A market research team conducted a pilot test for its new product. The team observed 50 volunteers and recorded their response scores. Using the sample mean and standard deviation, ahypothesis test was performed to see if the average response score was greater than 90. The team calculated a p-value of 0.0477. Which of the following statements is correct?

• A.The p-value is less than 0.05; hence, there is evidence to reject the null hypothesis.
• B.The p-value shows that the probability the average score is less than 90 is 0.0477.
• C.The p-value shows that the probability the average score is more than 90 is 0.0477.
• D.Without a specified significance level, the p-value cannot be used as evidence to reject or accept the null hypothesis.

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Which of the following situations is an example of materiality in accounting?

• A.Company A receives an order from its largest customer, but it is a relatively small order. Company A does not make any entry into the accounts at the time it receives the order.
• B.Company A wants to purchase $100,000 worth of fabric to use in its upholstery business. However, the supplier will not grant credit for a purchase that large, so Company A reduces the order to $20,000.
• C.Company A initiates a relatively small new advertising campaign. Company A decides to include these costs as part of selling, general, and administrative expenses on the income statement rather than disclose them separately.
• D.Company A owns land that it purchased for $100,000 twenty years ago. The land is now appraised at $250,000, but Company A does not adjust the value of the land in its accounts.

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Company A has a Weighted Average Cost of Capital (WACC) of 12 percent. They are evaluating four different projects/investments with financial flows as described below. Available funds are limited, so they can only pursue one of the investment alternatives. Each project/investment involves an initial outflow of $1,000,000 and has an eight year life.

Which project should they select?

• A.Project 1
• B.Project 3
• C.Project 2
• D.Project 4

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Company A has been profitable for the past five years but the Retained Earnings reported on the financial statements has not grown. Which of the following statements could explain the situation?

• A.Company A has issued additional shares of common stock.
• B.Company A has paid dividends to shareholders each year.
• C.Company A has paid down a portion of its long term debt.
• D.Company A has invested heavily in new machinery and equipment.

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Why would an entrepreneur want to operate a mobile food truck instead of a restaurant?

• A.A mobile food truck invites a wider variety of customers than a restaurant.
• B.In the long-run restaurants make zero economic profit.
• C.A mobile food truck has lower fixed costs than a restaurant.
• D.In the short-run restaurants make zero economic profit.

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