Question 1

Which of the following performance measures would be appropriate for evaluating an investment center, which has responsibility for its revenues, costs, and investment base, but would not be appropriate for evaluating cost, revenue, or profit centers?

Accepted Answer

Residual income is appropriate for evaluating an investment center because it considers the investment base, unlike cost, revenue, or profit centers which do not have responsibility for investments.

Question 2

The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:

Accepted Answer

The percentage of sales method aligns with the matching principle by estimating uncollectible accounts based on a percentage of sales, matching bad debt expense to the period in which the related sales occurred.

Question 3

Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?

Accepted Answer

Allocating costs on a volume basis is a common practice and may not necessarily indicate a problem with the cost accounting system, unlike the other options which highlight significant financial impacts or inaccuracies.

Question 4

Which of the following is a characteristic of just-in-time inventory management systems?

Accepted Answer

Just-in-time inventory management systems rely heavily on high-quality materials to ensure that production processes are not disrupted, as there is minimal inventory on hand to buffer against defects or delays.

Question 5

What must be monitored in order to manage risk of consumer product inventory obsolescence? 1. Inventory balances. 2. Market share forecasts. 3. Sales returns. 4. Sales trends.

Accepted Answer

Monitoring inventory balances helps track the amount of stock on hand, while sales trends provide insights into consumer demand patterns. Both are crucial for managing the risk of inventory obsolescence.

Question 6

Which of the following statements is true regarding the use of public key encryption to secure data while it is being transmitted across a network?

Accepted Answer

In public key encryption, the encryption key is public, allowing anyone to encrypt data, but the decryption key is private, ensuring only the intended recipient can decrypt the data.

Question 7

Which of the following statements is correct regarding corporate compensation systems and related bonuses? 1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control. 2. Compensation systems are not part of an organization's control system and should not be reported as such. 3. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.

Accepted Answer

A bonus system is part of the control environment as it can influence employee behavior and should be considered when evaluating internal controls.

Question 8

Which of the following describes the free trade zone in an e-commerce environment?

Accepted Answer

A free trade zone in an e-commerce environment refers to an area where communication and transactions occur between trusted parties, facilitating seamless and secure exchanges.

Question 9

An organization accomplishes its goal to obtain a 40 percent share of the domestic market, but is unable to get the desired return on investment and output per hour of labor. Based on this information, the organization is most likely focused on which of the following?

Accepted Answer

The answer of An organization accomplishes its goal to obtain...

Question 10

An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?

Accepted Answer

The contribution margin per unit is $12 - $7 = $5. Therefore, the total contribution margin is 100,000 units * $5 = $500,000.

Question 11

All of the following are possible explanations for a significant unfavorable material efficiency variance except:

Accepted Answer

Producing more units than planned would not cause an unfavorable material efficiency variance; it would likely lead to a favorable variance as more units would typically use materials more efficiently.

Question 12

Which of the following is not a method for implementing a new application system?

Accepted Answer

"Test" is not a method for implementing a new application system; it is a phase in the development process.

Question 13

A software that translates hypertext markup language (HTML) documents and allows a user to view a remote web page is called:

Accepted Answer

A web browser is the software that translates HTML documents and allows users to view web pages.

Question 14

The first step in determining product price is:

Accepted Answer

The first step in determining product price is developing pricing objectives, as it sets the foundation for the pricing strategy and aligns with the company's overall goals.

Question 15

In an analysis of alternative credit-management policies, which of the following components will cause the net present value of receivables on credit sales to increase, if everything else remains constant?

Accepted Answer

A tougher collections policy that reduces the bad debt loss ratio will increase the net present value of receivables on credit sales because it will reduce the amount of money that is lost due to bad debts.

Question 16

An organization that sells products to a foreign subsidiary wants to charge a price that will decrease import tariffs. Which of the following is the best course of action for the organization?

Accepted Answer

The answer of An organization that sells products to a...

Question 17

When applied to international economics, the theory of comparative advantage proposes that total worldwide output will be greatest when:

Accepted Answer

The theory of comparative advantage suggests that total worldwide output is maximized when each country specializes in producing goods for which it has the lowest opportunity cost, allowing for more efficient global production and trade.

Question 18

Which of the following borrowing options is an unsecured loan?

Accepted Answer

Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for financing accounts receivable and inventories.

Question 19

The market price is the most appropriate transfer price to be charged by one department to another in the same organization for a service provided when:

Accepted Answer

The market price is appropriate when there is an external market for the service, as it reflects the fair value that could be obtained in an open market transaction.

Question 20

Which of the following control techniques would minimize the risk of interception during transmission in an electronic data interchange system? 1. Encryption. 2. Traffic padding. 3. Edit checks. 4. Structured data format.

Accepted Answer

Encryption and traffic padding are techniques that help protect data during transmission by making it unreadable to unauthorized parties and by disguising the actual data flow, respectively.

Exam 5: Business Analysis and Information Technology