Archive for January 2017

There are those that believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis?

There are those that believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis?





A) Ratio analysis requires the analyst to evaluate a firm's performance over too many years to be of any value.
B) Proper ratio analysis requires the analyst to rely upon audited financial statements, which can be easily manipulated.
C) Thorough ratio analysis requires the analyst to refer to benchmarking, which is very easy to misinterpret.
D) Ratio analysis requires the analyst to utilize accounting data that is based on historical costs instead of current market values.




Answer: D

Which of the following is not a method of "benchmarking"?

Which of the following is not a method of "benchmarking"?




A) Conduct an industry group analysis.
B) Utilize the DuPont system to analyze a firm's performance.
C) Evaluating a single firm's performance over time.
D) Identify a group of firms that compete with the company being analyzed.





Answer: B

Return on Equity: In the latest year, Photon, Inc. reported $276,000 in net income. The firm maintains a debt ratio of 30% and has total assets of $3,000,000. What is Photon's return on equity? (Round off to the nearest 0.1%)

Return on Equity: In the latest year, Photon, Inc. reported $276,000 in net income. The firm maintains a debt ratio of 30% and has total assets of $3,000,000. What is Photon's return on equity? (Round off to the nearest 0.1%)





A) 13.1%
B) 14.6%
C) 22.5%
D) 18.7%









Answer: A

Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?

Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?




A) The quick ratio more accurately reflects a firm's profitability.
B) It omits the least liquid current asset from the numerator of the ratio.
C) The current ratio does not include accounts receivable.
D) It measures how "quickly" cash flows through the firm.




Answer: C



Which of the following is a benefit of a common-size income statement?

Which of the following is a benefit of a common-size income statement?



A) It is very useful to assess how effectively a firm collected its accounts receivable.
B) It reveals a great deal of information about the adequacy of a firm's net working capital.
C) It can tell the analyst a great deal about the firm's efficiency and profitability.
D) It reveals how effectively a firm has increased its sales.







Answer: C

Profitability ratios: Tigger Corp. has reported the financial results for year-end 2006. Based on the information given, calculate the firm's gross profit margin and operating profit margin. Net sales = $4,156,700 Net income = $778,321 Cost of goods sold = $2,715,334 EBIT = $1,356,098

Profitability ratios: Tigger Corp. has reported the financial results for year-end 2006. Based on the information given, calculate the firm's gross profit margin and operating profit margin.
Net sales = $4,156,700 Net income = $778,321
Cost of goods sold = $2,715,334 EBIT = $1,356,098



A) 34.7%; 32.6%
B) 32.6%; 18.72%
C) 34.7%; 18.72%
D) None of the above









Answer: A

Market-value ratios: Perez Electronics Corp. has reported that its net income for 2006 is $1,276,351. The firm has 420,000 shares outstanding and a P-E ratio of 11.2 times. What is the firm's share price?

Market-value ratios: Perez Electronics Corp. has reported that its net income for 2006 is $1,276,351. The firm has 420,000 shares outstanding and a P-E ratio of 11.2 times. What is the firm's share price?




A) $34.05
B) $3.68
C) $11.20
D) $36.80







Answer: A

Market-value ratio: RTR Corp. has reported a net income of $812,425 for the year. The company's share price is $13.45, and the company has 312,490 shares outstanding. Compute the firm's price-earnings ratio.

Market-value ratio: RTR Corp. has reported a net income of $812,425 for the year. The company's share price is $13.45, and the company has 312,490 shares outstanding. Compute the firm's price-earnings ratio.




A) 4.87 times
B) 8.12 times
C) 5.17 times
D) None of the above








Answer: C

Coverage ratios: Fahr Company had depreciation expenses of $630,715, interest expenses of $112,078, and an EBIT of $1,542,833 for the year ended June 30, 2006. What are the times interest earned and cash coverage ratios for this company?

Coverage ratios: Fahr Company had depreciation expenses of $630,715, interest expenses of $112,078, and an EBIT of $1,542,833 for the year ended June 30, 2006. What are the times interest earned and cash coverage ratios for this company?




A) 19.4 times; 12.7 times
B) 17.3 time; 11.4 times
C) 13.8 times; 19.4 times
D) None of the above







Answer: C

Efficiency ratio: Deutsche Bearings has total sales of $9,745,923, inventories of $2,237,435, cash and equivalents of $755,071, and days' sales outstanding of 49 days. If the firm's management wanted its DSO to be 35 days, by how much will the accounts receivable have to change?

