BEC 4

Question 1

Which of the following is the most likely result of imposing tariffs to increase domestic employment?

A long-run reallocation of workers from export industries to protected domestic industries
A short-run increase in domestic employment in import industries from export industries
A decrease in tariff rates of foreign nations
A decrease in consumer prices in the domestic market

Answer 1

A long-run reallocation of workers from export industries to protected domestic industries

Question 2

The machine language program that results when a symbolic language program is translated is called a(n)

Processor program.
Object program.
Source program.
Wired program.

Answer 2

Object program.

Question 3

The basic difference between a master budget and a flexible budget is that a master budget is

Only used before and during the budget period and a flexible budget is only used after the budget period.

For an entire production facility and a flexible budget is applicable to single departments only.

Based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.

Based on a fixed standard and a flexible budget allows management latitude in meeting goals.

Answer 3

Based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.

Question 4

Which of the following inventory management approaches orders at the point where carrying costs equate nearest to restocking costs in order to minimize total inventory cost?

Economic order quantity.
Just-in-time.
Materials requirements planning.
Activity-based costing (ABC).

Answer 4

Economic order quantity.

Question 5

Which statement is not one of the objectives of internal control as included in the definition of internal control developed by the Committee of Sponsoring Organizations (COSO)?

Asset safeguarding.
Compliance.
Financial reporting.
Operations.

Answer 5

Asset safeguarding

Question 6

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?

Use of the test-data approach by the author in testing the client’s program and verification of the subsidiary file.

Use of a running control total for the master file of checking account balances and comparison with the printout.

A program check for valid customer code.

Periodic recompiling of programs from documented source files, and comparison with programs currently in use.

Answer 6

Periodic recompiling of programs from documented source files, and comparison with programs currently in use.

Question 7

Which of the following U.S. GAAP levels of inputs for valuation purposes is/are based on observable inputs?

Level 1 Level 2 Level 3
Y, Y, Y
Y, Y, N
Y, N, N
N, N, Y

Answer 7

Y, Y, N

Question 8

_____ is the foundation of systems reliability.

Security
Availability
Processing integrity
Confidentiality

Answer 8

Security

Question 9

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

Prototyping.
Program integration.
SDLC (System Development Life Cycle).
Change control.

Answer 9

Change control

Question 10

Which of the following is most likely to pose a direct risk that the dollar value of a foreign direct investment by a U.S. investor will suffer a loss?

Appreciation in the value of the dollar against the currency of the country in which the investment is located.

Appreciation in the value of the currency of the country in which the investment is located against the dollar.

Depreciation in the value of the dollar against the currency of the country in which the investment is located.

Hedging the dollar value of the foreign direct investment.

Answer 10

Appreciation in the value of the dollar against the currency of the country in which the investment is located.

Question 11

The level of risk that concerns investors who supply capital to a diversified company is

Project risk (beta).
Pure play risk (beta).
The standard deviation of project risk (betas).
The weighted-average of project risk (betas).

Answer 11

The weighted-average of project risk (betas).

Question 12

Short-term interest rates are

Usually lower than long-term rates.
Usually higher than long-term rates.
Lower than long-term rates during periods of high inflation only.
Not significantly related to long-term rates.

Answer 12

Usually lower than long-term rates.

Question 13

With respect to the use of commercial paper by an industrial firm, which one of the following statements is most likely to be true?

The commercial paper is issued through a bank.
The commercial paper has a maturity of 60–270 days.
The commercial paper is secured by the issuer’s assets.
The commercial paper issuer is a small company.

Answer 13

The commercial paper has a maturity of 60–270 days.

Question 14

How do you calculate times-interest-earned

Answer 14

(Income before taxes + interest expense)/ interest expense

Question 15

When calculating the cost of capital, the cost assigned to retained earnings should be

Zero

Lower than cost of external common equity

Equal to the cost of external common equity

Higher than the cost of external common equity

Answer 15

Lower than the cost of external common equity

Question 16

True or false costs are accumulated by responsibility center for control purposes when using both job order costing and process costing

Answer 16

True

Question 17

Government borrowing to finance large deficits increases the demand for lendable funds and

Increases the supply of lendable funds.
Exerts downward pressure on interest rates.
Has no impact on interest rates.
Puts upward pressure on interest rates.

