misstatements will be identified.
  4. Enhancing the auditor’s understanding of the client’s business and identifying areas of potential risk.
  5. Assessing the adequacy of the available evidential matter.

 

  1. Which of the following would not be considered an analytical procedure?
  2. Estimating payroll expense by multiplying the number of employees by the average hourly wage rate and the total hours worked.
  3. Projecting an error rate by comparing the results of a statistical sample with the actual population characteristics.
  4. Computing accounts receivable turnover by dividing credit sales by the average net receivables.
  5. Developing the expected sales based on the sales trend of the prior five years.

 

  1. Which of the following auditing procedures most likely would assist an auditor in identifying related party transactions?
  2. Inspecting correspondence with lawyers for evidence of unreported contingent liabilities.
  3. Vouching accounting records for recurring transactions recorded just after the balance sheet date.
  4. Reviewing confirmations of loans receivable and payable for indications of guarantees.
  5. Performing analytical procedures for indications of possible financial difficulties.

 

  1. Which of the following most likely would indicate the existence of related parties?
  2. Writing down obsolete inventory just before year-end.
  3. Failing to correct previously identified internal control deficiencies.
  4. Depending on a single product for the success of the entity.
  5. Borrowing money at an interest rate significantly below the market rate.

 

  1. If the results of the auditor’s expert’s work do not provide sufficient appropriate audit evidence or are not consistent with other audit evidence, the auditor should
  2. Report the matter to the appropriate regulatory agency of the government.
  3. Resolve the matter.
  4. Withdraw from the engagement.
  5. Express an unqualified opinion with reference to the work of the expert.

 

 

 

 

RISK ASSESSMENTS AND INTERNAL CONTROL

 

  1. A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unmodified opinion has been issued is the
  2. Inherent risk.
  3. Acceptable audit risk.
  4. Control risk.
  5. Detection risk.

 

  1. Which of the following is not one of the three primary objectives of effective internal control?
  2. Reliability of financial reporting.
  3. Efficiency and effectiveness of operations.
  4. Compliance with laws and regulations.
  5. Assurance of elimination of business risk.

 

  1. Which of the following statements concerning the relevance of various types of controls to a financial statement audit is correct?
  2. All controls are ordinarily relevant to a financial statement audit.
  3. Controls over safeguarding of assets and liabilities are of primary importance, while controls over the reliability of financial reporting may also be relevant.
  4. Controls over the reliability of financial reporting are ordinarily most directly relevant to a financial statement audit, but other controls may also be relevant.
  5. An auditor may ordinarily ignore a consideration of controls when a substantive audit approach is taken.

 

  1. An auditor should consider two key issues when obtaining an understanding of a client’s internal controls. These issues are
  2. The effectiveness and efficiency of the controls.
  3. The frequency and effectiveness of the controls.
  4. The design and implementation of the controls.
  5. The implementation and efficiency of the controls.

 

  1. Authorizations can be either general or specific. Which of the following is not an example of a general authorization?
  2. Automatic reorder points for raw materials inventory.
  3. A sales manager’s authorization for a sales return.
  4. Credit limits for various classes of transactions.
  5. A sales price list for merchandise.

 

  1. An auditor should obtain sufficient knowledge of an entity’s information system, including the related business processes relevant to financial reporting, to understand the
  2. Policies used to detect the concealment of fraud.
  3. Process used to prepare significant accounting estimates.
  4. Safeguards used to limit access to computer facilities.
  5. Procedures used to assure proper authorization of transactions.

 

  1. Which of the following controls most likely would provide reasonable assurance that all credit sales transactions of an entity are recorded?
  2. The accounting department supervisor controls the mailing of monthly statements to customers and investigates any differences reported by customers.
  3. The accounting department supervisor independently reconciles, on a monthly basis, the accounts receivable subsidiary ledger to the accounts receivable control account.
  4. The billing department supervisor matches prenumbered shipping documents with entries in the sales journal.
  5. The billing department supervisor sends copies of approved sales orders to the credit department for comparison to authorized credit limits and current customer account balances.

 

 

 

 

 

  1. Which of the following control activities in an entity’s revenue/receipt cycle would provide reasonable assurance that all billed sales are correctly posted to the accounts receivable ledger?
  2. Each shipment of goods on credit is supported by a prenumbered sales invoice.
  3. The accounts receivable subsidiary ledger is reconciled daily to the accounts receivable control account in the general ledger.
  4. Daily sales summaries are compared to daily postings to the accounts receivable ledger.
  5. Each sales invoice is supported by a prenumbered shipping document.

 

  1. Which of the following controls is not usually performed in the accounts payable department?
  2. Indicating on the voucher the affected asset and expense accounts to be debited.
  3. Approving vouchers for payment by having an authorized employee sign the vouchers.
  4. Accounting for unused prenumbered purchase orders and receiving reports.
  5. Matching the vendor’s invoice with the related purchase requisition, purchase order, and receiving report.

 

  1. After gaining an understanding of internal control and assessing the risks of material misstatement, an auditor decided to perform tests of controls. The auditor most likely decided that
  2. Additional evidence to support a further reduction in control risk is not available.
  3. It is not possible or practicable to reduce the risks of material misstatement at the assertion level to an acceptably low level with audit evidence obtained only from substantive test procedures.
  4. There were many internal control weaknesses that could allow misstatements to enter the accounting system.
  5. An increase in the assessed level of control risk is justified for certain financial statement assertions.

