CPA-BEC EXAM WITH COMPLETE SOLUTIONS LATEST UPDATE
how often must an internal audit activity be subject to an external assessment? -
ANSWER every five years.
what are the significant themes that run throughout internal audit attribute standards? -
ANSWER (1) Purpose, Authority, and Responsibility; (2) Independence and Objectivity;
(3) Proficiency and Due Professional Care; and (4) Quality Assurance and Improvement
Program.
the 7 core themes of the performance programs: - ANSWER (1) Managing the Internal
Audit Activity; (2) Nature of Work; (3) Engagement Planning; (4) Performing the
Engagement; (5) Communicating Results; (6) Monitoring Progress; and (7) Resolution of
Senior Management's Acceptance of Risks.
in a standard graph, the 'intercept' is the point at which: - ANSWER the dependent
variable intersects the Y axis, and where the independent variable has the lowest value,
usually zero
elasticity of supply? - ANSWER %change in quantity supplied/%change in price
what is elasticity of demand? - ANSWER the % change in quantity is greater than the %
change in price
How do you prevent deflation? - ANS increase the money supply by lowering the reserve
requirement, or lowering interest rates which stimulate the demand and increases the
general price level
what does an import quota do? - ANS it restricts the quantity of a commodity that can be
brought into the country from foreign providers. The major beneficiary is the domestic
suppliers of the commodity.
,3 generic strategies by Michael Porter? - ANSWER cost leadership, differentiation, and
focus
which framework is for gauging the attractiveness of the competitive environment of an
industry? - ANSWER five forces
what analysis method is for evaluating a macroenvironment? - ANSWER PEST analysis:
political, economic, social, and technological characteristics
What are the five forces? 1-Threat of new competition entering the market, 2- Threat of
substitute goods or services, 3 - Bargaining power of buyers of the industry good or
service,4- Bargaining power of suppliers of the inputs used in the industry, and
5-Intensity of Rivalry
What does SWOT stand for? Answer: Strengths and weaknesses of the entity, and the
opportunities and threats faced by the entity
weighted avg cost of capital how is it calculated? - ANSWER the required rate of return
on each source of capital weighted by the proportion of total capital provided by each
source and then those amounts are summed.debt:30%x(10% 1-30% tax rate)=2.1%CS:
60%x12%= 7.2%PS: 10%x10%= 1%WACC= 10.3%
What is a compensating balance, and how is the effective interest rate calculated? -
ANSWER amount the borrower must keep in a account with a lender the effective int
rate is the cost of borrowing divided by the funds available for use if the interest each
year is 40,000 and the only amount you can actually use is 400,000 then effective rate is
10%.
How is the required rate of return calculated? - ANSWER risk free rate + Beta(expected
rate - risk free rate)
basic approach to capitalize earnings to determine value of business? - ANSWER annual
, earnings / required rate of return.
what is a time series model? - ANSWER models based on extrapolation of past data to
predict a future value
delphi method? - ANSWER form of qualitative forecasting that involves consensus of a
group of experts using a multi-stage process to converge on a forecast.
diff in quantitative & qualitative forecasting? - ANSWER quantitative is objective and rely
on math and calculations. qualitative are subjective and rely on judgement and opinion
What is the profitability index approach? - ANSWER the relative economic ranking of
projects by considering cost & npv of projects
average accounting rate of return? - ANSWER avg annual after tax net income / avg cost
of investment.the avg cost of investment is the beg book value + ending bv then divided
by 2.
formula to calculate a project's profitability index? - ANSWER present value of annual
after tax cash flows / original cash invested in the project
NASDAQ requires that all companies' audit committees be composed solely of: -
ANSWER Independent directors who must also be financially literate
can board of directors amend the articles of incorporation? - ANSWER no, only the
stockholders can do that
buying and selling of commodities for immediate delivery is called: - ANSWER the spot
market. the forward market is for delivery at some time in the future
what is a specialist on the NYSE? - ANSWER a NYSE member who acts as a dealer in a
few securities
how often must an internal audit activity be subject to an external assessment? -
ANSWER every five years.