Answer 17

Puts upward pressure on interest rates.

Question 18

According to the AICPA ASEC, GAPP are:

A type of generally accepted accounting principles.
A subelement of information quality.
Related to privacy.
Generally accepted principles and practices.

Answer 18

Related to privacy.

Question 19

The Federal Reserve System’s reserve ratio is

The specified percentage of a member commercial bank’s deposit liabilities that must be deposited in the central bank.

The rate that the central bank charges for loans granted to commercial banks or held as cash in the bank’s vault.

The ratio of excess reserves to legal reserves that are deposited in the central bank.

The specified percentage of a commercial bank’s demand deposits to total liabilities

Answer 19

The specified percentage of a member commercial bank’s deposit liabilities that must be deposited in the central bank.

Question 20

All of the following capital budgeting analysis techniques use cash flows as the primary basis for the calculation except for the

Net present value.
Payback period.
Discounted payback period.
Accounting rate of return.

Answer 20

Accounting rate of return.

Question 21

The calculation of depreciation is used in the determination of the net present value of an investment for which of the following reasons?

The decline in the value of the investment should be reflected in the determination of net present value.

Depreciation adjusts the book value of the investment.

Depreciation represents cash outflow that must be added back to net income.

Depreciation increases cash flow by reducing income taxes.

Answer 21

Depreciation increases cash flow by reducing income taxes.

Question 22

IT facility controls are

Detective.
General.
Corrective.
Preventive.

Answer 22

General

Question 23

Which of the following items represents a reduction in the balance of payment accounts for the United States?

Exports of services to residents of foreign nations
Loans to domestic entities by foreign commercial banks.
Foreign purchases of assets in the United States
Import of assets from foreign countries

Answer 23

Import of assets from foreign countries

Question 24

Breakeven analysis assumes that over the relevant range

Unit revenues are nonlinear.
Unit variable costs are constant.
Total costs are constant.
Total fixed costs are nonlinear.

Answer 24

Unit variable costs are constant.

Question 25

A graph that plots beta would show the relationship between

Asset risk and asset return.
Asset risk and benchmark return.
Benchmark risk and asset return.
Asset return and benchmark return.

Answer 25

Asset return and benchmark return

Question 26

Which one of the following transactions is most likely to constitute foreign direct investment?

A U.S. investor buys shares of stock in a foreign company for speculative purposes on a foreign stock exchange.

A U.S. citizen purchases a foreign currency to use on a vacation in that country.

A U.S. company signs an agreement with a foreign wholesaler to distribute the U.S. company’s products in the foreign market.

A U.S. company purchases land in a foreign country on which it plans to build a production facility.

Answer 26

A U.S. company purchases land in a foreign country on which it plans to build a production facility.

Question 27

When the demand for a product is inelastic, a decrease in price has what effect on the number of units sold and total revenue?

The percentage change in price will be greater than the percentage change in quantity, and total revenue will fall.

The percentage change in price will be greater than the percentage change in quantity, and total revenue will rise.

The percentage change in price will be less than the percentage change in quantity, and total revenue will fall.

The percentage change in price will be less than the percentage change in quantity, and total revenue will rise.

Answer 27

The percentage change in price will be greater than the percentage change in quantity, and total revenue will fall.

Question 28

Break-even analysis assumes over the relevant range that

Total costs are linear.
Fixed costs are nonlinear.
Variable costs are nonlinear.
Selling prices are nonlinear.

Answer 28

Total costs are linear.

Question 29

Womping Wembley Corp. maintains three sets of backups, which are updated monthly, weekly, and daily. This approach illustrates a (an):

Checkpoint and restart approach
RAID approach
Redundant backups approach.
SANs approach

Answer 29

Redundant backups approach.

Question 30

Echo Company uses a normalized job costing system and applies factory overhead on the basis of machine hours. Echo’s yearly profit plan disclosed anticipated factory overhead of $4,800,000 if 200,000 machine hours are worked. By year-end, actual factory overhead charges and machine hours worked amounted to $4,730,000 and 215,000, respectively. What amount correctly states the factory overhead applied to Echo’s actual year-end overhead?

$ 70,000 overapplied.
$360,000 overapplied.
$430,000 overapplied.
$430,000 underapplied.

Answer 30

$430,000 overapplied.