 

  1. An auditor may decide to assess control risk at the maximum level for certain assertions because the auditor believes
  2. Controls are unlikely to pertain to the assertions.
  3. The entity’s control components are interrelated.
  4. Sufficient appropriate audit evidence to support the assertions is likely to be available.
  5. More emphasis on tests of controls than substantive tests is warranted.

 

  1. Which of the following statements is correct concerning an auditor’s assessment of control risk?
  2. Assessing control risk may be performed concurrently during an audit with obtaining an understanding of the entity’s internal control.
  3. Evidence about the operation of controls in prior audits may not be considered during the current year’s assessment of control risk.
  4. The basis for an auditor’s conclusions about the assessed level of control risk need not be documented unless control risk is assessed at the maximum level.
  5. The lower the assessed level of control risk, the less assurance the evidence must provide that the controls are operating effectively.

 

  1. In performing tests of the operating effectiveness of an entity’s controls, an auditor selects from a variety of techniques, including
  2. Reperformance and observation.
  3. Inquiry and analytical procedures.
  4. Comparison and confirmation.
  5. Inspection and verification.

 

 

 

 

 

 

 

 

 

 

 

  1. Which of the following tests of controls most likely would help assure an auditor that goods shipped are properly billed?
  2. Scan the sales journal for sequential and unusual entries.
  3. Examine shipping documents for matching sales invoices.
  4. Compare the accounts receivable ledger to daily sales summaries.
  5. Inspect unused sales invoices for consecutive prenumbering.

 

  1. When there are numerous property and equipment transactions during the year, an auditor who plans to assess control risk at a low level usually performs
  2. Tests of controls and extensive tests of property and equipment balances at the end of the year.
  3. Analytical procedures for current year property and equipment transactions.
  4. Tests of controls and limited tests of current year property and equipment transactions.
  5. Analytical procedures for property and equipment balances at the end of the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRAUD AND ERROR

 

  1. “Error” includes
  2. Engaging in complex transactions that are structured to misrepresent the financial position or financial performance of the entity.
  3. Concealing, or not disclosing, facts that could affect the amounts recorded in the financial statements.
  4. An incorrect accounting estimate arising from oversight or misinterpretation of facts.
  5. Intentional misapplication of accounting policies relating to amounts, classification, manner of presentation, or disclosure.

 

  1. Fraud involving one or more members of management or those charged with governance is referred to as
  2. Management fraud. C.  Fraudulent financial reporting.
  3. Employee fraud. D.  Misappropriation of assets.

 

  1. The auditor is concerned with fraud that causes a material misstatement in the financial statements. There are two types of intentional misstatements that are relevant to the auditor: misstatements resulting from fraudulent financial reporting and misstatements resulting from
  2. Management fraud.
  3. Employee fraud.
  4. Misappropriation of assets.
  5. Collusion within the entity or with third parties.

 

  1. Fraudulent financial reporting involves intentional misstatements including omissions of amounts or disclosures in financial statements to deceive financial statement users. It may be accomplished in a number of ways, including
  2. Embezzling receipts.
  3. Stealing physical assets or intellectual property.
  4. Using an entity’s assets for personal use.
  5. Manipulation, falsification, or alteration of accounting records or supporting documentation from which the financial statements are prepared.

 

  1. The following are examples of fraud risk factors relating to misstatements arising from misappropriation of assets, except
  2. Recurring negative cash flows from operating activities while reporting earnings and earnings growth.
  3. Inadequate physical safeguards over cash, investments, inventory, or fixed assets.
  4. Inadequate segregation of duties or independent checks.
  5. Adverse relationship between the entity and employees with access to cash or other assets susceptible to theft created by recent changes made to employee compensation or benefit plans.

 

  1. Opportunities to misappropriate assets increase when there are
  2. Known or anticipated future employee layoffs.
  3. Promotions, compensation, or other rewards inconsistent with expectations.
  4. Recent or anticipated changes to employee compensation or benefit plans.
  5. Inventory items that are small in size, of high value, or in high demand.

 

  1. Which of the following conditions or events may create incentives/pressures to commit fraud?
  2. Inadequate system of authorization and approval of transactions.
  3. Lack of mandatory vacations for employees performing key control functions.
  4. Excessive pressure on management or operating personnel to meet financial targets established by those charged with governance, including sales or profitability incentive goals.
  5. Inadequate access controls over automated records.

 

  1. When the auditor identifies a misstatement in the financial statements, the auditor should consider whether such a misstatement may be indicative of fraud and if there is such an indication, the auditor should
  2. Consider the implications of the misstatement in relation to other aspects of the audit.
  3. Withdraw from the engagement.
  4. Communicate the information to regulatory and enforcement authorities.
  5. Report the matter to the person or persons who made the audit appointment.

AUDITING IN A CIS/IT ENVIRONMENT

 

  1. The use of a computer changes the processing, storage, and communication of financial information. A CIS environment may affect the following, except
  2. The accounting and internal control systems of the entity.
  3. The overall objective and scope of an audit.
  4. The auditor’s design and performance of tests of control and substantive procedures to satisfy the audit objectives.
  5. The specific procedures to obtain knowledge of the entity’s accounting and internal control systems.

