ACCT 3309 Exam Three Review
The exam is 40 multiple choice questions. There is no free response (essay or problems to write out)
required on the exam. There are only very basic computations on the exam. It is mostly analysis and
interpretation of numbers given. You do not need a calculator for the exam.
The exam is closed books/closed notes. You are not allowed to use notecards or other items during the
exam. You must use Lockdown Browser with Respondus Webcam Monitor during the exam.
Below is a list of the materials you need to review, as well as topics from the Lecture Notes that you
should study. This is not a comprehensive or exclusive list of every item that might be on the exam.
It is a study guide to help you navigate through the Class Lecture Notes (slides) you completed during
the video lectures.
Key Terms (know definitions, give examples, differentiate between)
Earned value management, network analysis, expected value technique, planned value
Stakeholder, shareholder, collective bargaining, debt covenant
Working capital, efficiency, depreciation, amortization, capital costs, carrying costs, ordering
costs, raw materials, works-in-process, finished goods, FIFO, LIFO, AR/AP terms
Compound interest, capital budgeting, cost of capital, weighted average cost of capital, hurdle
rate
Variances, unfavorable variance, favorable variance, price variance, quantity variance, volume
variance, management by exception, budget centers: cost center, revenue center, profit center
Class 09 Uncertainty – Read chapter 10
What is uncertainty, how do we deal with it (laws, structures to manage it)
Expected value technique, examining all possible outcomes
Network analysis, critical path
Class 10 Capital Budgeting, Group Exercise Four – Read chapter 11
Risk vs. return, hurdle rate, cost of capital
What cash flows are relevant to capital budgeting
Strengths/weaknesses of Payback period, NPV, IRR
Decision rules with payback period, NPV, IRR
Class 11 Jiminy Peak, Shareholder vs. Stakeholder, Discussion Three
Cost of capital and required rate of return in Jiminy Peak case
Who are shareholders, who are stakeholders (3 main groups)
Costs/risks of shareholder approach and stakeholder approach
Advantages of shareholder approach and stakeholder approach
Class 12 Earned Value Management – Read chapter 12
Definition: earned value, planned value, schedule variance, cost variance
Class 13 Depreciation – Read chapter 13
Define depreciation and amortization
Class 14 Bonds and Time Value of Money, Group Exercise Five – Read chapter 14
Present value vs. future value, why is $1 now better than $1 in the future
Five variables used in Time Value of Money: PV, FV, PMT, NPER, RATE
Adjusting RATE and NPER for number of periods/payments in a year
Example: quarterly payments: NPER = # years x 4; RATE = annual rate / 4
How is the issue price of a bond determined
PV of interest payments + PV of principal (face value of bond)
Using excel formulas to compute issue price of a bond
RATE = market rate / 2 if semiannual
NPER = # years x 2 if semiannual
PYMT = interest payments = face value x stated rate x 6/12 if semiannual
FV = face value
PV = computed = issue price of bonds (bond price)
Class 15 Working Capital Management, Just-In-Time Inventory, Discussion Four – Read chapter 15
What is working capital management
Why do we need to control for efficiency cost of capital
Cash: cost of carrying too much cash, cost of carrying too little
Inventory: cost of too much inventory, cost of too little
Definition of different inventory costs (carrying costs, ordering costs, etc)
Risks and benefits of Just-In-Time inventory
Changing to Just-In-Time (what processes/changes are needed)
Costs of changing from JIT to Just-in-case (what happens to product costs)
AR: risk and benefits of credit sales, cost of too strict credit terms, risk of too generous terms
AP: what are terms on an invoice (ex: 2/10, net 30), why pay within discount period
Class 16 Inventory Costing – Read chapter 16
Classes of inventory: raw materials, works-in-process, finished goods
What is LIFO, FIFO, weighted average
How do they produce different results on Income Stmt and Balance sheet
In normal period of rising costs which produces lowest net income, which highest
Increasing costs
LIFO increases COGS  decreases earnings
FIFO  decreases COGS  increases earnings
Class 17 Variance Analysis, Group Exercise Six – Read chapter 17
Definition of management by exception
Budget centers: revenue, cost, profit
Budget variance: unfavorable (U) causes NI to go down vs. favorable (F) causes NI to go up
Revenue variances – U is bad, F is good
Cost variances:
Examples of when an favorable cost variance is actually not good news
Price variance – what does it measure, U is bad, F is good
Quantity variance – what does it measure, U is bad, F is good
Volume variance – what does it measure, U is good, F is bad