ACC 576 Final Exam Guide
FOR MORE CLASSES VISIT www.acc576help.com ACC 576 Final Exam Study Question 1 (IFTC-0112) Controls in the information technology area are classified into the preventive, detective, and corrective categories. Which of the following is a preventive control? Question 2 (IFTC-0082) An organization relied heavily on e-commerce for its transactions. Evidence of the organizationâ€™s security awareness manual would be an example of which of the following types of controls? Question 3 (IFTC-0067) Which of the following types of control plans is particular to a specific process or subsystem, rather than related to the timing of its occurrence? Question 4 (CGIC-0032) Which of the following is true about the Sarbanes-Oxley requirements regarding the audit committee financial expert? Question 5 (CGIC-0026) Which of the following is not a component of COSOâ€™s enterprise risk management framework?
Question 6 (CGIC-0010) Which of the following is not required by the Sarbanes-Oxley Act of 2002? Question 7 (CGIC-0025) Which of the following is not an advantage of the employment of an enterprise risk management (ERM) system? Question 8 (CGIC-0008) A financial statement audit performed under the requirements of the Sarbanes-Oxley Act of 2002 must include an examination and report upon Question 9 (CGIC-0024) An important benefit of an enterprise risk management system is Question 10 (CGIC-0023) Which of the following bodies has developed a framework for enterprise risk management? Question 11 (CGIC-0005) Which of the following executives of an issuer corporation must certify to the accuracy and truthfulness of financial reports filed with the SEC? Question 12 (CGIC-0004) Which of the following is not a responsibility that should be assigned to the audit committee of the board of directors? Question 13 (CGIC-0018)
Which of the following components of internal control are characterized by ongoing activities and separate evaluations? Question 14 (CGIC-0003) Which of the following can be the most effective monitoring device for effective corporate governance? Question 15 (CGIC-0002) From a corporate governance standpoint which of the following best describes the main goal of a form of executive compensation? Question 16 (CGIC-0019) Which of the following components of internal control encompass policies and procedures that ensure that managementâ€™s directives are carried out? Question 17 (CGIC-0001) Which of the following forms of compensation is more likely to result in shirking by management? Question 18 (CGIC-0036) In the COSO framework, individuals within the company that monitor internal controls are referred to as Question 19 (CGIC-0016) The COSO definition of internal control considers control activities a(n): Question 20 (CGIC-0021) If internal control is properly designed, the same employee should not be permitted to
Question 1 (ECON-0036) If a government were to use only fiscal policy to stimulate the economy from a recession, it would Question 2 (ECON-0056) Disposable income is calculated as Question 3 (ECON-0003) Which of the following changes would create pressure for the Japanese yen to appreciate relative to the U.S. dollar? Question 4 (ECON-0021) If a group of consumers decide to boycott a particular product, the expected result would be Question 5 (ECON-0020) The movement along the demand curve from one price-quantity combination to another is called a(n) Question 6 (ECON-0030) In the long run, a firm may experience increasing returns due to Question 7 (ECON-0017) Which of the following is not accurate about product differentiation? Question 8 (ECON-0063) Which of the following segments of the economy will be least affected by the business cycle? Question 9 (ECON-0069)
What is the effect when a foreign competitorâ€™s currency becomes weaker compared to the U.S. dollar? Question 10 (ECON-0046) Some economic indicators lead the economy into a recovery or recession, and some lag it. An example of a lag variable would be Question 11 (ECON-0002) If the U.S. dollar declines in value relative to the currencies of many of its trading partners, the likely result is that Question 12 (ECON-0055) The rate of unemployment caused by changes in the composition of employment opportunities over time is referred to as the Question 13 (ECON-0060) To address the problem of a recession, the Federal Reserve Bank most likely would take which of the following actions? Question 14 (ECON-0040) Which of the following is a direct effect of imposing a protective tariff on an imported product? Question 15 (ECON-0077) What does the consumer price index measure? Question 16 (ECON-0037) The discount rate of the Federal Reserve System is Question 17 (ECON-0073) Which of the following individuals would be most hurt by an unanticipated increase in inflation?
Question 1 (FINM-0082) Which of the following statements is correct regarding the weighted-average cost of capital (WACC)? Question 2 (FINM-0066) The benefits of debt financing over equity financing are likely to be highest in which of the following situations? Question 3 (RMCB-0027) Which of the following describes an option? Question 4 (FINM-0034) A company has $1,500,000 of outstanding debt and $1,000,000 of outstanding common equity. Management plans to maintain the same proportions of financing from each source if additional projects are undertaken. If the company expects to have $60,000 of retained earnings available for reinvestment in new projects in the coming year, what dollar amount of new investments can be undertaken without issuing new equity? Value of equity Value of debt + Value of equity Since the question states that the firm will maintain the same weight of each financing source, each dollar invested is composed of 40 cents of equity and 60 cents of debt. The first $60,000 of equity used in financing new projects is sourced from retained earnings. This source of equity is exhausted when the firm reaches an investment level of $60,000 / .4 = $150,000.When the level of investment exceeds this amount, equity financing must be raised externally.
Question 5 (FINM-0024) DQZ Telecom is considering a project for the coming year that will cost $50,000,000. DQZ plans to use the following combination of debt and equity to finance the investment: Question 6 (RMCB-0026) Which of the following describes a normal yield curve? Question 7 (FINM-0073) Which of the following types of bonds is most likely to maintain a constant market value? Question 8 (RMCB-0058) Which of the following is an advantage of net present value modeling? Question 9 (RMCB-0057) The calculation of depreciation is used in the determination of the net present value of an investment for which of the following reasons? Question 10 (RMCB-0051) Net present value as used in investment decision-making is stated in terms of which of the following options? Question 11 (RMCB-0020) Essex Corporation is evaluating a lease that takes effect on March 1, 2012. The company must make eight equal payments, with the first payment due on March 1, 2012. The concept most relevant to the evaluation of the lease is
Question 12 (RMCB-0043) On January 1, 2012, Colt Company issued 10-year bonds with a face amount of $1,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows: Present value of 1 for 10 periods Present value of an ordinary annuity of 1 for 10 periods The total issue price (rounded) of the bonds was Question 13 (FINM-0001) Net working capital is the difference between Question 14 (RMCB-0041) Assume that management of Trayco has generated the following data about an investment project that has a five-year life: Initial investment Additional investment in working capital Cash flows before income taxes for years 1 through 5 Yearly depreciation for tax purposes Terminal value of machine Cost of capital Present value of $1 received after 5 years discounted at 8% Present value of an ordinary annuity of $1 for 5 years at 8%
Assume that Trayco's marginal tax rate is 30% and all cash flows come at the end of the year. Calculate the net present value of the investment of the project. Question 15 (FINM-0014) Which one of the following statements correctly compares bond financing alternatives? Question 16 (RMCB-0056) A client wants to know how many years it will take before the accumulated cash flows from an investment exceed the initial investment, without taking the time value of money into account. Which of the following financial models should be used? Question 17 (RMCB-0049) Harvey Co. is evaluating a capital investment proposal for a new machine. The investment proposal shows the following information: Initial cost Life Annual net cash inflows Salvage value If acquired, the machine will be depreciated using the straight-line method. The payback period for this investment is Question 18 (RMCB-0054) Which of the following statements is correct regarding financial decision making?
Question 19 (RMCB-0052) Which of the following formulas should be used to calculate the economic rate of return on common stock? Question 20 (FINM-0054) All of the following are features of just-in-time (JIT) systems except Question 1 (IFTC-0054) Because log-on procedures may be cumbersome and tedious, users often store log-on sequences in their personal computers and invoke them when they want to use mainframe facilities. A risk of this practice is that Question 2 (IFTC-0035) Employee numbers have all numeric characters. To prevent the input of alphabetic characters, what technique should be used? Question 3 (IFTC-0051) An organization's computer help desk function is usually a responsibility of the Question 4 (IFTC-0022) First Federal S&L has an online real-time system, with terminals installed in all of its branches. This system will not accept a customer's cash withdrawal instructions in excess of $1,000 without the use of a "terminal audit key." After the transaction is authorized by a supervisor, the bank teller then processes the transaction with the audit key. This control can be strengthened by Question 5 (IFTC-0043)
A brokerage firm has changed a program so as to permit higher transaction volumes. After proper testing of the change, the revised programs were authorized and copied to the production library. This practice is an example of Question 6 (IFTC-0023) In a daily computer run to update checking account balances and print out basic details on any customer's account that was overdrawn, the overdrawn account of the computer programmer was never printed. Which of the following control procedures would have been most effective in detecting this fraud? Question 7 (IFTC-0088) In which of the following locations should a copy of the accounting system data backup of year-end information be stored? Question 8 (IFTC-0018) A computer input control is designed to ensure that Question 9 (IFTC-0002) Which of the following would lessen internal control in a computer processing system? Question 10 (IFTC-0103) A value-added network (VAN) is a privately owned network that performs which of the following functions? Question 11 (IFTC-0102) Which of the following is usually a benefit of using electronic funds transfer for international cash transactions? Question 12 (IFTC-0030)
The machine language for a specific computer Question 13 (IFTC-0049) Securing client/server systems is a complex task because of all of the following factors except: Question 14 (IFTC-0028) A data warehouse in an example of Question 15 (IFTC-0078) Compared to batch processing, real-time processing has which of the following advantages? Question 16 (IFTC-0032) Which of the following is not a characteristic of a batch processed computer system? Question 17 (IFTC-0072) Which of the following is an advantage of a computer-based system for transaction processing over a manual system? A computerbased system Question 18 (IFTC-0131) When a client's accounts payable computer system was relocated, the administrator provided support through a dial-up connection to a server. Subsequently, the administrator left the company. No changes were made to the accounts payable system at that time. Which of the following situations represents the greatest security risk? Question 19 (IFTC-0114)
In a large multinational organization, which of the following job responsibilities should be assigned to the network administrator? Question 20 (IFTC-0055) Today organizations are using microcomputers for data presentation because microcomputer use, compared to mainframe use, is more Question 1 (COST-0056) The following is selected information from the records of Ray, Inc.: Purchases of raw materials Raw materials, beginning Raw materials, ending Work-in-process, beginning Work-in-process, ending Cost of goods sold Finished goods, beginning Finished goods, ending What is the total amount of conversion costs? Question 2 (PLAN-0049) A defense contractor for a government space project has incurred $2,500,000 in actual design costs to date for a guidance system whose total budgeted design cost is $3,000,000. If the design phase of the project is 60% complete, what is the amount of the contractor's current overrun/savings on this design work? Question 3 (COST-0044)
A company with three products classifies its costs as belonging to five functions: design, production, marketing, distribution, and customer services. For pricing purposes, all company costs are assigned to the three products. The direct costs of each of the five functions are traced directly to the three products. The indirect costs of each of the five business functions are collected into five separate cost pools and then assigned to the three products using appropriate allocation bases. The allocation base that would most likely be the best for allocating the indirect costs of the distribution function is Question 4 (COST-0051) Which of the following is assigned to goods that were either purchased or manufactured for resale? Question 5 (PLAN-0045) A company manufactures a product that has the direct material standard cost presented below. Budgeted and actual information for the current month for the manufacture of the finished product and the purchase and use of the direct material are also presented.Standard cost for direct material1.60 lb. @ $2.50 per lb. = $4.00
Finished goods (in units) Direct material usage (in pounds) Direct material purchases (in pounds) Total cost of direct material purchases The direct material price variance for the current month is
Question 6 (PLAN-0041) A favorable material price variance coupled with an unfavorable material usage variance would most likely result from Question 7 (PERM-0001) A strategy map in the balanced scorecard framework is Question 8 (PLAN-0035) Comparing actual results with a budget based on achieved volume is possible with the use of a Question 9 (PLAN-0032) The cash receipts budget includes Question 10 (COST-0043) A company is attempting to determine if there is a cause and effect relationship between scrap value and output produced. The following exhibit presents the company's scrap data for the last fiscal year: Scrap Value as a Percent of Standard Dollar Value of Output Produced Month Nov. 11 Dec. 11 Jan. 12 Feb. 12 Mar. 12
Apr. 12 May-12 Jun. 12 Jul. 12 Aug. 12 Sep. 12 Oct. 12 Based on the above data, the company's scrap value in relation to the standard dollar value of output produced appears to be Question 11 (PLAN-0013) In preparing its cash budget for July 2012, Reed Company made the following projections: Sales Gross profit (based on sales) Decrease in inventories Decrease in accounts payable for inventories For July 2012 what were the estimated cash disbursements for inventories? Question 12 (PERM-0022) The following selected data is for the Consumer Products Division of Gerriod Corp. Sales Average invested capital (total assets)
Net operating profit Cost of capital Calculate the spread between the return on investment and the required rate of return for the Consumer Products Division. Question 13 (RMCB-0001) A company is considering exchanging an old asset for a new asset. Ignoring income tax considerations, which of the following is economically relevant to the decision? Question 14 (PLAN-0105) Carter Co. paid $1,000,000 for land three years ago. Carter estimates it can sell the land for $1,200,000, net of selling costs. If the land is not sold, Carter plans to develop the land at a cost of $1,500,000. Carter estimates net cash flow from the development in the first year of operations would be $500,000. What is Carter's opportunity cost of the development? Question 15 (PERM-0012) In the cost of quality, liability claims are examples of Question 16 (PERM-0019) The following selected data is for the Consumer Products Division of Gerriod Corp. Sales Average invested capital (total assets) Net operating profit Cost of capital
Calculate the asset turnover ratio for the Consumer Products Division. Question 17 (PLAN-0106) A company that produces 10,000 units has fixed costs of $300,000, variable costs of $50 per unit, and a sales price of $85 per unit. After learning that its variable costs will increase by 20%, the company is considering an increase in production to 12,000 units. Which of the following statements is correct regarding the company's next steps? Question 18 (PLAN-0087) Which of the following listings correctly describes the order in which the four types of budgets must be prepared? Question 19 (PLAN-0048) All else being equal, the breakeven point in units will be higher if Question 20 (PLAN-0091) Relevant information for material A follows: Quantity purchased Standard quantity allowed Actual price Standard price What was the direct material price variance for material A?orting? ===============================================
ACC 576 Week 1 Quiz (All Possible Questions)
FOR MORE CLASSES VISIT www.acc576help.com This Tutorial contains More than 150 Question Test Bank (we have listed some of the Questions below)
Week 1 Quiz Question 1 The first general standard requires that an audit of financial statements is to be performed by a person or persons having Question 2 Which of the following standards requires a critical review of the work done and the judgment exercised by those assisting in an audit at every level of supervision? Question 3 An auditor uses the knowledge provided by the understanding of the internal control structure and the final assessed level of control risk primarily to determine the nature, timing, and extent of the Question 4 An auditor's primary consideration regarding an entity's internal control structure policies and procedures is whether the policies and procedures
Question 5 To obtain evidential matter about control risk, an auditor selects tests from a variety of techniques including Question 6 Prior to commencing fieldwork, an auditor usually discusses the general audit strategy with the client's management. Which of the following matters does the auditor and management agree upon at this time? Question 7 Which of the following factors most likely would cause a CPA to decline to accept a new audit engagement? Question 8 Which of the following factors would least influence an auditor's consideration of the reliability of data for purposes of analytical procedures? Question 9 A previously communicated significant deficiency ordinarily should be communicated again if Question 10 Which of the following statements concerning analytical procedures is correct? Question 11 Which of the following is the authoritative body designated to promulgate attestation standards?