Efficiency ratio: Deutsche Bearings has total sales of $9,745,923, inventories of $2,237,435, cash and equivalents of $755,071, and days' sales outstanding of 49 days. If the firm's management wanted its DSO to be 35 days, by how much will the accounts receivable have to change?



A) $373,816.23
B) -$373,816.23
C) -$379,008.12
D) $379,008.12








Answer: B

Liquidity ratio: Ronaldinho Trading Co. is required by its bank to maintain a current ratio of at least 1.75, and its current ratio now is 2.1. The firm plans to acquire additional inventory to meet an unexpected surge in the demand for its products and will pay for the inventory with short-term debt. How much inventory can the firm purchase without violating its debt agreement if their total current assets equal $3.5 million?

Liquidity ratio: Ronaldinho Trading Co. is required by its bank to maintain a current ratio of at least 1.75, and its current ratio now is 2.1. The firm plans to acquire additional inventory to meet an unexpected surge in the demand for its products and will pay for the inventory with short-term debt. How much inventory can the firm purchase without violating its debt agreement if their total current assets equal $3.5 million?



A) $0
B) $777,777
C) $1 million
D) None of the above








Answer: B

Limitations of ratio analysis include all but

Limitations of ratio analysis include all but




A) Ratios depend on accounting data based on historical costs.
B) Differences in accounting practices like FIFO versus LIFO make comparison difficult.
C) Trend analysis could be distorted by financial statements affected by inflation.
D) All of the above are limitations of ratio analysis.








Answer: D

Peer group analysis can be performed by

Peer group analysis can be performed by



A) management choosing a set of firms that are similar in size or sales, or who compete in the same market.
B) using the average ratios of this peer group, which would then be used as the benchmark.
C) identifying firms in the same industry that are grouped by size, sales, and product lines in order to establish benchmark ratios.
D) Only a and b relate to peer group analysis.








Answer: D

Which one of the following statements about trend analysis is NOT correct?

Which one of the following statements about trend analysis is NOT correct?




A) This benchmark is based on a firm's historical performance.
B) It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm.
C) The Standard Industrial Classification (SIC) System is used to identify benchmark firms.
D) All of the above are true statements.









Answer: C

Which one of the following is NOT an advantage of using ROE as a goal?

Which one of the following is NOT an advantage of using ROE as a goal?




A) ROE is highly correlated with shareholder wealth maximization.
B) ROE and the DuPont analysis allow management to break down the performance and identify areas of strengths and weaknesses.
C) ROE does not consider risk.
D) All of the above are advantages of using ROE as a goal.








Answer: C

Which one of the following is a criticism of equating the goals of maximizing the ROE of a firm and maximizing the firm's shareholder wealth?

Which one of the following is a criticism of equating the goals of maximizing the ROE of a firm and maximizing the firm's shareholder wealth?




A) ROE is based on after-tax earnings, not cash flows.
B) ROE does not consider risk.
C) ROE ignores the size of the initial investment as well as future cash flows.
D) All of the above are criticisms of ROE as a goal.






Answer: D

The DuPont equation shows that a firm's ROE is determined by three factors:

The DuPont equation shows that a firm's ROE is determined by three factors:




A) net profit margin, total asset turnover, and the equity multiplier
B) operating profit margin, ROA, and the ROE
C) net profit margin, total asset turnover, the ROA
D) ROA, total assets turnover, and the equity multiplier







Answer: A

Which one of the following statements is NOT correct?

Which one of the following statements is NOT correct?




A) The DuPont system is based on two equations that relate a firm's ROA and ROE.
B) The DuPont system is a set of related ratios that links the balance sheet and the income statement.
C) Both management and shareholders can use this tool to understand the factors that drive a firm's ROE.
D) All of the above are correct.






Answer: D

Coverage ratios, like times interest earned and cash coverage ratio, allow

Coverage ratios, like times interest earned and cash coverage ratio, allow





A) a firm's management to assess how well they meet short-term liabilities.
B) a firm's shareholders to assess how well the firm will meet its short-term liabilities.
C) a firm's creditors to assess how well the firm will meet its interest obligations.
D) a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense.









