BEC 2015 AICPA Released Question

BEC 2015 AICPA Released Question
2015 AICPA Newly Released Questions- Business
2. CPA-08523
According to COSO, an executive's deliberate misrepresentation to a banker who is considering whether

to make a loan to an enterprise is an example of which of the following internal control limitations?
a.
Costs versus benefits
b.
Management override
c.
Breakdown
d.
Collusion
EDITOR ANSWER SECTION BELOW:

Class to be assigned to: B-1
Topic to be assigned to: Topic 1
Page reference (page #and outline point): 81-17 111.H
ANSWER:
Choice "b" is correct. This example indicates that whatever internal control put in place by the company
was overridden by the executive's deliberate misrepresentation to the banker.
Choice "a" is incorrect. Weighting costs versus benefits is not an internal control limitation under COSO.
Choice "c" is incorrect. Although breakdown of internal control due to errors or human failure is an internal
control limitation, it is not evident in this example.
Choice "d" is incorrect. Although circumventing controls through collusion is an internal control limitation, it
is not part of this example, as only one party is involved in the misrepresentation.
Page 2 of 39
3. CPA-08524
Internal controls are likely to fail for any of the following reasons, except:
a.
They are not designed and implemented properly at the outset.
b.
They are designed and implemented properly as static controls, but the environment in which they
operate changes.
c.
They are designed and implemented properly, but their operation changes in some way.
d.
They are designed and implemented properly, and their design changes as processes change.

Page reference (page #and outline point): 81-16 111.F
ANSWER:
Choice "d" is correct. Internal controls that are designed and implemented properly, including the ability
for their design to adapt as processes change, will have the lowest chance of failure.
Choice "a" is incorrect. Internal controls that are not designed or implemented properly at the outset will
not function , with failure inevitable.
Choice "b" is incorrect. When internal controls are designed and implemented as static controls, any
change in the operating environment will increase the likelihood of their failure.
Choice "c" is incorrect. If internal controls are designed and implemented properly but their operation
changes in some way, there is a greater chance the controls may fail.
Page 3 of 39
4. CPA-08525
Which of the following would indicate that the economy is in an expansionary phase?
a.
Businesses increase capital investment.
b.
The economy's resources are underused.
c.
Potential national income will exceed actual national income.
d.
Building up of inventories is in excess of consumer demand.

Page reference (page #and outline point): 85-4 l.E.1
ANSWER:
Choice "a" is correct. In an expansionary phase, real GDP increases, firms' profits rise, and the demand
for goods and services increases. To capitalize on this rising economic activity, businesses increase their
capital investment and expand the size of their workforce.
Choice "b" is incorrect. During an expansionary phase, firms are likely to increase the size of their
workforce as the demand for goods and services increases and more economic resources are necessary.
Choice "c" is incorrect. An economy that is an expansionary phase will have rising economic activity
(actual real GDP growth) that is above its long-term (potential) growth trend.
Choice "d" is incorrect. The buildup of inventories would most likely occur during a contractionary phase
or trough when the demand for goods and services declines.
Page 4 of 39
5. CPA-08526
The price elasticity of demand for a good is 2.0, and the quantity demanded is 5,000 units. The price
increases by 10 percent. What is the new quantity demanded?
a.
1,000
b.
4,000
c.
4,500
d.
6,000

Page reference (page #and outline point): 85-35 11.A.3
ANSWER:
Choice "b" is correct. The choice is derived from the following calculations:
Price elasticity of demand = % Change in quantity demanded I % Change in price
2.0 (Given)= 20% (Solve) I 10% (Given)
% Change in quantity demanded (20%) = Xunits (new) - 5,000 units (old} I 5,000 units (old}= 4,000
units
We can assume the inverse relationship of price to quantity demanded, such that when price increases,
quantity demanded decreases. As such , a 20 percent change in quantity demanded will be a decrease of
20 percent (from 5,000 units to 4,000 units).
Choice "a" is incorrect. The 1,000 units represent the unit change in quantity demanded to obtain a price
elasticity of demand of 2.0, not the new units of quantity demanded.
Choice "c" is incorrect. Using the 4,500 units as the new quantity demanded results in a price elasticity of
demand of 1.0.
Choice "d" is incorrect. Using the 6,000 units as the new quantity demanded incorrectly assumes that
price and quantity demanded have a positive relationship.
Page 5 of 39
6. CPA-08529
An auto parts store must maintain inventory of a wide variety of parts to satisfy its diverse customer base.
As a result, the store's inventory has a high risk of obsolescence. Which of the following features would
be most desirable to the store's creditors during a financial review of the auto parts store?
a.
A high quick ratio.
b.
A high debt ratio.
c.
A high number of days' sales outstanding in ending trade receivables.
d.
A low inventory turnover ratio.

Class to be assigned to: 83
Page reference (page #and outline point): 83-40 l.B.2
ANSWER:
Choice "a" is correct. A high quick (acid test) ratio is most desirable to the store's creditors because it
indicates the company has more liquid short-term assets on its balance sheet. This is important given that
the store's inventory needs are high in order to satisfy its diverse customer base.
Choice "b" is incorrect. A high debt ratio would not be desirable to the store's creditors, as it indicates that
the company has high financial leverage on its balance sheet.
Choice "c" is incorrect. Having a high days' sales outstanding ratio would not be desirable to the store's
creditors because the trade receivables are deemed to have a long collection period. In contrast, a low
number of days' sales outstanding ratio indicates the company is getting its cash faster from its
customers.
Choice "d" is incorrect. A low inventory turnover ratio is not desirable to the store's creditors because
inventory is staying on the store shelves longer and is taking longer to convert to cash.
Page 6 of 39
7. CPA-08527
In capital budgeting , which of the following items is included in the payback model calculation?
a.
The total amount of the initial outlay for the project.
b.
The present value of the future cash flows of the project.
c.
The present value of the estimated salvage value of the project.
d.
The amount of depreciation over the life of the project.