Question 12 As the acceptable level of detection risk decreases, an auditor may change the Question 13 A CPA in public practice must be independent in fact and appearance when providing which of the following services? Question 14 The primary objective of procedures performed to obtain an understanding of the internal control structure is to provide an auditor with Question 15 Which of the following statements is correct concerning an auditor's required communication of significant deficiencies? Question 16 Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Question 17 When an auditor increases the planned assessed level of control risk because certain control procedures were determined to be ineffective, the auditor would most likely increase the Question 18 An auditor concludes that a client has committed an illegal act that has not been properly accounted for or disclosed. The auditor should withdraw from the engagement if the
Question 19 In performing an attestation engagement, a CPA typically Question 20 Which of the following characteristics most likely would heighten an auditor's concern about the risk of material misstatement arising from fraudulent financial reporting? ===============================================
ACC 576 Week 2 Quiz (All Possible Questions)
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Week 2 Quiz Question 1 The most likely result of ineffective internal control policies and procedures in the revenue cycle is that Question 2 An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using
Question 3 Which of the following statements is generally correct about the reliability ofaudit evidence? Question 4 Which of the following audit procedures would an auditor most likely perform to test controls relating to management's assertion concerning the completeness of sales transactions? Question 5 The audit working paper that reflects the major components of an amount reported in the financial statements is the Question 6 Which of the following most likely would indicate the existence of related parties? Question 7 Which of the following procedures would an auditor most likely perform during an audit engagement's overall review stage in formulating an opinion on an entity's financial statements? Question 8 In auditing accounts receivable the negative form of confirmation request most likely would be used when Question 9 Before applying substantive tests to the details of asset accounts at an interim date, an auditor should assess: Question 10
"There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices that could have a material effect on the financial statements." The foregoing passage is most likely from a Question 11 "We have disclosed to you all known instances of noncompliance or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements." The foregoing passage most likely is from a(n) Question 12 Which of the following controls would be most effective in assuring that recorded purchases are free of material errors? Question 13 An auditor should request that an audit client send a letter of inquiry to those attorneys who have been consulted concerning litigation, claims, or assessments. The primary reason for this request is to provide Question 14 To which of the following matters would materiality limits not apply in obtaining written management representations? Question 15 In which of the following circumstances is substantive testing of accounts receivable before the balance sheet date most appropriate? Question 16
The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the Question 17 An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely is to obtain evidence concerning management's assertions about Question 18 The objective of tests of details of transactions performed as substantive tests is to Question 19 Which of the following documentation is not required for an audit in accordance with generally accepted auditing standards? Question 20 An auditor should design the written audit program so that ===============================================
ACC 576 Week 3 Quiz
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Week 3 Quiz Question 1 In designing written audit programs, an auditor should establish specific audit objectives that relate primarily to the Question 2 Which of the following procedures is least likely to be performed before the balance sheet date? Question 3 In determining whether transactions have been recorded, the direction of the audit testing should be from the Question 4 Which of the following combination of procedures would an auditor most likely perform to obtain evidence about fixed asset additions? Question 5 An auditor may achieve audit objectives related to particular assertions by Question 6 The sampling unit in a test of controls pertaining to the existence of payroll transactions ordinarily is a(an) Question 7 The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the Question 8
Which of the following audit procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories? Question 9 When an auditor tests a computerized accounting system, which of the following is true of the test data approach? Question 10 An auditor is determining the sample size for an inventory observation using mean-per-unit estimation, which is a variables sampling plan. To calculate the required sample size, the auditor usually determines the Question 11 Processing data through the use of simulated files provides an auditor with information about the operating effectiveness of control policies and procedures. One of the techniques involved in this approach makes use of Question 12 An auditor should trace bank transfers for the last part of the audit period and first part of the subsequent period to detect whether Question 13 The primary responsibility of a bank acting as registrar of capital stock is to Question 14 An auditor most likely would perform substantive tests of details on payroll transactions and balances when
Question 15 Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of Question 16 In performing tests of controls over authorization of cash disbursements, which of the following sampling methods would be most appropriate? Question 17 In evaluating the adequacy of the allowance for doubtful accounts, an auditor most likely reviews the entity's aging of receivables to support management's financial statement assertion of Question 18 Which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of several unusually large cash disbursements? Question 19 Which of the following characteristics most likely would be an advantage of using classical variables sampling rather than probability-proportional-to-size (PPS) sampling? Question 20 Which of the following statements is correct concerning statistical sampling in tests of controls? ===============================================
ACC 576 Week 4 Quiz (All Possible Questions)
Week 4 Quiz Question 1 Comfort letters ordinarily are addressed to Question 2 When compiling a nonpublic entity's financial statements, an accountant would be least likely to Question 3 Comfort letters ordinarily are signed by the entity's Question 4 Which of the following matters is covered in a typical comfort letter? Question 5 Green, CPA, was engaged to audit the financial statements of Essex Co. after its fiscal year had ended. The timing of Green's appointment as auditor and the start of field work made
confirmation of accounts receivable by direct communication with the debtors ineffective. However, Green applied other procedures and was satisfied as to the reasonableness of the account balances. Green's auditor's report most likely contained a(an) Question 6 When engaged to audit a not-for-profit organization in accordance with Government Auditing Standards, an auditor is required to prepare a written report on compliance with laws and regulations that includes Question 7 (NOTE: This is a CPAexcel simulated Exam Question, not AICPA licensed Material) The effects of financial leverage result when a firm finances assets using: Question 8 Which of the following statements is correct concerning both an engagement to compile and an engagement to review a nonpublic entity's financial statements? Question 9 Which of the following representations does an accountant make implicitly when issuing the standard report for the compilation of a nonpublic entity's financial statements? Question 10 Which of the following statements is correct regarding a review engagement of a nonpublic company's financial statements
performed in accordance with the Statements on Standards for Accounting and Review Services (SSARs)? Question 11 In which of the following situations would an auditor ordinarily choose between expressing an "except for" qualified opinion or an adverse opinion? Question 12 When engaged to compile the financial statements of a nonpublic entity, an accountant is required to possess a level of knowledge of the entity's accounting principles and practices. This requirement most likely will include obtaining a general understanding of the Question 13 When a qualified opinion results from a limitation on the scope of the audit, the situation should be described in an explanatory paragraph Question 14 The standard report issued by an accountant after reviewing the financial statements of a nonpublic entity states that Question 15 Which of the following phrases would an auditor most likely include in the auditor's report when expressing a qualified opinion because of inadequate disclosure? Question 16
A client has capitalizable leases but refuses to capitalize them in the financial statements. Which of the following reporting options does an auditor have if the amounts pervasively distort the financial statements? Question 17 Wolf is auditing an entity's compliance with requirements governing a major federal financial assistance program in accordance with Government Auditing Standards. Wolf detected noncompliance with requirements that have a material effect on the program. Wolf's report on compliance should express Question 18 General Retailing, a nonissuer, has asked Ford, CPA, to compile its financial statements that omit substantially all disclosures required by GAAP. Ford may comply with General's request provided the omission is clearly indicated in Ford's report and the Question 19 Moore, CPA, has been asked to issue a review report on the balance sheet of Dover Co., a nonpublic entity. Moore will not be reporting on Dover's statements of income, retained earnings, and cash flows. Moore may issue the review report provided the Question 20 Reporting standards for financial audits under Government Auditing Standards (the Yellow Book) differ from reporting under generally accepted auditing standards in that Government Auditing Standards require the auditor to ===============================================
ACC 576 Week 5 Quiz (All Possible Questions)
Week 5 Quiz Question 1 An accountant's compilation report on a financial forecast should include a statement that the Question 2 When a CPA examines a client's projected financial statements, the CPA's report should Question 3 At a confidential meeting, an audit client informed a CPA about the client's illegal insider-trading actions. A year later, the CPA was subpoenaed to appear in federal court to testify in a criminal trial against the client. The CPA was asked to testify to the meeting between the CPA and the client. After receiving immunity, the CPA should do which of the following?
Question 4 (NOTE: This is a CPAexcel simulated Exam Question, not AICPA licensed Material) XYZ Corporation is having financial difficulties. Its CFO has ordered subordinates to pump up revenues artificially and hide that fact from the external auditor. If an internal auditor of XYZ intentionally misleads XYZ's outsider auditor from the ABC Accounting firm, the internal auditor has: Question 5 (AICPA.080962REG-1B) (NOTE: This is a CPAexcel simulated Exam Question, not AICPA licensed Material) Duncan, an accounting firm, is auditing Alchemy Inc. Regarding commissions and referral fees, which of the following arrangements would be permissible? Question 6 A CPA who is not in public practice is obligated to follow which of the following rules of conduct? Question 7 Under the Statements on Standards for Consulting Services, which of the following statements best reflects a CPA's responsibility when undertaking a consulting services engagement? The CPA must Question 8
Under the Code of Professional Conduct of the AICPA, which of the following is required to be independent in fact and appearance when discharging professional responsibilities? Question 9 Locke, CPA, was engaged to perform an audit for Vorst Co. During the audit, Locke discovered that Vorst's inventory contained stolen goods. Vorst was indicted and Locke was validly subpoenaed to testify at the criminal trial. Vorst has claimed accountant-client privilege to prevent Locke from testifying. Locke may be compelled to testify Question 10 (NOTE: This is a CPAexcel simulated Exam Question, not AICPA licensed Material) Ron is a partner in the Houston office of KPMG. A partner in Ron's office is the lead partner on the team that audits Midstream Pipeline, which operates intrastate oil and gas pipelines, but Ron is not on the engagement team. Which of the following scenarios represents an independence violation of the AICPA Code of Conduct? Question 11 (NOTE: This is a CPAexcel simulated Exam Question, not AICPA licensed Material) The CPA firm, where Joanna is currently a tax partner, is auditing Bubbles Corp. in Austin. Her mother, Teresa, has been working as a receptionist for Bubbles for the last 30 years. Her best friend since grade school, Maggie, is currently serving as CFO at Bubbles. Joanna knows that her brother, Jonathan, sank most of his savings into a
purchase of 6% of Bubbles outstanding stock, which he currently owns. Does Joanna have an independence issue? Question 12 An accountant may accept an engagement to apply agreed-upon procedures to prospective financial statements provided that Question 13 (NOTE: This is a CPAexcel simulated Exam Question, not AICPA licensed Material) In order to preserve independence, the PCAOB requires: Question 14 According to the standards of the profession, which of the following activities would most likely not impair a CPA's independence? Question 15 According to the standards of the profession, which of the following circumstances will prevent a CPA performing audit engagements from being independent? Question 16 Which of the following is a term for an attest engagement in which a CPA assesses a client's commercial Internet site for predefined criteria that are designed to measure transaction integrity, information protection, and disclosure of business practices?
A CPA in public practice is required to comply with the provisions of the Statements on Standards for Attestation Engagements (SSAE) when Question 18 An accountant's report expressing an opinion on a nonissuer's internal control over financial reporting should state that Question 19 In a state jurisdiction having an accountant-client privilege statute, to whom may a CPA turn over work papers without a client's permission? Question 20 Mell Corp. engaged Davis & Co., CPAs. to audit Mell's financial statements. Mell's management informed Davis it suspected that the accounts receivable were materially overstated. Although the financial statements did include a materially overstated accounts receivable balance, Davis issued an unqualified opinion.Mell relied on the financial statements in deciding to obtain a loan from County Bank to expand its operations. County relied on the financial statements in making the loan to Mell. As a result of the overstated accounts receivable balance, Mell has defaulted on the loan and has incurred a substantial loss. If County sues Davis for fraud, must Davis furnish County with the audit working papers? ===============================================
ACC 576 Week 6 Quiz (All Possible Questions)
ACC 576 Study Week 6 1. Which of the following did SOX NOT do to protect whistleblowers? 2. Dan provided original information to authorities regarding a securities fraud in his company. It led the SEC to impose penalties of $2 million. Which of the following is most likely to be Dan's award under Dodd-Frank? 3. Which of the following is necessary to be an audit committee financial expert, according to the criteria specified in the SarbanesOxley Act of 2002? 4. Which of the following did Dodd-Frank do regarding a whistleblower's right to sue for retaliation accorded by SOX? 5. A public company audit committee's "financial expert" must have all of the following except: 6. Fang provided original information to authorities regarding a securities fraud in his company. The information led to an imposition
of penalties of $500,000. It also led to Fang being fired in retaliation by his public company employer. Which of the following is true? 7. Public company audit committees must contain which of the following? 8. Under SOX, it is a crime to punish a public company whistleblower who provides truthful information relating to which of the following: 9. Mar has been complicit in her public company's accounting fraud. She consults a lawyer as the time comes to file her firm's 10-K with the SEC. She is a little uncomfortable with what she might have to do. The lawyer will likely tell her that she will have to certify (and be potentially criminally liable for lying about) these matters: 10. Milo Corp. maintains daily backups of its accounting system in a fireproof vault in the file library. Weekly, monthly, and annual backups are stored in a secure, fireproof vault at an off-site location. 11. Maintenance of the backup files is an example of 12. Review of the audit (also called transaction) log is an example of which of the following types of security control? 13. Which of the following statements presents an example of a general control for a computerized system? 14. Controls in the information technology area are classified into the categories of preventive, detective, and corrective. Which of the following is a preventive control? 15. A company's new time clock process requires hourly employees to select an identification number and then choose the clock-in or clock-out button. A video camera captures an image of the employee
using the system. Which of the following exposures can the new system be expected to change the least? 16. Which of the following is an example of a detective control? 17. In the COSO "cube" model, each of the following is a control objective except 18. In the COSO "cube" model, this component of internal control enables an organization's people to identify, process, and exchange the information needed to manage and control operations. 19. This component of internal control concerns the policies and procedures that ensure that actions are taken to address the risks related to the achievement of management's objectives. 20. This fundamental component of internal control is the core or foundation of any system of internal control. 21. This component of internal control concerns testing the system and its data. 22. According to COSO, which of the following is a compliance objective? 23. This is the process of identifying, analyzing, and managing the risks involved in achieving the organization's objectives. 24. In the COSO (2011) "cube" model, each of the following are components of internal control except 25. According to the 17 COSO control principles, risk reduction primarily relates to which fundamental component of internal control: 26. According to the 17 COSO control principles, establishing a whistle-blower hot line contributes to:
27. According to the 17 COSO control principles, information quality primarily relates to which fundamental component of internal control: 28. According to the 17 COSO control principles, organizational objectives primarily relate to which fundamental component of internal control: 29. According to the 17 COSO control principles, addressing control deficiencies primarily relates to which fundamental component of internal control: 30. According to the 17 COSO control principles, change management primarily relates to which fundamental component of internal control: 31. According to the 17 COSO control principles, fraud primarily relates to which fundamental component of internal control: 32. The original COSO model has _____ control components, while the COSO ERM model has _____ control components. 33. Strategic, operations, reporting, and compliance objectives are a part of which of the following models of internal control? 34. Which of the following items is one of the eight components of COSO's enterprise risk management framework? 35. Which component of the COSO ERM framework is concerned with management's decision to avoid, accept, reduce, or share risk and to develop a set of actions to align risk with the entity's risk preferences? 36. Activities that can be useful in monitoring control system effectiveness include all of the following except
37. The goals of risk management include: 38. According to COSO, which of the following is the most effective method to transmit a message of ethical behavior throughout an organization? 39. Each of the following is a limitation of enterprise risk management (ERM) except 40. Which of the following control activities should be taken to reduce the risk of incorrect processing in a newly installed computerized accounting system? 41. Recognizing potential impediments to communication between system user and system designer can be useful in 42. A senior executive of an international organization who wishes to demonstrate the importance of the security of company information to all team members should 43. In which of the following organizations might segregation of duties be easiest to achieve? 44. A manufacturing firm noted that it would have difficulty sourcing raw materials locally, so it decided to relocate its production facilities. According to COSO, this decision represents which of the following responses to the risk? 45. Which of the following is most useful when risk is being prioritized? 46. According to COSO, the two primary attributes of effective evaluators are 47. Which of the following are reasons that internal controls need to be monitored?
48. Which of the following is the best definition of a compensating control? 49. Within the COSO Internal Control-Integrated Framework, which of the following components is designed to ensure that internal controls continue to operate effectively? 50. According to COSO, an effective approach to monitoring internal control involves each of the following steps,except 51. According to COSO, the use of ongoing and separate evaluations to identify and address changes in internal control effectiveness can best be accomplished in which of the following stages of the monitoring-for-change continuum? 52. Internal control monitoring is considered 53. Which of the following is not a major step in the COSO model of control monitoring? 54. In a large public corporation, evaluating internal control procedures should be the responsibility of 55. The system of internal control begins with 56. The IIA's International Professional Practices Framework includes among its "mandatory" guidance each of the following elements except 57. One of the Rules of Conduct in the IIA's Code of Ethics states, "Internal auditors shall perform internal audit services in accordance with the International Standards for the Professional Practice of Internal Auditing." To which Principle of the Code of Ethics does this Rule of Conduct relate?