Answer: C

Which one of the following statements is NOT correct?

Which one of the following statements is NOT correct?



A) A leveraged firm is more risky than a firm that is not leveraged.
B) A leveraged firm is less risky than a firm that is not leveraged.
C) A firm that uses debt magnifies the return to its shareholders.
D) All of the above statements are correct.







Answer: B

If firm A has a higher debt-to-equity ratio than firm B, then

If firm A has a higher debt-to-equity ratio than firm B, then




A) firm A has a lower equity multiplier than firm B.
B) firm B has a lower equity multiplier than firm A.
C) firm B has lower financial leverage than firm A.
D) None of the above.







Answer: A

Which one of the following statements is correct?

Which one of the following statements is correct?



A) The lower the level of a firm's debt, the higher the firm's leverage.
B) The lower the level of a firm's debt, the lower the firm's equity multiplier.
C) The lower the level of a firm's debt, the higher the firm's equity multiplier.
D) The tax benefit from using debt financing reduces a firm's risk.







Answer: B

Which one of the following statements is NOT true?

Which one of the following statements is NOT true?



A) The accounts receivables turnover ratio measures how quickly the firm collects on its credit sales.
B) One ratio that measures the efficiency of a firm's collection policy is days' sales outstanding.
C) The more days that it takes the firm to collect on its receivables, the more efficient the firm is.
D) DSO measures in days, the time the firm takes to convert its receivables into cash.







Answer: C

All but one of the following is true about the inventory turnover ratio.

All but one of the following is true about the inventory turnover ratio.



A) It is calculated by dividing inventory by cost of goods sold.
B) It measures how many times the inventory is turned over into saleable products.
C) The more times a firm can turnover the inventory, the better.
D) Too high a turnover or too low a turnover could be a warning sign.








Answer: A

Which one of the following does NOT change a firm's current ratio?

Which one of the following does NOT change a firm's current ratio?





A) The firm collects on its accounts receivables.
B) The firm purchases inventory by taking a short-term loan.
C) The firm pays down its accounts payables.
D) None of the above.







Answer: A

All but one of the following is true about quick ratios.

All but one of the following is true about quick ratios.




A) The quick ratio is calculated by dividing the most liquid of current assets by current liabilities.
B) Service firms that tend not to carry too much inventory will see significantly higher quick ratios than current ratios.
C) Inventory, being not very liquid, is subtracted from total current assets to determine the most liquid assets.
D) Quick ratios will tend to be much smaller than current ratio for manufacturing firms or other industries that have a lot of inventory.







Answer: B

Which of the following is NOT true of liquidity ratios?

Which of the following is NOT true of liquidity ratios?




A) They measure the ability of the firm to meet short-term obligations with short-term assets without putting the firm in financial trouble.
B) There are two commonly used ratios to measure liquidity—current ratio and quick ratio.
C) For manufacturing firms, quick ratios will tend to be much larger than current ratios.
D) The higher the number, the more liquid the firm and the better its ability to pay its short-term bills.






Answer: C

Which of the following is true of ratio analysis?

Which of the following is true of ratio analysis?




A) A ratio is computed by dividing one balance sheet or income statement by another.
B) The choice of the scale determines the story that can be garnered from the ratio.
C) Ratios can be calculated based on the type of firm being analyzed or the kind of analysis being performed.
D) All of the above are true.







Answer: C

Which of the following is NOT true of liquidity ratios?

Which of the following is NOT true of liquidity ratios?





A) They measure the ability of the firm to meet short-term obligations with short-term assets without putting the firm in financial trouble.
B) There are two commonly used ratios to measure liquidity—current ratio and quick ratio.
C) For manufacturing firms, quick ratios will tend to be much larger than current ratios.
D) The higher the number, the more liquid the firm and the better its ability to pay its short-term bills.






Answer: C

Common-size financial statements:

Common-size financial statements:




A) are a specialized application of ratio analysis.
B) allow us to make meaningful comparisons between the financial statements of two firms that are different in size.
C) are prepared by having each financial statement item expressed as a percentage of some base number, such as total assets or total revenues.
D) All of the above are true.






Answer: D

All but one of the following is true of common-size income statements.

All but one of the following is true of common-size income statements.