Page reference (page # and outline point): 8 3-15 111.B
ANSWER:
Choice "a" is correct. The initial cash outlay is included in the numerator of the payback period method
formula. The increase in annual net after-tax cash flows is included in the denominator of the formula ,
which determines how long it will take for the project to pay back the initial cash outlay.
Choice "b" is incorrect. A major disadvantage of the payback period method is that the time value of
money is ignored.
Choice "c" is incorrect. Another disadvantage of the payback period method is that cash flows after the
payback period (e.g., salvage value cash flows) are ignored. This method also does not consider the time
value of money.
Choice "d" is incorrect. The payback period method takes into account net after-tax cash flows (including
depreciation and its related tax shield), but only up until the initial investment is recovered; beyond that
point, depreciation is ignored.
Page 7 of 39
8. CPA-08528
Each of the following will affect a company's return on investment, except:

a.
Raising prices as demand remains unchanged.
b.
Maintaining the company's cost of capital at current levels.
c.
Decreasing expenses.
d.
Decreasing investment in assets.

Page reference (page #and outline point): 83-30 I.A
ANSWER:
Choice "b" is correct. Return on investment is defined as income/investment capital. If a company

maintains the cost of capital at current levels, there will be no effect on either net income or investment
capital, resulting in no change to return on investment.
Choice "a" is incorrect. When a company raises its prices with no effect on sales demand , net income will
increase and return on investment will rise.
Choice "c" is incorrect. If a company reduces its expenses, net income and return on investment will
increase.
Choice "d" is incorrect. Reducing investments in assets (e.g., capital expenditures) will lower the
denominator of the RO I formula and increase the company's return on investment, assuming all other
factors are held constant.
Page 8 of 39
9. CPA-08530
In Year 1, a large domestic manufacturer produces all of its motors domestically and sells them
internationally. The company's management team is in the process of developing its Year 2 budget, and
copper costs represent a significant line item in the budget. In Year 1, the company spent $1,000,000 in
purchasing 250,000 pounds of copper. Economic data indicate that in Year 1 copper costs had a price
index of 120.0, and expectations are that the index will increase to 126.0 in Year 2. Management
anticipates a 5 percent increase in copper usage for Year 2. What amount represents the Year 2 budget
for copper purchases?
a.
$1 ,000,000
b.
$1,050,000
c.
$1 ,102,500
d.
$1,300,000

Page reference (page# and outline point): 85-18 IV.A.3
ANSWER:
Choice "c" is correct. The choice is derived from the following calculations:
=$4 per lb.

Copper Inflation Rate: (1.26 - 1.20) I 1.20 x 100 =5.0%
Year 2 Copper Price: $4 x 1.05 =$4.20
Year 2 Copper Usage: 250,000 lbs. x 1.05 =262,500 lbs.
Year 2 Copper Budget: 262 ,500 lbs. x $4.20 =$1,102,500
Year 1 Copper Price: $1,000,000 I 250,000 lbs.
Choice "a" is incorrect. This represents the Year 1 copper budget assuming no change in Year 2 price or
copper usage.
Choice "b" is incorrect. The $1 ,050,000 budget amount includes the 5 percent increase in price but does
not recognize the change in volume.
Choice "d" is incorrect. This budget amount was inserted as a distracter.
Page 9 of 39
10. CPA-08531
A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The
selling price is $5 per unit and the purchase price is $3 per unit. Budgeted ending inventory is 10 percent
of the next month's sales. What is the budgeted cost of purchases for January?
a.
$54,000
b.
$60,000
c.
$61,500
d.
$75,000

Page reference (page #and outline point): 82-37 VI.A
ANSWER:
Choice "c" is correct. The choice is derived from the following calculation steps.
Step 1: Determine budgeted purchases for January.
20,000 units x $3/unit =$60,000
Step 2: Determine the desired ending inventory at January 31.
(25,000 units
10%)
$3
=$7,500
Step 3: Determine beginning inventory at January 1.

(20,000 x 10%) x $3
=$6,000
Step 4: Calculate the cost of purchases for January.

Budgeted sales purchases + Desired ending inventory - Beginning inventory
$60,000 + $7,500 - $6,000
=$61,500
Choice "a" is incorrect. This budgetary amount does not account for February's 10 percent expected
ending inventory.
Choice "b" is incorrect. This budgetary amount fails to account for the company's beginning and ending
inventory.
Choice "d" is incorrect. This budgetary amount is based on the cost of purchases based on February
budgeted sales, without including the beginning or ending inventory.
Page 10 of 39
11 . CPA-08532
Which of the following classifications of security controls includes smoke detectors, generators, security
guards, and ID badges?
a.
Technical.
b.
Physical.
c.
Administrative.
a.
Logical.

Page reference (page #and outline point): 84-39 11.E
ANSWER:
Choice "b" is correct. The use of smoke detectors, generators, security guards, and ID badges are
examples of physical security controls.
Choice "a" is incorrect. Technical security controls may include user log-in and logical access controls as
well as antivirus software firewalls. The controls referenced in the question are physical security controls.
Choice "c" is incorrect. Administrative security controls may include separation of employee duties,
business continuity planning , and proper hiring practices. The controls referenced in the question are
physical security controls.
Choice "d" is incorrect. Logical controls may consist of software safeguards for an entity's computer
systems identification and software access. The controls referenced in the question are physical security
controls.
Page 11 of 39
12. CPA-08533
In an effort to recognize improvement opportunities, a company is reviewing its in-house systems. The
best reason for the company to consider switching to cloud computing as a solution is that it:
a.
Is the best way to secure sensitive corporate information.
b.
Is accessible only from within the company on its Intranet.
c.
Usually has lower upfront costs for equipment and maintenance.
d.
Provides better program modification options.

Page reference (page #and outline point): 84-49 X.D
ANSWER:
Choice "c" is correct. Cloud computing involves virtual servers available over the Internet. Upfront and
maintenance costs are usually much cheaper than a particular software solution installed in-house. Cloud
computing is a cost-efficient method to use, maintain, and upgrade.
Choice "a" is incorrect. Although cloud computing has a high level of security for customer data, a
disadvantage of cloud computing is that a company's sensitive information has to be given to a third-party
cloud service provider.
Choice "b" is incorrect. Cloud computing is accessible over the Internet, not an Intranet system.
Choice "d" is incorrect. With cloud computing, program modification would depend on the service
provider, which may be less responsive and flexible than in-house resources.
Page 12 of 39
13. CPA-08534
Which of the following types of business planning focuses on how a company can most effectively restore
business operations following a disaster?
a.
Capacity planning.
b.
Budget planning.
c.
Strategy planning.
d.
Continuity planning.