58. The IIA's Code of Ethics identifies four "Principles" around which the 12 Rules of Conduct are organized. Each of the following key words or phrases is associated with these Principles except 59. What term identifies the type of internal auditing standards used to measure the quality of the internal auditor's conduct in delivering internal audit services? 60. What term identifies the type of internal auditing standards used to describe the characteristics associated with organizations and individuals who provide internal audit services? 61. The IIA's Definition of Internal Auditing specifically mentions each of the following terms among the organizational objectives to be improved by internal auditing except 62. What term is used in the IIA's International Standards to identify the person responsible for managing an organization's internal audit activity? 63. The Attribute Standards related to an internal audit activity's Quality Assurance and Improvement Program must include periodic external assessments. How often is an external assessment required? 64. The Attribute Standards focus on four primary themes around which the remaining Attribute Standards are organized. Each of the following key words or phrases is associated with those four primary themes except 65. Standard 1300, "Quality Assurance and Improvement Program," states, "The chief audit executive must develop and maintain a quality assurance and improvement program that covers all aspects of the internal audit activity." Six additional Attribute Standards provide further requirements on that topic. Which of the following is
an accurate statement regarding the standards applicable to the required Quality Assurance Improvement Program? 66. The Performance Standards focus on seven primary themes around which the remaining Performance Standards are organized. Each of the following key words or phrases is associated with these seven primary themes except 67. The Performance Standards focus on seven primary themes around which the remaining Performance Standards are organized. Each of the following key words or phrases is associated with these seven primary themes except 68. What term identifies the guidance in the International Standards for the Professional Practice of Internal Auditing that distinguishes between requirements for "assurance" services and "consulting" services? 69. There are seven additional Performance Standards that relate to Standard 2000, "Managing the Internal Audit Activity." The general theme of these standards associated with Managing the Internal Audit Activity is best characterized by which of the following statements? Quiz 6 Question 1 (IFTC-0112) Controls in the information technology area are classified into the preventive, detective, and corrective categories. Which of the following is a preventive control? Question 2 (IFTC-0082)
An organization relied heavily on e-commerce for its transactions. Evidence of the organization's security awareness manual would be an example of which of the following types of controls? Question 3 (IFTC-0067) Which of the following types of control plans is particular to a specific process or subsystem, rather than related to the timing of its occurrence? Question 4 (CGIC-0032) Which of the following is true about the Sarbanes-Oxley requirements regarding the audit committee financial expert? Question 5 (CGIC-0026) Which of the following is not a component of COSO's enterprise risk management framework? Question 6 (CGIC-0010) Which of the following is not required by the Sarbanes-Oxley Act of 2002? Question 7 (CGIC-0025) Which of the following is not an advantage of the employment of an enterprise risk management (ERM) system? Question 8 (CGIC-0008) A financial statement audit performed under the requirements of the Sarbanes-Oxley Act of 2002 must include an examination and report upon Question 9 (CGIC-0024)
An important benefit of an enterprise risk management system is Question 10 (CGIC-0023) Which of the following bodies has developed a framework for enterprise risk management? Question 11 (CGIC-0005) Which of the following executives of an issuer corporation must certify to the accuracy and truthfulness of financial reports filed with the SEC? Question 12 (CGIC-0004) Which of the following is not a responsibility that should be assigned to the audit committee of the board of directors? Question 13 (CGIC-0018) Which of the following components of internal control are characterized by ongoing activities and separate evaluations? Question 14 (CGIC-0003) Which of the following can be the most effective monitoring device for effective corporate governance? Question 15 (CGIC-0002) From a corporate governance standpoint which of the following best describes the main goal of a form of executive compensation? Question 16 (CGIC-0019) Which of the following components of internal control encompass policies and procedures that ensure that management's directives are carried out?
Question 17 (CGIC-0001) Which of the following forms of compensation is more likely to result in shirking by management? Question 18 (CGIC-0036) In the COSO framework, individuals within the company that monitor internal controls are referred to as Question 19 (CGIC-0016) The COSO definition of internal control considers control activities a(n): Question 20 (CGIC-0021) If internal control is properly designed, the same employee should not be permitted to ===============================================
ACC 576 Week 7 Assignment 1 Economic and Monetary Policy
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Assignment 1: Economic and Monetary Policy
Using the Internet and Library, research the economies and monetary policies of two (2) countries.
Write a four to five (4-5) page paper in which you:
Choose one (1) of the two (2) countries that you have researched, and give your opinion on the degree to which the chosen country manages its economy and monetary policy well. Provide support for your opinion. Compare and contrast the economies and monetary policies of the two (2) countries that you have researched. Make at least two (2) recommendations as to the primary manner in which both countries could improve their economy and / or monetary policies. Analyze the impact that economic and monetary policies of one (1) of the chosen countries currently exerts upon its trade with other countries. Make at least two (2) recommendations as to changes that the chosen country should make to its policies to benefit its foreign trade. Propose one (1) alternative economic and monetary policy that would make one (1) of the chosen countries stronger over the longer term. Support your proposal with anticipated outcomes related to the selected alternative policy.
Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. Include a cover page containing the title of the assignment, your name, the professorâ€™s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Analyze domestic microeconomic and macroeconomic principles that impact businesses. Analyze international economics and its impact on businesses, globalization, and business strategy.
Use technology and information resources to research issues in business law and tax. Write clearly and concisely about business law and tax using proper writing mechanics. ===============================================
ACC 576 Week 7 Quiz (All Possible Questions)
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ACC 576 Week 7 Study 1. A management accountant performed a linear regression of maintenance cost vs. production using a computer spreadsheet. The regression output shows an "intercept" value of $322,897. How should the accountant interpret this information? 2. The equation for the graphic plot of a linear economic variable is D = b + m(a). Which of the following represents the value of the "intercept"? 3. Which of the following statements regarding the use of graphs to depict economic relationships is not correct?
4. Graphs are a means of depicting the relationship between two variables. These variables are usually identified as 5. The equation for the graphic plot of a linear economic variable is D = b + m(a), where m > 0. Which of the following is the slope of the economic "curve" represented by this equation? 6. Measures of the economic activity of an entire nation would be included in the study of 7. The free-market economy flow model depicts four major interrelated flows:I . Individuals provide economic resources to business firms.II. Firms provide payment to individuals for economic resources.III. Firms provide goods and services to individuals.IV. Individuals provide payment to firms for goods and services. 8. If the cost of imported oil declined suddenly and significantly, which one of the above flows would be most likely to be the first impacted? 9. The free-market economy flow model depicts four major interrelated flows:I . Individuals provide economic resources to business firms.II. Firms provide payment to individuals for economic resources.III. Firms provide goods and services to individuals.IV. Individuals provide payment to firms for goods and services. 10. If financial institutions and businesses suddenly and severely restrict the availability of consumer credit, which one of the above flows would be most likely to be the first to be impacted adversely? 11. Which of the following are considered economic resources? 12. In a free-market economy, which of the following should be the least significant factor in determining resource allocation and use?
13. Which of the following is not a characteristic of a free-market economy? 14. The demand for a commodity would increase when the price of a 15. When a demand schedule is plotted on a graph, the resulting demand curve will be 16. In the statement "quantity demanded is a function of price," are the variables quantity and price dependent or independent variables? 17. The demand curve for a product reflects which of the following? 18. If there is an increase in the income of market participants, which of the following is most likely to happen to the demand for normal goods? 19. Which one of the following would not cause an increase in demand for a commodity? 20. Concurrent with a significant downturn in the economy, the sale of Scope's high-end electronics decreased dramatically. Which of the following is the most likely direct cause of the decline in demand for Scope's products? 21. Which one of the following factors would not cause an increase in the supply curve of a commodity? 22. A supply schedule (or supply curve) shows the relationship between the quantity of a commodity that will be supplied during a period of time and 23. If a change in market variables causes a supply curve to shift inward, which one of the following will occur?
24. When the cost of input factors to the production process increases, which one of the following will occur? 25. In the statement "quantity supplied is a function of price," are the variables quantity and price dependent or independent variables? 26. An increase in taxes on cigarette production would cause which one of the following to occur? 27. What is the effect on the quantity of a commodity supplied relative to demand as a result of a government-mandated price ceiling or price floor? 28. A city ordinance that establishes a price ceiling on rent may cause 29. If both demand and supply have traditional curves, a higher equilibrium price may be caused by which one of the following? 30. If the price for a good is fixed by government fiat below market equilibrium price, which one of the following will occur? 31. A price ceiling that is below the market equilibrium price would be expected to result in which one of the following sets of effects on demand and supply? 32. Which of the following characteristics would indicate that an item sold would have a high price elasticity of demand? 33. An increase in the price of Commodity Y from $50 to $60 resulted in an increase in the quantity supplied, from 80 units to 88 units. Which one of the following is the price elasticity of supply?
34. A company has a policy of frequently cutting prices to increase sales. Product demand is significantly elastic. What impact would this have on the company's situation? 35. If demand for a product is elastic, what would be the effect of a price increase and a price decrease on total revenue (TR) generated? 36. In which of the following situations would there be inelastic demand? 37. The elasticity of demand is measured by 38. A 4% increase in the market price of Commodity X resulted in an 8% increase in the quantity of Commodity X supplied. Which one of the following statements is correct? 39. As an individual acquires (or consumes) more units of a commodity over a given time period, what is the effect on the individual's total utility and marginal utility? 40. The following graph shows four curves: A-A, B-B, C-C, and D-D. Which one of these curves could depict a total utility curve? 41. Allen buys only beer and pizza. When the price of beer is $2.00 per bottle and the price of pizza is $10.00, Allen maximizes his total utility (satisfaction) by buying 5 beers and 4 pizzas. If the marginal utility of the 5th beer is 100 utils, which one of the following would be the marginal utility of the 4th pizza? 42. The following graph shows four curves: A-A, B-B, C-C, and D-D. Which of these curves depict variables that are not interdependent? 43. Allen has the following schedule of marginal utility for slices of pizza and bottles of beer: If Allen maximizes his total utility by consuming 3 slices of pizza and 3 bottles of beer, which one of the
following is the ratio of the price of a slice of pizza to the price of a bottle of beer? 44. Which one of the following cost curves does not have a general "U-shape"? 45. In the long run, if all input factors to a production process are increased by 100%, but total output increases by only 75%, this indicates 46. Which one of the following statements regarding periods of analysis is correct? 47. According to the law of diminishing returns, which one of the following is correct? 48. In a macroeconomic free-market flow model, which of the following would be considered leakages? 49. Which of the following forms of economic activity is considered in macroeconomics, but not in microeconomics? 50. In a macroeconomic free-market flow model, which one of the following would not be considered an "injection?" 51. Which of the following issues is least likely to be relevant to the study of macroeconomics? 52. The foreign sector plays a role in a macroeconomic free-market flow model because of 53. Which of the following sectors is most likely to be relevant in both microeconomic and macroeconomic models of free-market flows?
54. Potential GDP is a measure of an economy's ability to produce goods and services. Which of the following is assumed in estimating potential GDP? 55. Which of the following graphs shows the maximum combination of goods and services that can be produced at a given time, if all available resources are used efficiently? 56. A positive gross domestic product (GDP) gap exists when 57. Gross domestic product (GDP) is a measure of 58. Adjustment from gross national product (GNP) to net national product (NNP) would require which one of the following? 59. A good produced in 2008 that was in the finished goods inventory on December 31, 2008, and was sold in January 2009 would be included in whole or in part in the GDP of which year(s)? 60. The following information is available for economic activity for year 1: What amount is the gross domestic product for year 1? 61. Which of the following indicates that the economy is in a recessionary phase? 62. If the U.S. economy is experiencing a 9% total unemployment rate and the natural rate of unemployment is 5.5%, which of the following is the cyclical rate of unemployment? 63. Jason, 14 years old, has been working delivering newspapers for the past two years. Because he just entered high school, he has had to give up his newspaper delivery job. Although he has been seeking a new job, he has not been able to find one. Jason would be considered
64. There can be official full employment when there is which of the following kinds of unemployment? I. Structural unemployment.II. Frictional unemployment.III. Seasonal unemployment. 65. As a result of the recession in 2009 and the related decline in tourism, several thousand hospitality industry workers in Florida became unemployed. These workers were 66. Which of the following changes in unemployment is most likely to be associated with a period of economic contraction? 67. Which of the following types of unemployment typically results from technological advances? 68. Which of the following is not included in what is considered the natural rate of unemployment? 69. Which of the following is most likely to decrease aggregate demand? 70. In macroeconomics, which one of the following would not be considered investment spending? 71. During 2008, Roy's disposable income was $100,000 and he spent $90,000 on consumable goods. During 2009, Roy's disposable income increased to $200,000 and he spent $150,000 on consumable goods. For 2009, when compared to 2008, what is Roy's marginal propensity to consume? 72. An increase in spending on imported goods would most likely cause which one of the following? 73. Which of the following is most likely to result in an increase in aggregate demand in the U.S. economy?
74. Which of the following is most likely to increase aggregate demand? 75. During 2008, Roy's disposable income was $100,000 and he spent $90,000 on consumable goods. During 2009, Roy's disposable income increased to $200,000 and he spent $150,000 on consumable goods. During 2009, what is Roy's average propensity to consume? 76. The full-employment gross domestic product is $1.3 trillion, and the actual gross domestic product is $1.2 trillion. The marginal propensity to consume is 0.8. When inflation is ignored, what increase in government expenditures is necessary to produce full employment? 77. Which of the following theoretical aggregate supply curves has a "kink" at the level of output at which there is full employment? 78. The war in Iraq substantially reduced the working population, as well as other economic resources, of that country. Which one of the following most likely occurred in the Iraqi economy as a result of the reduced working population? 79. Which of the following effects is most likely to accompany an unexpected reduction in aggregate supply, assuming a conventional supply curve? 80. An increase in the minimum wage rate would likely result in which one of the following? 81. Assuming a conventional supply curve, which one of the following factors will not cause a shift in the aggregate supply curve for a good?
82. An increase in the value of the Chinese currency (the RMB) relative to the U.S. dollar would most likely cause which of the following? 83. Assume increased capital investment results in higher levels of output of goods, but demand remains unchanged. What will be the likely effect on aggregate equilibrium quantity and price if a conventional supply curve is assumed? 84. A rise in a country's exports would most likely cause which one of the following shifts? 85. Assume increased capital investment results in higher levels of output of goods, but demand remains unchanged. What will be the likely effect on aggregate equilibrium quantity and price if a classical supply curve is assumed? 86. Assume increased capital investment results in higher levels of output of goods, but demand remains unchanged. What will be the likely effect on aggregate equilibrium quantity and price if a Keynesian supply curve is assumed and the level of aggregate demand is at greater than full employment? 87. The aggregate demand and aggregate supply curves intersect at a price and quantity that are 88. Which one of the following statements concerning the business cycle is correct? 89. The business cycle in the U.S. is measured in terms of changes in 90. Which of the following measures is most likely to indicate a forthcoming recessionary period? 91. Which of the following segments of the economy will be least affected by the business cycle?
92. Which of the following statements concerning the business cycle, if any, is correct? I. Business cycles recur with a consistent pattern of length and magnitude. II. Business cycles impact individual industries at different times and with different degrees of severity. 93. Variations between business cycles are most likely attributable to which of the following factors? 94. Which of the following changes is most likely to be a lagging indicator of a change in the business cycle? 95. Which of the following typically is not a reason for international economic activity by a U.S. entity? 96. Which of the following typically is not a reason for international economic activity by a U.S. entity? 97. Which one of the following concepts underlies the benefits of international economic activity (i.e., international trade)? 98. The concept of comparative advantage in international business activity is based on which one of the following? 99. Which one of the following would not be an argument made by U.S. unions in favor of trade protectionism? 100. In the long run, the imposition of an import quota on a commodity is likely to provide the greatest direct benefit to 101. Which of the following is not an account used by the U.S. to account for transactions and balances with other nations (i.e., those not in the U.S. balance of payments statement)? 102. What is the effect when a foreign competitor's currency becomes weaker compared to the U.S. dollar?
