Flagged Questions Flashcards
3 steps for process costing
- Determine Equivalent Units on basis of costs (direct materials and conversion costs)
- Calculate cost per EU (DM + Conv)/EU
- Multiply EU x Cost/EU to get WIP ending inventory and Cost of Goods Transferred Out
What is the difference between FIFO and Weighted Average to determine the EU?
How beginning inventory is treated.
FIFO: uses only the current # of units started in the period to compute cost per EU (i.e. does NOT use BI)
Weighted Average: uses the eqiuvalent units of work to complete beginning inventory as well as goods started in the period
When would Weighted Average and FIFO equivalent units be the same?
The only distinguishing difference between the FIFO and weighted average methods of calculating equivalent units is the treatment of beginning inventory. Thus, the results will be equivalent for the two methods, where no beginning inventory exists.
Formula to calculate the nominal rate of forgoing a trade discount is:
Nominal annual cost = discount % / 100 - discount % x 360 days / Total Days - Discount Days
Computer Input Control
designed to provide reasonable assurance that data received for processing by computer have been properly authorized, converted into machine sensible form and identified, and have not been lost, suppressed, added, duplicated, or otherwise improperly changed.
Which of the following internal control components includes the principle that the organization evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action?
Control activities.
Information and communication.
Monitoring.
The control environment.
C. Monitoring
The two principles related to the monitoring component include:
a. The organization selects, develops, and performs ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning.
b. The organization evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate.
To protect his or her interest a large minority shareholder would prefer which of the following types of shares?
Preferred shares.
Common stock with no voting rights.
Common stock with statutory voting rights.
Common stock with cumulative voting rights.
D. Common stock with cumulative voting rights
With cumulative voting rights the shareholder gets one vote for each director for each share of stock owned.
How to use the CPI
A hospital is comparing last year’s emergency rescue services expenditures to those from 10 years ago. Last year’s expenditures were $100,500. Ten years ago, the expenditures were $72,800. The CPI for last year is 168.5 as compared to 121.3 ten years ago. After adjusting for inflation, what percentage change occurred in expenditures for emergency rescue services?
The cost 10 years ago adjusted for inflation is equal to $101,127
[$72,800 × (168.5 ÷ 121.3)]. This year’s cost of $100,500 is 0.6% less than $101,127.
The Internet is made up of a series of networks which include
Gateways to allow mainframe computers to connect to personal computers.
Bridges to direct messages through the optimum data path.
Repeaters to physically connect separate local area networks (LANs).
Routers to strengthen data signals between distant computers.
Ans. A
Gateways connect Internet computers of dissimilar networks.
Arbitrage Pricing Model
Involves a more precise measurement of systematic risk than CAPM.
Investors face two different types of risk for an investment.
• Systematic risk—Market risk that cannot be diversified away.
• Unsystematic risk—The risk of the specific investment that can be eliminated through diversification.
CAPM uses only one variable to capture systematic risk, the market rate of return or km. The arbitrage pricing model uses a series of systematic risk factors to develop a value that reflects the multiple dimensions of systematic risk.