 

  1. The following are benefits of using IT-based controls, except
  2. Ability to process large volume of transactions.
  3. Over-reliance on computer-generated reports.
  4. Ability to replace manual controls with computer-based controls.
  5. Reduction in misstatements due to consistent processing of transactions.

 

  1. Which of the following statements concerning the Internet is incorrect?
  2. The Internet is a shared public network that enables communication with other entities and individuals around the world.
  3. The Internet is a private network that only allows access to authorized persons or entities.
  4. The Internet is interoperable, which means that any computer connected to the Internet can communicate with any other computer connected to the Internet.
  5. The Internet is a worldwide network that allows entities to engage in e-commerce/e-business activities.

 

  1. The auditor shall consider the entity’s CIS environment in designing audit procedures to reduce risk to an acceptably low level. Which of the following statements is incorrect?
  2. The auditor’s specific audit objectives do not change whether financial information is processed manually or by computer.
  3. The methods of applying audit procedures to gather audit evidence are not influenced by the methods of computer processing.
  4. The auditor may use either manual audit procedures, computer-assisted audit techniques (CAATs), or a combination of both to obtain sufficient appropriate audit evidence.
  5. In some CIS environments, it may be difficult or impossible for the auditor to obtain certain data for inspection, inquiry, or confirmation without the aid of a computer.

 

  1. A characteristic that distinguishes computer processing from manual processing is
  2. The potential for systematic error is ordinarily greater in manual processing than in computerized processing.
  3. Errors or fraud in computer processing will be detected soon after their occurrences.
  4. Most computer systems are designed so that transaction trails useful for audit purposes do not exist.
  5. Computer processing virtually eliminates the occurrence of computational errors normally associated with manual processing.

 

 

 

  1. Which of the following statements most likely represents a disadvantage for an entity that maintains data files on personal computers (PCs) rather than manually prepared files?
  2. It is usually more difficult to compare recorded accountability with the physical count of assets.
  3. Random error associated with processing similar transactions in different ways is usually greater.
  4. Attention is focused on the accuracy of the programming process rather than errors in individual transactions.
  5. It is usually easier for unauthorized persons to access and alter the files.

 

 

 

 

 

 

 

  1. The internal controls over computer processing include both manual procedures and procedures designed into computer programs (programmed control procedures). These manual and programmed control procedures comprise the general CIS controls and CIS application controls. The purpose of general CIS controls is to
  2. Establish specific control procedures over the accounting applications in order to provide reasonable assurance that all transactions are authorized and recorded and are processed completely, accurately, and on a timely basis.
  3. Establish a framework of overall controls over the CIS activities and to provide a reasonable level of assurance that the overall objectives of internal control are achieved.
  4. Provide reasonable assurance that systems are developed and maintained in an authorized and efficient manner.
  5. Provide reasonable assurance that access to data and computer programs is restricted to authorized personnel.

 

  1. An entity has recently converted its purchasing cycle from a manual process to an online computer system. Which of the following is a probable result associated with conversion to the new IT system?
  2. Traditional duties are less separated.
  3. Increased processing time.
  4. Reduction in the entity’s risk exposure.
  5. Increased processing errors.

 

  1. An entity should plan the physical location of its computer facility. Which of the following is the primary consideration for selecting a computer site?
  2. It should be in the basement or on the ground floor.
  3. It should maximize the visibility of the computer.
  4. It should minimize the distance that data control personnel must travel to deliver data and reports and be easily accessible by a majority of company personnel.
  5. It should provide security.

 

  1. An entity installed antivirus software on all its personal computers. The software was designed to prevent initial infections, stop replication attempts, detect infections after their occurrence, mark affected system components, and remove viruses from infected components. The major risk in relying on antivirus software is that it may
  2. Consume too many system resources.
  3. Interfere with system operations.
  4. Not detect certain viruses.
  5. Make software installation too complex.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUDIT OBJECTIVES, PROCEDURES,EVIDENCE, AND DOCUMENTATION

 

  1. Which of the following should be considered by the auditor in deciding which means (or combination of means) to use in selecting items for testing?
  2. The risk of material misstatement related to the assertion being tested.
  3. Audit efficiency.
  4. I only C.  Both I and II
  5. II only D.  Neither I nor II

 

  1. The quantity of audit evidence needed is affected by the risk of misstatement and also by the quality of such audit evidence.

The reliability of audit evidence is influenced by its source and by its nature and is dependent on the individual circumstances under which it is obtained.

  1. Both statements are true. C.  True; False.
  2. Both statements are false. D.  False; True.

 

  1. Which of the following is a false statement about audit objectives?
  2. There should be a one-to-one relationship between audit objectives and procedures.
  3. Audit objectives should be developed in light of management assertions about the financial statement components.
  4. Selection of tests to meet audit objectives should depend upon the understanding of internal control.
  5. The auditor should resolve any substantial doubt about any of management’s material financial statement assertions.