ANSWER:
Choice "d" is correct. Business continuity planning focuses on restoring and continuing operations in the
event a disaster occurs that affects an organization. Disaster recovery and business continuity plans are
used for dealing with the destruction of program and data files as well as how to restore business
processing capability.
Choice "a" is incorrect. Capacity planning pertains to having the necessary physical space or capability
for an entity's production operations. Continuity planning deals with how to restore and maintain
operations after a disaster.
Choice "b" is incorrect. Budgetary planning deals with financial planning (budgets) versus disaster
recovery planning.
Choice "c" is incorrect. Strategic planning is high-level management planning that involves how the entity
will execute its goals for near and longer term periods. Continuity planning deals with how to restore and
maintain operations after a disaster.
Page 13 of 39
14. CPA-08535
Falser Co. increases all of its input factors by 100 percent, resulting in increased output of 90 percent.
Which of the following statements identifies the effect of this change?
a.
Marginal returns rise.
b.
Marginal costs decrease.
c.
Returns to scale increase.
d.
Returns to scale decrease.

Page reference (page #and outline point): 85-40 111.B(C)
ANSWER:
Choice "d" is correct. Returns to scale focus only on the relationship between input and output quantities.
When output increases by less than the proportional change in inputs, the firm is exhibiting decreasing
returns to scale.
Choice "a" is incorrect. Marginal return is the additional output resulting from a one unit increase in the
use of variable inputs (only). Because the input factors are not separated between variable and fixed, the
marginal return cannot be determined.
Choice "b" is incorrect. Marginal costs represent the change in incremental cost associated with a change
in quantity for a given period. Total costs are not provided for this determination.
Choice "c" is incorrect. In order for returns to scale to increase, the output must increase more than the
proportional change in inputs. Because the opposite relationship exists here, the firm is exhibiting
decreasing returns to scale.
Page 14 of 39
15. CPA-08536
A company's standard costs for direct labor are as follows:

Direct Labor
Standard Quantity
Standard Price
1 hour per unit
$15 per hour
Last month, the company produced and sold 100 units of its product, using 110 direct labor hours at a
rate of $16 per hour. What amount is the company's direct labor efficiency variance for last month?
a.
$260
b.
$160
c.
$150
d.
$110

Page reference (page #and outline point): 82-52 11.C.1
ANSWER:
Choice "c" is correct. The direct labor efficiency variance is determined as follows:
DL efficiency variance
=Standard rate x (Actual hours worked =$15 x ( 11 0 - 100)

=$150
Standard hours allowed)
This is considered unfavorable, as it took more hours (110) to produce 100 units of its product than
budgeted (100).
Choice "a" is incorrect. This amount is included as a distracter.
Choice "b" is incorrect. This amount consists of the budgeted hours per output multiplied by the difference
between the standard rate and actual rate.
Choice "d" is incorrect. This amount represents the direct labor rate variance.
Page 15 of 39
16. CPA-08537
Which of the following changes would cause a company's breakeven point in sales to increase?
a.
The company's contribution-margin rate increases.
b.
The company's variable cost per unit decreases.
c.
The company's total fixed costs increases.
d.
The company's selling price per unit increases.

Page reference (page #and outline point): 82-8 l.C.2
ANSWER:
Choice "c" is correct. The breakeven point in units is based on the formula:
Total fixed costs I Contribution margin per unit
To determine the breakeven point in dollar sales, the breakeven point in units is then multiplied by the unit
sales price. As a result, if the company's total fixed costs increase, the breakeven point in units and sales
must also increase.
Choice "a" is incorrect. If a company's contribution margin per unit rate increases, then the breakeven
point in units and sales decreases.
Choice "b" is incorrect. A decline in a company's variable cost per unit results in a per unit increase in the
contribution-margin rate. This will cause the breakeven point in units and sales to decrease.
Choice "d" is incorrect. An increase in the sales price per unit increases a company's per unit contribution
margin , resulting in a decline in the breakeven point in units and sales.
Page 16 of 39
17. CPA-08538
Which of the following costs is deducted from revenues of a manufacturing company in order to
determine gross margin, but not deducted from revenues to determine contribution margin?
a.
Fixed manufacturing.
b.
Variable manufacturing.
c.
Fixed selling and administrative.
d.
Variable selling and administrative.

Page reference (page # and outline point): 82-4 l.B.3
ANSWER:
Choice "a" is correct. Under the absorption approach, all fixed and variable manufacturing overhead is
part of cost of goods sold to determine an entity's gross margin. In contrast, under the contribution
approach, fixed manufacturing overhead is treated as a period cost that is not used to determine an
entity's contribution margin.
Choice "b" is incorrect. Variable manufacturing costs are included in the gross margin and contribution
margin calculations under both the absorption and contribution approaches.
Choice "c" is incorrect. Fixed selling and administrative expenses are excluded from the gross margin and
contribution margin calculations under both the absorption and contribution margin calculations; instead,
they are treated as period costs.
Choice "d" is incorrect. Variable selling and administrative expenses are excluded from the gross margin
calculation under the absorption method gross margin calculation. Variable selling and administrative
expenses are included in the contribution margin calculation as a deduction from revenue.
Page 17 of 39
18. CPA-08539
A company uses a process costing system to record inventory costs. Data at the end of the month are as
follows:
Units
Direct Materials
(%complete)
Conversion Cost
(%complete)
Work-in-process inventory
100
100%
80%
Finished goods inventory
900
100%
100%
The company uses the weighted average method to compute the costs. Its total costs for the month are
$10,000 for direct materials and $19,600 for conversion costs. What is the total conversion cost per
equivalent unit?
a.
b.
c.
d.
$19.60
$20.00
$24.50
$30.00

Page reference (page #and outline point): 81-55 Vll.D.3
ANSWER:
Choice "b" is correct. The choice is derived from the following calculation.
Material (%)
Conversion Cost (%)
Units in process (end of month)
100 (100%)
80 (80%)
Finished goods units
900 {100%)
900 {100%)
1,000
980
$10,000
$19,600
$10
$20
Total units
Costs
Equivalent cost (per unit)
Choice "a" is incorrect. This choice applies 1,000 units and does not account for the 20 percent of
conversion costs that are incomplete.
Choice "c" is incorrect. This choice assumes 800 total units in the calculation by applying 80 percent to all
costs completed for both the work-in-process and finished goods inventory.
Choice "d" is incorrect. This choice includes both the material and conversion equivalent costs per unit.
Page 18 of 39
19. CPA-08540
Last year, a consulting company that solves computer network problems instituted a total quality
management (TQM) program and produced the following summary cost-of-quality report:
Year 1
Prevention costs
Year 2
Change
$ 200,000
$ 300,000
+50%
Appraisal costs
210,000
315,000
+50%
Internal failure costs
190,000
114,000
-40%
1,200,000
621,000
-48%
$1 ,800,000
$1,350,000
-25%
External failure costs

Total quality costs
Which of the following statements regarding the report is most likely correct?
a.
An increase in inspection costs was solely responsible for the decrease in quality costs.
b.
An increase in conformance costs resulted in a decrease in nonconformance costs.
c.
The increase in conformance costs indicated that the TQM program was not working.
d.
In the long run, increased conformance costs would cause total quality costs to increase.

