Business 1: Multiple Choice

  1. Which component of ERM addresses an entity's reporting deficiencies?
  2. According to SOX, codifications of ethical standards should include provisions for:
    Prompt internal reporting of code provisions and accountability for adherence to the code.
  3. SOX requires that all of the following adhere to a code of ethics, except:
    The CEO
  4. Listing risks is a technique for risk assessment known as a(n):
    Event Inventory
  5. What is inherent risk?
    Inherent risk-risk to an entity in absence of actions of management
  6. What is residual risk?
    The risk that remains after management responds to the risk.
  7. Control activities are most closely related to:

    A. Risk Responses
  8. The criteria for evaluating the effectiveness of enterprise risk management are:
    The components of the internal control integrated framework
  9. What statement describes nonfinancial measures of a process?
    They are best viewed as attention directors.
  10. The sales price at point of sale, reduced by cost to complete after split-off, is assumed to be equal to the:
    Relative sales value at split-off
  11. What is the focus of managerial accounting?
    The needs of the organization's internal parties.
  12. In an activity-based costing system, cost reduction is accomplished by identifying and eliminating:
    Nonvalue-adding activities
  13. In a traditional job order cost system, the issue of indirect materials to a production department increases:
    Factory overhead control
  14. Cost drivers are:
    Activities that cause costs to increase as the activity increases.
  15. What is a cost that bears an observable and known relationship to a quantifiable activity base?
    Engineered cost
  16. An operation costing system is the same as a process costing system except:
    Materials are allocated on the basis of batches of production.
  17. Costs are allocated to cost objectives in many ways and for many reasons. What is one purpose of cost allocation?
    Measuring income and assets for external reporting.
  18. The appropriate method for the disposition of underapplied or overapplied factory overhead:
    Depends on the significance of the amount

    • Insignificant-Goes only to COGS
    • Significant-Apportioned to COGS and FG Inventory
  19. In allocating factory service department cost to producing departments, which one of the following items would most likely be used as an activity base?

    C. Units of electrical power consumed

    Good indication of producing departments' demand on the service department
  20. Steps to implement activity based costing for a company who currently uses a traditional cost system include:
    I. Evaluation of existing system to assess how well the system supports the objective of an activity-based cost system.

    II. Identification of the activities for which cost information is needed with differentiation between value adding and non-value adding activities.
  21. A CPA would recommend implementing an activity-based costing system under which of the following circumstances?
    The client produced products that heterogenerously consume resources.
  22. Companies that adopt a JIT purchasing system often experience:
    A reduction in the number of suppliers.
  23. What are some typical characteristics of a JIT production environment?
    • Lot sizes equal to one
    • Insignificant set-up times and costs
    • Balanced and level workloads
    • Controlled by a "pull" approach
  24. The benefits of a JIT system for raw materials usually include:
    Elimination of nonvalue adding operations
  25. All of the following would generally be included in a cost of quality report, except:
    Lost contribution margin
  26. In an activity-based costing system, cost reduction is accomplished by identifying and eliminating:
    Nonvalue-adding activities
Card Set
Business 1: Multiple Choice
Difficult multiple choice questions...