 

  1. Which of the following statements concerning evidential matter is true?
  2. Appropriate evidence supporting management’s assertions should be convincing rather than merely persuasive.
  3. Effective internal control contributes little to the reliability of the evidence created within the entity.
  4. The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained.
  5. A client’s accounting records cannot be considered sufficient evidence to support the financial statements.

 

  1. Which of the following types of audit evidence is the most persuasive?
  2. Prenumbered purchase order forms.
  3. Client worksheets supporting cost allocations.
  4. Bank statements obtained from the client.
  5. Client representation letter.

 

  1. Which of the following generalizations does not relate to the appropriateness of evidence?
  2. Audit evidence from external sources (for example, confirmation received from a third party) is more reliable than that generated internally.
  3. An auditor’s opinion, to be economically useful, is formed within reasonable time and based on evidence obtained at a reasonable cost.
  4. Audit evidence generated internally is more reliable when the related accounting and internal control systems are effective.
  5. Audit evidence obtained directly by the auditor is more reliable than that obtained from the entity.

 

  1. Each of the following might, by itself, form a valid basis for an auditor to decide to omit a test except for the
  2. Difficulty and expense involved in testing a particular item.
  3. Assessment of control risk at a low level.
  4. Inherent risk involved.
  5. Relationship between the cost of obtaining evidence and its usefulness.

 

 

 

 

 

 

 

 

  1. In which of the following circumstances would the use of the negative form of accounts receivable confirmation most likely be justified?
  2. A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers.
  3. A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances.
  4. A small number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers.
  5. A small number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances.

 

  1. Which of the following statements is correct concerning the use of negative confirmation requests?
  2. Unreturned negative confirmation requests rarely provide significant explicit evidence.
  3. Negative confirmation requests are effective when detection risk is low.
  4. Unreturned negative confirmation requests indicate that alternative procedures are necessary.
  5. Negative confirmation requests are effective when understatements of account balances are suspected.

 

  1. Which of the following most likely would give the most assurance concerning the valuation and allocation assertion of accounts receivable?
  2. Vouching amounts in the subsidiary ledger to details on shipping documents.
  3. Comparing receivable turnover ratios with industry statistics for reasonableness.
  4. Inquiring about receivables pledged under loan agreements.
  5. Assessing the allowance for uncollectible accounts for reasonableness.

 

  1. Confirmation is “the process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.” Two assertions for which confirmation of accounts receivable balances provides primary evidence are
  2. Completeness and valuation
  3. Valuation and rights and obligations
  4. Rights and obligations and existence
  5. Existence and completeness

 

  1. To gain assurance that all inventory items in a client’s inventory listing schedule are valid, an auditor most likely would vouch
  2. Inventory tags noted during the auditor’s observation to items listed in the inventory listing schedule.
  3. Inventory tags noted during the auditor’s observation to items listed in receiving reports and vendors’ invoices.
  4. Items listed in the inventory listing schedule to inventory tags and the auditor’s recorded count sheets.
  5. Items listed in receiving reports and vendors’ invoices to the inventory listing schedule.

 

  1. Which of the following is not an audit procedure that the independent auditor would perform with respect to litigation, claims, and assessments?
  2. Inquire of and discuss with management the policies and procedures adopted for litigation, claims, and assessments.
  3. Obtain from management a description and evaluation of litigation, claims, and assessments that existed at the balance sheet date.
  4. Obtain assurance from management that if has disclosed all unasserted claims that the lawyer has advised are probable of assertion and must be disclosed.
  5. Confirm directly with the client’s lawyer that all claims have been recorded in the financial statements.

 

 

 

 

 

 

 

 

 

  1. Audit documentation may be recorded on paper or on electronic or other media. The following are examples of audit documentation, except
  2. Audit programs
  3. Letters of confirmation and representation
  4. Correspondence (including e-mail) concerning significant matters
  5. The entity’s accounting records

 

  1. The completion of the assembly of the final audit file after the date of the auditor’s report does not ordinarily involve
  2. The performance of new audit procedures or the drawing of new conclusions.
  3. Sorting, collating and cross-referencing working papers.
  4. Deleting or discarding superseded documentation.
  5. Signing off on completion checklists relating to the file assembly process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AUDIT SAMPLING

 

  1. Audit sampling involves the
  2. Selection of all items over a certain amount.
  3. Application of audit procedures to less than 100% of items within a class of transactions or an account balance such that all items have a chance of selection.
  4. Application of audit procedures to all items that comprise a class of transactions or an account balance.
  5. Application of audit procedures to all items over a certain amount and those that are unusual or have a history of error.

 

  1. Population, as defined in PSA 530, means the entire set of data from which a sample is selected and about which the auditor wishes to draw conclusions. It is important for the auditor to ensure that the population is
  2. Appropriate to the objective of the audit procedure.
  3. Complete.
  4. I only C.  Both I and II
  5. II only D.  Neither I nor II

 

  1. An advantage of statistical over nonstatistical sampling methods in tests of controls is that the statistical methods
  2. Afford greater assurance than a nonstatistical sample of equal size.
  3. Provide an objective basis for quantitatively evaluating sampling risks.
  4. Can more easily convert the sample into a dual-purpose test useful for substantive testing.
  5. Eliminate the need to use judgment in determining appropriate sample sizes.