Page reference (page #and outline point): 86-8 V.B
ANSWER:
Choice "b" is correct. Based on the summary cost-of-quality report presented, the increase in
conformance costs (prevention and appraisal costs) resulted in lower nonconformance costs (internal and
external failure costs).
Choice "a" is incorrect. Inspection costs are classified as prevention costs. Because prevention costs
increased by 50 percent in Year 2, this is not the reason total quality costs declined.
Choice "c" is incorrect. The increase in conformance costs may be necessary to ensure conformance with
quality standards, but is not an indicator of the success or failure of an entity's TQM program.
Choice "d" is incorrect. Increased conformance costs should ultimately lead to lower nonconformance
costs as internal and external failures are reduced.
Page 19 of 39
2015 AICPA Business Newly Released MCQs-Difficult (Hard) Rating

20. CPA-08541
According to COSO, the four categories of entity objectives in the enterprise risk management framework
include each of the following, except:
a.
Effective and efficient use of the entity's resources .
b.
Compliance with applicable laws and regulations.
c.
Implementation of internal controls.
d.
Reliability of reporting.

Page reference (page# and outline point): B1-19 IV.B
ANSWER:
Choice "c" is correct. The four categories of ERM entity objectives include strategic, operations, reporting,
and compliance. Implementation of internal controls is not an entity objective in the ERM framework.
Choice "a" is incorrect. Operations include the effective and efficient use of an entity's resources. It is an
enterprise objective in the ERM framework.
Choice "b" is incorrect. An enterprise objective under the ERM framework is to ensure compliance with all
applicable laws and regulations.
Choice "d" is incorrect. The achievement of reliable and consistent reporting is an enterprise objective
under the ERM framework.
Page 20 of 39
21 . CPA-08542
According to COSO, the proper tone at the top helps a company to do each of the following , except:
a.
Create a compliance-supporting culture that is committed to enterprise risk management.
b.
Navigate gray areas where
c.
Adhere to fiscal budgets and goals as outlined by the internal audit committee and board of
directors.
d.
Promote a willingness to seek assistance and report problems before it is too late for corrective
action.
no specific compliance rules or guidelines exist.

Page reference (page # and outline point): 81-1 3 111.D
ANSWER:
Choice "c" is correct. Fiscal budgets and goals are not a factor in setting the "tone at the top" from the
leaders of an organization . It is also unlikely that a company's internal audit committee would have
responsibility for setting such budgets.
Choice "a" is incorrect. The "tone at the top" under COSO adheres to a compliance-supporting culture
that is committed to enterprise risk management.
Choice "b" is incorrect. Under COSO, the "tone at the top" or direction is established by senior
management and the board of directors of a company. Navigating gray areas where no specific
compliance rules or guidelines exist is consistent with the "tone at the top," because the proper tone helps
people to make decisions when they do not have specific guidance.
Choice "d" is incorrect. Accountability and communication are important aspects of the COSO framework
that are established by the "tone at the top" before it is too late for corrective action .
Page 21 of 39
22. CPA-08543
According to COSO, each of the following is an example of an appropriate ongoing monitoring activity,
except:
a.
Follow-up of customer and vendor complaints regarding amounts due and owed .
b.
Periodic analysis of variances between expectations and actual results.
c.
Comparisons of information from various sources within the company.
d.
Approval of high-dollar transactions by supervisors.

Page reference (page# and outline point): 81-14111.D.4
ANSWER:
Choice "d" is correct. Monitoring activities involve ongoing or separate evaluations to determine whether
the components of internal control are present and functioning properly as well as reporting and
correcting deficiencies. The act of approving high-dollar transactions by supervisors is an internal control,
not a monitoring activity under the COSO framework.
Choice "a" is incorrect. Following up on customer and vendor complaints regarding amounts, and
ultimately recommending corrective action , is a monitoring activity under the COSO framework.
Choice "b" is incorrect. Investigating variances and their causes between expected and actual results is a
monitoring activity under the COSO framework.
Choice "c" is incorrect. Comparing information from various sources within the company is a monitoring
activity under the COSO framework.
Page 22 of 39
23. CPA-08544
Which of the following methods may the Federal Reserve use to reduce inflationary pressures?
a.
Decrease reserve requirements.
b.
Increase margin requirements.
c.
Increase the money supply.
d.
Decrease the target interest rate.

Page reference (page #and outline point): 85-25 Vll.C
ANSWER:
Choice "b" is correct. The Federal Reserve can increase margin requirements as a means to decrease
the economy's money supply. This is a viable contractionary monetary policy used by the Federal
Reserve to lower the economy's price level (inflation).
Choice "a" is incorrect. Lowering the required reserve ratio for banks increases the money supply and is
an expansionary monetary policy that will cause the price level to further rise.
Choice "c" is incorrect. Increasing the money supply is not a method but the effect of a given method
used by the Federal Reserve to further stimulate the economy and raise the economy's price level.
Choice "d" is incorrect. An increase in the money supply causes the target interest rate to fall. This is an
expansionary monetary policy that will result in an increase in an economy's price level.
Page 23 of 39
24. CPA-08545
Product demand increases and product supply decreases. Which of the following statements is correct
regarding resulting market changes?
Price
Quantity
a.
Decreases
Increases
b.
Uncertain
Increases
c.
Increases
Decreases
d.
Increases
Uncertain

ANSWER:
Choice "d" is correct. Both an increase in product demand and decrease in product supply will increase
the price. However, the effect on quantity is uncertain , as an increase in product demand will increase
quantity, while a decrease in product supply will decrease quantity.
Choice "a" is incorrect. Both the price and quantity effects are inaccurate, given an increase in product
demand and decrease in product supply.
Choice "b" is incorrect. This choice is the exact opposite when product demand increases and product
supply decreases.
Choice "c" is incorrect. Although the price effect is accurate, the effect on quantity is uncertain, as an
increase in product demand will increase quantity while a decrease in product supply will lower quantity.
Page 24 of 39
25. CPA-08546
An importing partnership has experienced a dramatic surge in its exporting business and is looking for
ways to minimize its risks from foreign currency fluctuations. The partnership's imports and exports to
European Union countries are at similar levels. Which of the following methods most effectively
minimizes risk?
a.
Purchase futures of the currency in which the payables will be paid.
b.
Hold payables and receivables due in the same currency and amount.
c.
Enter into an interest rate swap to mitigate the effects of exchange rate fluctuations.
d.
Conduct all foreign transactions in U.S. dollars.

