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2009 Aicpa Newly Released Question – Business

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2009 AICPA Newly Released Questions – Business Following are multiple choice questions recently released by the AICPA. These questions were released by the AICPA with letter answers only. Our editorial board is currently working on providing detailed explanations for these questions, so please check back to the Becker Knowledgebase soon for the updated file. Please note that the AICPA generally releases questions that it does NOT intend to use again. These questions and content may or may not be representative of questions you may see on any upcoming exams.

1 009 AICPA Newly Released Questions – Business 1. CPAA company’s target gross margin is 40% of the selling price of a product that costs $89 per unit. The product’s selling price should be: a. b. c. d. $124. 60 $142. 40 $148. 33 $222. 50 Explanation Choice “c” is correct. 2 2009 AICPA Newly Released Questions – Business 2. CPAWren Co. manufactures and sells two products with selling prices and variable costs as follows: A $18. 00 12. 00 B $22. 00 14. 00 Selling price Variable costs Wren’s total annual fixed costs are $38,400. Wren sells four units of A for every unit of B.

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If operating income last year was $28,800, what was the number of units Wren sold? a. b. c. d. 5,486 6,000 9,600 10,500 Explanation Choice “d” is correct. 3 2009 AICPA Newly Released Questions – Business 3. CPAWhich form of business entity has the following attributes? I. Limited liability for all its owners. II. Can permit all its owners to participate in management and control of the entity. III. Absent an agreement to the contrary, is dissolved on the death, withdrawal, or bankruptcy of an owner. a. b. c. d. A limited partnership. A limited liability company. A general partnership. A corporation.

Explanation Choice “b” is correct. 4 2009 AICPA Newly Released Questions – Business 4. CPAJoint ventures are most similar to which of the following types of business organizations? a. b. c. d. Limited partnerships. General partnerships. Business trusts. Subchapter S corporations. Explanation Choice “b” is correct. 5 2009 AICPA Newly Released Questions – Business 5. CPAWhich of the following statements best states the purpose of cumulative voting? a. b. c. d. To assure the continuance of incumbent directors. To allow minority shareholders to gain representation on the board of directors.

To allow for the election of one-third of the board of directors each year. To assure that a majority of shares voted elects the entire board of directors. Explanation Choice “b” is correct. 6 2009 AICPA Newly Released Questions – Business 6. CPAWhich of the following forms of business generally provides all owners with limited liability while avoiding federal taxation of income at the entity level? a. b. c. d. Subchapter C corporation. Subchapter S corporation. Partnership. Limited partnership. Explanation Choice “b” is correct. 7 2009 AICPA Newly Released Questions – Business . CPAUnder the Revised Model Business Corporation Act, which of the following dividends is not defined as a distribution? a. b. c. d. Cash dividends. Property dividends. Liquidating dividends. Stock dividends. Explanation Choice “d” is correct. 8 2009 AICPA Newly Released Questions – Business 8. CPAWhich of the following rates is most commonly compared to the internal rate of return to evaluate whether to make an investment? a. b. c. d. Short-term rate on U. S. Treasury bonds. Prime rate of interest. Weighted-average cost of capital. Long-term rate on U. S. Treasury bonds.

Explanation Choice “c” is correct. 9 2009 AICPA Newly Released Questions – Business 9. CPAWhat is the most likely effect if a court pierces the corporate veil? a. b. c. d. The corporation’s shareholders, officers, and directors can be assigned liability. The corporation can be held liable for acts of the directors. The corporation can lose its tax exempt status. The corporation can be held liable for acts of nonofficer employees of the corporation. Explanation Choice “a” is correct. 10 2009 AICPA Newly Released Questions – Business 10. CPAEaton is the sole owner of a construction company.

Eaton is concerned about personal liability. Which of the following entities will best allow Eaton to limit personal liability? a. b. c. d. Sole proprietorship. C corporation. General partnership. Limited partnership. Explanation Choice “b” is correct. 11 2009 AICPA Newly Released Questions – Business 11. CPAWhich of the following costs would decrease if production levels were increased within the relevant range? a. b. c. d. Total fixed costs. Variable costs per unit. Total variable costs. Fixed costs per unit. Explanation Choice “d” is correct. 12 2009 AICPA Newly Released Questions – Business 2. CPAWhich of the following assumptions is associated with the economic order quantity formula? a. b. c. d. The carrying cost per unit will vary with quantity ordered. The cost of placing an order will vary with quantity ordered. Periodic demand is known. The purchase cost per unit will vary based on quantity discounts. Explanation Choice “c” is correct. 13 2009 AICPA Newly Released Questions – Business 13. CPAWhich of the following statements about investment decision models is true? a. The discounted payback rate takes into account cash flows for all periods. b.

