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BEC CPA Exam > BEC Part 1 > Flashcards

BEC Part 1 Flashcards

1
Q

How does a price increase affect supply?

A

When the prices of an item increases supply increases- because more sellers are willing to sell.**

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2
Q

What is a supply curve shift?

A

When supply changes due to something other than price.

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3
Q

What are the characteristics of a positive supply curve shift (shift right)?

A

Supply increases at each price point

Higher Equilibrium GDP

Number of sellers increases - market can get flooded

Examples: Government subsidies or technology improvements that decrease costs for suppliers

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4
Q

What are the characteristics of a negative supply curve shift (shift left)?

A

Supply decreases at each price point

Lower Equilibrium GDP

Cost of producing item increases

Examples: Shortage of gold- so less gold watches are made; wars or crises in rice-producing countries means there is less rice on the market

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5
Q

How does price affect the demand for an item?

A

When the prices of an item increases- demand for it decreases.

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6
Q

What is a Demand Curve Shift?

A

When demand changes due to something other than price.

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7
Q

What is a Positive Demand Curve Shift (Shift Right)?

A

When demand increases at each price point

Price of substitutes go up - price of beef rises- so people buy more chicken

Future price increase is expected - War in Middle East- people go out and buy gas

Market expands - i.e. people get new free health care plan- demand at clinic rises

Expansion - more spending increases equilibrium GDP

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8
Q

What is a Negative Demand Curve Shift (Shift Left)?

A

Demand decreases at each price point.

Price of complement goes up - price of beef goes up- less demand for ketchup

Boycott - Company commits social blunder- consumers boycott

Consumer income rises - Demand for inferior goods drops as people have more money to spend

Consumer tastes change

Contraction - less spending decreases equilibrium GDP

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9
Q

What is the Marginal Propensity to Consume?

A

How much you spend when your income increases

Calculate: Change in Spending / Change in Income

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10
Q

What is the Marginal Propensity to Save?

A

How much you save when income increases

Calculate: Change in Savings / Change in Income

Also equals 1 - Marginal Propensity to Consume

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11
Q

How is the multiplier effect calculated?

A

(1 / 1-MPC) x Change in Spending

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12
Q

How does increased spending by consumers and the government affect the demand curve?

A

As spending by consumers or the government increases- the demand curve increases (shifts right).

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13
Q

How does spending change due to the multiplier effect?

A

The increase in demand ends up being larger than the amount of additional income spent in the economy due to the multiplier effect.

One consumer spends money- which:
*Increases the income of a business
*Increases the income of a vendor
*Increases income of employees
*Increases tax revenue

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14
Q

How is Price Elasticity of Demand calculated?

A

% Change in Quantity Demand / % Change in Price

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15
Q

Under elastic demand- how does price affect revenues?

A

Price increases- Revenue decreases

Price decreases- Revenue increases

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16
Q

What conditions would indicate Elastic Demand?

A

Many substitutes (luxury items)
Considered elastic if elasticity is greater than 1
10% drop in demand / 8% increase in price : 1.25 (Elastic)

Price increases- Revenue decreases
Price decreases- Revenue increases

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17
Q

How does revenue react to price under Inelastic Demand?

A

Price increases- Revenue increases

Price decreases- Revenue decreases

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18
Q

What conditions would indicate Inelastic Demand?

A

Few substitutes (groceries- gasoline)
Considered inelastic if coefficient of elasticity is less than 1
5% drop in demand / 10% increase in price : .5 (inelastic)

Price increases- Revenue increases
Price decreases- Revenue decreases

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19
Q

What is Unitary Demand?

A

Total revenue will remain the same if price is increased

Considered unitary if coefficient of elasticity : 1

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20
Q

How is Income Elasticity of Demand calculated?

A

% Change Quantity Demanded / % Change in Income

Normal goods greater than 1 (demand increases more than income)

Inferior goods less than 1 (demand increases less than income)

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21
Q

What conditions occur under periods of inflation?

A

Interest rates increase
Reduced demand for loans
Reduced demand for houses- autos- etc.
Value of bonds and fixed income securities decrease
Inferior good demand to increase
Foreign goods more affordable than domestic
Demand for domestic goods decrease

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22
Q

What happens under Demand-Pull inflation?