A) Each income statement item is standardized by dividing it by total assets.
B) Income statement accounts are represented as percentages of sales.
C) Each income statement item is standardized by dividing it by sales.
D) Common-size financial statement analysis is a specialized application of ratio analysis.






Answer: A

All but one of the following is true of common-size balance sheets.

All but one of the following is true of common-size balance sheets.






A) Each asset and liability item on the balance sheet is standardized by dividing it by total assets.
B) Balance sheet accounts are represented as percentages of total assets.
C) Each asset and liability item on the balance sheet is standardized by dividing it by sales.
D) Common-size financial statements allow us to make meaningful comparisons between the financial statements of two firms that are different in size.




Answer: C


Anyone analyzing a firm's financial statements should

Anyone analyzing a firm's financial statements should




A) use audited financial statements only.
B) do a trend analysis.
C) perform a benchmark analysis.
D) All of the above.







Answer: D

A firm's management analyzes financial statement's so that:

A firm's management analyzes financial statement's so that:





A) they can get feedback on their investing, financing, and working capital decisions by identifying trends in the various accounts that are reported in the financial statements.
B) similar to shareholders, they can focus on profitability, dividend, capital appreciation, and return on investment.
C) they can get more stock options.
D) a and b.






Answer: D

The creditors of a firm analyze financial statements so that they can focus on

The creditors of a firm analyze financial statements so that they can focus on




A) the firm's amount of debt.
B) the firm's ability to generate sufficient cash flows to meet all legal obligations first and still have sufficient cash flows to meet debt repayment and interest payments.
C) the firm's ability to meet its short-term obligations.
D) All of the above.






Answer: D

Shareholders analyze financial statements in order to:

Shareholders analyze financial statements in order to:




A) assess the cash flows that the firm will generate from operations/
B) determine the firm's profitability, their return for that period, and the dividend they are likely to receive.
C) focus on the value of the stock they hold.
D) All of the above.






Answer: D

According to environmental scientists, all of the following are deficiencies of the U.S. air pollution control laws, except

According to environmental scientists, all of the following are deficiencies of the U.S. air pollution control laws, except




a. reliance on pollution cleanup rather than prevention

b. failure to increase fuel-efficiency standards for light trucks and SUVs

c. failure to curb petroleum released into harbor waters

d. failure to regulate greenhouse gas releases

e. failure to regulate air pollution from oceangoing ships in U.S. ports









Answer: C

National ambient air quality standards

National ambient air quality standards





a. have been established for almost 100 air pollutants

b. must be met by 50 major U.S. metropolitan areas that are responsible for implementation

c. are established by Congress

d. specify the maximum allowable level, averaged over a specific time period, for a certain

e. specify the minimum allowable level, averaged over a specific time period, for a certain






Answer: D

The people least vulnerable to air pollution are

The people least vulnerable to air pollution are




a. infants

b. elderly people

c. adult males

d. people with heart and respiratory disease

e. pregnant women








Answer: C

In 1988, the EPA and the U.S. Surgeon General recommended that everyone living in a detached house or the first three floors of an apartment building test for radon. By 2004, ______% of all households had tested for radon.

In 1988, the EPA and the U.S. Surgeon General recommended that everyone living in a detached house or the first three floors of an apartment building test for radon. By 2004, ______% of all households had tested for radon.



a. >10

b. <10 p="">
c. >15

d. <15 p="">
e. >5









Answer: A

Experts rate indoor air pollution as a

Experts rate indoor air pollution as a




a. high-risk health problem for humans

b. medium-risk health problem for humans

c. low-risk health problem for humans

d. high-risk ecological problem

e. none of these








Answer: A

Acid deposition has been linked to

Acid deposition has been linked to





a. contamination of fish with highly toxic methyl mercury

b. excessive soil nitrogen levels

c. reduced nutrient uptake by tree roots

d. weakening trees so they become more susceptible to other types of damage

e. all of these









Answer: E

Experts rate acid rain as a

Experts rate acid rain as a



a. high-risk ecological and human health problem

b. medium-risk ecological problem and high-risk human health problem

c. high-risk ecological and low-risk human health problem

d. medium-risk ecological and human health problem

e. high-risk ecological problem and no-risk human health problem









Answer: B

Acid deposition is best classified as a

Acid deposition is best classified as a




a. local problem

b. state problem

c. regional problem

d. national problem

e. international problem








Answer: C

A temperature inversion is the result of

A temperature inversion is the result of




a. precipitation

b. cold air drainage

c. a lid of warm air on top of cooler, stagnant air

d. a cold blanket of air that prevents warm air from rising

e. mixing of cool and warm air









Answer: C

Which of the following statements is true?