what are the significant themes that run throughout internal audit attribute standards? -
ANSWER (1) Purpose, Authority, and Responsibility; (2) Independence and Objectivity;
(3) Proficiency and Due Professional Care; and (4) Quality Assurance and Improvement
Program.
the 7 core themes of the performance programs: - ANSWER (1) Managing the Internal
Audit Activity; (2) Nature of Work; (3) Engagement Planning; (4) Performing the
Engagement; (5) Communicating Results; (6) Monitoring Progress; and (7) Resolution of
Senior Management's Acceptance of Risks.
in a standard graph, the 'intercept' is the point at which: - ANSWER the dependent
variable intersects the Y axis, and where the independent variable has the lowest value,
usually zero
elasticity of supply? - ANSWER %change in quantity supplied/%change in price
what is elasticity of demand? - ANSWER the % change in quantity is greater than the %
change in price
How do you prevent deflation? - ANS increase the money supply by lowering the reserve
requirement, or lowering interest rates which stimulate the demand and increases the
general price level
what does an import quota do? - ANS it restricts the quantity of a commodity that can be
brought into the country from foreign providers. The major beneficiary is the domestic
suppliers of the commodity.
,3 generic strategies by Michael Porter? - ANSWER cost leadership, differentiation, and
focus
which framework is for gauging the attractiveness of the competitive environment of an
industry? - ANSWER five forces
what analysis method is for evaluating a macroenvironment? - ANSWER PEST analysis:
political, economic, social, and technological characteristics
What are the five forces? 1-Threat of new competition entering the market, 2- Threat of
substitute goods or services, 3 - Bargaining power of buyers of the industry good or
service,4- Bargaining power of suppliers of the inputs used in the industry, and
5-Intensity of Rivalry
What does SWOT stand for? Answer: Strengths and weaknesses of the entity, and the
opportunities and threats faced by the entity
weighted avg cost of capital how is it calculated? - ANSWER the required rate of return
on each source of capital weighted by the proportion of total capital provided by each
source and then those amounts are summed.debt:30%x(10% 1-30% tax rate)=2.1%CS:
60%x12%= 7.2%PS: 10%x10%= 1%WACC= 10.3%
What is a compensating balance, and how is the effective interest rate calculated? -
ANSWER amount the borrower must keep in a account with a lender the effective int
rate is the cost of borrowing divided by the funds available for use if the interest each
year is 40,000 and the only amount you can actually use is 400,000 then effective rate is
10%.
How is the required rate of return calculated? - ANSWER risk free rate + Beta(expected
rate - risk free rate)
basic approach to capitalize earnings to determine value of business? - ANSWER annual
, earnings / required rate of return.
what is a time series model? - ANSWER models based on extrapolation of past data to
predict a future value
delphi method? - ANSWER form of qualitative forecasting that involves consensus of a
group of experts using a multi-stage process to converge on a forecast.
diff in quantitative & qualitative forecasting? - ANSWER quantitative is objective and rely
on math and calculations. qualitative are subjective and rely on judgement and opinion
What is the profitability index approach? - ANSWER the relative economic ranking of
projects by considering cost & npv of projects
average accounting rate of return? - ANSWER avg annual after tax net income / avg cost
of investment.the avg cost of investment is the beg book value + ending bv then divided
by 2.
formula to calculate a project's profitability index? - ANSWER present value of annual
after tax cash flows / original cash invested in the project
NASDAQ requires that all companies' audit committees be composed solely of: -
ANSWER Independent directors who must also be financially literate
can board of directors amend the articles of incorporation? - ANSWER no, only the
stockholders can do that
buying and selling of commodities for immediate delivery is called: - ANSWER the spot
market. the forward market is for delivery at some time in the future
what is a specialist on the NYSE? - ANSWER a NYSE member who acts as a dealer in a
few securities
