VE Assessment Exam 2019 Part 2

. Budgets can be a useful tool for company managers when

• budgeted amounts are compared to actual amounts to find areas of strengths and weakness

• separate budgets are used for each department

• amounts budgeted are always in anticipation of the ''best-case scenarios''

• the budget is prepared only under conditions of perfect certainty

The income statement

• A. is generally used to determine the amount left after deducting sales discounts and return allowances from gross sales

• B. can be substituted for the cash flow statement when reporting income

• C. is a report of the total dollar amount of a company's sales

• D. summarizes the firm's revenues and expenses and shows total profit over a period of time

A break-even analysis is important because it

• A. allows a company to determine how many units of a product it would have to sell in order to have sales revenue exceed total costs

• B. enables a company to determine how many units of a product it would have to sell in order to have sales revenue meet total costs

• C. allows a company to determine sales revenue based only on variable costs

• D. enables a company to determine fixed and variable costs

Companies prepare annual reports

• A. as an optional exercise, if the firm sells stock to the public

• B. as an optional exercise, if the firm has prepared a business plan in the same fiscal year

• C. because it is required by the Securities and Exchange Commission

• D. to provide information to investors, creditors and employees of the firm

Which is the functional equivalent of a personal check?

• A. a credit card

• B. a debit card

• C. an overdraft protection

• D. a money market account

Investment option A offers 4% APR compounded daily; investment option B offers 4% APR compounded monthly. Which statement about these investment choices is true?

• A. The APY for option A will be higher than for option B.

• B. The APY for option B will be higher than for option A.

• C. The APY for options A and B will be the same. information.

• D. The APY for options A and B cannot be determined without additional

The federal income tax is generally recognized to be a

• A. progressive tax because as people's taxable income grows, the amount paid increases although the percent remains unchanged.

• B. progressive tax because as people's taxable income grows, the amount paid increases and the percent they pay also increases.

• C. proportional tax because everyone with the same taxable income pays the same tax.

• D. regressive tax because the amount that poor people pay is more important to them regardless of the percent of their taxable income they pay.

Choose the statement about taxation that is true.

• A. Students are exempt from paying federal income tax and are not required to file a federal tax return.

• B. Employees can decide whether or not they would like to have Social Security and Medicare payments withheld from their paychecks.

• C. The standard deduction amount is the same for all taxpayers.

• D. The amount of federal income tax withheld from an employee's pay is based, in part, upon information that the employee provides to the employer.

Choose from A through D below to identify the correct statement about the time value of money.

• A. The present value of an investment cannot be determined without determining the amount of risk an investor can tolerate.

• B. The present value of an investment is the total amount that a series of future payments is worth now.

• C. The present value of an investment cannot be determined without calculating the expected rate of inflation during the investment period.

• D. None of the above statements about the time value of money are correct.

Which of the following is a true statement about a personal budget?

• A. A personal budget provides an early warning system that, when compared to actual results, can identify when something is wrong.

• B. A personal budget is an ineffective way for people to know what they need to save and spend.

• C. A personal budget will guarantee that individuals live within their income.

• D. A personal budget can only be prepared by someone who has received extensive training in budget preparation