The payback rule ignores all cash flows after the end of the payback period. c. The net present value model says to accept investment opportunities when their rates of return exceed the company’s incremental borrowing rate. d. The internal rate of return rule is to accept the investment if the opportunity cost of capital is greater than the internal rate of return. Explanation Choice “b” is correct. 14 2009 AICPA Newly Released Questions – Business 14. CPAWhich of the following Federal Reserve policies would increase money supply? a. b. c. d. Change the multiplier effect. Increase reserve requirements.

Reduce the discount rate. Sell more U. S. Treasury bonds. Explanation Choice “c” is correct. 15 2009 AICPA Newly Released Questions – Business 15. CPAWhich of the following tasks would be included in a document flowchart for processing cash receipts? a. b. c. d. Compare control and remittance totals. Record returns and allowances. Authorize and generate an invoice. Authorize and generate a voucher. Explanation Choice “a” is correct. 16 2009 AICPA Newly Released Questions – Business 16. CPAThe performance audit report of an information technology department indicated that the department lacked a disaster recovery plan.

Which of the following steps should management take first to correct this condition? a. b. c. d. Bulletproof the information security architecture. Designate a hot site. Designate a cold site. Prepare a statement of responsibilities for tasks included in a disaster recovery plan. Explanation Choice “d” is correct. 17 2009 AICPA Newly Released Questions – Business 17. CPAThe regression analysis results for ABC Co. is shown as y = 90x + 45. The standard error (Sb) is 30 and coefficient of determination (r2) is 0. 81. The budget calls for production of 100 units. What is ABC’s estimate of total costs? a. b. c. d. 3,090 $4,590 $9,030 $9,045 Explanation Choice “d” is correct. 18 2009 AICPA Newly Released Questions – Business 18. CPAAn information technology director collected the names and locations of key vendors, current hardware configuration, names of team members, and an alternative processing location. What is the director most likely preparing? a. b. c. d. Data restoration plan. Disaster recovery plan. System security policy. System hardware policy. Explanation Choice “b” is correct. 19 2009 AICPA Newly Released Questions – Business 19. CPAA company currently has 1,000 shares of common stock outstanding with zero debt.

It has the choice of raising an additional $100,000 by issuing 9% long-term debt, or issuing 500 shares of common stock. The company has a 40% tax rate. What level of earnings before interest and taxes (EBIT) would result in the same earnings per share (EPS) for the two financing options? a. b. c. d. An EBIT of $27,000 would result in EPS of $10. 80 for both. An EBIT of $27,000 would result in EPS of $7. 20 for both. An EBIT of -$18,000 would result in EPS of ($7. 20) for both. An EBIT of -$10,800 would result in EPS of ($7. 92) for both. Explanation Choice “a” is correct. 20 2009 AICPA Newly Released Questions – Business 0. CPAWhat does the consumer price index measure? a. b. c. d. Cost of capital. Average household income. Rate of inflation. Prime rate of interest. Explanation Choice “c” is correct. 21 2009 AICPA Newly Released Questions – Business 21. CPAPlatinum Co. has a receivable due in 30 days for 30,000 euros. The treasurer is concerned that the value of the euro relative to the dollar will drop before the payment is received. What should Platinum do to reduce this risk? a. b. c. d. Buy 30,000 euros now. Enter into an interest rate swap contract for 30 days. Enter into a forward contract to sell 30,000 euros in 30 days.

Platinum cannot effectively reduce this risk. Explanation Choice “c” is correct. 22 2009 AICPA Newly Released Questions – Business 22. CPAWhich of the following best defines electronic data interchange (EDI) transactions? a. b. c. d. Electronic business information is exchanged between two or more businesses. Customers’ funds-related transactions are electronically transmitted and processed. Entered sales data are electronically transmitted via a centralized network to a central processor. Products sold on central web servers can be accessed by users any time. Explanation Choice “a” is correct. 3 2009 AICPA Newly Released Questions – Business 23. CPAWhich of the following entities does not require the approval of the state in which the entity is formed? a. b. c. d. A general partnership. A limited liability partnership. A limited liability company. A corporation. Explanation Choice “a” is correct. 24 2009 AICPA Newly Released Questions – Business 24. CPAFreely fluctuating exchange rates perform which of the following functions? a. b. c. d. They automatically correct a lack of equilibrium in the balance of payments. They make imports cheaper and exports more expensive.

They impose constraints on the domestic economy. They eliminate the need for foreign currency hedging. Explanation Choice “a” is correct. 25 2009 AICPA Newly Released Questions – Business 25. CPAWhich of the following characteristics would indicate that an item sold would have a high price elasticity of demand? a. b. c. d. The item has many similar substitutes. The cost of the item is low compared to the total budget of the purchasers. The item is considered a necessity. Changes in the price of the item are regulated by governmental agency. Explanation Choice “a” is correct. 26 009 AICPA Newly Released Questions – Business 26. CPAA company has an outstanding one-year bank loan of $500,000 at a stated interest rate of 8%. The company is required to maintain a 20% compensating balance in its checking account. The company would maintain a zero balance in this account if the requirement did not exist. What is the effective interest rate of the loan? a. b. c. d. 8% 10% 20% 28% Explanation Choice “b” is correct. 27 2009 AICPA Newly Released Questions – Business 27. CPAWhich of the following is a primary function of a database management system? a. b. c. d. Report customization.

