01/07/15 Flashcards
The cost of common equity is calculated by dividing the expected next dividend by the current stock price and adding the results to the expected growth rate in earnings.
The cost of common equity is calculated by dividing the expected next dividend by the current stock price and adding the results to the expected growth rate in earnings.
Idle space that has no alternative use has an opportunity cost of????
ZERO
Review of the audit log is an example of which of the following types of security control?
DETECTIVE
NPV assumes that cash inflows from the investment project can be reinvested at the cost of capital while IRR assumes that cash flows from each project can be reinvested at the IRR for that particular project. This underlying assumption is considered to be a weakness of the IRR technique.
DIFFERENCE IN NPV AND IRR
To be successful in a purely competitive market, the firm needs to focus on decreasing costs. Supply chain management can be effective at reducing costs.
management techniques THAT would likely be most important to a firm in a purely competitive market
If cost of sales is $132,500,000 and inventory turnover is 8 times per year, average inventory is $16,562,500 ($132,500,000 ÷ 8) If turnover increases to 10 times, average inventory would decrease to $13,250,000 ($132,500,000 ÷ 10). Average inventory would decrease by $3,312,500 ($16,562,500 – $13,250,000), which would save Spotech $165,625 ($3,312,500 × 5%) in interest.
EXAMPLE OF HOW TO CALCULATE INTEREST SAVINGS WITH A HIGHER INVENTORY TURNOVER
ONE EXAMPLE OF HOW INFLATION DISTORTS REPORTED INCOME IS THROUGH?????
DEPRECIATION- HISTORICAL COST DOES NOT EQUAL CURRENT COSTS TO REPLACE FIXED ASSETS….
EXAMPLE OF JOINT COST ALLOCATION
To determine the amount to be allocated, the joint costs should be multiplied by the ratio of the sales value of the white meat to the sales value of all meat.
The sales value of the white meat is $200,000 (100,000 pounds × $2 per pound) and the sales value of the leg meat is $50,000 (50,000 pounds × $1 per pound).
ADD UP THE SALES VALUE OF BOTH PRODUCTS AND DIVIDE THE SALES VALUE THAT THE JOINT C0STS ARE BEING ALLOCATED TO……
Therefore, the amount of joint costs allocated to white meat is equal to $48,000 = $60,000 × [$200,000 ÷ ($200,000 + $50,000)].
HOW TO DETERMINE THE ALLOCATED JOINT COSTS
Wexford Co. has a subunit that reported the following data for year 1:
Asset (investment) turnover 1.5 times
Sales $750,000
Return on sales 8%
The imputed interest rate is 12%. What is the division residual income for year 1?
This answer is correct. If asset turnover is equal to 1.5 times, invested assets is equal to $500,000 ($750,000 sales ÷ 1.5 asset turnover). This answer is correct because residual income is equal to $0 [($750,000 × 8%) − ($500,000 invested assets × 12%)].
THE PERCENTAGE OF VARIATION IN THE DEPENDENT VARIABLES EXPLAINED BY THE VARIATION OF THE INDEPENDENT VARIABLES IS THE?????
COEFFICIENT OF DETERMINATION R SQUARED THAT MEASURES THE VARIATION OF INDEPENDENT VARIABLES
IN STATISTICAL ANALYSIS, A WEIGHTED AVERAGE USING PROBABILITIES AS WEIGHTS IS THE
EXPECTED VALUE
IMPROPER DESIGN IS ???? A REASON FOR INTERNAL CONTROL BREAK DOWN
NOT
THE STARTING POING FOR CONTROL MONITORING IS A BASELINE UNDERSTANDING OF THE????
SYSTEM
According to the IIA International Standards for the Professional Practice of Internal Auditing, the internal audit charter should include all of the following except:
The purpose of the internal audit activity.
The responsibility of the internal audit activity.
The scope of the internal audit activity.
The authority of the internal audit activity.
This answer is correct. The scope of the activity should not be included in the charter.
The ????? market rate does not effect the variance of the portfolio like % of investment, variance, and co-variance
expected