Which of the following statements is true?



a. Temperature inversion occurs when a layer of cold air prevents warm air from rising.

b. Temperature inversions make pollution problems worse.

c. Temperature inversions last only a few minutes to a few hours.

d. Normally, cool air near earth's surface expands and rises, carrying pollutants higher into the troposphere.

e. Temperature inversions help prevent air pollution







Answer: B

Which of the following would not be a factor that reduces outdoor air pollution?

Which of the following would not be a factor that reduces outdoor air pollution?




a. Particles that are heavier than air settle out of the atmosphere.

b. Rain and snow wash pollutants out of the atmosphere.

c. Winds sweep pollutants away.

d. Chemical reactions convert pollutants into benign chemicals.

e. Radiation from the sun converts pollutants into benign chemicals.









Answer: E

What do all volatile organic compounds have in common?

What do all volatile organic compounds have in common?





a. all are carbon based.

b. All are produced from manmade sources.

c. All are emitted for processing and/or burning fossil fuels.

d. All are colorless, odorless reactive gases.

e. All are naturally occurring colorless and odorless gases found in rocks and vegetation.







Answer: A

Human health depends on having

Human health depends on having



a. low amounts of ozone in the troposphere and stratosphere

b. enough ozone in the stratosphere and little ozone in the troposphere

c. high amounts of ozone in the troposphere and low amounts in the stratosphere

d. high amounts of ozone in the stratosphere

e. high amounts of ozone in the troposphere









Answer: B

Stratospheric ozone is responsible for all of the following, except

Stratospheric ozone is responsible for all of the following, except



a. screening out ultraviolet radiation

b. allowing the evolution of life on land

c. preventing ozone formation in the troposphere

d. helping protect humans from sunburn and cataracts

e. lowering atmospheric water vapor









Answer: E

The troposphere differs from the stratosphere in that it has

The troposphere differs from the stratosphere in that it has





a. 1,000 times less oxygen by volume

b. 1,000 times more ozone by volume

c. 1,000 times less ozone by volume

d. 1,000 times more nitrogen

e. 1,000 times less moisture by volume










Answer: C

You send up a weather balloon that monitors temperature changes in the atmosphere. Initially, the temperature drops as the balloon rises. Suddenly, there is a reversal and the temperature starts to rise. This boundary would be the

You send up a weather balloon that monitors temperature changes in the atmosphere. Initially, the  temperature drops as the balloon rises. Suddenly, there is a reversal and the temperature starts to rise. This boundary would be the



a. the tropopause

b. the stratopause

c. the menopause

d. the mesopause

e. the thermopause








Answer: A

Most of earth's weather occurs in the

Most of earth's weather occurs in the



a. troposphere

b. thermosphere

c. mesosphere

d. stratosphere

e. tropopause









Answer: A

The atmosphere is divided into spherical layers based upon the

The atmosphere is divided into spherical layers based upon the





a. density of each layer

b. concentration of ozone in each layer

c. temperature changes from variations in absorption of solar energy

d. concentration of oxygen in each layer

e. precipitation in each layer









Answer: C

The correct sequence of layers of the atmosphere from innermost to outermost is

The correct sequence of layers of the atmosphere from innermost to outermost is




a. mesosphere—stratosphere—thermosphere—troposphere

b. troposphere—stratosphere—mesosphere—thermosphere

c. stratosphere—thermosphere—troposphere—mesosphere

d. thermosphere—stratosphere—mesosphere—troposphere

e. thermosphere—mesosphere—stratosphere—troposphere










Answer: B

According to environmental scientists, all of the following are deficiencies of the U.S. air pollution control laws, except