103. A statement expressed in the form of "1 euro = $1.20" expresses a/an 104. A company manufactures goods in Esland for sale to consumers in Woostland. Currently, the economy of Esland is booming and imports are rising rapidly. Woostland is experiencing an economic recession and its imports are declining. How will the Esland currency, $E, react with respect to the Woostland currency, $W? 105. A country's currency conversion value has recently changed from 1.5 to the U.S. dollar to 1.7 to the U.S. dollar. Which one of the following statements about the country is correct? 106. Freely fluctuating exchange rates perform which of the following functions? 107. Platinum Co. has a receivable due in 30 days for 30,000 euros. The treasurer is concerned that the value of the euro relative to the dollar will drop before the payment is received. What should Platinum do to reduce this risk? 108. Assume a U.S. company purchases shares of a French company for 1,000,000 euros on March 1, 2003, when the exchange rate was 1 E = $1.10. The investment is classified as available-for-sale by the U.S. company. After holding the shares for eight months, it sold the entire investment in the foreign market for 1,200,000 euros when the exchange rate was 1 E = $1.23.What dollar amount of total investment gain or loss would the U.S. company recognize? 109. Assume a U.S. company purchases shares of a French company for 1,000,000 euros on March 1, 2003, when the exchange rate was 1 E = $1.10. The investment is classified as available-for-sale by the U.S. company. After holding the shares for
eight months, it sold the entire investment in the foreign market for 1,200,000 euros when the exchange rate was 1 E = $1.23.Which of the following type(s) of gain or loss would be recognized as a result of this investment in and subsequent sale of shares in the French company? 110. A put is an option that gives its owner the right to do which of the following? 111. A domestic entity may be exposed to foreign currency exchange rate risk if it engages in which, if any, of the following kinds of transactions that are denominated in a foreign currency? 112. Which of the following types of exchange risk derives from changes in currency exchange rates that alter the value of future transactions? 113. CompCo., a U.S. computer maker, imported a supply of computer chips from ChipCo., a Japanese supplier, and agreed to pay ChipCo. in yen, with terms of net 90. CompCo. is concerned that the dollar will weaken against the yen during the next three months and decides to hedge its liability. Which one of the following contract transactions would CompCo. initiate to hedge its exchange rate risk? 114. Which of the following is not a common basis for establishing a transfer price between affiliated entities? 115. pricing?
Which of the following examples involves transfer
116. Globalco, a U.S. parent, has subsidiaries in Germany (Gerco) and in England (Engco). Gerco produces products that are sent to Engco for final assembly and packaging. Engo then sends the goods to Globalco for retail sales in the U.S. The effective income tax
rates faced by each of the companies is: If the objective of transfer prices is to minimize income taxes, which of the following policies, within legally acceptable ranges, should Globalco adopt with respect to the transfer prices? 117. Which of the following statements regarding international transfer pricing is/are correct? I. Firms with operations in multiple nations can manipulate earnings through transfer pricing.II. The transfer price preferred by a foreign subsidiary manager may be different than the transfer price that maximizes consolidated profits. 118. pricing?"
Which of the following best describes "transfer
119. Which of the following is not a kind of economic crisis that could be addressed by the International Monetary Fund? 120. Foreign direct investment occurs when a domestic entity invests in 121. If a country with a developed economy faces a debt crisis that makes it unable to satisfy its foreign debt obligations, which of the following international organizations is most likely to be called upon to help resolve the debt crisis? 122. Which one of the following would not be a purpose of the General Agreement on Tariffs and Trade (GATT)? 123. Which one of the following international organizations has the promotion of economic development through loans to developing countries as a primary purpose? 124. Which of the following enters into the determination of gross domestic product of a country?
125. Which of the following countries is the world's largest exporter of goods/services? 126. The long-term trend in the dollar value of U.S. exports and imports reflects 127. Which of the following statements regarding international trade is/are correct? I. International trade has been facilitated by regional trade agreements.II. International trade benefits both exporters and importers. 128. Over the past 50 years, how has the share of total U.S. purchases and output represented by imports and exports, respectively, changed? 129. Which of the following goods, if any, does the U.S. export more of than it imports (i.e., has net exports)? I. Manufactured goods. II. Industrial materials. III. Agricultural goods. 130. Which of the following statements regarding international trade over the last 50 years is/are correct? I. International trade accounts for an increasing share of worldwide economic activity.II. International trade accounts for an increasing share of U.S. economic activity. 131.
International trade is measured by a country's
132. Which of the following is least likely to be a risk encountered when goods are outsourced to a foreign supplier and payment is denominated in the foreign supplier's currency? 133.
Outsourcing may involve the acquisition of
134. Which of the following, if either, would serve to mitigate risks associated with outsourcing? I. Negotiate for payment
to the foreign supplier be made in the foreign currency.II. Include an arbitration clause in the contract with the foreign supplier. 135. Outco, Inc., a U.S. firm, has a contract to acquire spare parts from a foreign supplier. The contract provides that the parts are to be manufactured to Outco's specifications and Outco is to pay in U.S. dollars. Which of the following risks will Outco encounter as a direct result of the contract? 136.
Outsourcing of goods may involve acquisition of
137. Which of the following, if either, may be a reason a firm elects to outsource production of a subassembly used in its final product? I. To Improve quality of subassembly.II. To reduce the time needed to have the subassembly available. 138. Which of the following statements regarding the Eurodollar market, if either, is/are correct? I. Eurodollars can be either EEU Euros or U.S. dollars.II. The Eurodollar market provides long-term loans. 139. The currency or currencies of the Eurodollar market (Euromarket) include(s): 140. Bigo, Inc., a U.S. entity, decided to build a production facility in Mexico. To finance construction, it borrows one million pesos from Banco Uno, a Mexican bank. Which of the parties is exposed to currency exchange risk? 141.
Capital markets facilitate the trading of
142. In which of the following circumstances, as the dollar changes against the foreign currency, would an investment in a foreign currency result in fewer dollars and a borrowing in a foreign currency cost more dollars?
143. Which of the following statements regarding globalization of capital markets, if either, is/are correct? I. Globalization permits reduced investment portfolio risk.II. Globalization permits a lower cost of capital. 144. Parco, Inc., a U.S. entity, has a 100% owned subsidiary, Subco, Inc., located in the country of Eastlaco. In which one of the following arrangements would there be no foreign currency exchange risk associated with borrowing by either Parco or its subsidiary, Subco, prior to consolidation? 145. Which one of the following sets identifies the two countries that are most likely the world's largest export countries? 146. In which of the following geographical areas has the greatest decline in share of worldwide output occurred over the past 40 years? 147. Which one of the following is most likely the U.S. share of worldwide exports? 148. Which of the following most closely represents the U.S. share of worldwide GDP (output)? 149. Which one of the following countries is not one of the world's largest exporters of goods and services? 150. In which of the following geographical areas has the greatest increase in share of worldwide output occurred over the past 30 years? 151. Which of the following is the most elementary form of international business?
152. Which one of the following is least likely an advantage associated with the acquisition of a pre-existing foreign entity? 153. Which of the following statements regarding foreign licensing and foreign franchising, if any, is/are correct? I. Licensors typically remain more involved with a licensee than a franchisor remains involved with a franchisee.II. Franchising typically provides greater quality control than does simple licensing. 154. Which one of the following is least likely an advantage associated with a wholly owned foreign subsidiary? 155.
Government-imposed trade barriers may restrict
156. Which of the following statements regarding importing and exporting, if any, is/are correct? I. Goods with a low value-to-weight ratio are less likely to be suitable for importing than goods with a high value-to-weight ratio.II. In the exporting of goods, one may encounter import restrictions imposed by the country of destination. 157. Which one of the following forms of international business is most likely to give an entity the greatest control over an international business activity? 158. The measurement of post-performance characteristics is most likely to be associated with which one of the following activities of the strategic planning process? 159. Which of the following activities is most likely to be the first step in the strategic planning process? 160. Which of the following is not a generic strategy identified by Michael Porter?
161. Which of the following identifies a framework for gauging the attractiveness of the competitive environment of an industry? 162. Which of the following factors is explicitly included in PESTEL analysis but is not explicitly in PEST analysis? 163.
PEST is an acronym for
164. In the context of PEST analysis, the analysis of labor law would be most likely to fall under which of the PEST categories? 165. analysis of
Macro-environmental analysis is concerned with
166. Which of the following describes a form of analysis that is useful in evaluating the characteristics of a macroenvironment? 167.
PEST analysis can be used when considering
168. Which one of the following sets of characteristics should have the highest intensity of rivalry within an industry? 169. In which one of the following circumstances are customers most likely to have the greatest ability to affect product prices? 170. Vico, Inc., is considering a horizontal expansion of its business into a new industry. Vico is concerned that other businesses may be considering moving into the same industry in the near future. Which one of the following forms of analysis would Vico most likely use to assess whether the industry is likely to be highly competitive in the near future?
171. Which one of the following features would not create a higher level of competitive threat posed by substitute goods or services in an industry? 172. In which of the following independent circumstances would entry of new competitors be most likely? 173. Which of the following is not a five forces factor used in determining the operating attractiveness of an industry? 174. Which one of the following would not be an entity's strength in a competitive environment? 175. A regulatory agency has been considering the imposition of stricter regulations on an industry. Under SWOT analysis, the possibility of this new regulation would be considered 176. Is SWOT analysis concerned with external environment, internal characteristics, or both? 177. Which one of the following would be least likely to be a possible threat to an entity? 178. Which of the following types of analysis is directly concerned with the relationship between an entity and its environment? 179. Which of the following SWOT matrix relationship categories (intersections) poses the greatest risk to an entity? 180. Targeting a niche market always involves which of the following strategies, if either? 181. Which of the following is a characteristic of a cost leadership entity?
182. Under which of the following strategies, if either, would the strength and dedication of an entity's marketing function be critical? 183. Entities that adopt a differentiation strategy will provide goods or services that 184. Which one of the following is not a generic strategy identified by Porter? 185. When an entity adopts a cost leadership strategy, which one of the following might it use to help carry out this strategy? 186. Which of the following forms of analysis, if either, is concerned only with analysis of the external environment of an entity? 187. Which one of the following is least likely to be useful in deciding in which country an entity should operate? 188. should be
Goals established in the strategic planning process
189. PEST analysis and SWOT analysis are assessment techniques used in the strategic planning process. Are these forms of analysis primarily concerned with "where" an entity should be located or with "how" an entity should operate? ===============================================
ACC 576 Week 8 Quiz (All Possible Questions)
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ACC 576 Week 8 Quiz (All Possible Questions) ACC 576 Week 8 Study 1. Regarding financial resources, financial management is concerned with the efficiency and effectiveness of which of the following? 2. Which of the following financial management-related areas are considered long-term issues? 3. Which one of the following would be considered a long-term financial management activity or concern? 4. Financial management involves decisions and activities that deal with 5. Which of the following "tools" are likely to be used in financial management? 6. A company has the following target capital structure and costs:The company's marginal tax rate is 30%. What is the company's weighted-average cost of capital? 7. A company has the following financial information: To maximize shareholder wealth, the company should accept projects with returns greater than what percent?
8. The measurement of the benefit lost by using resources for one purpose and not another is 9. Which of the following statements is correct regarding the weighted-average cost of capital (WACC)? 10. Carter Co. paid $1,000,000 for land three years ago. Carter estimates it can sell the land for $1,200,000, net of selling costs. If the land is not sold, Carter plans to develop the land at a cost of $1,500,000. Carter estimates net cash flow from the development in the first year of operations would be $500,000. What is Carter's opportunity cost of the development? 11. A company with a combined federal and state tax rate of 30% has the following capital structure:What is the weighted-average after-tax cost of capital for this company? 12. Which of the following is assigned to goods that were either purchased or manufactured for resale? 13. Management at MDK Corp. is deciding whether to replace a delivery van. A new delivery van costing $40,000 can be purchased to replace the existing delivery van, which cost the company $30,000 and has accumulated depreciation of $20,000. An employee of MDK has offered $12,000 for the old delivery van. Ignoring income taxes, which of the following correctly states relevant costs when making the decision whether to replace the delivery vehicle? 14. Alpha Corporation has the following capital structure and related cost of capital for each source: Which one of the following is Alpha's weighted average cost of capital? 15. A company uses its company-wide cost of capital to evaluate new capital investments. What is the implication of this policy when
the company has multiple operating divisions, each having unique risk attributes and capital costs? 16. Which one of the following costs, if any, is relevant in making financial decisions? 17. Buff Co. is considering replacing an old machine with a new machine. Which of the following items is economically relevant to Buff's decision? (Ignore income tax considerations.) 18. The ABC Company is trying to decide between keeping an existing machine and replacing it with a new machine. The old machine was purchased just two years ago for $50,000 and had an expected life of 10 years. It now costs $1,000 a month for maintenance and repairs, due to a mechanical problem. A new replacement machine is being considered, with a cost of $60,000. The new machine is more efficient and it will only cost $200 a month for maintenance and repairs. The new machine has an expected life of 10 years. In deciding to replace the old machine, which of the following factors, ignoring income taxes, should ABC not consider? 19. Egan Co. owns land that could be developed in the future. Egan estimates it can sell the land for $1,200,000, net of all selling costs. If it is not sold, Egan will continue with its plans to develop the land. As Egan evaluates it options for development or sale of the property, what type of cost would the potential selling price represent in Egan's decision? 20. Which of the following statements is true regarding opportunity cost? 21. For the year ended December 31, 2004, Abel Co. incurred direct costs of $500,000 based on a particular course of action during the year. If a different course of action had been taken, direct costs
would have been $400,000. In addition, Abel's 2004 fixed costs were $90,000. The incremental cost was 22. Pole Co. is investing in a machine with a 3-year life. The machine is expected to reduce annual cash operating costs by $30,000 in each of the first 2 years and by $20,000 in year 3. Present values of an annuity of $1 at 14% are:Using a 14% cost of capital, what is the present value of these future savings? 23. Which one of the following kinds of tables most likely would be used to determine the current worth of five equal amounts to be received at the end of each of the next five years. 24. Which of the following changes would result in the highest present value? 25. On August 31, 2004, Ashe Corp. adopted a plan to accumulate $1,000,000 by September 1, 2008. Ashe plans to make four equal annual deposits to a fund that will earn interest at 10% compounded annually. Ashe will make the first deposit on September 1, 2004. Future value and future amount factors are as follows: Which one of the following would be the amount of annual deposits Ashe should make (rounded)? 26. Which one of the following sets of interest (or discount) rates will give the greater present value of $1.00 and greater future value of $1.00? 27. On November 1, 2005, a company purchased a new machine that it does not have to pay for until November 1, 2007. The total payment on November 1, 2007 will include both principal and interest. Assuming interest at a 10% rate, the cost of the machine would be the total payment multiplied by what time value of money concept?
28. A corporation obtains a loan of $200,000 at an annual rate of 12%. The corporation must keep a compensating balance of 20% of any amount borrowed on deposit at the bank, but it normally does not have a cash balance account with the bank. What is the effective cost of the loan? 29. A company has an outstanding one-year bank loan of $500,000 at a stated interest rate of 8%. The company is required to maintain a 20% compensating balance in its checking account. The company would maintain a zero balance in this account if the requirement did not exist. What is the effective interest rate of the loan? 30. Josey maintained a $10,000 balance in his savings account throughout 2008, the first year of the account. The savings account paid 2% interest compounded annually. For 2008, the inflation rate was 3%. For 2008, what is Josey's real interest rate on the savings account? 31. Which one of the following is interest earned on both an initial principal and the unpaid accrued interest that accumulated on that principal from prior periods? 32. Beta Company has arranged to borrow $10,000 for 180 days. Beta will repay the principal amount plus $600 in interest at the maturity of the note.Which one of the following is the annual percentage rate (APR) of interest that Beta is paying on the loan? 33. Which one of the following is the annual rate of interest applicable when not taking trade credit terms of "2/10, net 30?" 34. The following information is available on market interest rates: What is the market rate of interest on a one-year U.S. Treasury bill? 35. Which one of the following U.S. GAAP approaches to determining fair value converts future amounts to current amounts?
36. Which of the following U.S. GAAP levels of inputs for valuation purposes is/are based on observable inputs? 37. Conceptually, which one of the following U.S. GAAP approaches for determining value is most likely to provide the best evidence of fair value? 38. Which of the following characteristics, if any, should be taken into account in valuing a specific item? 39. Under U.S. GAAP requirements, valuation may be based on an 40. Which of the following level(s) of input in the U.S. GAAP hierarchy of inputs for fair value determination is/are likely to be most appropriate for valuing basic agricultural commodities? 41. Assuming they are traded in an active market, which of the following types of investments, if any, could be valued using level 1 inputs of the U.S. GAAP hierarchy of inputs for determining fair value? 42. Quoted prices in which of the following types of markets could be level 2 inputs in determining fair value under the U.S. GAAP hierarchy of inputs for fair value determination? 43. Which of the following levels of the U.S. GAAP hierarchy of inputs used for determining fair value can be based on inputs not directly observable for the item being valued? 44. Which of the following types of active markets, if any, would be considered as providing level 1 inputs under the U.S. GAAP hierarchy of inputs for fair value determination? 45. Which one of the following beta values indicates the least volatility?