A

Overall spending increases

Demand increases (shifts right)

Market equilibrium price increases

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23
Q

What happens under Cost-Push inflation?

A

Overall production costs increase
Supply decreases (shifts left)
Market equilibrium price increases

Note: Demand-Pull and Cost-Push Inflation BOTH result in market equilibrium price to increase

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24
Q

What is the Equilibrium Price?

A

The price where Quantity Supplied : Quantity Demanded

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25
Q

What is Optimal Production?

A

When Marginal Revenue : Marginal Cost

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26
Q

What is the result of a Price Floor?

A

Causes a surplus if above equilibrium price.

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27
Q

What is GDP (Gross Domestic Product)?

A

The annual value of all goods and services produced domestically at current prices by consumers- businesses- the government- and foreign companies with domestic interests

Included: Foreign company has US Factory

Not included: US company has foreign factory

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28
Q

What is included under the income approach for calculating GDP?

A

Sole Proprietor and Corp Income
Passive Income
Taxes
Employee Salaries
Foreign Income Adjustments
Depreciation

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29
Q

What is included under the Expenditure Approach for calculating GDP?

A

Individual Consumption

Private Investment

Government Purchases

Net Exports

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30
Q

What is Nominal GDP?

A

Measures goods/services in current prices.

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31
Q

For what is a GDP Deflator used?

A

Used to convert GDP to Real GDP

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32
Q

What is Real GDP?

A

Nominal GDP / GDP Deflator x 100

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33
Q

What is Gross National Product (GNP)?

A

Like GDP; Swaps foreign production. US Firms overseas are included- Foreign firms domestically are not included

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34
Q

What is the Consumer Price Index (CPI)? How is it applied?

A

Price of goods relative to an earlier period of time- which is the benchmark. Year 1 : 1.0

((CPI Current - CPI Last) / CPI Last) * 100

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35
Q

How is disposable income calculated?

A

Personal Income - Personal Taxes

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36
Q

How is Return to Scale calculated?

A

% Increase in output / % Increase in input

Greater than 1 : Increasing returns to scale

Less than 1 : Decreasing returns to scale

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37
Q

When is the economy in Recession?

A

When GDP growth is negative for two consecutive quarters.

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38
Q

What is a Depression?

A

A prolonged- severe recession with high unemployment rates

No requisite period of time for the economy to officially be in a depression

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39
Q

What are the stages of the Economic Cycle?

A

Peak (highest)
Recession (decreasing)
Trough (lowest)
Recover (increasing)
Expansion (higher again)

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40
Q

What are leading indicators?

A

Conditions that occur before a recession or before a recovery

Example: Stock Market or New Housing Starts

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41
Q

What are lagging indicators?

A

Conditions that occur after a recession or after a recovery

Examples: Prime Interest Rates- Unemployment

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42
Q

What are coincident indicators?

A

Conditions that occur during a recession or during a recovery

Example: Manufacturing output

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43
Q

Which people are included in the calculation of unemployment?

A

Only people looking for jobs

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44
Q

What is Cyclical Unemployment?

A

GDP doesn’t grow fast enough to employ all people who are looking for work

Example: People are unemployed in 2010 because there aren’t enough jobs available due to the economy

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45
Q

What is Frictional Unemployment?

A

People are changing jobs or entering the work force. This is a normal aspect of full employment.

Example: A recent college graduate is looking for a job

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46
Q

What is Structural Unemployment?

A

A worker’s job skills do not match those necessary to get a job so they need education or training

Example: A construction worker wants to work in an office- so they quit their job and get computer training

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47
Q

How does inflation relate to unemployment?

A

High Unemployment : Low Inflation (Vice Versa)

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48
Q

What is the Discount Rate?

A

The rate a bank pays to borrow from the Fed.

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49
Q

What is the Prime Rate?

A

The rate a bank charges their best customers on short-term borrowings.

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50
Q

What is the Real Interest Rate?

A

Inflation-adjusted interest rate

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51
Q

What is the Nominal Rate?