According to environmental scientists, all of the following are deficiencies of the U.S. air pollution control laws, except




a. reliance on pollution cleanup rather than prevention

b. failure to increase fuel-efficiency standards for light trucks and SUVs

c. failure to curb petroleum released into harbor waters

d. failure to regulate greenhouse gas releases

e. failure to regulate air pollution from oceangoing ships in U.S. ports









Answer: C

National ambient air quality standards

National ambient air quality standards






a. have been established for almost 100 air pollutants

b. must be met by 50 major U.S. metropolitan areas that are responsible for implementation

c. are established by Congress

d. specify the maximum allowable level, averaged over a specific time period, for a certain

e. specify the minimum allowable level, averaged over a specific time period, for a certain








Answer: D


The people least vulnerable to air pollution are

The people least vulnerable to air pollution are




a. infants

b. elderly people

c. adult males

d. people with heart and respiratory disease

e. pregnant women







Answer: C

In 1988, the EPA and the U.S. Surgeon General recommended that everyone living in a detached house or the first three floors of an apartment building test for radon. By 2004, ______% of all households had tested for radon.

In 1988, the EPA and the U.S. Surgeon General recommended that everyone living in a detached house or the first three floors of an apartment building test for radon. By 2004, ______% of all households had tested for radon.



a. >10

b. <10 p="">
c. >15

d. <15 p="">
e. >5









Answer: A

Experts rate indoor air pollution as a

Experts rate indoor air pollution as a




a. high-risk health problem for humans

b. medium-risk health problem for humans

c. low-risk health problem for humans

d. high-risk ecological problem

e. none of these








Answer: A

Acid deposition has been linked to

Acid deposition has been linked to




a. contamination of fish with highly toxic methyl mercury

b. excessive soil nitrogen levels

c. reduced nutrient uptake by tree roots

d. weakening trees so they become more susceptible to other types of damage

e. all of these







Answer: E

Experts rate acid rain as a

Experts rate acid rain as a





a. high-risk ecological and human health problem

b. medium-risk ecological problem and high-risk human health problem

c. high-risk ecological and low-risk human health problem

d. medium-risk ecological and human health problem

e. high-risk ecological problem and no-risk human health problem









Answer: B

Acid deposition is best classified as a

Acid deposition is best classified as a



a. local problem

b. state problem

c. regional problem

d. national problem

e. international problem









Answer: C

A temperature inversion is the result of

A temperature inversion is the result of



a. precipitation

b. cold air drainage

c. a lid of warm air on top of cooler, stagnant air

d. a cold blanket of air that prevents warm air from rising

e. mixing of cool and warm air







Answer: C

Which of the following statements is true?

Which of the following statements is true?




a. Temperature inversion occurs when a layer of cold air prevents warm air from rising.

b. Temperature inversions make pollution problems worse.

c. Temperature inversions last only a few minutes to a few hours.

d. Normally, cool air near earth's surface expands and rises, carrying pollutants higher into the troposphere.

e. Temperature inversions help prevent air pollution








Answer: B

Which of the following would not be a factor that reduces outdoor air pollution?

Which of the following would not be a factor that reduces outdoor air pollution?




a. Particles that are heavier than air settle out of the atmosphere.

b. Rain and snow wash pollutants out of the atmosphere.

c. Winds sweep pollutants away.

d. Chemical reactions convert pollutants into benign chemicals.

e. Radiation from the sun converts pollutants into benign chemicals.








Answer: E

What do all volatile organic compounds have in common?

What do all volatile organic compounds have in common?





a. all are carbon based.

b. All are produced from manmade sources.

c. All are emitted for processing and/or burning fossil fuels.

d. All are colorless, odorless reactive gases.

e. All are naturally occurring colorless and odorless gases found in rocks and vegetation.







Answer: A

Human health depends on having

Human health depends on having




a. low amounts of ozone in the troposphere and stratosphere

b. enough ozone in the stratosphere and little ozone in the troposphere

c. high amounts of ozone in the troposphere and low amounts in the stratosphere

d. high amounts of ozone in the stratosphere

e. high amounts of ozone in the troposphere







Answer: B

Stratospheric ozone is responsible for all of the following, except

Stratospheric ozone is responsible for all of the following, except




a. screening out ultraviolet radiation

b. allowing the evolution of life on land

c. preventing ozone formation in the troposphere

d. helping protect humans from sunburn and cataracts

e. lowering atmospheric water vapor








Answer: E

The troposphere differs from the stratosphere in that it has

The troposphere differs from the stratosphere in that it has




a. 1,000 times less oxygen by volume

b. 1,000 times more ozone by volume

c. 1,000 times less ozone by volume

d. 1,000 times more nitrogen

e. 1,000 times less moisture by volume








Answer: C

You send up a weather balloon that monitors temperature changes in the atmosphere. Initially, the temperature drops as the balloon rises. Suddenly, there is a reversal and the temperature starts to rise. This boundary would be the