46. Which one of the following is not a limitation of the capital asset pricing model? 47. Assume the following rates exist in the U.S.: Prime interest rate = 6% 48. Fed discount rate = 4% U.S. Treasury Bond rate = 2% Inflation rate = 1% which one of the following is most likely the nominal risk-free rate of return in the U.S.? 49. Assume the following values for an investment: Risk-free rate of return = 2% Expected rate of return = 9% Beta = 1.4 which one of the following is the required rate of return for the investment? 50. Which one of the following is not an element in the capital asset pricing model formula? 51. A graph that plots beta would show the relationship between 52. Which one of the following is not a factor routinely considered in valuing a stock option? 53. Charles Allen was granted options to buy 100 shares of Dean Company stock. The options expire in one year and have an exercise price of $60.00 per share. An analysis determines that the stock has an 80% probability of selling for $72.50 at the end of the one-year option period and a 20% probability of selling for $65.00 at the end of the year. Dean Company's cost of funds is 10%. Which one of the following is most likely the current value of the 100 stock options? 54. Which one of the following is not a limitation of the basic BlackScholes option pricing model? 55. Which one of the following characteristics is not an advantage of the Black-Scholes option pricing model?
56. Which one of the following options, A through D, is most likely to have the greatest value (all other things being equal)? 57. Assume the following abbreviated Income Statement: In a common-size income statement, which one of the following percentages would be shown for Finance Expense? 58. Which one of the following approaches to valuing a business is most likely to be appropriate when the business has been losing money and is going to be sold in a distressed sale? 59. Which one of the following is least likely to be the reason an entity would seek a valuation of the entity as a going concern? 60. Assume the following abbreviated Balance Sheet: In a commonsized balance sheet, which one of the following percentages would be shown for current liabilities? 61. A business with a net book value of $150,000 has an appropriate fair value of $120,000. Charles Harvey, one of three owners, has decided to sell his 10% interest in the business. Which one of the following is most likely the amount at which Harvey can sell his interest? 62. Which one of the following is not a major approach for assigning a value to an entire going business? 63. Which one of the following shows the basic approach used to capitalize earnings to determine the value of a business? 64. Common-size financial statements are useful in making comparisons 65. Which of the following statements, if any, concerning the valuation of business enterprises is/are correct? I. Nonpublic entities are likely to be more difficult to value than publicly traded entities. II.
The conditions in the macroeconomic environment should be considered in valuing an entity. III. The status of the industry in which a business operates should be considered in valuing the entity. 66. The P/E ratio for a share of common stock is computed as: 67. Which one of the following is not an income approach to the valuation of a business? 68. The land and building that constitute a strip shopping mall were valued using the recent sales price of a comparable strip shopping mall located across the street. The method of valuation would be an example of the 69. Which one of the following is not a qualitative forecasting method? 70. Business forecasting can use 71. Which one of the following sets shows each type of business forecasting in the correct method classification? 72. Which one of the following sets best reflects the relationship between the method of forecasting and the nature of forecasting? 73. Which one of the following forecasting methods is based on extrapolation of past data? 74. Which one of the following sets shows the most likely method appropriate for short-term and long-term forecasting? 75. Which one of the following statements describes a difference between the simple moving average and the weighted moving average times series models for forecasting? 76. Each month Fuco, Inc. forecasts its next three months sales using the average of its actual sales for the most recent 12 months. Which
one of the following times series models is Fuco using to forecast sales? 77. Which one of the following would be a time series model for forecasting that reduces random fluctuations in data? 78. Data patterns that reflect an upward movement over a long period of time would describe which one of the following patterns? 79. Which one of the following is not a causal model approach to forecasting? 80. Which one of the following is not a time series pattern? 81. Which one of the following identifies the rate of return required by investors to compensate them for deferring current consumption when making an investment? 82. A graph of the relationship between financial risk and expected financial reward would show a curve that has a: 83. The presence of risk for a portfolio of projects means: 84. Which one of the following risks is least likely to be mitigated by project diversification? 85. As the perceived risk of an undertaking increases, what would be the expected effect on the risk-free rate of return and the risk premium rate of return? 86. A project has an initial outlay of $1,000. The projected cash inflows earned evenly over each year are: Year 1 $200 Year 2 200 Year 3 400 Year 4 400 what is the investment's payback period? 87. Which one of the following is not a technique or approach for evaluating capital budgeting opportunities?
88. Major Corp. is considering the purchase of a new machine for $5,000 that will have an estimated useful life of five years and no salvage value. The machine will increase Major's after-tax cash flow by $2,000 annually for five years. Major uses the straight-line method of depreciation and has an incremental borrowing rate of 10%. The present value factors for 10% are as follows: Ordinary annuity with five payments 3.79 Annuity due for five payments 4.17 using the payback method, how many years will it take to pay back Major's initial investment in the machine? 89. Eval Co. is evaluating a major capital project to determine its economic feasibility. The following data have been accumulated: 90. Eval Co. uses straight-line depreciation for capital investments of this type.Excerpts from present value tables showed the following: Using the information above, which one of the following is the payback period in years for this project? (Ignore income tax.) 91. Which one of the following is a strength of the payback method of evaluating an investment project? 92. A company invested in a new machine that will generate revenues of $35,000 annually for seven years. The company will have annual operating expenses of $7,000 on the new machine. Depreciation expense, included in the operating expenses, is $4,000 per year. The expected payback period for the new machine is 5.2 years. What amount did the company pay for the new machine? 93. Which one of the following approaches to capital project evaluation is primarily concerned with the relative economic ranking of projects? 94. Capital budgeting is concerned with capital investments that have which one of the following characteristics?
95. Which of the following statements is correct regarding the payback method as a capital budgeting technique? 96. The discounted payback period approach to project evaluation is better than the payback period approach because I. It considers the time value of money. II. It is useful in evaluating the liquidity of a project. III. It uses expected cash flows. 97. A company purchases an item for $43,000. The salvage value of the item is $3,000. The cost of capital is 8%. Pertinent information related to this purchase is as follows: What is the discounted payback period in years? 98. Which of the following statements concerning the discounted payback period method of evaluating capital projects is/are correct? I. It is useful in evaluating the liquidity of a project.II. It measures total project profitability.III. It results in a longer computed payback period than does the undiscounted payback period method. 99. Which one of the following is the capital budgeting evaluation approach that determines the number of periods required for the discounted cash inflows of a project to equal the discounted cash outflows? 100. Which of the following statements concerning the discounted payback period approach to project evaluation is/are correct? I. It takes into account cash flows received over the entire life of the project. II. Any project economically acceptable under the payback period approach will be acceptable under the discounted payback period approach. III. Any project economically acceptable under the discounted payback period approach will be acceptable under the payback period approach.
101. Which one of the following methods of evaluating potential capital projects would take into account depreciation expense that was non-deductible for tax purposes? 102. Which of the following statements concerning the accounting rate of return approach to evaluating capital projects is/are correct? I. It considers the entire life of a project. II. It considers the time value of money. III. It assumes that the incremental net income is the same each year. 103. Lin Co. is buying machinery it expects will increase average annual operating income by $40,000. The initial increase in the required investment is $60,000, and the average increase in required investment is $30,000. To compute the accrual accounting rate of return, what amount should be used as the numerator in the ratio? 104. Phillips Company is considering the acquisition of a new machine that would cost $66,000, has an expected life of 6 years, and an expected salvage value of $16,000. The company expects the machine to provide annual incremental income before taxes of $7,200. Phillips has a tax rate of 30%. If Phillips uses average values in its calculations, which one of the following will be the average accounting rate of return on the machine? 105. Tam Co. is negotiating for the purchase of equipment that would cost $100,000, with the expectation that $20,000 per year could be saved in after-tax cash costs if the equipment is acquired. The equipment's estimated useful life is 10 years, with no residual value, and it would be depreciated by the straight-line method. Tam's predetermined minimum desired rate of return is 12%. Present value of an annuity of 1 at 12% for 10 periods
is 5.65. Present value of 1 due in 10 periods at 12% is .322.Accrual accounting rate of return based on initial investment is 106. Given a 10% discount rate with cash inflows of $3,000 at the end of each year for five years and an initial investment of $11,000, what is the net present value? 107. A company is considering two projects, which have the following details: Which project would provide the largest aftertax cash inflow? 108. Net present value as used in investment decisionmaking is stated in terms of which of the following options? 109. Which of the following is an advantage of net present value modeling? 110. A corporation is considering purchasing a machine that costs $100,000 and has a $20,000 salvage value. The machine will provide net annual cash inflows of $25,000 per year and has a six-year life. The corporation uses a discount rate of 10%. The discount factor for the present value of a single sum six years in the future is 0.564. The discount factor for the present value of an annuity for six years is 4.355. What is the net present value of the machine? 111. Salem Co. is considering a project that yields annual net cash inflows of $420,000 for years 1 through 5, and net cash inflow of $100,000 in year 6. The project will require an initial investment of $1,800,000. Salem's cost of capital is 10%. Present value information is present below: What was Salem's expected net present value for this project? 112. Yarrow Co. is considering the purchase of a new machine that costs $450,000. The new machine will generate net
cash flow of $150,000 per year and net income of $100,000 per year for five years. Yarrow's desired rate of return is 6%. The present value factor for a five-year annuity of $1, discounted at 6%, is 4.212. The present value factor of $1, at compound interest of 6% due in five years, is 0.7473. What is the new machine's net present value? 113. The discount rate is determined in advance for which of the following capital budgeting techniques? 114. The following information pertains to Krel Co.'s computation of net present value relating to a contemplated project: Discounted expected cash inflows $1,000,000 Discounted expected cash outflows 700,000 Net present value is: 115. Oak Company bought a machine that they will depreciate on a straight-line basis over an estimated life of seven years. The machine has no salvage value. They expect the machine to generate after-tax net cash inflows from operations of $110,000 in each of the seven years. Oak's minimum rate of return is 12%. Information on present value factors is as follows: Assuming a positive net present value of $12,000, what was the cost of the machine? 116. A project's net present value, ignoring income tax considerations, is normally affected by the 117. Smarti Co. has determined the following data in connection with its evaluation of a capital investment project: Smarti uses straight-line depreciation for capital investments of this type. Excerpts from present value tables showed the following: Using the above information, which one of the following is the present value of total estimated future cash inflows and savings? (Ignore income taxes.)
118. The calculation of depreciation is used in the determination of the net present value of an investment for which of the following reasons? 119. Tam Co. is negotiating for the purchase of equipment that would cost $100,000, with the expectation that $20,000 per year could be saved in after-tax cash costs if the equipment is acquired. The equipment's estimated useful life is 10 years, with no residual value, and would be depreciated by the straight-line method. Tam's predetermined minimum desired rate of return is 12%. Present value of an annuity of 1 at 12% for 10 periods is 5.65. Present value of 1 due in 10 periods at 12% is .322. Net present value is 120. An investment in a new product will require an initial outlay of $20,000. The cash inflow from the project will be $4,000 a year for the next six years. The payment will be received at the end of each year. What is the net present value of the investment at 8% using the correct factor from below? 121. A project should be accepted if the present value of cash flows from the project is: 122. How are the following used in the calculation of the internal rate of return of a proposed project? Ignore income tax considerations. 123.
What is an internal rate of return?
124. If income taxes are ignored, which of the following methods of evaluating capital investment projects includes the use of depreciation expense? 125. Which of the following statements about investment decision models is true?
126. Which of the following metrics equates the present value of a project's expected cash inflows to the present value of the project's expected costs? 127. Which of the following events would decrease the internal rate of return of a proposed asset purchase? 128. Which of the following decision-making models equates the initial investment with the present value of the future cash inflows? 129. Neu Co. is considering the purchase of capital equipment that has a positive net present value based on Neu's 12% hurdle rate. The internal rate of return would be: 130. A client wants to know how many years it will take before the accumulated cash flows from an investment exceeds the initial investment, without taking the time value of money into account. Which of the following financial models should be used? 131. Which of the following phrases defines the internal rate of return on a project? 132. Which of the following capital budgeting techniques, if any, implicitly assumes that all cash inflows are immediately reinvested to earn a return for the company? 133. In evaluating the economic feasibility of a capital project, the discount rate (or hurdle rate of return) must be determined in advance when using the: 134. Which of the following characteristics represent an advantage of the internal rate of return technique over the accounting rate of return technique in evaluating a project? I.
Recognition of the project's salvage value. II. Emphasis on cash flows. III. Recognition of the time value of money. 135. Which of the following rates is most commonly compared to the internal rate of return to evaluate whether to make an investment? 136. Tam Co. is negotiating for the purchase of equipment that would cost $100,000, with the expectation that $20,000 per year could be saved in after-tax cash costs if the equipment is acquired. The equipment's estimated useful life is 10 years, with no residual value, and it would be depreciated by the straight-line method. Tam's predetermined minimum desired rate of return is 12%. Present value of an annuity of 1 at 12% for 10 periods is 5.65. Present value of 1 due in 10 periods at 12% is .322. In estimating the internal rate of return, the factors in the table of present values of an annuity should be taken from the columns closest to 137. When estimating cash flow for use in capital budgeting, depreciation is 138. Polo Co. requires higher rates of return for projects with a life span greater than five years. Projects extending beyond five years must earn a higher specified rate of return. Which of the following capital budgeting techniques can readily accommodate this requirement? 139. Which of the following limitations is common to the calculations of payback period, discounted cash flow, internal rate of return, and net present value? 140. If it is determined that a project investment is expected to generate $1.20 in present value for each $1.00 invested,
which one of the following was most likely used to reach that conclusion? 141. Disco is considering three capital projects that have the following costs and net present values (NPV): Which one of the projects, if any, is not economically feasible? 142. What is the formula for calculating the profitability index of a project? 143. Which of the following is a limitation of the profitability index? 144. Disco is considering three capital projects that have the following costs and net present values (NPV): Using the profitability index, which project, if any, would be ranked as the most desirable? 145. Which one of the following represents the formula used to calculate the profitability index for ranking projects? 146. Which one of the following methods of evaluating investment projects is most likely to be used to rank projects competing for limited capital investment funds? 147. Which of the following statements is correct regarding financial decision making? 148. Which one of the following methods of evaluating investment projects is most likely to be least acceptable for making project ranking decisions? 149. Which of the following methods should be used if capital rationing needs to be considered when comparing capital projects?
150. The term "capital structure" refers to which one of the following? 151. The term "financial structure" refers to which one of the following? 152. Bonds Payable, which mature in 10 years, would be included as part of a firm's 153. Which one of the following statements concerning the relationship between the concepts and measurement of capital structure and financial structure of a firm is correct? 154. Which one of the following most likely would not be considered when computing the weighted average cost of capital? 155. Which of the following uses of accounts receivable, if either, would be considered short-term financing? 156. financing?
Which of the following can provide short-term
157. Short-term financing is normally concerned with financing for which one of the following lengths of time? 158. Which of the following statements concerning shortterm financing is/are correct? I. Accounts payable can provide shortterm financing. II. Accounts receivable can provide short-term financing. III. Inventory can provide short-term financing. 159. Which one of the following generally is not an advantage associated with the use of trade accounts payable and accrued accounts payable for short-term financing needs? 160. On January 23, Inco Company received from one of its suppliers a statement with terms of "2/10, n/30." Because the
statement was misfiled, it was not located for payment until February 5. On which one of the following dates should the bill be paid? 161. Alpha Company borrowed $20,000 from High Bank, giving a one-year note. The terms of the note provided for 6% interest and required a 10% compensating balance. Which one of the following is the effective rate of interest on the loan? 162. Which one of the following provides a source of spontaneous financing for a firm? 163. Which one of the following forms of short-term financing is least likely to be considered a spontaneous source of funding? 164. Which one of the following forms of short-term financing is least likely to be restricted as to use of proceeds? 165. An amount that a bank requires a firm to maintain in a demand deposit account with the bank in return for a line of credit or loan is called: 166. Which one of the following typically is not a characteristic of commercial paper? 167. Which one of the following is a formal legal commitment to extend credit up to some maximum amount to a borrower over a stated period? 168. Which one of the following would an importer of goods from a new foreign supplier most likely use to assure the supplier of payment?