 

  1. Which of the following best illustrates the concept of sampling risk?
  2. A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest.
  3. An auditor may select audit procedures that are not appropriate to achieve the specific objective.
  4. An auditor may fail to recognize errors in the documents examined for the chosen sample.
  5. The documents related to the chosen sample may not be available for inspection.

 

  1. Which of the following statistical selection techniques is least desirable for use by an auditor?
  2. Systematic selection C.  Block selection
  3. Stratified selection D.  Sequential selection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPLETING THE AUDIT AND POST-AUDIT RESPONSIBILITIES

 

  1. Analytical procedures used in the overall review stage of the audit generally include
  2. Retesting controls that appeared to be ineffective during the assessment of control risk.
  3. Considering unusual or unexpected account balances that were not previously identified.
  4. Gathering evidence concerning account balances that have not changed from the prior year.
  5. Performing tests of transactions to corroborate management’s financial statement assertions.

 

  1. Analytical procedures performed in the overall review stage of an audit suggest that several accounts have unexpected relationships. The results of these procedures most likely indicate that
  2. The communication with the audit committee should be revised.
  3. Irregularities exist among the relevant account balances.
  4. Additional substantive tests of details are required.
  5. Internal control activities are not operating effectively.

 

  1. Which of the following events most likely indicates the existence of related parties?
  2. Making a loan without scheduled terms for repayment of the funds.
  3. Discussing merger terms with a company that is a major competitor.
  4. Selling real estate at a price that differs significantly from its book value.
  5. Borrowing a large sum of money at a variable rate of interest.

 

  1. An auditor searching for related party transactions should obtain an understanding of each subsidiary’s relationship to the total entity because
  2. This may permit the audit of intercompany account balances to be performed as of concurrent dates.
  3. This may reveal whether particular transactions would have taken place if the parties had not been related.
  4. The business structure may be deliberately designed to obscure related party transactions.
  5. Intercompany transactions may have been consummated on terms equivalent to arm’s-length transactions.

 

  1. After determining that a related party transaction has, in fact, occurred, an auditor should
  2. Obtain an understanding of the business purpose of the transaction.
  3. Substantiate that the transaction was consummated on terms equivalent to an arm’s-length transaction.
  4. Add a separate paragraph to the auditor’s report to explain the transaction.
  5. Perform analytical procedures to verify whether similar transactions occurred, but were not recorded.

 

  1. Which of the following statements best describes the “date of the financial statements?”
  2. The date on which those with the recognized authority assert that they have prepared the entity’s complete set of financial statements, including the related notes, and that they have taken responsibility for them.
  3. The date that the auditor’s report and audited financial statements are made available to third parties.
  4. The date of the end of the latest period covered by the financial statements, which is normally the date of the most recent balance sheet in the financial statements subject to audit.
  5. The date on which the auditor has obtained sufficient appropriate audit evidence on which to base the opinion on the financial statements.

 

 

 

 

 

 

 

 

 

  1. Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?
  2. Inquiring as to whether any unusual adjustments were made after the date of the financial statements.
  3. Confirming a sample of material accounts receivable established after the date of the financial statements.
  4. Comparing the financial statements being reported on with those of the prior period.
  5. Investigating personnel changes in the accounting department occurring after the date of the financial statements.

 

  1. Which of the following statements best expresses the auditor’s responsibility with respect to facts discovered after the date of the auditor’s report but before the date the financial statements are issued?
  2. The auditor should amend the financial statements.
  3. If the facts discovered will materially affect the financial statements, the auditor should issue a new report which contains either a qualified opinion or an adverse opinion.
  4. The auditor should consider whether the financial statements need amendment, discuss the matter with management, and consider taking actions appropriate in the circumstances.
  5. The auditor should withdraw from the engagement.

 

  1. After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unless
  2. Final determinations or resolutions are made of contingencies that had been disclosed in the financial statements.
  3. Information about an event that occurred after the date of the auditor’s report comes to the auditor’s attention.
  4. The control environment changes after issuance of the report.
  5. Information, which existed at the report date and may affect the report, comes to the auditor’s attention.

 

  1. Which of the following events occurring after the issuance of an auditor’s report most likely would cause the auditor to make further inquiries about the previously issued financial statements?
  2. A technological development that could affect the entity’s future ability to continue as a going concern.
  3. The entity’s sale of a subsidiary that accounts for 30% of the entity’s consolidated sales.
  4. The discovery of information regarding a contingency that existed before the financial statements were issued.
  5. The final resolution of a lawsuit disclosed in the notes to the financial statements.

 

  1. Which of the following statements best describes the auditor’s responsibility concerning the appropriateness of the going concern assumption in the preparation of the financial statements?
  2. The auditor’s responsibility is to make a specific assessment of the entity’s ability to continue as a going concern.
  3. The auditor’s responsibility is to predict future events or conditions that may cause the entity to cease to continue as a going concern.
  4. The auditor’s responsibility is to consider the appropriateness of management’s use of the going concern assumption and consider whether there are material uncertainties about the entity’s ability to continue as a going concern that need to be disclosed in the financial statements.
  5. The auditor’s responsibility is to give a guarantee in the audit report that the entity has the ability to continue as a going concern.