You send up a weather balloon that monitors temperature changes in the atmosphere. Initially, the temperature drops as the balloon rises. Suddenly, there is a reversal and the temperature starts to rise. This boundary would be the



a. the tropopause

b. the stratopause

c. the minipause

d. the mesopause

e. the thermopause








Answer: A

Most of earth's weather occurs in the

Most of earth's weather occurs in the



a. troposphere

b. thermosphere

c. mesosphere

d. stratosphere

e. tropopause






Answer: A

The atmosphere is divided into spherical layers based upon the

The atmosphere is divided into spherical layers based upon the




a. density of each layer

b. concentration of ozone in each layer

c. temperature changes from variations in absorption of solar energy

d. concentration of oxygen in each layer

e. precipitation in each layer









Answer: C

The correct sequence of layers of the atmosphere from innermost to outermost is

The correct sequence of layers of the atmosphere from innermost to outermost is





a. mesosphere—stratosphere—thermosphere—troposphere

b. troposphere—stratosphere—mesosphere—thermosphere

c. stratosphere—thermosphere—troposphere—mesosphere

d. thermosphere—stratosphere—mesosphere—troposphere

e. thermosphere—mesosphere—stratosphere—troposphere









Answer: B

Which of the following guidelines is least likely to be included in personal sustainable energy plans?

Which of the following guidelines is least likely to be included in personal sustainable energy plans?



a. Get as much heat and cooling as possible from natural sources.

b. Insulate existing houses heavily.

c. Create cracks along flooring and ceilings to increase indoor air quality.

d. Don't use electricity to heat space or water.

e. None of these.








Answer: C

According to Amory Lovins, the most expensive way to get more electricity would be

According to Amory Lovins, the most expensive way to get more electricity would be




a. industrial cogeneration

b. eliminating pure waste of electricity

c. building a new central power station

d. making appliances cost-effectively efficient

e. using alternative energy sources







Answer: C

Which of the following statements does not reflect the thinking of Amory Lovins?

Which of the following statements does not reflect the thinking of Amory Lovins?




a. The answers you get depend on the questions you ask.

b. The cheapest way to get more electricity is to convert to efficient lighting equipment.

c. Energy efficiency and conservation are the cheapest ways to achieve low-temperature heating and cooling.

d. The way to develop a sound energy policy is to define your energy sources and find the most efficient ways to increase each of them.

e. None of these.







Answer: E

The least expensive perpetual resource is

The least expensive perpetual resource is



a. improving energy efficiency

b. hydroelectricity

c. tidal energy

d. photovoltaics

e. wind energy







Answer: A

A sustainable energy future is least likely to encourage

A sustainable energy future is least likely to encourage




a. requiring that all energy systems supported by government funds be based on cost-benefit analysis

b. requiring that electrical production be on a least-cost basis

c. full-cost pricing including social and environmental costs of energy sources

d. permitting utilities to earn money by reducing electricity demand

e. None of these







Answer: A

A sustainable energy future is least likely to encourage

A sustainable energy future is least likely to encourage




a. greatly increased use of perpetual and renewable resources

b. phasing out of government subsidies for nonrenewable resources

c. taxing of fossil fuels with energy assistance to the poor

d. no government influence on personal decisions about purchases of energy-consuming goods

e. tax credits for buying efficient cars








Answer: D

Keeping energy prices artificially low

Keeping energy prices artificially low





a. encourages waste and rapid depletion of energy resources getting favorable treatment

b. protects consumers from sharp price increases

c. discourages the development of energy alternatives not getting favorable treatment

d. does all of these

e. encourages waste and rapid depletion of energy resources getting favorable treatment and protects consumers from sharp price increases









Answer: D

Which of the following approaches emphasizes today's prices for short-term economic gain and inhibits long-term development of new energy resources?