169. Which one of the following is a form of inventory secured loan in which the inventory is placed under the control of an independent third party? 170. Nexco, Inc. is considering factoring its accounts receivable. Factorco, Inc. has offered the following terms for accounts receivable due in 30 days: If Nexco plans to factor $200,000 of accounts receivable due in 30 days, which one of the following is the amount it will receive from Factorco at the time the accounts are factored? 171. Nexco, Inc. is considering factoring its accounts receivable. Factorco, Inc. has offered the following terms for accounts receivable due in 30 days: If Nexco factors $200,000 of its accounts receivable due in 30 days with Factorco and, during that 30 days, $10,000 of those accounts receivable are reversed because the related goods were return or allowances were granted, which one of the following is the amount that Nexco will receive from Factorco at the end of the 30 day period? 172. Which one of the following forms of collateral is most commonly used as security for short-term loans? 173. Po Co. plans to use its inventory as collateral for a short-term loan. Which one of the following types of loan agreements with its lender would provide Po Co. the most flexibility in the use of the inventory it pledges as collateral? 174. The weighted average cost of capital for a firm is determined by its cost of 175. Which of the following statements concerning longterm financing is/are correct? I. Long-term financing consists of sources that constitute capital structure. II. Long-term financing
consists of sources on which the weighted-average cost of capital is based. III. Long-term financing consists only of equity sources of capital. 176. Which one of the following would not be considered a means of long-term financing? 177.
Components of long-term financing would be part of
178. Long-term financing is normally concerned with financing for which one of the following lengths of time? 179. Which of the following long-term notes would best facilitate financial leverage for the borrowing firm? 180. Under which of the following described lease terms would the lessee be responsible during the term of the lease for executory costs associated with the leased asset? 181. What would be the primary reason for a company to agree to a debt covenant limiting the percentage of its long-term debt? 182. Which of the following statements concerning the leasing of an asset is/are correct? I. If the net present value of purchasing an asset is not positive, then leasing the asset should not be considered as an alternative. II. In a net-net lease, the lessee is responsible for executory costs and residual value of the leased asset. 183. Which one of the following bond issues, with different terms and stated rates of interest, would have the highest interest rate risk, all other things being equal? 184. The market price of a bond issued at a premium is equal to the present value of its principal amount
185. Which one of the following is a contract that states the terms of a bond issued by a corporation? 186. Which of the following types of bonds is most likely to maintain a constant market value? 187. Which of the following statements concerning debenture bonds and secured bonds is/are correct? I. Debenture bonds are likely to have a greater par value than comparable secured bonds. II. Debenture bonds are likely to be of longer duration than comparable secured bonds. III. Debenture bonds are more likely to have a higher coupon rate than comparable secured bonds. 188. In which one of the following areas is preferred stock most likely to differ from common stock? 189. A company recently issued 9% preferred stock. The preferred stock sold for $40 a share, with a par of $20. The cost of issuing the stock was $5 a share. What is the company's cost of preferred stock? 190. Whipco has determined that its pre-tax cost of preferred stock is 12%. If its tax rate is 30%, which one of the following is its after-tax cost of preferred stock? 191. Which of the following statements concerning preferred stock is/are generally correct? I. Requires dividends be paid. II. Grants ownership interest. III. Grants voting rights. 192. Allen issues $100 par value preferred stock that is selling for $101 per share, on which the firm has to pay an underwriting fee of $5 per share sold. The stock is paying an annual dividend of $10 per share. Allen's tax rate is 40%. Which one of the following is the cost of preferred stock financing to Allen?
193. What impact will the issuing of new preferred stock have on the following for the issuing entity? 194. The stock of Fargo Co. is selling for $85. The next annual dividend is expected to be $4.25 and is expected to grow at a rate of 7%. The corporate tax rate is 30%. What percentage represents the firm's cost of common equity? 195. Which of the following statements concerning common stock is/are generally correct? I. Requires dividends be paid. II. Grants ownership interest. III. Grants voting rights. 196. Bander Co. is determining how to finance some long-term projects. Bander has decided it prefers the benefits of no fixed charges, no fixed maturity date, and an increase in the creditworthiness of the company. Which of the following would best meet Bander's financing requirements? 197. Which of the following formulas should be used to calculate the historic economic rate of return on common stock? 198.
The cost of debt most frequently is measured as
199. Why would a firm generally choose to finance temporary assets with short-term debt? 200. Which of the following statements concerning the use of short-term financing by an entity is/are correct? I. Short-term financing generally offers greater financial flexibility than long-term financing. II. Short-term financing generally has a lower interest rate than long-term financing. III. Short-term financing generally has a lower risk of illiquidity than long-term financing.< ===============================================
ACC 576 Week 9 Quiz (All Possible Questions)
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ACC 576 Week 9 Quiz (All Possible Questions) ACC 576 Week 9 Study 1. Checkpoint auto leasing is a small company with six employees. The best action that it can take to increase its internal control effectiveness is 2. Morgan Property Management, Inc. recently switched from a manual accounting system to a computerized accounting system. The system supports online real-time processing in a networked environment, and six employees have been granted access to various parts of the system in order to perform their jobs. Relative to the manual system, Morgan can expect to see 3. Which of the following statements is (are) true. I.A greater level of control is necessary in automated than manual systems. II. The uniformity of transaction processing is higher in automated than manual systems. 4. In COBIT, the process of identifying automated solutions falls within the ________ control process domain.
5. In COBIT, the process of reviewing system response time logs falls within the _______ control process domain. 6. In COBIT, the process of developing tactics to realize the strategic vision for IT falls within the _________ control process domain. 7. In COBIT, the process of ensuring security and continuous service falls within the _______ control process domain. 8.
One important purpose of COBIT is to
9. Which of the following is true of enterprise resource planning (ERP) systems? I. The online analytical processing system (OLAP) provides data warehouse capabilities for the ERP system. II. The ability of an ERP system to provide an integrated view of transactions in all parts of the system is a function of the online transaction processing (OLTP) system. 10. An enterprise resource planning (ERP) system has which of the following advantages over multiple independent functional systems? 11. The fixed assets and related depreciation of a company are currently tracked on a password-protected spreadsheet. The information technology governance committee is designing a new enterprise-wide system and needs to determine whether the current fixed asset process should be included because the current system seems to be working properly. What long-term solution should the committee recommend? 12. What is an example of the use of the cloud to access software and programs? 13. Credit Card International developed a management reporting software package that enables members interactively to query a data
warehouse and drill down into transaction and trend information via various network set-ups. What type of management reporting system has Credit Card International developed? 14. A client would like to implement a management information system that integrates all functional areas within an organization to allow information exchange and collaboration among all parties involved in business operations. Which of the following systems is most effective for this application? 15. What is an example of the use of the cloud to create software and programs? 16. An enterprise resource planning system is designed to 17. Which of the following risks increases the least with cloud-based computing compared with local server storage for an organization that implements cloud-based computing? 18. What is an example of the use of the cloud to access hardware? 19. An information technology director collected the names and locations of key vendors, current hardware configuration, names of team members, and an alternative processing location. What is the director most likely preparing? 20. Bacchus, Inc. is a large multinational corporation with various business units around the world. After a fire destroyed the corporate headquarters and largest manufacturing site, plans for which of the following would help Bacchus ensure a timely recovery? 21. In an e-commerce environment that requires that the information technology (IT) system be available on a continuous basis, more emphasis will be placed on which of the following aspects of the planning than in a traditional organization?
22. A controller is developing a disaster recovery plan for a corporation's computer systems. In the event of a disaster that makes the company's facilities unusable, the controller has arranged for the use of an alternate location and the delivery of duplicate computer hardware to this alternate location. Which of the following recovery plans would best describe this arrangement? 23. The performance audit report of an information technology department indicated that the department lacked a disaster recovery plan. Which of the following steps should management take first to correct this condition? 24. Which of the following tasks comes first in business continuity management (BCM)? 25. In DRP, the lowest priority is given to which activities? 26. Which of the following terms refers to a site that has been identified and maintained by the organization as a data processing disaster recovery site, but has not been stocked with equipment? 27. In DRP, top priority is given to which activities? 28. To maintain effective segregation of duties within the information technology function, an application programmer should have which of the following responsibilities? 29. In business information systems, the term "stakeholder" refers to which of the following parties? 30. In a large multinational organization, which of the following job responsibilities should be assigned to the network administrator? 31. IT people controls are mostly 32. What is the role of the systems analyst in an IT environment?
33. The position responsible for managing the flow of documents and reports in and out of the computer operations department is the 34. Which of the following information technology (IT) departmental responsibilities should be delegated to separate individuals? 35. Who is responsible for granting users access to specific data resources? 36. When a client's accounts payable computer system was relocated, the administrator provided support through a dial-up connection to a server. Subsequently, the administrator left the company. No changes were made to the accounts payable system at that time. Which of the following situations represents the greatest security risk? 37. In a large firm, the custody of an entity's data is most appropriately maintained by which of the following personnel? 38. In which of the following stages of computer system development would training occur? 39. Which of the following roles is responsible for prioritizing systems development proposals? 40. At this stage, we purchase hardware: 41. Which of the following is responsible for overall program logic and functionality? 42. Data conversion occurs at this stage: 43. Which of the following implementation approaches has been described as "sink or swim?" 44. Which of the following is responsible for identifying problems and proposing initial solutions?
45. Which of the following is responsible for designing, creating, and testing programs? 46. In which of the following implementation approaches is the system divided into modules for implementation? 47. In which of the following implementation approaches do the new and old systems run concurrently until it is clear that the new system is working properly? 48. In which of the following implementation approaches are users divided into smaller groups and trained on the new system, one group at a time? 49. The requirements definition document is signed at this stage: 50. In a small business with only microcomputers, which documentation would be most useful to an untrained user to learn how to correct data errors in a database application? 51. Rose and McMullin, a regional public accounting firm, has recently accepted a contract to audit On-the-Spot, Inc., a mobile vending service that provides vending machines for large events. Onthe-Spot uses a computerized accounting system, portions of which were developed internally to integrate with a standard financial reporting system that was purchased from a consultant. What type of documentation will be most useful to Rose and McMullin in determining how the system as a whole is constructed? 52. Which of the following types of documentation would a computer operator use to determine how to set up and run a specific computer application. 53. Management of a company has a lack of segregation of duties within the application environment, with programmers having access
to development and production. The programmers have the ability to implement application code changes into production without monitoring or a quality assurance function. This is considered a deficiency in which of the following areas? 54. After changes to a source program have been made and verified, it moves to 55. Which of the following controls in not usually found in batch processing systems? 56. Which of the following is considered an application input control? 57. An employee mistakenly enters April 31 in the date field. Which of the following programmed edit checks offers the best solution for detecting this error? 58. Which of the following input controls would prevent an incorrect state abbreviation from being accepted as legitimate data? 59. Which of the following techniques would be used to verify that a program was free of unauthorized changes? 60. An entity has the following sales orders in a batch: Which of the following numbers represents the record count? 61. Mark Chen was recently hired by the Rollins Company at a monthly salary of $1,800. When his employee information was entered into the company's personnel system, his monthly salary amount was entered correctly, but he was inadvertently classified as an hourly employee. Which of the following controls would be most likely to detect this error?
62. A poor quality connection caused extensive line noise, resulting in faulty data transmission. Which of the following controls is most likely to detect this condition? 63. The distribution of reports is considered what type of control? 64. An audit trail is considered what type of control? 65. An auditor was examining a client's network and discovered that the users did not have any password protection. Which of the following would be the best example of the type of network password the users should have? 66. What is the primary objective of data security controls? 67. Which of the following is the strongest password? 68. Problems associated with e-commerce in general include all of the following except 69. Which of the following is not a risk of e-commerce? 70. Which of the following is not a risk of e-commerce? 71. This is an example of B2G 72. Which of the following best defines electronic data interchange (EDI) transactions? 73. A manufacturing company that wants to be able to place material orders more efficiently most likely would utilize which of the following? 74. Which of the following is not considered to be an electronic funds transfer (EFT) transaction? 75. Communications between trading partners in an electronic data interchange (EDI) environment are usually
76. Which of the following types of networks is often utilized to process electronic data interchange (EDI) transactions? 77. Which of the following is not an example of an e-commerce system? 78. Which of the following statements is correct concerning the security of messages in an electronic data interchange (EDI) system? 79. Which of the following is the primary advantage of using a valueadded network (VAN)? 80. QuikStop, Inc., a local convenience store chain, is planning to install point-of-sale (POS) systems in all eight of its locations by the end of the year. In the first year or so of operation, QuikStop can reasonably expect to experience all of the following except 81. Which of the following is not a benefit of using an electronic data interchange (EDI) system? 82. The Board of Directors of Martin Manufacturing Enterprises, Inc. is meeting to consider whether they should expand their manufacturing facilities to include a product line. Although the company's current financial position and sales potential for existing products are part of the information the Board must consider, of even greater importance is external information concerning economic conditions, market projects for the new product, the cost of long-term financing alternatives, and information about potential competitors. The Board of Directors' decision process would be best supported by a 83. Which of the following types of systems would you use to record the number of hours worked during the current pay period for each of your employees?
84. Which of the following is an example of a report that would be produced by a management information system (MIS) as opposed to an accounting information system (AIS)? 85. This system is most likely to include external data. 86. Which of the following systems assists with non routine decisions, serves strategic levels of the organization, and helps answer questions regarding what a company's competitors are doing, as well as identifies new acquisitions that would protect the company from cyclical business swings? 87. Which of the following terms best describes a payroll system? 88. The system that most resembles a managerial accounting, budgeting system is: 89. This system is sometimes also called a TPS. 90. Which of the following is an example of a non-financial transaction? 91. A data warehouse differs from a data mart because 92. Which of the following is a critical success factor in data mining a large data store? 93. A specialized version of a data warehouse that contains data that is pre-configured to meet the needs of specific departments is known as 94. Which of the following statements is correct? I. An important advantage of flat file systems is that they are program independent. II. Flat file systems contain little data redundancy. 95. Which of the following is true in regard to data warehouses? I. The bulk of the data found in a data warehouse comprises historical
operational data. II. Pattern recognition is one of the principal functionalities offered by data mining software. 96. Which of the following strategies is important to managing security over mobile systems? 97. Which of the following is less likely to occur in a small business than in a large business? 98. Which of the following is an effective control related to personal computing in a small business? 99. Which of the following statements is true regarding small business computing? 100. Which of the following is not a benefit of mobile computing? 101. If complete segregation of duties is impossible in a small business, which two functions should be potentially combined? 102. Which of the following critical accounting function is most likely to be absent in a small business computing environment? 103. Which of the following statements is true regarding small business computing? 104.
Database management software is considered:
105. Which of the following is not a category of computer software? 106. Which of the following allows a database management system to add new records, delete old records, and update existing records?
107. Which of the following structures refers to the collection of data for all vendors in a relational data base? 108. What is the correct ascending hierarchy of data in a system? 109. The following customer data is stored in the sales processing system to a regional produce distributor: Customer Number, Customer Name, Customer Phone, Customer Contact and Customer Credit Limit. Which of the following is true? 110. Which of the following components of a database is responsible for maintaining the referential integrity of the data in the system? 111. Which of the following items would be most critical to include in a systems specification document for a financial report? 112. Vindaloo Corporation wants data storage for a large volume of data that is unlikely to change often. They should consider using 113.
The CPU includes all of the following except
114. Which of the following is not considered a secondary storage device? 115. Which of the following devices "burns" data onto a surface? 116. Which of the following is not true of a computerized environment as compared to a manual environment? 117. In an accounting information system, which of the following types of computer files most likely would be a master file?
118. Which of the following is true of batch processing? I. In batch processing, data is captured in a transaction file as transactions occur. II. Periodically (once a day, once a week, etc.), the group of transactions in the transaction file are edited, sorted, and then the transactions are used to update the master file. 119. Which of the following sets of characteristics is most closely associated with online real-time processing? 120. During the annual audit, it was learned from an interview with the controller that the accounting system was programmed to use a batch processing method and a detailed posting type. This would mean that individual transactions were 121. Which of the following is not true of online/real-time transaction processing systems? 122. Which of the following cycles does not have accounting information that is recorded into the general ledger reporting system? 123. Which of the following transaction processing modes provides the most accurate and complete information for decisionmaking? 124. In a computer-based system, the equivalent of a subsidiary ledger is a 125. Which of the following statements about processing methodologies is true? 126. Which of the following is an advantage of a computerbased system for transaction processing over a manual system? A computer-based system 127.
Which of the following is true about master files?
128. Which of the following is not an advantage of decentralized/distributed systems? 129. Which of the following multi-location system structures has the fewest problems with input and output bottlenecks? 130. The multi-location system structure that is sometimes called the "Goldilocks" solution because it seeks to balance design tradeoffs is 131. In walking through O'Hare airport in Chicago, you notice a man talking into an ear piece. The communication between the ear piece and the man's cell phone mostly likely uses which transmission media and protocol? 132. Which of the following is a low-cost wired transmission medium? 133. Consider the following statements: I. LANs use dedicated lines. II. WANs use dedicated lines. 134. The data control protocol used to control transmissions on the Internet is 135.