 

  1. Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity’s ability to continue as a going concern?
  2. Cash flows from operating activities are negative.
  3. Stock dividends replace annual cash dividends.
  4. Significant related party transactions are pervasive.
  5. Research and development projects are postponed.

 

 

  1. Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity’s ability to continue as a going concern?
  2. Restrictions on the disposal of principal assets are present.
  3. Usual trade credit from suppliers is denied.
  4. Significant related party transactions are pervasive.
  5. Arrearages in principal stock dividends are paid.

 

  1. Which of the following audit procedures would most likely assist an auditor in identifying conditions and events that may indicate there could be substantial doubt about an entity’s ability to continue as a going concern?
  2. Confirmation of bank balances.
  3. Confirmation of accounts receivable from major customers.
  4. Reconciliation of interest expense with debt outstanding.
  5. Review of compliance with terms of debt agreements.

 

  1. When an auditor concludes that there is substantial doubt about a continuing audit client’s ability to continue as a going concern for a reasonable period of time, the auditor’s responsibility is to
  2. Consider the adequacy of disclosure about the client’s possible inability to continue as a going concern.
  3. Issue a qualified or adverse opinion, depending upon materiality, due to the possible effects on the financial statements.
  4. Report to the client’s audit committee that management’s accounting estimates may need to be adjusted.
  5. Reissue the prior year’s auditor’s report and add an emphasis of matter paragraph that specifically refers to “substantial doubt” and “going concern.”

 

  1. When an audit is made in accordance with generally accepted auditing standards, the auditor should always
  2. Observe the taking of physical inventory on the balance sheet date.
  3. Obtain certain written representations from management.
  4. Employ analytical procedures as substantive tests to obtain evidence about specific assertions related to account balances.
  5. Document the understanding of the client’s internal control and the basis for all conclusions about the assessed level of control risk for financial statement assertions.

 

  1. When considering the use of management’s written representations as audit evidence about the completeness assertion, an auditor should understand that such representations
  2. Constitute sufficient appropriate audit evidence to support the assertion when considered in combination with a sufficiently low assessed level of control risk.
  3. Are not part of the audit evidence considered to support the assertion.
  4. Replace a low assessed level of control risk as audit evidence to support the assertion.
  5. Complement, but do not replace, substantive tests designed to support the assertion.

 

  1. A written representation from a client’s management that, among other matters, acknowledges responsibility for the fair presentation of financial statements, should normally be signed by the
  2. Chief financial officer and the chair of the board of directors.
  3. Chief executive officer and the chief financial officer.
  4. Chief executive officer, the chair of the board of directors, and the client’s lawyer.
  5. Chair of the audit committee of the board of directors.

 

  1. The date of the management representation letter should coincide with the date of the
  2. Statement of Financial Position
  3. Latest related party transaction
  4. Auditor’s report
  5. Latest interim financial information

 

 

 

 

 

 

 

 

  1. Which of the following statements concerning management representations is incorrect?
  2. Representations by management can be a substitute for other audit evidence that the auditor could reasonably expect to be available.
  3. If the auditor is unable to obtain sufficient appropriate audit evidence regarding a matter, which has, or may have, a material effect on the financial statements and such audit evidence is expected to be available, this will constitute a limitation in the scope of the audit, even if a representation from management has been received on the matter.
  4. If a representation by management is contradicted by other audit evidence, the auditor should investigate the circumstances and, when necessary, reconsider the reliability of other representations by management.
  5. The auditor’s working papers would ordinarily include a summary of oral discussions with management or written representations from management.

 

  1. What type of opinion should be expressed if the client’s management refuses to provide a representation that the auditor considers necessary?
  2. Qualified opinion or a disclaimer of opinion.
  3. Qualified opinion or an adverse opinion.
  4. Adverse opinion or a disclaimer of opinion.
  5. Unqualified opinion.

 

  1. The primary reason an auditor requests that letters of inquiry be sent to a client’s attorneys is to provide the auditor with
  2. A description and evaluation of litigation, claims, and assessments that existed at the balance sheet date.
  3. The attorneys’ opinions of the client’s historical experiences in recent similar litigation.
  4. Corroboration of the information furnished by management about litigation, claims, and assessments.
  5. The probable outcome of asserted claims and pending or threatened litigation.

 

  1. The letter of audit inquiry should be
  2. Prepared and sent by the auditor.
  3. Prepared by management and sent by the auditor.
  4. Prepared and sent by management.
  5. Prepared by the auditor and sent by management.

 

  1. The refusal of a client’s lawyer to provide a representation on the legality of a particular act committed by the client is ordinarily
  2. Proper grounds to withdraw from the engagement.
  3. Insufficient reason to modify the auditor’s report because of the lawyer’s obligation of confidentiality.
  4. Considered to be a scope limitation.
  5. Sufficient reason to issue a “subject to” opinion.

 

  1. Management’s refusal to give the auditor permission to communicate with the entity’s legal counsel is most likely to lead to
  2. An adverse opinion.
  3. A qualified opinion or an adverse opinion.
  4. An unqualified opinion.
  5. A qualified opinion or a disclaimer of opinion.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE AUDITOR’S REPORT ON FINANCIAL STATEMENTS

 

  1. The following statements relate to the date of the auditor’s report. Which is false?
  2. The auditor should date the report as of the completion date of the audit.
  3. The date of the auditor’s report should not be earlier than the date on which the financial statements are signed or approved by management.
  4. The date of the auditor’s report should not be later than the date on which the financial statements are signed or approved by management.
  5. The date of the auditor’s report should always be later than the date of the financial statements (i.e., the balance sheet date).

