# Accounting Week 8 Quiz and Homework Question Latest 2016

Accounting Week 8 Quiz and Homework Question Latest 2016

The figure given below represents two indifference curves I1 and I2 of an individual.
Figure 7.2

Refer to Figure 7.2. Which of the following statements is true?

a. Point B yields a greater level of satisfaction than point C.

b. Point B yields a greater level of satisfaction than point D.

c. Points A and E yield the same level of satisfaction.

d. Point C yields a lower level of satisfaction than point D.

e. I2 represents a greater level of satisfaction than I1.

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.
Figure 8.3
Refer to the Figure 8.3. In the long run, an increase in production from Q1 to Q3 would:

a. increase average cost by C4 – C1.

b. increase average cost by C3 – C2.

c. decrease average cost by C3 – C1.

d. decrease average cost by C3 – C2.

e. increase average cost by C3 – C1.

If the total cost of producing 6 units is \$228 and the total cost of producing 7 units is \$245, what is the marginal cost of producing the seventh unit?

a. \$17

b. \$38

c. \$245

d. \$35

e. \$3

The table below shows the total cost of producing different units of a commodity.
Table 8.2
Total Output Total Cost
0 \$100
2 \$196
4 \$212
6 \$310
8 \$430
10 \$570

Refer to Table 8.2. The average fixed cost of the first unit of output is:

a. \$140.

b. \$98.

c. \$50.

d. \$100.

e. \$46.

If the cost borne by a firm when output is zero is \$100 and that of producing 5 units is \$250, then the variable cost of the firm is equal to \$150.
a. True
b. False

If long-run costs are plotted on the vertical axis and quantity of output plotted on the horizontal axis, a positively sloped line implies _____.

a. an increase in capital-labor ratio

b. diseconomies of scale

c. constant returns to scale

d. economies of scale

e. a decrease in cost-output ratio
Which of the following reflects the correct relationship between average total cost (ATC) and marginal cost (MC)?

a. When ATC < MC; MC is falling.

b. When MC > ATC; ATC is falling.

c. When MC < ATC; ATC is falling.

d. When MC < ATC; ATC is constant.

e. When ATC is minimum; ATC < MC.
A firm’s marginal cost equals the:

a. slope of the demand curve under perfect competition.

b. ratio of total cost to total quantity.

c. slope of the total product curve when the latter is at its maximum.

d. change in total cost divided by the change in total output.

e. slope of the supply curve.

Suppose that the total fixed cost of producing five sailboats is \$4,000, total variable cost is \$4,000, and the total cost of producing six sailboats is \$10,000. The marginal cost of the sixth sailboat is:

a. \$10,000.

b. \$2,000.

c. \$8,000.

d. \$4,000.

e. \$6,000.

The following table shows the cost of producing different units of ball point pens by a firm.
Table 8.1
Total Output Total Cost
0 10
1 12
2 14
3 18
4 24
5 30

Refer to Table 8.1. What is the marginal cost of producing the fifth unit?

a.\$2

b.\$4

c.\$6

d.\$8

e. \$10

In the electricity generation industry, the cost per kilowatt hour of electricity declines as the capacity to generate output increases. This situation represents:

a. economies of scale.

b. constant returns to scale.

c. a poor opportunity for investors.

d.decreasing returns to scale.

e.diseconomies of scale.

Homework Question
District Water Company issued 10-year bonds with a face value of \$100,000 and a stated interest rate of 8.0%. The bonds are dated April 1, 2016, and call for semiannual interest payments on each April 1 and October 1. Due to market fluctuations, the bonds actually sold to yield 10.0% per year.

1. Compute the amount received for the bonds.
2. Compute the first interest and amortization amounts for the October 1, 2016, payment.
3. Prepare journal entries for the issuance of the bonds and for the first interest payment.
4. Compute the second interest and amortization amounts for the April 1, 2017, payment.

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