Which of the following is not true?
136. Which of the following technologies is specifically designed to exchange financial information over the World Wide Web? 137. In which of the following locations should a copy of the accounting system data backup of year-end information be stored? 138. Rollins Corporation uses batch processing for its accounting system. During a recent monthly payroll processing run, it experienced a power failure that corrupted the payroll database.
139. Which of the following controls will be most useful to the company in recovering from this failure? 140.
A rollback and recovery is used mostly in _____ systems.
A checkpoint is used mostly in _____ systems.
_____ systems include redundancy of components.
144. A company has a significant e-commerce presence and self-hosts its website. To assure continuity in the event of a natural disaster, the firm should adopt which of the following strategies? 145. true?
Which of the following statements about firewalls is NOT
In an accounting system, a header can be used to
IT facility controls are
148. Which of the following statements best characterizes the function of a physical access control? 149.
Internal disk labels are physically read by
A fire suppression system in a computer facility
151. An entity doing business on the Internet most likely could use any of the following methods to prevent unauthorized intruders from accessing proprietary information except 152. Which of the following provides the most reliable form of electronic authentication? 153. What is a major disadvantage of using a private key to encrypt data?
154. A digital signature is used primarily to determine that a message is 155. Which of the following can be used to authenticate messages transmitted in a networked environment? 156. Which of the following solutions creates an encrypted communication tunnel across the Internet for the purpose of allowing a remote user secure access to the network? 157. Which of the following is true regarding public/private key encryption? 158. A company's web server has been overwhelmed with a sudden surge of false requests that caused the server to crash. The company has most likely been the target of 159. Which of the following is a computer program that appears to be legitimate, but performs an illicit activity when it is run? 160. A type of malware designed to let the attacker bypass the normal user authentication process (e.g., enter username and password) and enter the user's system is 161. Which of the following is true about denial-of-service attacks? I. A denial-of-service attack takes advantage of a network communications protocol to tie up the server's communication ports so that legitimate users cannot gain access to the server. II. If the denial-of-service attack is successful, the attacker can gain access to unprotected resources on the server. ===============================================
ACC 576 Week 10 Quiz (All Possible Questions)
ACC 576 Week 10 Quiz (All Possible Questions) ACC 576 Week 10 Study 1.
Wages earned by machine operators in producing the firm's product should be categorized as
Which of the following is assigned to goods that were either purchased or manufactured for resale?
In a traditional job order cost system, the issue of indirect materials to a production department increases
4. The accountant for Champion Brake, Inc. applies overhead based on machine hours. The budgeted overhead and machine hours for the year are $260,000 and 16,000, respectively. The actual overhead and machine hours incurred were $275,000 and 20,000. The cost of goods sold and inventory data compiled for the year is as follows: Direct Materials $ 50,000, COGS 450,000, WIP (units) 100,000, Finished Goods (units) 150,000. What is the amount of over/under applied overhead for the year? 5. If a product required a great deal of electricity to produce, and crude oil prices increased, which of the following costs most likely increased?
6. Fab Co. manufactures textiles. Among Fab's 2004 manufacturing costs were the following salaries and wages: Loom operators $120,000, Factory foremen 45,000, Machine mechanics 30,000. What was the amount of Fab's 2004 direct labor? 7.
In a process cost system, the application of factory overhead usually would be recorded as an increase in
8. Jonathan Mfg. adopted a job-costing system. For the current year, budgeted cost driver activity levels for direct labor hours and direct labor costs were 20,000 and $100,000, respectively. In addition, budgeted variable and fixed factory overheads were $50,000 and $25,000, respectively. The actual costs and hours for the year were as follows: Direct labor hours 21,000, Direct labor costs $110,000, Machine hours 35,000. For a particular job, 1,500 direct labor hours were used. Using direct labor hours as the cost driver, what amount of overhead should be applied to this job? 9.
Indirect labor is a
10. Hoyt Co. manufactured the following units: Saleable 5,000, Unsalable (normal spoilage) 200, Unsalable (abnormal spoilage) 300, the manufacturing cost totaled $99,000. What amount should Hoyt debit to finished goods? 11. In the past, four direct labor hours were required to produce each unit of product Y. Material costs were $200 per unit, the direct labor rate was $20 per hour, and factory overhead was three times the direct labor cost. In budgeting for next year, management is planning to outsource some manufacturing activities and to further automate others. Management estimates that these plans will reduce labor hours by 25%, increase the factory overhead rate to 3.6 times the direct labor costs, and increase material costs by $30
per unit. Management plans to manufacture 10,000 units. What amount should management budget for the cost of goods manufactured? 12. During the month of March 2005, Nale Co. used $300,000 of direct materials. On March 31, 2005, Nale's direct materials inventory was $50,000 more than it was on March 1, 2005. Direct material purchases during the month of March 2005 amounted to 13. Based on the following data, what is the gross profit for the company? Sales $1,000,000, Net purchases of raw materials 600,000, Cost of goods manufactured 800,000, Marketing and administrative expenses 250,000, Indirect manufacturing costs 500,000. 14. On January 1 Maples had two jobs in process: #506 with assigned costs of $10,500 and #507 with assigned costs of $14,250. During January three new jobs, #508 through #510, were started and three jobs, #506, #507, and #508, were completed. Materials and labor costs added during January were as follows: Manufacturing overhead is assigned at the rate of 200 percent of labor. What is the January cost of goods manufactured and transferred from work-in-process? 15. In June, Delta Co. experienced scrap, normal spoilage, and abnormal spoilage in its manufacturing process. The cost of units produced includes 16. In its April 2005 production, Hern Corp., which does not use a standard cost system, incurred total production costs of $900,000, of which Hern attributed $60,000 to normal spoilage and $30,000 to abnormal spoilage. Hern should account for this spoilage as
17. Mat Co. estimated its material handling costs at two activity levels as follows: What is Mat's estimated cost for handling 75,000 kilos? 18. When using a flexible budget, a decrease in production levels within a relevant range 19. A delivery company is implementing a system to compare the costs of purchasing and operating different vehicles in its fleet. Truck 415 is driven 125,000 miles per year at a variable cost of $0.13 per mile. Truck 415 has a capacity of 28,000 pounds and delivers 250 full loads per year. What amount is the truck's delivery cost per pound? 20. Sender, Inc. estimates parcel mailing costs using the data shown on the chart below. What is Sender's estimated cost for mailing 12,000 parcels? 21. When production levels are expected to increase within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following costs? 22. Day Mail Order Co. applied the high-low method of cost estimation to customer order data for the first 4 months of 2005. What is the estimated variable order filling cost component per order? 23. When production levels are expected to decline within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following? 24. In an activity-based costing system, cost reduction is accomplished by identifying and eliminating
25. Book Co. uses the activity-based costing approach for cost allocation and product costing purposes. Printing, cutting, and binding functions make up the manufacturing process. Machinery and equipment are arranged in operating cells that produce a complete product starting with raw materials. Which of the following are characteristic of Book's activity-based costing approach? I. Cost drivers are used as a basis for cost allocation. II. Costs are accumulated by department or function for the purposes of product costing. III. Activities that do not add value to the product are identified and reduced to the extent possible. 26. What is the normal effect on the numbers of cost pools and allocation bases when an activity-based cost (ABC) system replaces a traditional cost system? 27. In an activity-based costing system, what should be used to assign a department's manufacturing overhead costs to products produced in varying lot sizes? 28. Gram Co. develops computer programs to meet customers' special requirements. How should Gram categorize payments to employees who develop these programs? 29. Where one part of an organization provides an essential business process where previously it had been provided by multiple parts of that same organization, this is called 30. Which of the following items often provides a significant risk with off-shore operations? 31. A manufacturing company has several product lines. Traditionally, it has allocated manufacturing overhead costs between product lines based on total machine hours for each product line. Under a new activity-based costing system, which of
the following overhead costs would be most likely to have a new cost driver assigned to it? 32. Nile Co.'s cost allocation and product costing procedures follow activity-based costing principles. Activities have been identified and classified as being either value-adding or nonvalue-adding as to each product. Which of the following activities, used in Nile's production process, is nonvalue-adding? 33. Which of the following items is a process management approach that involves radical change? 34. In an income statement prepared as an internal report using the direct (variable) costing method, fixed selling and administrative expenses would 35. The absorption costing method includes in work in process and finished goods inventories: 36. In an income statement prepared as an internal report using the direct (variable) costing method, fixed selling and administrative expenses would 37. Cay Co.'s 2005 fixed manufacturing overhead costs totaled $100,000, and variable selling costs totaled $80,000. Under direct costing, how should these costs be classified? 38. Using the variable costing method, which of the following costs are assigned to inventory? 39. A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period, actual sales revenues, total gross profit, and total contribution margin approximated budgeted figures, whereas income was substantially greater than the budgeted amount. There
was no beginning or ending inventories. The most likely explanation of the income increase is that, compared to budget, actual 40. Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods? 41. A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period, actual sales revenues, total gross profit, and total contribution margin approximated the budgeted figures, whereas income was substantially below the budgeted amount. There was no beginning or ending inventories. The most likely explanation for the income shortfall is that, compared to budget, actual 42. A single-product company prepares income statements using both absorption and variable costing methods. Manufacturing overhead cost applied per unit produced in 2005 was the same as in 2004. The 2005 variable costing statement reported a profit, whereas the 2005 absorption costing statement reported a loss. The difference in reported income could be explained by the units produced in 2005 being 43. At the end of Killo Co.'s first year of operations, 1,000 units of inventory remained on hand. Variable and fixed manufacturing costs per unit were $90 and $20, respectively. If Killo uses absorption costing rather than direct (variable) costing, the result would be a higher pretax income of 44. Lynn Manufacturing Co. prepares income statements using both standard absorption and standard variable costing methods. For 2005, unit standard costs were unchanged from 2004. In 2005,
the only beginning and ending inventories were finished goods of 5,000 units. How would Lynn's ratios using absorption costing compare with those using variable costing? 45. A direct labor overtime premium should be charged to a specific job when the overtime is caused by the 46. In a job cost system, manufacturing overhead is 47. Birk Co. uses a job order cost system. The following debits (credits) appeared in Birk's work in process account for the month of April 2005: Birk applies overhead to production at a predetermined rate of 80% of the direct labor cost. Job No. 5, the only job still in process on April 30, 2005, was charged with direct labor of $2,000. What was the amount of direct materials charged to Job No. 5? 47. 48. A job order cost system uses a predetermined factory overhead rate based on expected volume and expected fixed cost. At the end of the year, under applied overhead might be explained by which of the following situations? 49. A standard cost system may be used in 50. During the current year, the following manufacturing activity took place for a company's products: Beginning work in process: 10,000 units, 70% complete, Units started into production during the year: 150,000 units, Units completed during the year: 140,000 units, Ending work in process: 20,000 units, 25% complete. What was the number of equivalent units produced using the first-in, first-out method?
51. Yarn Co.'s inventories in process were at the following stages of completion on April 30, 2004: 52. The forming department is the first of a two-stage production process. Spoilage is identified when the units have completed the forming process. The costs of spoiled units are assigned to units completed and transferred to the second department in the period when spoilage is identified. The following information concerns forming's conversion costs in May 2005: Using the weighted average method, what was forming's conversion cost transferred to the second production department? 53. Weighted average and first in, first out (FIFO) equivalent units would be the same in a period when which of the following occurs? 54. In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers current period costs 55. Black, Inc. employs a weighted average method in its process costing system. Black's work in process inventory on June 30 consists of 40,000 units. These units are 100% complete with respect to materials and 60% complete with respect to conversion costs. The equivalent unit costs are $5.00 for materials and $7.00 for conversion costs. What is the total cost of the June 30 work in process inventory? 56. A process costing system was used for a department that began operations in January 2005. Approximately the same number of physical units, at the same degree of completion, were in work in process at the end of both January and February. Monthly conversion costs are allocated between ending work in process and units completed. Compared to the FIFO method, would the
weighted average method use the same or a greater number of equivalent units to calculate the monthly allocations? 57. In process 2, material G is added when a batch is 60% complete. Ending work in process units, which are 50% complete, would be included in the computation of equivalent units for 58. The following information pertains to Lap Co.'s Palo Division for the month of April: All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent unit for materials is 59. Which of the following is not a basic approach to allocating costs for costing inventory in joint-cost situations? 60. Kode Co. manufactures a major product that gives rise to a byproduct called May. May's only separable cost is a $1 selling cost when a unit is sold for $4. Kode accounts for May's sales by deducting the $3 net amount from the cost of goods sold of the major product. There are no inventories. If Kode were to change its method of accounting for May from a by-product to a joint product, what would be the effect on Kode's overall gross margin? 61. Mighty, Inc. processes chickens for distribution to major grocery chains. The two major products resulting from the production process are white breast meat and legs. Joint costs of $600,000 are incurred during standard production runs each month, which produce a total of 100,000 pounds of white breast meat and 50,000 pounds of legs. Each pound of white breast meat sells for $2 and each pound of legs sells for $1. If there are no further processing costs incurred after the split-off point, what amount of the joint costs would be allocated to the white breast meat on a net realizable value basis?
62. Mig Co., which began operations in 2003, produces gasoline and a gasoline by-product. The following information is available pertaining to 2003 sales and production: Mig accounts for the byproduct at the time of production. What are Mig's 2003 cost of sales for gasoline and the by-product? 63. LM Enterprises produces two products in a common production process, each of which is processed further after the split-off point. Joint costs incurred for the current month are $36,000. The following information for the current month was. What amount would be the joint cost allocated to product M, assuming that LM Enterprises uses the estimated net realizable value method to allocate costs? 64. A company manufactures two products, X and Y, through a joint process. The joint (common) costs incurred are $500,000 for a standard production run that generates 240,000 gallons of X and 160,000 gallons of Y. X sells for $4.00 per gallon, while Y sells for $6.50 per gallon. If there are no additional processing costs incurred after the split-off point, what is the amount of joint cost for each production run allocated to X on a physical-quantity basis? 65. The following information pertains to a by-product called Moy: The inventory of Moy was recorded at net realizable value when produced in 2004 and net proceeds from the sale were used to reduce joint costs. No units of Moy were produced in 2005. What amount should be recognized as profit on Moy's 2005 sales? 66. Johnson Co., distributor of candles, has reported the following budget assumptions for year 1: No change in candles inventory level; cash disbursement to candle manufacturer, $300,000; target accounts payable ending balance for year 1 is 150% of accounts payable beginning balance; and sales price is set at a markup of
20% of candle purchase price. The candle manufacturer is Johnson's only vendor, and all purchases are made on credit. The accounts payable has a balance of $100,000 at the beginning of year 1. What is the budgeted gross margin for year 1? 67. Lon Co.'s budget committee is preparing its master budget on the basis of the following projections: What are Lon's estimated cash disbursements for inventories? 68. When a manager is concerned with monitoring total cost, total revenue, and net profit conditioned upon the level of productivity, an accountant would normally recommend 69. What is the required unit production level given the following factors? 70. Which of the following types of budgets is the last budget to be produced during the budgeting process? 71. Cook Co.'s total costs of operating five sales offices last year were $500,000, of which $70,000 represented fixed costs. Cook has determined that total costs are significantly influenced by the number of sales offices operated. Last year's costs and the number of sales offices can be used as the bases for predicting annual costs. What would be the budgeted costs for the coming year if Cook were to operate seven sales offices? 72. Lanta Restaurant compares monthly operating results with a static budget.When actual sales are less than budget, would Lanta usually report favorable variances on variable food costs and fixed supervisory salaries? 73. A static budget contains which of the following amounts?
