1A

Question 1

Reliability

Answer 1

Information Must be:
Faithful Representation
Verifiable
Neutral

Question 2

5 components of COSO ERM

Answer 2

1)Governance and culture
2)Strategy and objective setting
3)Performance
4)Review and revisions
5)Information, communication, and reporting

Question 3

Limitations of the Model

Answer 3

1)Human Judgement and human error
2)Cost vs benefit limitations
3)simple errors can lead to big mistakes
4)Circumvention of controls or procedures due to collusion
5)Management Override

Question 4

5 Internal Control components of COSO

Answer 4

1)Control Environment
2)Risk assessment
3)Information and communication
4)Monitoring
5)Control activities

Question 5

4 Stages of Economic/Business Cycle

Answer 5

1)Expansion
2)Peak
3)Contraction
4)Trough

Question 6

SWOT Analysis evaluates

Answer 6

Strengths
Weaknesses
Opportunities
Threats

Question 7

Working Capital Formula

Answer 7

(Current Assets minus Current Liabilities) divided by Current Liabilities

Question 8

Quick Ratio Formula

Answer 8

Current Assets minus Inventory and Prepaids

Question 9

Weighted Average Cost of Capital formula (WACC)

Answer 9

(% of Equity Financing Times Cost of Equity) Plus ((% of Debt Financing Times Cost of Debt Interest Rate) Times (1 Minus Tax Rate))

Question 10

Return on Assets Formula

Answer 10

Net Income Divided by Total Assets

Question 11

Growth Rate

Answer 11

((End Value Minus Beginning Value) Divided by Beginning Value) Times 100

Question 12

Gross Margin Formula

Answer 12

Revenue Minus COGS

Question 13

Contribution Margin Formula

Answer 13

Revenue Minus Variable Expenses

Question 14

Operating Margin Formula

Answer 14

Operating Income Divided By Revenue

Question 15

Pretax Margin Formula

Answer 15

Earnings Before Tax Divided By Revenue

Question 16

Net Profit Margin

Answer 16

Net Income Divided By Revenue

Question 17

COGS Formula

Answer 17

Beginning Inventory
+ Purchases
= Goods available for sale
- Ending Inventory
= Cost of Goods Sold

Question 18

Cash Formula

Answer 18

Cash Balance
+ Cash Sales
- Cash Expenditures
+/- Change in AR
+/- Change in AP
= Ending Cash Balance

Question 19

AR and AP Changes

Answer 19

If AR increases, cash decreases
If AR decreases, cash increases
If AP increases, cash increases
If AP decreases, cash decreases

Question 20

Regression Analysis Formula

Answer 20

Y = A + Bx

Y= Total Costs(Dependent variable)
A= Fixed Cost(the y intercept)
B= variable cost per unit(the slope)
x= number of units(independent variable)

Question 21

Nonmaterial variances

Answer 21

Written off to COGS

Question 22

Material Variances

Answer 22

Are allocated to WIP, finished goods, and/or COGS.