Capability to create and modify the database. Financial transactions input. Database access authorizations. Explanation Choice “b” is correct. 28 2009 AICPA Newly Released Questions – Business 28. CPAWhich of the following types of bonds is most likely to maintain a constant market value? a. b. c. d. Zero-coupon. Floating-rate. Callable. Convertible. Explanation Choice “b” is correct. 29 2009 AICPA Newly Released Questions – Business 29. CPATo maintain effective segregation of duties within the information technology function, an application programmer should have which of the following responsibilities? . b. c. d. Modify and adapt operating system software. Correct detected data entry errors for the cash disbursement system. Code approved changes to a payroll program. Maintain custody of the billing program code and its documentation. Explanation Choice “c” is correct. 30 2009 AICPA Newly Released Questions – Business 30. CPAWhich of the following limitations is common to the calculations of payback period, discounted cash flow, internal rate of return, and net present value? a. b. c. d. They do not consider the time value of money. They require multiple trial and error calculations.

They require knowledge of a company’s cost of capital. They rely on the forecasting of future data. Explanation Choice “d” is correct. 31 2009 AICPA Newly Released Questions – Business 31. CPAA company with a combined federal and state tax rate of 30% has the following capital structure: Weight 40% 50% 10% Instrument Bonds Common stock Preferred stock Cost of capital 10% 10% 20% What is the weighted-average after-tax cost of capital for this company? a. b. c. d. 3. 3% 7. 7% 8. 2% 9. 8% Explanation Choice “d” is correct. 32 2009 AICPA Newly Released Questions – Business 2. CPAWhich of the following terms best describes a payroll system? a. b. c. d. Data base management system (DBMS). Transaction processing system (TPS). Decision support system (DSS). Enterprise resource planning (ERP) system. Explanation Choice “b” is correct. 33 2009 AICPA Newly Released Questions – Business 33. CPATo measure inventory management performance, a company monitors its inventory turnover ratio. Listed below are selected data from the company’s accounting records: Current year $2,525,000 40% Prior year $2,125,000 35% Annual sales Gross profit percent

Beginning finished goods inventory for the current year was 15% of the prior-year’s annual sales, and ending finished goods inventory was 22% of the current-year’s annual sales. What was the company’s inventory turnover at the end of the current period? a. b. c. d. 1. 82 2. 31 2. 73 3. 47 Explanation Choice “d” is correct. 34 2009 AICPA Newly Released Questions – Business 34. CPAIn a large multinational organization, which of the following job responsibilities should be assigned to the network administrator? a. b. c. d. Managing remote access. Developing application programs.

Reviewing security policy. Installing operating system upgrades. Explanation Choice “a” is correct. 35 2009 AICPA Newly Released Questions – Business 35. CPAAn employee mistakenly enters April 31 in the date field. Which of the following programmed edit checks offers the best solution for detecting this error? a. b. c. d. Online prompting. Mathematical accuracy. Preformatted screen. Reasonableness. Explanation Choice “d” is correct. 36 2009 AICPA Newly Released Questions – Business 36. CPAA ceramics manufacturer sold cups last year for $7. 50 each. Variable costs of manufacturing were $2. 25 per unit.

The company needed to sell 20,000 cups to break even. Net income was $5,040. This year, the company expects the price per cup to be $9. 00; variable manufacturing costs to increase 33. 3%; and fixed costs to increase 10%. How many cups (rounded) does the company need to sell this year to break even? a. b. c. d. 17,111 17,500 19,250 25,667 Explanation Choice “c” is correct. 37 2009 AICPA Newly Released Questions – Business 37. CPAA company has the following financial information: Source of capital Long-term debt Preferred stock Common stock Proportion of capital structure 60% 20% 20% Cost of capital 7. 1% 10. % 14. 2% To maximize shareholder wealth, the company should accept projects with returns greater than what percent? a. b. c. d. 7. 1% 9. 2% 10. 6% 14. 2% Explanation Choice “b” is correct. 38 2009 AICPA Newly Released Questions – Business 38. CPATwo individuals are planning to form a business with equal ownership. The individuals would like to limit their personal liability, avoid double taxation, and be active in the business. Which of the following organizational structures would meet their requirements? a. b. c. d. C corporation. Limited liability company. Limited partnership. General partnership.