Which of the following approaches emphasizes today's prices for short-term economic gain and inhibits long-term development of new energy resources?



a. free-market competition

b. energy prices kept artificially high

c. energy prices kept artificially low

d. government command and control

e. intense regulation









Answer: A

Which of the following statements is false?

Which of the following statements is false?



a. There is not enough financial capital to develop all energy alternatives.

b. We should not depend on only one source of energy but should develop a mix of perpetual

c. Energy production should be centralized as much as possible to increase efficiency.

d. Improving energy efficiency is the best option available to produce more energy.

e. There is not enough financial capital to develop all energy alternatives and We should not fossil fuels and nuclear energy in the pastand renewable energy resources.







Answer: C

The Solar-Hydrogen Revolution could be encouraged by

The Solar-Hydrogen Revolution could be encouraged by



a. convincing private investors to risk capital in investing in hydrogen

b. convincing the government to put up some money for hydrogen development as it did for

c. phasing in full-cost pricing of fossil fuels

d. all of these

e. none of these









Answer: D

Large-scale funding of hydrogen research would generally be least opposed by

Large-scale funding of hydrogen research would generally be least opposed by




a. electric utilities

b. sustainable developers reservoir sites. hydrogen releases low amounts of carbon dioxide.

c. fossil-fuel companies

d. automobile manufacturers

e. heating and air conditioning manufacturers








Answer: B

Which of the following statements is false?

Which of the following statements is false?





a. The costs of using solar energy to produce electricity are coming down.

b. Hydrogen gas could be stored at high pressures and distributed by pipeline.

c. Burning hydrogen releases low amounts of carbon dioxide.

d. Hydrogen gas is easier to store than electricity.

e. The costs of using solar energy to produce electricity are coming down and Burning






Answer: C

Which of the following statements is false?

Which of the following statements is false?



a. When burned, hydrogen produces virtually no air pollutants.

b. Some metals can store and release hydrogen.

c. Fuel tanks of metal-hydrogen compounds would tend to explode in an accident.

d. Experimental cars have been running on hydrogen for years.

e. None of these statements is false.








Answer: C

Hydrogen gas can be used to

Hydrogen gas can be used to



a. heat buildings

b. fuel cars and trucks

c. power factories

d. fuel planes

e. all of these








Answer: E

By 2050, which country plans to run its entire economy on renewable hydropower, geothermal energy, and wind and use these sources to produce hydrogen for running all of its motor vehicles and ships?

By 2050, which country plans to run its entire economy on renewable hydropower, geothermal energy, and wind and use these sources to produce hydrogen for running all of its motor vehicles and ships? 




a. Norway

b. Denmark

c. Finland

d. Iceland

e. Spain








Answer: D

An advantage associated with the development and use of geothermal energy systems is that

An advantage associated with the development and use of geothermal energy systems is that




a. Carbon dioxide is the only air pollutant produced.

b. Geothermal power plants do not require cooling water.

c. Geothermal energy sources are vast, reliable, and potentially renewable for areas near

d. There is no risk of harmful environmental impact.

e. It requires high land use.









Answer: C

Which of the following disadvantages of the development of geothermal power is false?

Which of the following disadvantages of the development of geothermal power is false?




a. Use of geothermal energy is limited by scarcity of sites and economics.

b. It sometimes causes land subsidence.

c. It releases more carbon dioxide than fossil fuels.

d. It sometimes causes ecosystem degradation.

e. It has very high efficiency.







Answer: C

Magma is

Magma is




a. a deep source of fossil fuel

b. molten rock

c. an air pollutant given off by geothermal energy

d. cooled lava flow

e. volcanic ash







Answer: B

Geothermal energy can be used for all of the following, except

Geothermal energy can be used for all of the following, except



a. heating space

b. producing electricity

c. transportation fuel

d. producing high-temperature heat for industry

e. heating space and producing high-temperature heat for industry








Answer: C

Geothermal energy is stored in the form of

Geothermal energy is stored in the form of



a. dry steam

b. wet steam

c. hot water

d. dry steam, wet steam, and hot water

e. wet steam and hot water









Answer: D

A major disadvantage of using biomass for energy is

A major disadvantage of using biomass for energy is



a. large land requirements

b. higher nitrous oxide emissions than other sources of energy

c. lack of versatility in its use and application

d. that it is not renewable

e. higher sulfur dioxide emissions than other sources of energy







Answer: A
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