74. The basic difference between a master budget and a flexible budget is that a master budget is 75. A company forecast first quarter sales of 10,000 units, second quarter sales of 15,000 units, third quarter sales of 12,000 units and fourth quarter sales of 9,000 units at $2 per unit. Past experience has shown that 60% of the sales will be in cash and 40% will be on credit. All credit sales are collected in the following quarter, and none are uncollectible. What amount of cash is forecasted to be collected in the second quarter? 76. Which of the following would be most impacted by the use of the percentage of sales forecasting method for budgeting purposes? 77. A 2005 cash budget is being prepared for the purchase of Toyi, a merchandise item. The budgeted data are as follows: Purchases will be made in 12 equal monthly amounts and paid for in the following month. What is the 2005 budgeted cash payment for the purchase of Toyi? 78. A flexible budget is appropriate for a 79. Dough Distributors has decided to increase its daily muffin purchases by 100 boxes. A box of muffins costs $2 and sells for $3 through regular stores. Any boxes not sold through regular stores are sold through Dough's thrift store for $1. Dough assigns the following probabilities to selling additional boxes: What is the expected value of Dough's decision to buy 100 additional boxes of muffins? 80. Under frost-free conditions, Cal Cultivators expects its strawberry crop to have a $60,000 market value. An unprotected crop subject to frost has an expected market value of $40,000. If Cal
protects the strawberries against frost, then the market value of the crop is still expected to be $60,000 under frost-free conditions and $90,000 if there is a frost. What must be the probability of a frost for Cal to be indifferent to spending $10,000 for frost protection? 81. In describing the regression equation used for cost prediction, Y = a + bx, which of the following is correct? 82. A management accountant performs a linear regression of maintenance cost vs. production using a computer spreadsheet. The regression output shows an "intercept" value of $322,897. How should the accountant interpret this information? 83. The coefficient of determination, r squared, in a multiple regression equation is the 84. Box Co. uses regression analysis to estimate the functional relationship between an independent variable (cost driver) and overhead cost. Assume that the following equation is being used: y = A + Bx. What is the symbol for the independent variable? 85. In using regression analysis, which measure indicates the extent to which a change in the independent variable explains a change in the dependent variable? 86. The regression analysis results for ABC Co. are shown as y = 90x + 45. The standard error (Sb) is 30 and the coefficient of determination (r2 ) is 0.81. The budget calls for the production of 100 units. What is ABC's estimate of total costs? 87. The sales and cost information for Gamore Company are as follows: Gamore's breakeven point in the number of units is
88. State College is using cost-volume-profit analysis to determine tuition rates for the upcoming school year. Projected costs for the year are as follows: Based on these estimates, what is the approximate break-even point in number of students? 89. In 2004, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed costs of $1,000,000 and a profit before income taxes of $200,000. Due to an adverse legal decision, Thor's 2005 liability insurance increased by $1,200,000 over 2004. Assuming the volume and other costs are unchanged, what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes? 90. Trendy Co. produced and sold 30,000 backpacks during the last year at an average price of $25 per unit. Unit variable costs were the following: Total fixed costs were $250,000. There was no yearend work-in-process inventory. If Trendy had spent an additional $15,000 on advertising, then sales would have increased by $30,000. If Trendy had made this investment, what change would have occurred in Trendy's pretax profit? 91. The most likely strategy to reduce the breakeven point would be to 92. At the breakeven point, the contribution margin equals total 93. Wren Co. manufactures and sells two products with selling prices and variable costs as follows: Wren's total annual fixed costs are $38,400. Wren sells four units of A for every unit of B. If the operating income last year was $28,800, what was the number of units Wren sold? 94. Del Co. has fixed costs of $100,000 and breakeven sales of $800,000. What is its projected profit at $1,200,000 sales?
95. A ceramics manufacturer sold cups last year for $7.50 each. Variable costs of manufacturing were $2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was $5,040. This year, the company expects the following changes: sales price per cup to be $9.00; variable manufacturing costs to increase 33.3%; fixed costs to increase 10%; and the income tax rate to remain at 40%. Sales in the coming year are expected to exceed last year's sales by 1,000 units. How many units does the company expect to sell this year? 96. A ceramics manufacturer sold cups last year for $7.50 each. The variable cost of manufacturing was $2.25 per unit. The company needed to sell 20,000 cups to break even. Its net income was $5,040. This year, the company expects the price per cup to be $9.00; the variable manufacturing cost to increase by 33.3%; and the fixed costs to increase by 10%. How many cups (rounded) does the company need to sell this year to break even? 97. A company that produces 10,000 units has fixed costs of $300,000, variable costs of $50 per unit, and a sales price of $85 per unit. After learning that its variable costs will increase by 20%, the company is considering an increase in production to 12,000 units. Which of the following statements is correct regarding the company's next steps? 98. Breakeven analysis assumes that over the relevant range 99. On January 1, 2005, Lake Co. increased its direct labor wage rates. All other budgeted costs and revenues were unchanged. How did this increase affect Lake's budgeted breakeven point and budgeted margin of safety?
100. In the profit-volume chart below, EF and GH represent the profit-volume graphs of a single-product company for 2004 and 2005, respectively. If the 2004 and 2005 unit sales are identical, how did the total fixed costs and unit variable costs of 2005 change as compared to 2004? 101. Cott Company has sales of $200,000, a contribution margin of 20%, and a margin of safety of $80,000. What is Cott's fixed cost? 102. Central Winery manufactured two products, A and B. The estimated demand for product A was 10,000 bottles, and for product B, 30,000 bottles. The estimated sales price per bottle for A was $6.00, and for B, $8.00. The actual demand for product A was 8,000 bottles, and for product B, 33,000 bottles. The actual price per bottle for A was $6.20, and for B, $7.70. What amount would be the total selling price variance for Central Winery? 103. The following direct labor information pertains to the manufacture of product Glu: What is the standard direct labor cost per unit of product Glu? 104. Selected costs associated with a product are as follows: What amount is the total direct labor price variance? 105.
Relevant information for material A follows: What was the direct material quantity variance for material A?
106. Virgil Corp. uses a standard cost system. In May, Virgil purchased and used 17,500 pounds of materials at a cost of $70,000. The materials usage variance was $2,500 unfavorable, and the standard materials allowed for May production was 17,000 pounds. What was the materials price variance for May?
107. Yola Co. manufactures one product with a standard direct labor cost of four hours at $12.00 per hour. In June, 1,000 units were produced using 4,100 hours at $12.20 per hour. The unfavorable direct labor efficiency variance was 108. Smart Co. uses a static budget. When actual sales are less than budget, Smart would report favorable variances on which of the following expense categories? 109. Management has reviewed the standard cost variance analysis and is trying to explain an unfavorable labor efficiency variance of $8,000. Which of the following is the most likely cause of the variance? 110. A manufacturing company that produces trivets has established the following standards for the current year: During April, the company purchased 10,000 pounds of material for $33,000 and used 9,400 pounds to produce 4,500 trivets. Four thousand trivets were sold during April. What amount should be reported as the materials' quantity (usage) variance? 111. For the current period production levels, XL Molding Co. budgeted 8,500 board feet of production and used 9,000 board feet for actual production. Material cost was budgeted at $2 per foot. The actual cost for the period was $3 per foot. What was XL's material efficiency variance for the period? 112. The following information pertains to Roe Co.'s 2004 manufacturing operations: Roe's 2004 unfavorable variable overhead efficiency variance was 113. In 2005, a department's three-variance overhead standard costing system reported unfavorable spending and volume variances. The activity level selected for allocating
overhead to the product was based on 80% of practical capacity. If 100% of practical capacity had been selected instead, how would the reported unfavorable spending and volume variances have been affected? 114.
Which of the following standard costing variances would be least controllable by a production supervisor?
115. The following information is available on Crain Co.'s two product lines: Assuming the tables line is discontinued, and the factory space previously used to make tables is rented for $24,000 per year, operating income will increase by what amount? 116.
Which of the following items is never relevant to a sell or process further decision?
Which one of the following costs, if any, is relevant when making financial decisions?
118. Allen Harvey, an accounting major, is considering a full-time internship during the spring semester of his junior year. The internship opportunity is located in the town where he attends school, so he would be able to continue to live in his apartment that costs $600 per month. The internship would pay $1,200 per month for January through May. If he does not take the internship, he will attend school at a cost of $4,000 for the semester. If Harvey decides to stay in school full-time during the spring semester, which one of the following would be the amount of his opportunity cost and the amount of his incremental (or differential) cost? 119. A company is considering outsourcing one of the component parts for its product. The company currently makes 10,000 parts per month. Current costs are as follows: The company decides to purchase the part for $8 per unit from another supplier
and rents its idle capacity for $5,000/month. How will the company's monthly costs change? 120. A company is offered a one-time special order for its product and has the capacity to take this order without losing current business. Variable costs per unit and fixed costs in total will be the same. The gross profit for the special order will be 10%, which is 15% less than the usual gross profit. What impact will this order have on total fixed costs and operating income? 121. Which of the following would be considered a relevant fixed cost in making a special order decision? 122. Clay Co. has considerable excess manufacturing capacity. A special job order's cost sheet includes the following applied manufacturing overhead costs: The fixed costs include a normal $3,700 allocation for in-house design costs, although no inhouse design will be done. Instead the job will require the use of external designers costing $7,750. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job? 123. A company receives an offer to purchase a special order of units of a product that normally sells for $10 each to regular customers. The cost of manufacturing the units is shown here. If all other conditions are favorable, what is the absolute lowest price that the company would be able to feasibly accept for the order if it has enough idle capacity to handle the order? 124. Rodder, Inc. manufactures a component in a router assembly. The selling price and unit cost data for the component are as follows: The company received a special one-time order for 1,000 components. Rodder has an alternative use for production
capacity for the 1,000 components that would produce a contribution margin of $5,000. What amount is the lowest unit price Rodder should accept for the component? 125. Tennis rackets can be purchased for $60 each from an outside vendor. It costs the manufacturer $80 a piece to produce them, of which 30% is unavoidable fixed overhead cost. What are the relevant costs for this decision? Based only on these costs, which option should the company choose? 126. In the GPK Coffee Company, the Strudel Division has strudel that can be sold either to outside customers or to the Bean Division that also sells coffee. Information about these divisions is given below: Given the facts in case 2, what are the minimum and maximum transfer prices? 127. In the GPK Coffee Company, the Strudel Division has strudel that can be sold either to outside customers or to the Bean Division that also sells coffee. Information about these divisions is given below: Given the facts in case 1, what are the minimum and maximum transfer prices? 128. In the GPK Coffee Company, the Strudel Division has strudel that can be sold either to outside customers or to the Bean Division that also sells coffee. Information about these divisions is given below: Will the internal transfer likely take place? Answer for Case 1 and 2 separately. 129. Spring Co. had two divisions, A and B. Division A created Product X, which could be sold on the outside market for $25, and used variable costs of $15. Division B could take Product X and apply additional variable costs of $40 to create Product Y, which could be sold for $100. Division B received a special order for
a large amount of Product Y. If Division A were operating at full capacity, which of the following prices should Division A charge Division B for the Product X needed to fill the special order? 130. Brent Co. has intracompany service transfers from Division Core, a cost center, to Division Pro, a profit center. Under stable economic conditions, which of the following transfer prices is likely to be most conducive to evaluating whether both divisions have met their responsibilities? 131. Which of the following techniques effectively measures improvements in product quality as a result of internal failure costs? 132.
In a quality control program, which of the following is (are) categorized as internal failure costs? I. Rework. II. Responding to customer complaints. III. Statistical quality control procedures.
133. As a consequence of finding a more dependable supplier, Dee Co. reduced its safety stock of raw materials by 80%. What is the effect of this safety stock reduction on Dee's economic order quantity? 134. As part of a benchmarking process, a company's costs of quality for the current month have been identified as follows: What amount is the company's prevention cost for the current month? 135.
The benefits of a just-in-time system for raw materials usually include
136. Which changes in costs are most conducive to switching from a traditional inventory ordering system to a just-intime ordering system?
The economic order quantity formula assumes that
Bell Co. changed from a traditional manufacturing philosophy to a just-in-time philosophy.
139. What are the expected effects of this change on Bell's inventory turnover and inventory as a percentage of total assets reported on Bell's balance sheet? 140. Which quality definition can be described as "meeting or exceeding the needs and wants of customers?" 141. Key Co. changed from a traditional manufacturing operation with a job order costing system to a just-in-time operation with a back-flush costing system. What is (are) the expected effect(s) of these changes on Key's inspection costs and recording detail of costs tracked to jobs in process? 142. Nonfinancial performance measures are important to engineering and operations managers in assessing the quality levels of their products. Which of the following indicators can be used to measure product quality? I. Returns and allowances. II. Number and types of customer complaints. III. Production cycle time. 143. To evaluate its performance, the Blankie Co. is comparing its costs of quality from one year to the next. The relevant costs are as follows: Which of the following conclusions can Blankie draw about its quality program? 144. Which measures would be useful in evaluating the performance of a manufacturing system? I. Throughput time. II. Total setup time for machines/Total production time. III. Number of rework units/Total number of units completed.
145. Which of the following balanced scorecard perspectives examines a company's success in targeted market segments? 146. Under the balanced scorecard concept developed by Kaplan and Norton, employee satisfaction and retention are measures used under which of the following perspectives? 147.
Which of the following performance measures is nonfinancial?
148. The management of a company would do which of the following to compare and contrast its financial information to published information reflecting optimal amounts? 149. A cost leadership strategy, in addition to focusing on the company's ability to sell a large volume of low-cost products, is often aided by all of the following characteristics except 150. 151.
Which of the following topics is the focus of managerial accounting? SWOT analysis includes considerations of what four strategic dimensions?
152. Vince Inc. has developed and patented a new laser disc reading device that will be marketed internationally. Which of the following factors should Vince consider in pricing the device? I. Quality of the new device. II. Life of the new device. III. Customers' relative preference for quality compared to price. 153.
Which of the following steps in the strategic planning process should be completed first?
154. The target capital structure of Traggle Co. is 50% debt, 10% preferred equity, and 40% common equity. The interest rate on debt is 6%, the yield on the preferred is 7%, the cost of common equity is 11.5%, and the tax rate is 40%. Traggle does not anticipate issuing any new stock. What is Traggle's weighted average cost of capital? 155. A company's target gross margin is 40% of the selling price of a product that costs $89 per unit. The product's selling price should be 156. A company has a tax rate of 40%. Information for the company is as follows: What is the weighted average cost of capital (WACC)? 157. A company has two divisions. Division A has an operating income of $500 and total assets of $1,000. Division B has an operating income of $400 and total assets of $1,600. The company's required rate of return is 10%. Division B's residual income would be which of the following amounts? 158. Wexford Co. has a subunit that reported the following data for year 1: The imputed interest rate is 12%. What is the division residual income for year 1? 159. Brewster Co. has the following financial information: What amount of sales is required for Brewster to achieve a 15% return on sales? 160. Related to the CFROI metric, "the required annual cash investment needed to replace fixed assets" is the definition of what?
161. Which of the following accurately reflects prevailing thought processes regarding the new value based metrics? 162. The following information pertains to Quest Co.'s Gold Division for 2004: Quest's return on investment was 163. North Bank is analyzing Belle Corp.'s financial statements for a possible extension of credit. Belle's quick ratio is significantly better than the industry average. Which one of the following factors should North consider as a possible limitation of using this ratio when evaluating Belle's creditworthiness? 164. To measure inventory management performance, a company monitors its inventory turnover ratio. Listed below are selected data from the company's accounting records: Beginning finished goods inventory for the current year was 15% of the prior year's annual sales, and ending finished goods inventory was 22% of the current year's annual sales. What was the company's inventory turnover at the end of the current period? 165.
The DuPont method of ROI uses sales to analyze what two elements of return separately?
166. Galax, Inc. had an operating income of $5,000,000 before interest and taxes. Galax's net book value of plant assets on January 1 and December 31 were $22,000,000 and $18,000,000, respectively. Galax achieved a 25% return on investment for the year, with an investment turnover of 2.5. What were Galax's sales for the year? 167.
How is contribution margin (CM) different from gross margin (GM)?
168. Which metric is often used as an alternative to ROI and is generally defined as "operating Income less (the required rate of return multiplied by invested capital)?" 169.
Why is cost avoidance a faster way to increase profits than to increase revenue?
Which of the following types of risk are best addressed with insurance? How is strategic risk best managed?
Which of the following types of risk are best addressed with hedging?
Which of the following terms describe or are consistent with systematic risk?
174. Jago Co. has two products that use the same manufacturing facilities and cannot be subcontracted. Each product has sufficient orders to utilize the entire manufacturing capacity. For short-run profit maximization, Jago should manufacture the product with the 175. 176.
What is the objective of the demand flow approach? Which of the following production processes best describes lean manufacturing?
177. Which of the following statements correctly describes the structural differences between mass and lean manufacturing? 178.
What tools does Six Sigma commonly use to achieve quality control?
When using PERT or CPM, activity slack is calculated as
180. When using PERT, project completion times are measured by a pessimistic, optimistic, and most probable estimate... 181.
Which of the following roles is typically taken on by a project team member? 182.
The process of adding resources to shorten selected activity times on the critical path is called
183. Which type of project risk is related to managing people, time, cost restrictions, and the interrelationships among activities? ===============================================
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