A

Rate that uses current prices

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52
Q

What is the Risk-Free Rate?

A

Rate for a loan with 100% certainty of payback.

Usually results in a lower rate.

US Treasuries are an example.

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53
Q

What is included in the M1 money supply?

A

Currency- Coins- and Deposits

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54
Q

What is included in the M2 money supply?

A

Highly liquid assets other than currency- coins or deposits

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55
Q

What is Deficit Spending?

A

Increased spending levels without increased tax revenue.

Lower taxes without decrease in spending

Gamble that the multiplier effect will take over and boost economy

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56
Q

How can the Fed control the money supply?

A

By buying and selling the government’s securities.

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57
Q

How does the Fed control economy-wide interest rates?

A

By adjusting the discount rate charged to banks

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58
Q

What is a Tariff?

A

A tax on imported goods

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59
Q

What is a quota?

A

A limit on the number of goods that can be imported

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60
Q

How do international trade restrictions affect domestic producers?

A

They are good for domestic producers.

Demand curve shifts right

Fewer substitutes

They can charge higher prices

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61
Q

How to international trade restrictions affect foreign producers?

A

They are bad for foreign producers

Demand curve shifts left

Fewer buyers

They must charge lower prices

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62
Q

How do international trade restrictions affect foreign consumers?

A

They are good for foreign consumers

Supply curve shifts right

Goods purchased at lower prices in the foreign markets

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63
Q

How do international trade restrictions affect domestic consumers?

A

They are bad for domestic consumers

Supply curve shifts left

Fewer goods bought due to higher prices

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64
Q

What is Accounting Cost?

A

Explicit (Actual) cost of operating a business

Implicit costs are opportunity costs

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65
Q

What is Accounting Profit?

A

Revenue - Accounting Cost

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66
Q

What is Economic Cost?

A

Explicit + Implicit Cost

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67
Q

What is Economic Profit?

A

Revenue - Economic Cost

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68
Q

Internal Control provisions of the Sarbanes-Oxley Act of 2002 apply to which companies in the U.S.

A

ALL companies that registered with SEC because they issue some type of security to the public

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69
Q

Who is responsible for establishing internal controls for public company?

A

Management is responsible for establishing and maintaining adequate internal control over financial reporting

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70
Q

What is the job of the Board of Directors?

A

1.Declare a cash dividend on both preferred and common stock
.2. Fire the President
3. Reduce pay rate of CFO
4. Oversee the work of the management team and also helps in policy and strategy decisions

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71
Q

The corporate responsibility section of the Act relates to:

A

Establishing an audit committee and the representations made by CEO & CFO

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72
Q

Who is responsible for establishing an audit committee?

A

Public Companies

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73
Q

What is the auditor’s communication requirement?

A

Disagreements with matter related to F/S to the audit committee

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74
Q

The Public Accounting firm is employed by:

A

Public Company (also called an issuer)

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75
Q

Can be members of the issuers’ board of directors but are to be otherwise independent:

A

Audit Committee

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76
Q

Who reports directly to the Audit committee

A

Auditor

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77
Q

Who is directly responsible for the appointment, compensation and oversight of the work of the public accounting firm?

A

Audit Committee

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78
Q

Who is responsible for resolving disputes b/w the auditors & managements?

A

Audit Committee

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79
Q

What do the CEO & CFO signature means?

A
  1. Report has been reviewed
  2. No untrue statement contained
  3. Financial statements in conformity with GAAP
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80
Q

What qualifies a financial expert?

A

Education, past experience as a public accountant or past experience as a finance officer for an issuer(public company)

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81
Q

An independent private sector initiative was initially established to study the factors that can lead to fraudulent financial reporting is:

A

Committee on Sponsoring Organizations(COSO)

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82
Q

What are the Five components consists of by COSO’s Framework?

A 
It would be a C.R.I.M.E if you forget
C- Control Activities
R- Risk Assessment
 I- Information & Communication
M- Monitoring
E- Control Environment
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83
Q

Referred to as the “Tone at the top”

A

Control Environment

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84
Q

COSO is sometimes referred to as:

A

Treadway Commission

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85
Q

In 1992, the COSO issued:

A

Internal Control

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86
Q

COSO issued ___________in 2004

A

(ERM) Enterprise Risk Management

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87
Q

ERM- integrated framework was issued by COSO to:

A

Assist organization in developing a comprehensive response to risk management

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88
Q

What is the intent of ERM?