 

  1. In which of the following circumstances would an auditor most likely add an emphasis of matter paragraph to the auditor’s report while expressing an unqualified opinion?
  2. There is a substantial doubt about the entity’s ability to continue as a going concern.
  3. Management’s estimates of the effects of future events are unreasonable.
  4. No depreciation has been provided in the financial statements.
  5. Certain transactions cannot be tested because of management’s records retention policy.

 

  1. A note to the financial statements of the Prudent Bank indicates that all of the records relating to the bank’s business operations are stored on magnetic disks, and that no emergency backup systems or duplicate disks are stored because the bank and its auditors consider the occurrence of a catastrophe to be remote. Based upon this note, the auditor’s report should express
  2. A qualified opinion C.  An adverse opinion
  3. An unmodified opinion D.  A “subject to” opinion

 

  1. When would the auditor refer to the work of an appraiser in the auditor’s report?
  2. An adverse opinion is expressed based on a difference of opinion between the client and the outside appraiser as to the value of certain assets.
  3. A disclaimer of opinion is expressed because of a scope limitation imposed on the auditor by the appraiser.
  4. A qualified opinion is expressed because of a matter unrelated to the work of the appraiser.
  5. An unqualified opinion is expressed and an emphasis of matter paragraph is added to disclose the use of the appraiser’s work.

 

  1. When audited financial statements are presented in a document (e.g., annual report) containing other information, the auditor
  2. Should read the other information to consider whether it is inconsistent with the audited financial statements.
  3. Has no responsibility for the other information because it is not part of the basic financial statements.
  4. Has an obligation to perform auditing procedures to corroborate the other information.
  5. Is required to express a qualified opinion if the other information has a material misstatement of fact.

 

  1. An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. If the auditor concludes that the financial statements do not require revision, but the client refuses to revise or eliminate the material inconsistency, the auditor may
  2. Disclaim an opinion on the financial statements after explaining the material inconsistency in an emphasis of matter paragraph.
  3. Revise the auditor’s report to include an other matter paragraph describing the material inconsistency.
  4. Express a qualified opinion after discussing the matter with the client’s directors.
  5. Consider the matter closed because the other information is not in the audited statements.

 

 

 

 

 

 

 

  1. In which of the following situations would an auditor ordinarily choose between expressing a qualified opinion or an adverse opinion?
  2. The auditor wishes to emphasize an unusually important subsequent event.
  3. The financial statements fail to disclose information that is required by Philippine Financial Reporting Standards.
  4. Events disclosed in the financial statements cause the auditor to have substantial doubt about the entity’s ability to continue as a going concern.
  5. The auditor did not observe the entity’s physical inventory and is unable to become satisfied as to its balance by other auditing procedures.

 

  1. An auditor should disclose the substantive reasons for expressing an adverse opinion in the Basis for Adverse Opinion paragraph
  2. Following the opinion paragraph.
  3. Preceding the opinion paragraph.
  4. Following the introductory paragraph.
  5. Within the notes to the financial statements.

 

  1. The predecessor auditor, who is satisfied after properly communicating with the incoming auditor, has reissued his/her auditor’s report on prior year financial statements. The predecessor auditor’s report should
  2. Refer to the work of the incoming auditor in the scope and opinion paragraphs.
  3. Refer to the report of the incoming auditor only in the scope paragraph.
  4. Refer to both the work and the report of the incoming auditor only in the opinion paragraph.
  5. Not refer to the report or the work of the incoming auditor.

 

  1. The following statements relate to unaudited prior year financial statements that are presented in comparative form with audited current year financial statements. Which is incorrect?
  2. The incoming auditor should state in the auditor’s report that the comparative financial statements are unaudited.
  3. The incoming auditor need not perform audit procedures regarding opening balances of the current period.
  4. Clear disclosure in the financial statements that the comparative financial statements are unaudited is encouraged.
  5. In situations where the incoming auditor identifies that the prior year unaudited figures are materially misstated, the auditor should request management to revise the prior year’s figures or if management refuses to do so, appropriately modify the report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER REPORTING RESPONSIBILITIES

 

  1. Financial statements of an entity that have been reviewed by an accountant should be accompanied by a report stating that a review
  2. Provides only limited assurance that the financial statements are fairly presented.
  3. Includes examining, on a test basis, information that is the representation of management.
  4. Consists principally of inquiries of company personnel and analytical procedures applied to financial data.
  5. Does not contemplate obtaining corroborating evidential matter or applying certain other procedures ordinarily performed during an audit.

 

  1. An accountant’s report on a review of the financial statements of an entity should state that the accountant
  2. Does not express an opinion or any form of limited assurance on the financial statements.
  3. Conducted the review in accordance with the Philippine Standard on Review Engagements.
  4. Obtained reasonable assurance about whether the financial statements are free of material misstatements.
  5. Examined evidence, on a test basis, supporting the amounts and disclosures in the financial statements.