Page reference (page # and outline point): 86-48 IV.B
ANSWER:
Choice "b" is correct. This strategy can be loosely viewed as currency diversification. Even though there is
a time difference between transaction initiation and settlement, this strategy is (of the choices given) the
most effective way to mitigate foreign currency exposure on import and export transactions.
Choice "a" is incorrect. Purchasing currency futures on payables scheduled for payment helps minimize
currency risk pertaining to imports, but it does not mitigate currency risks pertaining to exports
(receivables).
Choice "c" is incorrect. Entering into interest rate swaps does not mitigate the effects of foreign exchange
rate fluctuations. Instead, the partnership would use currency swaps to minimize the risks associated with
foreign exchange rate fluctuations.
Choice "d" is incorrect. Although requiring that all import and export activity be transacted in U.S. dollars
would eliminate foreign currency fluctuations assuming that the partnership is a U.S.-based entity, it is not
necessarily the most realistic approach to minimizing risk.
Page 25 of 39
26. CPA-08547
A company invests $100,000 in property. The company has a contract to sell it for $120,000 in one year.
The bank has a guaranteed interest rate of 10 percent. What is the net present value of the company's
investment in the property?
a.
$9,091
b.
$10,000
c.
$109,091
d.
$110 ,000

Page reference (page # and outline point): 8 3-7 11.B
ANSWER:
Choice "a" is correct. The NPV of the property investment is determined as follows:
NPV
=-$100,000+$120,000/1. 101
=$9,091
Choice "b" is incorrect. This amount represents the investment multiplied by the interest rate.
Choice "c" is incorrect. This amount is the present value of the expected cash flow from the sale of the
property in one year. It is not the NPV of the investment because it fails to subtract out the initial
investment.
Choice "d" is incorrect. This amount adds the initial investment to the first year's interest, assuming all
funds were borrowed at a rate of 10 percent. It does not account for the first year's present value of
expected cash flows less the initial investment under the NPV approach.
Page 26 of 39
27. CPA-08548
Which of the following terms refers to a performance measurement that is calculated as an investment
center's after-tax operating income minus the product of its total assets multiplied by the company's
weighted average cost of capital (WACC)?
a.
Economic value added.
b.
Return on investment.
c.
Net realizable value.
d.
Profitability index.

Page reference (page #and outline point): 83-36 111.C
ANSWER:
Choice "a" is correct. Economic value added is a firm's (investment center's) net operating profit after
taxes (NOPAT) less its required return (after-tax cost of capital on the investment). NOPAT is calculated
by multiplying EBIT x (1 - Taxes), whereas the required return is determined by multiplying the
investment (total assets) by the cost of capital or WACC.
Choice "b" is incorrect. Return on investment represents a firm's income divided by its investment capital.
Choice "c" is incorrect. Net realizable value is the amount (value) the company expects to receive from an
asset. For example, the net realizable value on accounts receivable is the balance of gross accounts
receivable less the allowance for uncollectible accounts.
Choice "d" is incorrect. The profitability index is the present value of the net future cash inflows divided by
the present value of the net initial investment. A profitability index greater than one is associated with a
positive NPV capital budgeting project.
Page 27 of 39
28. CPA-08549
Which of the following observations regarding the valuation of bonds is correct?

a.
The market value of a discount bond is greater than its face value during a period of rising
interest rates.
b.
When the market rate of return is less than the stated coupon rate, the market value of the bond will
be more than its face value , and the bond will be selling at a premium.
c.
When interest rates rise so that the required rate of return increases, the market value of the bond
will increase.
d.
For a given change in the required return , the shorter its maturity, the greater the change in the
market value of the bond.

Class to be assigned to: 86
Page reference (page # and outline point): 86-60 l.C .5
ANSWER:
Choice "b" is correct. The bond will sell at a premium when the stated coupon rate on the bond is greater
than the market interest rate on the bond at a given date.
Choice "a" is incorrect. The market value of a discount bond is worth less than a par (face) value bond .
Assum ing market interest rates rise (market return increases) and are above the stated coupon rate, the
market value of the discount bond is also lower.
Choice "c" is incorrect. If interest rates rise and the required rate of return increases, the present value of
the bond's cash flows are worth less and the market value of the bond decreases.
Choice "d" is incorrect. When there is change in the required return, longer maturity bonds usually have a
greater change in their market values versus shorter maturity bonds.
Page 28 of 39
29. CPA-08560
An individual holds a 10-year fixed-rate bond as an investment. Three years of its life remain. When the
bond was issued, interest rates were much higher than they are now. Interest rates are expected to be
stable for the next three years. Which of the following statements is correct regarding the bond?
a.
The bond will become more sensitive to changes in interest rates during the next three years.
b.
The bond is currently selling at a discount.
c.
The bond will increase in value during the next three years.
d.
The bond is currently selling at a premium.

Page reference (page # and outline point): 8 3-50 V
ANSWER:
Choice "d" is correct. The facts indicate that when the bond was issued, market interest rates were much
higher than they are today. Although there is no indication of whether the bond was issued at a discount
or premium , it can be inferred that the stated (coupon) rate on the bond is higher than the current market
interest rates. Therefore, the bond would be currently selling at premium as it adjusts to the prevailing
market rate of interest.
Choice "a" is incorrect. There will be a stable interest rate environment over the next three years
indicating the bond prices will also be relatively stable.
Choice "b" is incorrect. The bond would be selling at a discount if the stated rate were below the current
market interest rates. Given the drop in market interest rates, the bond would be selling at a premium.
Choice "c" is incorrect. The interest rate environment is expected to remain stable over the next three
years. Based on these expectations, the bond's market value will remain relatively stable.
Page 29 of 39
30. CPA-08550
What is the relationship between the allowance for doubtful accounts and working capital?
a.
When bad debts expense is recorded for the period, working capital decreases.
b.
When bad debts expense is recorded for the period, cash increases.
c.
When an account is written off against the allowance, working capital decreases.
d.
When an account is written off against the allowance, cash decreases.