A

To allow management to effectively deal with uncertainty, evaluate risk acceptance, and build value

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89
Q

How is value maximized?

A

When strategy balances risks and returns as well as efficiency and effectiveness in accomplishing objectives

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90
Q

What are four enterprise objectives defined by ERM:

A 
S.O.R.C
S-trategic
O-peration
R-eporting
C-ompliance
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91
Q

The components of ERM are:

A

IS EAR AIM
I- Internal Environment
S- Setting Objectives

E-Event Identification
A- Assessment of Risk
R- Risk response

A-Activities(control)
I- Information & communications
M-Monitoring

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92
Q

____provides that framework to evaluate how an organization will respond to risk

A

Enterprise Risk Management(ERM)

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93
Q

Internal Environment is supported by eight key elements:

A 
PHRASED C
P- Philosophy(risk mgmt)
H-Human resources
R-Risk Appetite
A-Assignment ofAuthority & Responsibility
S- Organization Structure
E- Integrity and Ethical values
D- Board of Directors
C- Committment to Competence
94
Q

Risk assessment that exists after management TAKES ACTION to mitigate the adverse impact of the event:

A

RESIDUAL RISK

95
Q

Component of ERM is similiar to the control environment of the framework and defines the tone of the organization:

A

Internal Environment

96
Q

Focuses management on the cost/benefit of activities:

A

Activity Based Costing

97
Q

Whats the concept of Just-in-Time?

A

Inventory does not add value

98
Q

What are cost elements of appraisal costs?

A

Statistical Quality Check
Testing
Inspection
Maintenance of the laboratory

99
Q

Costs incurred to discover and remove defective parts before they are shipped to the customer or the next department:

A

Appraisal Cost.

100
Q

Example of External Failure Costs are:

A 
Warranty Cost
Liability claims
Cost of returning the good
Lost customers
Re-engineering an external failure
101
Q

The focus on lean is:

A

Wast Reduction & Efficiency

102
Q

Synonymous with continous improvement

A

Kaizen

103
Q

In processing costing:

A

All costs are assigned to products

104
Q

The framework most likely to be used by management in its internal control assessment required by Sarbanes-Oxley Act of 2002

A

Committee of Sponsoring Organization Treadway Commission(COSO)

105
Q

Business Process Management activties can be grouped into five(5) categories:

A 
Design
Modeling
Execution
Monitoring
Optimization
106
Q

Refers to an unsecured bond:

A

Debenture

107
Q

What are the four components of credit policy?

A

Credit Period-when payment is due
Credit Standard-criteria as to which customers are granted credit
Collection Policy-enforcement of the collection process
Discount- reductions offered to speed up payment

108
Q

What are two reasons long-term debt is cheapest?

A
  1. The interest rate an the debt is tax deductible

2. Debt is repaid first so it has less risk

109
Q

Convertible bond allows the bondholder the option to:

A

Exchange the bond for a fixed number of shares of common stock

110
Q

An average costs is also known as a(n):

A

Unit Cost

111
Q

Inventoriable cost is an example of

A

Direct Material

112
Q

Total fixed cost along the relevant range will:

A

Stays the same as volume increases

113
Q

Fixed unit cost along the relevant range will:

A

Decrease as volume increase

114
Q

Prohibits the use of the completed contract method

A

IFRS

115
Q

Prohibits the use of LIFO method

A

IFRS- because inventory will be lower in periods of rising prices

116
Q

Has uniform application of percentage of completion method for construction

A

IFRS

117
Q

Emphasize reliable financial reporting

A

Management Philosophy & Operating Style

118
Q

What principle of the control environment states that NO more than 3 layers of organization exist b/w the CFO and the individual involved in financial reporting

A

Organizational Structure

119
Q

What principle of control environment audit committee oversee the mgmt process for defining responsibility for key financial reporting roles?