 

  1. Financial statements of an entity that have been reviewed by an accountant should be accompanied by a report stating that
  2. The scope of the inquiry and analytical procedures performed by the accountant has not been restricted.
  3. The financial statements are the responsibility of the company’s management.
  4. A review includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
  5. A review is greater in scope than a compilation, the objective of which is to present financial statements that are free of material misstatements.

 

  1. When compiling the financial statements of an entity, an accountant should
  2. Review agreements with financial institutions for restrictions on cash balances.
  3. Understand the accounting principles and practices of the entity’s industry.
  4. Inquire of key personnel concerning related parties and subsequent events.
  5. Perform ratio analyses of the financial data of comparable prior periods.

 

  1. When compiling an entity’s financial statements, an accountant would be least likely to
  2. Perform analytical procedures designed to identify relationships that appear to be unusual.
  3. Read the compiled financial statements and consider whether they appear to include adequate disclosure.
  4. Obtain an acknowledgment from management of its responsibility for the financial statements.
  5. Plan the work so that an effective engagement will be performed.

 

  1. Which of the following should not be included in an accountant’s report based upon the compilation of an entity’s financial statements?
  2. A statement that a compilation of the company’s financial statements was made in accordance with the Philippine Standard on Related Services applicable to compilation engagements.
  3. A statement that management is responsible for the financial statements.
  4. A statement that the accountant has not audited or reviewed the statements.
  5. A statement that the accountant does not express an opinion but provides only negative assurance on the statements.

 

 

 

 

 

 

 

 

  1. An accountant may accept an engagement to apply agreed-upon procedures that are not sufficient to express an opinion on one or more specified accounts or items of a financial statement provided that
  2. The accountant’s report does not enumerate the procedures performed.
  3. The financial statements are prepared in accordance with a comprehensive basis of accounting other than generally accepted accounting principles.
  4. Distribution of the accountant’s report is restricted.
  5. The accountant is also the entity’s continuing auditor.

 

 

  1. When an accountant examines prospective financial statements, the accountant’s report should include a separate paragraph that
  2. Contains an opinion as to whether the prospective financial statements are properly prepared on the basis of the assumptions and are presented in accordance with generally accepted accounting principles in the Philippines.
  3. Provides an explanation of the differences between an examination and an audit.
  4. States that the accountant is responsible for events and circumstances up to 1 year after the report’s date.
  5. Disclaims an opinion on whether the assumptions provide a reasonable basis for the prospective financial statements.

 

  1. The following statements relate to the examination of prospective financial information. Which is false?
  2. The auditor should express an opinion as to whether the results shown in the prospective financial information will be achieved.
  3. Before accepting an engagement to examine prospective financial information, the auditor should consider the intended use of the information.
  4. The auditor should not accept, or should withdraw from, an engagement to examine prospective financial information when the assumptions are clearly unrealistic.
  5. When in the auditor’s judgment an appropriate level of satisfaction has been obtained, the auditor is not precluded from expressing positive assurance regarding the assumptions.

 

  1. Which of the following is a prospective financial information for general use upon which an accountant may appropriately report?
  2. Financial projection
  3. Partial presentation
  4. Pro forma financial statement
  5. Financial forecast

 

 

END

 

ENG 225 Week 2 week 1

 

  1. Which of the following is usually true of the scenes in which film actors perform?

Multiple versions of each scene are shot

  1. What kind of film is least likely to use the three-point lighting system?

A documentary

  1. Method actors draw upon which primary source for their roles?

Their own experiences

  1. Shooting the same scene from multiple camera viewpoints to provide options for the director is known as what?

Coverage

  1. Which element of mise en scène is typically designed by the cinematographer?

Lighting

  1. What is another name for the cinematographer?

Director of photography

  1. Which of the following is true of a realistic acting style?

It can seem stylized to audiences from different eras

  1. How does the cinematographer control color in a scene?

By using color filters

  1. In addition to acting, which of the following is part of a movie’s mise en scène?

Props

  1. In today’s movie industry, who is most responsible for creating and maintaining a star’s persona?

 

  1. What is a theme?

An idea, subject, or topic that pervades the plot

  1. Which of the following leads to the deepest appreciation of a film?

Paying attention to what a film is trying to say

  1. Why do some filmmakers object to the widespread availability of films on computers and mobile devices?

It causes viewers to miss details in films

  1. In a scene from Butch Cassidy and the Sundance Kid, the title characters are holed up inside a building discussing their plans for future bank robberies while the audience is shown the entire Bolivian army gathering outside to kill them. The filmmakers are making use of what literary element in this scene?

Dramatic irony

  1. A good film critic is likely to do which of the following?

Examine a film on many levels

  1. If a film depicts the bungling efforts of army officers and soldiers in order to demonstrate the absurdity of military behavior and values, it is employing what literary technique?

Satire

  1. Which is the best description of the difference between “plot” and “story”?

Story is what happens, and plot is how it happens

  1. Which of the following is a demonstration of media literacy?

Recognizing how a movie manipulates the audience’s reactions to it

  1. If a film constantly lets the audience know more than the characters, which point of view does it have?

Omniscient

  1. Which of the following is primarily responsible for piecing individual shots and scenes together in coherent form?

 

Editor