Page reference (page # and outline point): 8 3-39 I.A
ANSWER:
Choice "a" is correct. A company that records bad debt expense for a period also recognizes an increase
in the contra-account, allowance for doubtful accounts. When this occurs, the company's net realizable
value on outstanding accounts receivables declines, lowering its current assets. Because working capital
is current assets less current liabilities, the company's working capital decreases for the period.
Choice "b" is incorrect. Recording bad debt expense does not increase cash (current assets), as the
customer is delinquent on its payment to the company.
Choice "c" is incorrect. Because the allowance for doubtful accounts already reduced the net realizable
value on the accounts receivable, the write-off does not affect working capital.
Choice "d" is incorrect. The write-off of accounts receivable against the allowance for doubtful accounts
does not affect the cash account.
Page 30 of 39
31 . CPA-08551
A systems engineer is developing the input routines for a payroll system . Which of the following methods
validates the proper entry of hours worked for each employee?
a.
Check digit.
b.
Sequence check.
c.
Capacity check.
d.
Reasonableness check.

Page reference (page# and outline point): 84-9 111.D.1
ANSWER:
Choice "d" is correct. A reasonableness check is used to verify the data input before acceptance by a
system. For a payroll system , a reasonableness check validates the proper entry of hours worked for
each of the company's employees.
Choice "a" is incorrect. A check digit involves adding numbers or codes (for example, the account
number) to verify the accuracy of the document that is processed or transmitted .
Choice "b" is incorrect. A sequence check involves testing a list of items or records for correct ascending
or descending order.
Choice "c" is incorrect. A capacity check is used to determine if the selected storage (computer) system
has the capability of storing a certain amount of input data.
Page 31 of 39
32. CPA-08552
Passenger 1 and passenger 2 are booking separately on an airline website for the last available seat on a
flight. Passenger 1 presses the enter key a few seconds before passenger 2, thus locking out passenger
2 and obtaining the last seat. This locking is a form of which of the following types of control?
a.
Concurrent update control.
b.
Compensating control.
c.
Data-entry control.
d.
Operational data control.

Page reference (page #and outline point): 84-64 l.C
ANSWER:
Choice "a" is correct. Concurrent update control is a database management system (DMBS) that
addresses conflicts that arise when users simultaneously attempt to access data that occur from the use
of a multi-user system. In the scenario above, the concurrent update control allows passenger 1 to book
the last available ticket on a flight just a few seconds before passenger 2 attempts to also book the same
flight.
Choice "b" is incorrect. A compensating control is a control used by an entity instead of the recommended
control, which provides comparable protection for an information system . The scenario above describes
the use of a concurrent update control.
Choice "c" is incorrect. A data-entry control is a control used to ensure that the users enter the correct
data in a system. The scenario above describes the use of a concurrent update control.
Choice "d" is incorrect. Operational data control represents the control over how the data is executed in a
normal business process. The scenario above describes the use of a concurrent update control.
Page 32 of 39
33. CPA-08553
Cloud computing can best be defined as a model that:

a.
Streamlines business processes onto a well-secured and highly available in-house e-commerce
platform to optimize customers' online experience.
b.
Is designed for rapid application deployment by making several virtual servers run on one physical
host.
c.
Allows users to access network resou rces from remote locations through a virtual private network.
d.
Allows organizations to use the Internet to access and use services and applications that run on
remote third-party technology infrastructure.

Page reference (page # and outline point): 84-49 X. D
ANSWER:
Choice "d" is correct. Cloud computing consists of virtual servers that allow users (including
organizations) access to applications and services over the Internet on a real-time basis. These services
are offered from data centers all over the world , which is consistent with the term "the cloud."
Choice "a" is incorrect. The cloud is not an in-house e-commerce platform , as it consists of virtual servers
available over the Internet.
Choice "b" is incorrect. The cloud does not consist of one physical host; rather, the services and
applications are offered through the Internet from data centers all over the world.
Choice "c" is incorrect. Although users can access services and applications from remote locations
through the Internet, private, public, and hybrid networks may be used.
Page 33 of 39
34. CPA-08554
In a lean accounting environment, a company accepts a special order to make 200 units of a product
each month for the next two months for $130 per unit. The company normally sells the unit for $170 per
unit with variable costs per unit at $80. The company plans to use excess capacity. By what amount
would this special order increase profit?
a.
$16,000
b.
$20,000
c.
$36,000
d.
$52,000

Page reference (page #and outline point): 82-18 II.A
ANSWER:
Choice "b" is correct. The scenario facts indicate the company will use its excess capacity for the special
order. The special order will be profitable as long as the selling price is above the $80 per unit variable
cost. The contribution margin for each special order unit is $50 ($130 - $80). Assuming the company
makes 400 special order units over the next two months, the company will increase its profit by $20,000
($50/unit x 400 units).
Choice "a" is incorrect. This choice represents the $40 difference in regular and special order sales price
multiplied by the 400 special order units. This choice also does not factor in coverage of the variable cost
per unit.
Choice "c" is incorrect. This choice incorrectly uses the normal selling price of $170 and determines a
contribution margin per unit of $90, to derive a special order profit of $36,000.
Choice "d" is incorrect. This choice multiplies the special order selling price of $130 by the 400 additional
special order units to derive an incorrect profit of $52,000. Variable costs also are not factored into this
special order profit calculation .
Page 34 of 39
35. CPA-08555
A company uses a standard costing system . The production budget for Year 1 was based on 200,000
units of output. Each unit requires two standard hours of manufacturing labor for completion. Total
overhead was budgeted at $900,000 for the year, and the budgeted fixed overhead rate was $1 .50 per
direct manufacturing labor hour. Both variable and fixed overheads are allocated to the product based on
direct manufacturing labor hours. The actual data for Year 1 are as follows:
Actual production in units
198,000
Actual direct manufacturing labor hours
425,000
Actual variable overhead
$352,000
Actual fixed overhead
$575,000
What is the amount of unfavorable variable overhead efficiency variance?