A

Authority & Responsibility

120
Q

Provide an assessment of the performance of the system overtime and may be done on an ongoing basis or in separate evaluation

A

Monitoring

121
Q

What principle of control environment where the Board of Directors or audit committee regularly evaluates the competencies of the CFO?

A

Financial Reporting Competencies

122
Q

Occurs at the manufacturing stage

A

Kaizen

123
Q

Anything that impedes the accomplishment of an objective

A

Constraints

124
Q

An organization commitment to customer focused performance that emphasizes both quality and continous improvement

A

Total Quality Management(TQM)

125
Q

Cost incurred to prevent the production of defective units

A

Prevention Costs

126
Q

Record revenues and costs for batches of identical units of product

A

Process Costing System

127
Q

Financial statement disclosures are intended to:

A

Ensure that the application of GAAP transactions are transparent to the reader

128
Q

For the components of ERM to be functioning effectively, there cannot be:

A

Material Weakness of Internal Control

129
Q

According to COSO, which of the following components of ERM addresses an entity’s integrity and ethical values?

A

Internal Environment

130
Q

Control Activities are most closely related to:

A

Risk Responses

131
Q

Return on Investment(ROI) is expressed as a:

A

Percentage of profit to investment

132
Q

Operations can be improved with

A

Non-financial measure

133
Q

What are the elements of the manufacturing process used in Fishbone Diagram?

A

Machinery-settings wrong
Method-preparation incomplete
Materials- wrong consistency
Manpower- inexperienced workers

134
Q

Dynamic factors that have the ability to change total costs

A

Cost Drivers

135
Q

For the purpose of Manufacturing Overhead cost drivers are referred to as

A

Allocation Bases

136
Q

Direct Material + Direct Labor =

A

Prime Cost

137
Q

Direct Labor + Mfg Overhead Applied=

A

Conversion Cost

138
Q

All costs related to the manfacture of the product is

A

Product Costs

139
Q

Consist of Direct Material, Direct Labor & Overhead applied

A

Product Cost

140
Q

Costs consist of both direct & indirect costs

A

Manufacturing Costs

141
Q

Expenses includes Selling & Administrative expenses, interest expenses:

A

Period Costs

142
Q

Performance of quality assurance occurs in which of the following processes?

A

Implementation

143
Q

Costs that change in total but constant per unit

A

Variable Cost

144
Q

How are cost measurement system divided?

A

B/w Actual,Normal, & Standard costing systems or methods

145
Q

Cost incurred in the current period

A

FIFO

146
Q

Accounts for work to be completed

A

FIFO

147
Q

Using a balance scorecard approach, the internal business processes is measured:

A

Based on how well the company manages to do a particular process

148
Q

What methods are used for estimating project cost?

A
  1. Judgement
  2. Reserve Analysis
  3. Vendor Bid Analysis
149
Q

Under which of these circumstances would an organization be likely to offer credit terms of 2/10, net 30?

A

Most competitors are offering the same terms, and the organization has a shortage of cash

150
Q

The BEST way to secure data integrity for a personal computer environment:

A

ALL computers linked to a local are network(LAN)

151
Q

Expansionary fiscal policy is so named because it:

A

Is designed to expand real GDP

152
Q

U.S. export transactions create which of the following?

A

A foreign demand for dollars and the satisfaction of this demand increases the supplies of foreign monies held by U.S. banks

153
Q

Suppose that the economy is in the midst of a recession. Which of the following policies would be consistent with active fiscal policy

A

A reduction in Federal tax rates on personal and corporate income

154
Q

In an income statement prepared as an internal report using the direct(variable) costing method, fixed selling and administrative expenses would

A

Be used in the computation of operating income but not in the computation of the contribution margin

155
Q

When purchasing temporary investments, the risk associated with the ability to sell the investment is a short period of time

A

Liquidity Risk

156
Q

The acquisition of market share acquired during the year would be measured under which of the critical success factors in a balanced scorecard approach?

A

Innovation and Learning

157
Q

Focuses on long and not short-term goals

A

Balanced scorecard

158
Q

Which group of ratios would be useful in evaluating the effectiveness of working capital management?

