BEC - 7

Question 1

Which component of the COSO ERM framework is concerned with management’s decision to avoid, accept, reduce, or share risk and to develop a set of actions to align risk with the entity’s risk preferences?

AICPA.101047BEC-SIM

Answer 1

Risk response does include management’s decision to avoid, accept, reduce, or share risk and to develop a set of actions to align risk with the entity’s risk preferences.

Question 2

Which of the following is not a risk of e-commerce?

System Availability
Viral Marketing
Nonrepudiation
Failure of trust in trading partners

AICPA.1405045BEC-SIM

Answer 2

Viral marketing is the use of e-commerce or e-business to increase brand awareness or sales.

Question 3

What is source code comparison program?

Answer 3

Compares an archived version of the program to the program actually in use. It is a technique that would be used to verify that a program is free of unauthorized changes.

Question 4

Authorization matrix

Answer 4

Stores information about usernames and the data records and files that can be accessed

Question 5

Is the cost of inventory a factor used in computing the reorder point for an item of inventory?

Answer 5

No.

The calculation of the reorder point would be: Reorder point = safety stock + delivery-time stock. The cost of inventory does not enter into the determination of the reorder point (but it does enter into the optimum quantity to reorder).

Question 6

Are the following fixed-rate investments subject to interest rate risk during their life?

Domestic Bonds
International Bonds
US Treasury Bills

Answer 6

ALL fixed-rate debt investments have an interest rate risk associated with them. Specifically, the risk is that the market rate of interest will go up, causing the value of outstanding debt (issued at a lower interest rate) to go down.

Question 7

Communications between trading partners in an electronic data interchange (EDI) environment are usually:

Answer 7

Sent through a value-added network (VAN).

Because of their security and auditing features, VANs remain the most popular means of managing EDI communications.

Question 8

What are acceptable joint cost allocation methods?

Answer 8

• Sales value at split-off
• Physical measures
• Constant gross margin

Flexible budget amounts are NOT used for joint cost allocation

Question 9

What is SWOT analysis concerned with

Answer 9

SWOT analysis is directly concerned with the relationship between an entity (its strengths and weaknesses) and its environment (the opportunities and threats).

Question 10

What is PESTEL analysis concerned with?

Answer 10

PESTEL analysis, a variation of PEST analysis, is concerned with the nature of the macro-environment within which an entity operates or may operate.