a.
$21,750
b.
$33,250
c.
$43,500
d.
$55,000

Page reference (page # and outline point): 82-56 11.D.6.b
ANSWER:
Choice "a" is correct. The choice is derived from the following calculations:
Step 1: Determine the standard variable overhead rate.
Budgeted FOH: 400,000 (budgeted labor hours)
$1.50 (budgeted FOH rate)= $600,000
Budgeted VOH: $900,000 (total budgeted overhead) - $600 ,000 (FOH) = $300,000
Standard VOH rate: $300,000/400,000 labor hours= $0.75/hour
Step 2: Calculate variable overhead efficiency variance .
VOH efficiency variance
= Standard rate x (Actual hours - Standard hours allowed for actual volume)
= $0.75 x (425,000 hours - 396,000* hours)
=$21 ,750
*198,000 units x 2 hour/unit = 396,000 hours
Choices "b", "c", and "d" are incorrect, based on the calculations provided above .
Page 35 of 39
36. CPA-08556
In Year 1, a company's cash is 15 percent of sales, accounts receivable is 10 percent of sales, inventory
is 20 percent of sales, accounts payable is 30 percent of sales, and long-term debt is 5 percent of sales.
The company is preparing its forecasts and anticipates that sales will increase from $50,000 in Year 1 to
$55,000 in Year 2. The company uses the percentage-of-sales method. What amount would be the
required net working capital in Year 2?
a.
($2,750)
b.
$5,500
c.
$7,500
d.
$8,250

Page reference (page # and outline point): 8 3-39 I.A
ANSWER:
Choice "d" is correct. The net working capital amount in Year 2 is derived as follows:
Net working capital
=Current assets -
Current liabilities
Cash $8 ,250 (15%) +Accounts receivable $5 ,500 (10%) +Inventory $1 1,000 (20%)-Accounts payable
$16,500 (30%) =$8,250
Note: The candidate should recognize the individual current asset and current liability weights, as a
percentage of sales. It could then be observed that the net working capital amount can be derived by
multiplying the cash percentage (15%) to the Year 2 net sales of $55,000, as the other current assets and
current liability weights cancel each other out.
Choice "a" is incorrect. This choice uses the Year 2 long-term debt amount (only) as the net working
capital amount without applying the formula above.
Choice "b" is incorrect. This choice subtracts long-term as a liability in the net working capital calculation.
Because long-term debt is not a current liability, it should be excluded.
Choice "c" is incorrect. This represents the Year 1 net working capital.
Page 36 of 39
37. CPA-08557
At the start of its fiscal year, a company anticipated producing 300,000 units throughout the year. The
annual budgeted manufacturing overhead was $150,000 for variable costs and $600,000 for fixed costs.
In April, when there was a beginning inventory for finished goods of 5,000 units, the company showed an
income of $40,000 using absorption costing. That same month, ending inventory for finished goods was
7,000 units. What amount would the company recognize as income for April using variable costing?
a.
$35,000
b.
$36,000
c.
$44,000
d.
$45,000

Page reference (page #and outline point): 82-6 1.8.4
ANSWER:
Choice "b" is correct. The choice is derived from the following calculations:
Determine COGS in units: 5,000 (Bl)+ 25,000 (Units produced in April: 300,000/12)- 7,000 (El)= 23,000
units
Facts: 25,000 units produced , 23,000 units sold , $50,000 April fixed overhead ($600,000/12)
Step 1: Compute fixed cost per unit: $50,000/25,000 units = $2/unit
Step 2: Compute change in income: (25,000 - 23,000 units) x $2 = $4,000
Step 3A: Apply rule: Increase in inventory means absorption net income > variable net income
Step 3B: Calculate variable costing income: $40,000 - $4,000 = $36,000
Choices "a" and "d" are incorrect as a result of errors in the computational steps above.
Choice "c" is incorrect. This choice would be accurate if there were a decrease in inventory.
Page 37 of 39
38. CPA-08558
Colter Corp. is conducting an analysis of a potential capital investment. The project is expected to
increase sales by $100,000 and reduce costs by $50,000 annually. Depreciation expense is $30,000 per
year. Colter's marginal tax rate is 40 percent. What is the annual operating cash flow for the project?
a.
$42,000
b.
$72,000
c.
$90,000
d.
$102 ,000

Page reference (page #and outline point): 83-5 l.C.2
ANSWER:
Choice "d" is correct. The choice is derived from the following calculation:
Annual OCF
=Pretax cash flow
=$150,000 x (1 =$102,000
(1 - Tax rate)+ (Depreciation
Tax rate)
0.40) + ($30,000 x 0.40)
Choice "a" is incorrect. This choice only uses the $50,000 costs reduction and ignores the increase in
sales when determining pretax cash flows in the formula above.
Choice "b" is incorrect. This choice represents the expected net income from the project.
Choice "c" is incorrect. This choice does not add back the interest tax shield of $12,000 when calculating
the annual operating cash flow.
Page 38 of 39
39. CPA-08559
A company is conducting a risk analysis on a project. One task has a risk probability estimated to be 0. 15.
The task has a budget of $35,000. If the risk occurs, it will cost $6,000 to correct the problem caused by
the risk event. What is the expected monetary value of the risk event?
a.
$900
b.
$4,350
c.
$5,250
d.
$6,150

Page reference (page # and outline point): 86-21 Ill.A
ANSWER:
Choice "a" is correct. The risk event has an estimated 15 percent of occurring and an 85 percent chance
of not occurring. To derive the expected monetary value of the $6,000 risk event, the following
calculation is made: 15% x $6,000 + 85% x $0 =$900.
Choice "b" is incorrect. This choice incorrectly applies the risk probability of 15 percent to the budget of
$35,000 less the $6,000 cost to correct the problem.
Choice "c" is incorrect. This choice incorrectly applies the risk probability of 15 percent to the budget of
$35,000, as opposed to the $6,000 cost to correct the problem .
Choice "d" is incorrect. This choice incorrectly applies the risk probability of 15 percent to the budget of
$35,000 plus the $6,000 cost to correct the problem.
Page 39 of 39
BEC
The human resource manager at Revive Co. is considering allowing more employees to work from home
for one or two days a week. Some of t he department managers are eagerly encouraging t he idea.
Write a memo to the department manager explaining t he advantages and disadvant ages of
telecommuting.
Type your communication in the response area below the horizontal line using the word processor
provided.
REMINDER: Your response will be graded for both technical content and writing skills. Technical
content will be evaluated for information that is helpful to the intended reader and clearly relevant to
the issue. Writing skills will be evaluated for development, organization, and the appropriate
expression of ideas in professional correspondence. Use a standard business memo or letter format
with a clear beginning, middle, and end. Do not convey information in the form of a table, bullet
point list, or other abbreviated presentation.
To: Department managers