A

Acid-test ratio
Inventory turnover ratio
Average collection period ratio

159
Q

Lean manufacturing works best when

A

Consultants are used to train others to see ineffeicienies in a business process

160
Q

In the United States, business cycles have occurred against a backdrop of a long-run trend of :

A

Rising real GDP

161
Q

A shift in the supply curve downward and to the right, with the demand curve unchanged, will lead to:

A

Lower price and a larger equilibrium quantity

162
Q

The first step of the lean manufacturing process is to

A

Let customers determine what value means to them

163
Q

A chief audit executive should report administratively to the

A

The chief executive officer

164
Q

The time that must pass in order for a member of the board of directs to be considered independent from a company where that member was once an employee according to the National Association of Securities Dealers Automated Quotation Systems(NASDAQ) is

A

3 years

165
Q

The New York Stock Exchange requires how many years elapse between prior company employment and appointment to the board of directors by an individual.

A

5 years

166
Q

All compensation of the chief financial officer must be disclosed to the

A

SEC

167
Q

What is best definition of a company’s risk tolerance or its risk appetite?

A

Risk appetite is the product of ALL of the risk tolerances in a company’s business processes

168
Q

Measurement of the quantitative sales plan vs budgeted sales plan would fall under which critical success factor in a balanced scorecard approach

A

Internal Business processes

169
Q

Companies that have implemented a Just-In-Time production environment usually experience

A

A decrease in the number of raw material vendors

170
Q

Factors that might cause a firm to increase the debt in its financial structure?

A

An increase in the corporate income tax rate

171
Q

A firm’s target or optimal capital structure is consistent with:

A

Minimum weighted average cost of capital

172
Q

What is an automated clearinghouse (ACH) electronic transfer?

A

Electronic payment to a company’s account at a concentration bank

173
Q

How can the working capital of a firm be increased?

A

Refinancing of accounts payable with a two-year note payble

174
Q

What is the purpose of a lock box system?

A

Accelerates the inflow of funds

175
Q

In a computer system environment, the procedures that include the equipment configuration, program, and data files to be used as well as description of conditions that may require interruption of a program executive are known as:

A

Operating documentation

176
Q

Initial Cost / Annual Net Cash Inflow

A

Payback period

177
Q

Computes the years needed to recoup an investment

A

Payback period

178
Q

The required rate of return must be less than the project(s)

A

Internal Rate of Return

179
Q

A project with a positive NPV will have an IRR greater than

A

The required rate of return

180
Q

The profitability index is a variation of what capital budgeting models

A

Net Present Value

181
Q

Discount Cash Flow Method includes

A

NPV
IRR
Profitability index

182
Q

The capital budgeting model that is considered the BEST model for long-range decision making is the:

A

Discount Cash Flow

183
Q

Relevant cash flows are those that we can keep

A

After paying taxes

184
Q

The objective of the discounted cash flow(DCF) method is to

A

Focus the attention of management on RELEVANT cash flows appropriately discounted to present value

185
Q

Rate used to discount future cash flows is set by management using any number of different approaches such as

A
  1. Mgmt may use a WACC method
  2. Mgmt may simply assign a target for new projects to meet
  3. Mgmt may recommend that the discount rate be related to the risk specific to the proposed project
186
Q

Depreciation tax shield =

A

Depreciation expense x Marginal tax rate

187
Q

Focus decision makers on both liquidity and risk

A

Payback Period Method

188
Q

The Lower the better for

A

Payback Period Method

189
Q

Limitation of Payback Period Method

A
  1. Time value of money is ignored
  2. Cash flows after the initial investment is recovered are NOT considered
  3. Reinvestment of cash flows is NOT considered
  4. Total projecIt profitablity is neglected
190
Q

Is the desired or minimum rate of return that is set by mgmt to evaluate investment

A

Hurdle Rate

191
Q

Use of accelerated(instead of straight-line) depreciation methods

A

Increases the present value of the depreciation tax shield

192
Q

The next best alternative is

A

The opportunity cost

193
Q

Positive Result(Result > or = Zero)

A

= Make Investment

194
Q

Negative Result(Result < Zero)

A

= Do Not Make Investment

195
Q

When comparing two investment alternatives that have different expected returns and standard deviations, what statistical measure should be used to select the superior option?

