8-8 - 10 EQs - 80%

Question 1

COSO’s 8 components of ERM

Answer 1

1  internal environment
2  objective setting
3  event identification
4  risk assessment
5  risk response
6  control activities
7  information and communication
8  monitoring

Question 2

How to calculate break-even in units.

Answer 2

Total Fixed Costs / Unit CM = BEP units

Question 3

In preparing its cash budget for July 2012, Reed Company made the following projections:

Sales $1,500,000
Gross profit (based on sales) 25%
Decrease in inventories $70,000
Decrease in accounts payable for inventories $120,000

For July 2012 what were the estimated cash disbursements for inventories?

Answer 3

COGS = .75*1,500,000 = $1,125,000

1,125,000
+ 120,000
- 70,000

= 1,175,000

Question 4

Echo Check or Echo Control

Answer 4

transmitting data back to the source unit for comparison with the original data that were transmitted

example:

A control feature in an electronic data processing system requires the central processing unit (CPU) to send signals to the printer to activate the print mechanism for each character. The print mechanism, just prior to printing, sends a signal back to the CPU verifying that the proper print position has been activated.

Question 5

Which of the following internal control procedures would prevent an employee from being paid an inappropriate hourly wage?

Having the supervisor of the data entry clerk verify that each employee’s hours worked are correctly entered into the system.

Using real-time posting of payroll so there can be no after-the-fact data manipulation of the payroll register.

Giving payroll data entry clerks the ability to change any suspicious hourly pay rates to a reasonable rate.

Limited access to employee master files to authorized employees in the personnel department.

Answer 5

D. Limited access to employee master files to authorized employees in the personnel department.