Explanation Choice “b” is correct. 39 2009 AICPA Newly Released Questions – Business 39. CPAA company has the following information in its financial records: Beginning balance $ 3,900 3,800 14,600 $ 22,300 $103,200 20,430 $ 82,770 Ending balance $ 3,000 4,400 12,900 $20,300 Cash Marketable securities Accounts receivable Total current assets Net sales Expenses Net income What is the company’s receivable turnover ratio? a. b. c. d. 6. 0 7. 1 7. 5 8. 0 Explanation Choice “c” is correct. 40 2009 AICPA Newly Released Questions – Business 40. CPAA controller is developing a disaster recovery plan for a corporation’s computer systems.

In the event of a disaster that makes the company’s facilities unusable, the controller has arranged for the use of an alternate location and the delivery of duplicate computer hardware to this alternate location. Which of the following recovery plans would best describe this arrangement? a. b. c. d. Hot site. Cold site. Back-up site procedures. Hot spare site agreement. Explanation Choice “b” is correct. 41 2009 AICPA Newly Released Questions – Business 41. CPAControls in the information technology area are classified into the preventive, detective, and corrective categories.

Which of the following is a preventive control? a. b. c. d. Contingency planning. Hash total. Echo check. Access control software. Explanation Choice “d” is correct. 42 2009 AICPA Newly Released Questions – Business 42. CPAWhich of the following topics is the focus of managerial accounting? a. b. c. d. Financial statements and other financial reports. Historical cost principles. The needs of creditors. The needs of the organization’s internal parties. Explanation Choice “d” is correct. 43 2009 AICPA Newly Released Questions – Business 43. CPAWhich of the following statements is true regarding opportunity cost? a. b. . d. Opportunity cost is recorded in the accounts of an organization that has a full costing system. The potential benefit is not sacrificed when selecting an alternative. Idle space that has no alternative use has an opportunity cost of zero. Opportunity cost is representative of actual dollar outlay. Explanation Choice “c” is correct. 44 2009 AICPA Newly Released Questions – Business 44. CPAMerry Co. has two major categories of factory overhead: material handling and quality control. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection $120,000 200,000

The plant currently applies overhead based on direct labor hours. The estimated direct labor hours are 80,000 per year. The plant manager is asked to submit a bid and assembles the following data on a proposed job: Direct materials Direct labor (2,000 hours) $4,000 6,000 What amount is the estimated product cost on the proposed job? a. b. c. d. $8,000 $10,000 $14,000 $18,000 Explanation Choice “d” is correct. 45 2009 AICPA Newly Released Questions – Business 45. CPAUnder the Revised Uniform Limited Partnership Act, which of the following statements is correct regarding limited partnerships? a. b. . d. Limited partners may lose limited liability if they participate in management activities. Limited partnerships may legally exist without filing a certificate of limited partnership. Limited partners have the same rights, responsibilities, and authority as general partners. Limited partners may contribute cash only and may not contribute services as their capital contributions. Explanation Choice “a” is correct. 46 2009 AICPA Newly Released Questions – Business 46. CPAWhich of the following is not a basic approach to allocating costs for costing inventory in joint-cost situations? a. b. c. d.

Sales value at split-off. Flexible budget amounts. Physical measures such as weights or volume. Constant gross margin percentage net realizable value method. Explanation Choice “b” is correct. 47 2009 AICPA Newly Released Questions – Business 47. CPAA company has two divisions. Division A has operating income of $500 and total assets of $1,000. Division B has operating income of $400 and total assets of $1,600. The required rate of return for the company is 10%. Division B’s residual income would be which of the following amounts? a. b. c. d. $40 $240 $400 $640 Explanation Choice “b” is correct. 8 2009 AICPA Newly Released Questions – Business 48. CPAThe management of a company would do which of the following to compare and contrast its financial information to published information reflecting optimal amounts? a. b. c. d. Budget. Forecast. Benchmark. Utilize best practices. Explanation Choice “c” is correct. 49 2009 AICPA Newly Released Questions – Business 49. CPAWeighted average and first in, first out (FIFO) equivalent units would be the same in a period when which of the following occurs? a. b. c. d. No beginning inventory exists. No ending inventory exists.

Beginning inventory units equal ending inventory units. Both a beginning and an ending inventory exist but are not necessarily equal. Explanation Choice “a” is correct. 50 2009 AICPA Newly Released Questions – Business 50. CPABacchus, Inc. is a large multinational corporation with various business units around the world. After a fire destroyed the corporate headquarters and largest manufacturing site, plans for which of the following would help Bacchus ensure a timely recovery? a. b. c. d. Daily backup. Network security. Business continuity. Backup power. Explanation Choice “c” is correct. 51

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2009 Aicpa Newly Released Question – Business. (2017, Jan 22). Retrieved from https://graduateway.com/2009-aicpa-newly-released-question-business/

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