A

Coefficient of variation

196
Q

The risk premium is comprised of five components

A
  1. Business risk
  2. Financial risk
  3. Liquidity risk
  4. Currency risk
  5. Country risk
197
Q

The length of time required for an investment’s discounted cash flow to equal its initial cost (net investment) is the definition of which capital budgeting technique?

A

Discounted payback period

198
Q

Is evaluated in dollars

A

NPV

199
Q

is evaluated in percentage

A

IRR

200
Q

assumes reinvestment at the cost of capital

A

NPV

201
Q

IRR assumes reinvestment of each cash flow at

A

THE IRR

202
Q

In making decisions about the use of assets, benefits that are passed up are referred to as:

A

OPPORTUNITY COST

203
Q

Value of Perpetuity(Preferred Stock) =

A

Annual Cash Flow / Required Rate of Return

204
Q

A preferred stock is

A

perpetuity

205
Q

Retention rate is

A

the percentage of each dollar earned that the firm keeps

206
Q

ROE x Retention Rate

A

= Growth Rate

207
Q

Activity-based costing is based on two principles. First, activities consume resources. Second:

A

Second, these resources are consumed by products, services, or other cost objectives (output).

208
Q

Activity Based Costing is typically used to distribute which of the following cost to products and services?

A

Overhead cost

209
Q

Under variable costing, fixed manufacturing overhead is expensed immediately

A

As a period cost

210
Q

under absorption costing, such amounts are treated as a product cost and added to -

A

the cost of inventory

211
Q

Absorption costing is used for

A

External Reporting purposes

212
Q

Variable cost is used

A

Internal-decision making purposes

213
Q

Job order costing is a costing system that distributes cost:

A

To customer orders based on Direct Material, Direct Labor and Overhead consumed by this specific job which is considered unique

214
Q

Traditional process, job order, and standard cost accounting have always focused exclusively on -

A

the manufacturing process.

215
Q

A company produces a product in a long-series of automated steps that requires little direct material and direct labor but a lot of overhead. What costing system is the company most likely to use?

A

Activity-based costing

216
Q

Requires many steps in the process and overhead is a significant cost.

A

Activity-based costing

217
Q

A standard costing system focuses on

A

target costs that are attainable when a system is operating efficiently (but not under ideal conditions). It is the foundation for variance analysis that identifies variances in overhead, labor, and material costs

218
Q

In an activity-based cost system, the company tries to determine

A

a cost driver for each separate cost

219
Q

Activities that add no value to end customers

A

such as costs of rework, scrap, and some materials and packaging, are considered non-value added activities.

220
Q

One of the primary purposes of a standard costing system is

A

to identify what is driving variances between actual costs and those based on standard per unit costs for products.

221
Q

Overhead is assigned for each separate activity under:

A

Activity Based Accounting

222
Q

The maximization of throughout is an inherent concept in which of the following management philosophies?

A

THEORY OF CONSTRAINTS

222
Q

The maximization of throughout is an inherent concept in which of the following management philosophies?

A

THEORY OF CONSTRAINTS

223
Q

Unlike business process reengineering, business process management:

A

SEEKS INCREMENTAL CHANGE

223
Q

Unlike business process reengineering, business process management:

A

SEEKS INCREMENTAL CHANGE

224
Q

In the United States, business cycles have occurred against a backup of a long-run trend of:

A

Rising real GDP

225
Q

Recurring upswings and downswings in an economy’s real GDP over time are called

A

Business Cycle

226
Q

What is an appropriate fiscal policy for severe demand pull inflation

A

A tax rate increase

227
Q

Measurement of the quantitative sales plan versus budgeted sales plan would fall under which critical success factor in a balanced scorecard approach

A

Internal Business Processes

228
Q

The process considered most downstream of the following is

A

Development

229
Q

Parity Checks

A

Detects internal data errors

Bit added to each characters, check to see if a bit was lost

BEC CPA Exam (6 decks)

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