BEC 2 Flashcards
What tools are used in financial management (there are 2)
Time value of money and interest rate concepts
What is a common limitation of payback period, disc cash flows, internal rate of return, and net present value
They rely on the forecasting of future data
To determine the inventory reorder point, calculations normally include the
Average daily usage
The hurdle rate must be determined in advance for which method?
Net present value method
A curve on a graph with the rate of return on the vertical axis and time on the horizontal axis depicts
A yield curve showing the term structure of interest rates
A firm operating in a monopolistic competitive market structure will optimize its investment in research and development (R&D) when
The marginal cost of its investment in R&D equals the marginal revenue from that investment.
Which of the following is least likely to be a foreign exchange control that may be implemented by a country?
Banning possession of foreign currency by citizens.
Fixed exchange rates.
Restricting currency exchange to government approved exchangers.
Requiring a floating exchange rate.
Requiring a floating exchange rate.
Which of the following scenarios would encourage a company to use short-term loans to retire its ten-year bonds that have five years until maturity?
Interest rates have declined over the last five years.
Which of the following financial instruments generally provides the largest source of short-term credit for small firms?
(This question is CMA adapted)
Installment loans.
Commercial paper.
Trade credit.
Mortgage bonds.
Trade credit.
In a client/server environment, the “client” is most likely to be the
Computers of various users
At Mega-Construction, secured payments are sent to suppliers as soon as materials are received and scanned. Many attributes of the received goods are also scanned and recorded immediately on receipt (e.g., time received, quality indicators, item location through GPS functionality). This information is shared through a distributed ledger. Mega-Construction is likely using _______________.
Blockchain
TCP/IP
Bitcoin
STMP
Blockchain
How do you find the accounting rate of return
Avg annual after-tax net income/Avg cost of the investment
A transaction processing system allows an authorized individual to select a quantity of items from the company’s online inventory. It is also possible to trace back to a copy of the purchase order to see when the items were ordered and who authorized the order. Which of the following features does this system have?
Automated order processing
An audit trail
An inventory tracking system
Real-time inventory auditing
Audit Trail
True or False: Pledging AR and Factoring AR is a form of short-term financing
True
Assuming exchange rates are allowed to fluctuate freely, which one of the following factors would likely cause a nation’s currency to appreciate on the foreign exchange market?
(This question is CMA adapted)
A relatively rapid rate of growth in income that stimulates imports.
A high rate of inflation relative to other countries.
A slower rate of growth in income than in other countries, which causes imports to lag behind exports.
Domestic real interest rates that are lower than real interest rates abroad.
A slower rate of growth in income than in other countries, which causes imports to lag behind exports.
Leapin’ Lizards (LL) reptile trainers is a small but growing organization that trains lizards and chameleons to do tricks and sells the trained lizards to buyers. Combining which of the following functions would represent the least (i.e., smallest) concern for the system of internal control at LL?
Authorizing vendor creation, authorizing purchases, and custody of purchased items
Granting credit to customers and recording sales
Authorizing chameleon purchases and internal audit of receivables
Custody of chameleons and recording chameleon purchases, sales, and deaths
Authorizing chameleon purchases and internal audit of receivables
Which of the following statements is true regarding small business computing?
General IT controls are less important in a small business computing environment.
Spreadsheets should be reviewed and tested by an independent third party.
The centralized IT department should be the primary source of control.
All of the above.
Spreadsheets should be reviewed and tested by an independent third party
What type of check is designed to detect errors in data transmission
Parity Check
A checkpoint is used mostly in _________ systems
Batch
When calculating break-even sales volume should you include noncash outlays in the calculation
Yes
Company specific risk is also known as
Unsystematic risk
What is IaaS used for
Access virtual hardware
What is PaaS used for
Create software and programs
What is SaaS used for
Use (not create) software
Which of the following types of risk can be reduced by diversification?
High interest rates.
Inflation.
Labor strikes.
Recession.
Labor Strikes
Which of the following is correct regarding the Consumer Price Index (CPI) for measuring the estimated decrease in a company’s buying power?
The CPI is measured only once every 10 years.
The products a company buys should differ from what a consumer buys.
The CPI measures what consumers will pay for items.
The CPI is skewed by foreign currency transactions.
The products a company buys should differ from what a consumer buys
Assume the total final sales value of a set of joint products exceeds the total joint costs and that the incremental revenue from processing each product further exceeds the separable costs. Which joint cost allocation method could result in the reporting of a loss for some products and a profit for others?
Net realizable value method
Physical output method
Sales value at split-off method
Constant gross margin net realizable value method
Physical output method
Dennis Rodman’s Shoes and Shinola recently implemented a whistleblower hotline to facilitate the reporting of events and concerns related to potential violations of its code of conduct. This initiative most likely occurs as a part of which component in the ERM framework?
Information, Communication, and Reporting
Which of the following actions is the acknowledged preventive measure for a period of deflation
Increasing interest rates.
Increasing the money supply.
Decreasing interest rates.
Decreasing the money supply.
Increasing the money supply
If a service auditor is unable to obtain a written assertion from the service organization’s management regarding its system and the suitability of the design and operating effectiveness of controls, it would be most appropriate for the auditor to
Withdraw from the engagement unless prohibited by law.
