BEC 9 Flashcards
Which of the following metrics equates the present value of a project’s expected cash inflows to the present value of the project’s expected costs?
Net present value.
Return on assets.
Internal rate of return.
Economic value-added.
Internal rate of return
The internal rate of return metric equates the present value of a project’s expected cash inflows to the present value of the project’s expected costs. It does so by determining the discount (interest) rate that equates the present value of the project’s future cash inflows with the present value of the project’s cash outflows. The rate so determined is the rate of return earned on the project.
A contract executed on an exchange that requires the holder to purchase or sell a specific quantity of an asset on a future date is most likely a
Forward contract.
Put option contract
Futures contract
Call option contract
Futures contract
Futures contracts on on exchange
A contract executed between two parties that requires the holder to purchase or sell a specific quantity of an asset on a future date is most likely a
Forward contract.
Put option contract
Futures contract
Call option contract
Forward contract.
Forward contracts are between two parties
There can be official full employment when there is which of the following kinds of unemployment?
I. Structural unemployment.
II. Frictional unemployment.
III. Seasonal unemployment.
Only I.
Only II.
Only III.
I, II, and/or III.
I, II, and/or III.
There could be official full employment when there is structural, frictional, and/or seasonal unemployment. Only cyclical unemployment is considered in the official measure of full employment.
When finding breakeven volume in sales units do you use non cash outlays?
No
The fixed portion of the semivariable cost of electricity for a manufacturing plant is a
Period cost Product cost
Yes No
Yes Yes
No Yes
No No
No Yes
_____ concerns the completeness, validity, accuracy, timeliness, and authorization of system process.
Quality
Processing integrity
Privacy
Access
Processing integrity
A company reports the following account balances at year-end:
Account Balance Long-term debt $200,000 Cash 50,000 Net sales 600,000 Fixed assets (net) 320,000 Tax expense 67,500 Inventory 25,000 Common Stock 100,000 Interest expense 20,000 Administrative expense 35,000 Retained earnings 150,000 Accounts payable 65,000 Accounts receivable 120,000 Cost of goods sold 400,000 Depreciation expense 10,000
Additional Information:
The opening balance of common stock was $100,000
The opening balance of retained earnings was $82,500
The company had 10,000 common shares outstanding all year
No dividends were paid during the year
At the year-end, the company has a book value per share, to the nearest cent, of
$10.00
$15.00
$21.63
$25.00
$25.00
This answer is correct. Book value per share is calculated as
Common stockholders’ equity ÷ Outstanding shares
= (Common stock + Retained earnings) ÷ Outstanding shares
= (100,000 + 150,000) / 10,000
= $25
Internal disk labels are physically read by
People.
Software.
Scanners.
Consumers.
Software
Trendy Toy Manufacturer uses absorption costing for its external reports and variable costing for its internal reports. The LIFO cost flow is used for both costing methods. Data concerning the firm’s inventories appear below: Trendy Toy — Inventories
Sept Oct Nov
Abs $11,250 $13,125 $18,750
Var $9,000 $10,500 $15,000
What is the relationship between absorption cost and variable cost operating income in November? Determine whether variable costing or absorption costing will show the higher operating income in November, and calculate the amount by which the operating incomes would differ.
Absorption costing income in November is $1,125 higher than variable costing income because inventories increased during the month.
Absorption costing income in November is $4,500 higher than variable costing income because inventories increased during the month.
Absorption costing income in November is $1,125 lower than variable costing income because inventories changed during the month.
Absorption costing income in November is $5,625 higher than variable costing income because inventories increased during the month.
Absorption costing income in November is $1,125 higher than variable costing income because inventories increased during the month
To determine the differences in income between the two methods, we need to know the change in inventory levels between the two months, and then determine the amount of overhead cost that was added or subtracted in November. Following are the calculations.
CHANGE in inventory from October to November for each method is:
Absorption ($18,750 − $13,125) $5,625
Variable ($15,000 − $10,500) $4,500
Difference $ 1,125
Morgan Property Management, Inc. recently switched from a manual accounting system to a computerized accounting system. The system supports online real-time processing in a networked environment, and six employees have been granted access to various parts of the system in order to perform their jobs. Relative to the manual system, Morgan can expect to see
That functions that had previously been spread across multiple employees have been combined.
An increase in the incidence of clerical errors.
A decrease in the incidence of systemic errors.
A decrease in the need for access controls to the accounting records.
That functions that had previously been spread across multiple employees have been combined.
Which of the following methods should be used if capital rationing needs to be considered when comparing capital projects?
Net present value.
Internal rate of return.
Return on investment.
Profitability index.
Profitability index.
Gus McCrae, an accountant at Lonesome Dove Cattle Ranch, builds a spreadsheet to track cow movements between locations. However, there are so few movements of cattle between locations that the spreadsheet is unhelpful. This problem illustrates which of the following issues?
Inadequate scope and scalability
Lack of strategic focus
Lack of strategic engagement
Digitization
Lack of strategic focus
Each of the following would help prevent incorrect postings to the general ledger in a computerized accounting system, except
Validating the posting date of the transaction.
Restricting the ability to post directly to accounts with subsidiary ledgers.
Performing a range check on the general ledger account in the transaction.
Establishing a unique transaction number for each general ledger posting.
Establishing a unique transaction number for each general ledger posting.
Correct! Although there are cases in which transaction numbers might be useful (e.g., identifying duplicate transactions), many accounting systems do not include transaction numbers for general ledger postings.
Which of the following controls would assist in detecting an error when the data input clerk records a sales invoice as $12.99 when the actual amount is $122.99?
Batch control totals.
Echo check.
Limit check.
Sign check.
Batch control totals.