Re: Advantages and disadvantages of t elecommuting
To:
Department managers
Re:
Advantages and disadvantages of telecommuting
I sincerely appreciate everyone's interest in offering telecommuting options to our

employees. Your flexibility in allowing us to innovate with employee work schedules
provides new dimensions to our recruitment and retention efforts.
As we seriously consider this alternative to work scheduling, though, we will all need to
be fully aware of the advantages and disadvantages of telecommuting. A quick review
of both sides of this issue show a downside that logically follows the upside.
To be positive, the direct advantages to our employees and indirect benefits to us are
impressive. Our telecommuting employees have the potential of being a far more
rested and productive workforce. Elimination of the fatigue that comes with an actual
commute and the flexibility for employees to achieve needed work-life balance, which
logically includes more time for exercise and family, affords direct benefits to our
employees and strong indirect benefits to us.
But we all need to be very aware of the negatives that produce direct disadvantages to
us and erode employee advantages. The distractions of a home environment, which
might include interruptions from family members, may dilute the increases in
productivity that we hope to see. Only the most focused and disciplined of our
employees can work a telecommuting program to our mutual benefit. Our least
disciplined employees may be either unproductive or constantly plugged in and fatigued
as boundaries between work and home become blurred. Team members who
telecommute also run the risk of alienation from the regular work force as perceived or
real barriers to promotion, advancement, and team participation materialize.
There is definitely much good to say about a telecommuting option that can be offered
to current and future employees, but there are negatives to consider. I look forward to
meeting each of you individually and collectively to discuss the manner in which we
might implement and control telecommuting options for our workforce.
The owner of a new business is consulting with you about the financial records the business will need to
ma inta in . Specifically, the owner wants t o know about balance sheets and income statements.
Describe these two financial statement s and compare them. Note timing, components of each, and
some of the ways in which the owner will be able to use the statements.
Type your communication in the response area below the horizontal line using the word processor
provided.
REMINDER: Your response will be graded for both technical content and writing skills. Technical
content will be evaluated for information that is helpful to the intended reader and clearly relevant to
the issue. Writing skills will be evaluated for development, organization, and the appropriate
expression of ideas in professional correspondence. Use a standard business memo or letter format
with a clear beginning, middle, and end. Do not convey information in the form of a table, bullet
point list, or other abbreviated presentation.
To: Owner
Re: Financial statements- purpose and use of
To:
Owners
Re:
Financial statements-purpose and use of
We are delighted to assist you in the development of the records and reports you will
need to successfully monitor the financial performance of your business. Ultimately,
you will find that your records will mirror the data requirements of your reports.
We will recommend that you collect transaction data in specific journals that accumulate
groups of activities such as sales, cash receipts, cash disbursements, and purchases.
Summarized activity in these journals will be posted to ledgers that in turn will be used
to accumulate account balances as of a particular time or for a period . Accounts that
represent a point in time are often referred to as "real accounts" because they exist in
perpetuity, while accounts that purely capture data for a period of time are referred to as
"nominal accounts" because they are dissolved at the end of the reporting period and
closed to an equity account (a real account).
Real accounts are used to produce a balance sheet that displays your financial position
as of a point in time (such as year-end). The balance sheet comprises assets, liabilities,
and equity; it shows that your assets are equal to the liabilities used to finance them and
your equity or the extent to which you own your assets. The balance sheet reports your
net worth at a point in time and is used to evaluate both short-term liquidity (the ability to
pay obligations as they come due) and long-term solvency (the long term sustainability
of your operations).
Nominal accounts are used to produce an income statement that displays your results
of operations for a period of time (such as a year, quarter, or month). The income
statement displays sales and related expenses, including the cost of inventory sold and
administrative expenses. Owner draws or dividends are not part of the income
statement, although any salary you might pay yourself would be included here. The
income statement allows you to measure your profitability and predict your potential
future cash flows.
The balance sheet and income statement are very useful in combination and allow you
to evaluate the efficiency and effectiveness of operations and return on investment.
I would be very happy to meet with you at your convenience to discuss to the details of
account organization (chart of account numbering, etc.), possible financial statement
formatting that best meets your needs, and the techniques used to interpret and
evaluate reported amounts.

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BEC 2015 AICPA Released Question

2015 AICPA Newly Released Questions- Business

According to COSO, an executive's deliberate misrepresentation to a banker who is considering whether

Costs versus benefits

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

They are not designed and implemented properly at the outset.

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

Businesses increase capital investment.

The economy's resources are underused.

Potential national income will exceed actual national income.

Building up of inventories is in excess of consumer demand.

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

A high quick ratio.

A high debt ratio.

A high number of days' sales outstanding in ending trade receivables.

A low inventory turnover ratio.

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

The total amount of the initial outlay for the project.

The present value of the future cash flows of the project.

The present value of the estimated salvage value of the project.

The amount of depreciation over the life of the project.

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

Each of the following will affect a company's return on investment, except:

Raising prices as demand remains unchanged.

Maintaining the company's cost of capital at current levels.

Decreasing investment in assets.

EDITOR ANSWER SECTION BELOW:

Choice "b" is correct. Return on investment is defined as income/investment capital. If a company

2015 AICPA Newly Released Questions- Business

EDITOR ANSWER SECTION BELOW:

=$4 per lb.

2015 AICPA Newly Released Questions- Business

EDITOR ANSWER SECTION BELOW:

Step 3: Determine beginning inventory at January 1.

Step 4: Calculate the cost of purchases for January.

2015 AICPA Newly Released Questions- Business

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

Is the best way to secure sensitive corporate information.

Is accessible only from within the company on its Intranet.

Usually has lower upfront costs for equipment and maintenance.

Provides better program modification options.

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

Marginal returns rise.

Marginal costs decrease.

Returns to scale increase.

Returns to scale decrease.

EDITOR ANSWER SECTION BELOW:

2015 AICPA Newly Released Questions- Business

A company's standard costs for direct labor are as follows:

1 hour per unit

$15 per hour

EDITOR ANSWER SECTION BELOW:

=Standard rate x (Actual hours worked =$15 x ( 11 0 - 100)