The ABC Company is trying to decide between keeping an existing machine and replacing it with a new machine. The old machine was purchased just two years ago for $50,000 and had an expected life of 10 years. It now costs $1,000 a month for maintenance and repairs due to a mechanical problem. A new machine is being considered to replace it at a cost of $60,000. The new machine is more efficient and it will only cost $200 a month for maintenance and repairs. The new machine has an expected life of 10 years. In deciding to replace the old machine, which of the following factors, ignoring income taxes, should ABC not consider?

A member of the board of directors of Central Communications Co. is offered a license by a third party to operate a cellular phone system. The director does not present this offer to the board of directors for approval but informally mentions it to a fellow board member, who does not think it will be a problem. The director buys the license. Which of the following statements is correct regarding the director’s actions?

Company management completes event identification and analyzes the risks. The company wishes to assess its risk after management’s response to the risk. According to COSO, which of the following types of risk does this situation represent?

A company implements an enterprise resource planning application to help improve its financial and operational reporting, while gaining other efficiencies related to sales and inventory management. For the implementation, the company hires an individual specializing in preparing the company for the changes through documenting new policies and procedures and developing new training. This is an example of

A significant decline in the exchange rate of the U.S. dollar generally will have which of the following effects?

Each of the following financial instruments is a derivative, except

During which of the following periods will prices generally increase the fastest?

When calculating a company’s cost of common stock, an analyst evaluates the following four components: risk-free rate, stock’s beta coefficient, rate of return on the market portfolio, and required rate of return on the company’s stock. Which of the following measurement models is being used?

Engaging in traditional electronic data interchange (EDI) provides which of the following benefits?

A company began issuing handheld devices to key executives. Each of the following factors is a reason for requiring changes to the security policy, except

A company switches all processing to an alternate site, and staff members report to the alternate site to verify that they are able to connect to all major systems and perform all core business processes from the alternate site. Which of the following best identifies the activities performed by the staff?

Which of the following ratios should be used to compare the profitability of two electronics companies that differ in size?

Which of the following statements is correct regarding variable costing and absorption costing income statements for a company that has no beginning inventory and whose production exceeds sales for the current period?

The Enterprise Risk Management-Integrated Framework of the committee of sponsoring organizations (COSO) is best defined as a

According to COSO, the position or internal entity that is best suited, as part of the enterprise risk management process, to devise and execute risk procedures for a particular department is

Each of the following statements is correct regarding the existence and implementation of codes of conduct, except:

Each of the following is an effect from opening markets to foreign investment, except

Global companies that deal with the political and financial risks of conducting business in a particular foreign location face which of the following types of risk?

Which of the following concepts can best be used to understand oligopoly behavior?

A U.S. parent company is reviewing the cash flows from its international subsidiaries. In addition to exchange rate risk, which of the following items would be a primary consideration in the company’s cash flow analysis?

Which of the following errors most likely would be detected by batch financial totals?

Which of the following options lists the correct sequence for preparing budgets?

Each of the following business functions is considered part of a company’s value chain, except:

According to COSO, the difference between inherent risk and residual risk arises because of management’s

BEC1C001n

According to SOX, a whistleblower can’t be punished by the company for providing truthful information about:

BEC1C002n

Which type of recovery is a SOX whistleblower entitled to?

BEC1C003n

If the SEC imposes $1 million or more of sanctions as a result of a whistleblower, what is the percentage of the penalties under Dodd-Frank the whistleblower can receive as an award?

BEC1C004n

The audit committee of any public company must include a ‘financial expert’ that has which of the following qualifications?

BEC1A008n

What are the 3 main types of controls?

BEC1A009n

Backing up sensitive data on a daily basis is an example of what type of control?

BEC1A010n

Segregation of duties is an example of which type of control?

BEC1A011n

Bank reconciliations are an example of which type of control?

BEC1A012n

What are the 5 components of internal control based on COSO?

BEC1A014n

What internal control framework do most companies in the United States use to develop their internal controls?

BEC1A013n

When an auditor is evaluating the internal controls of a company, which is the more important consideration?

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If during an audit, the auditor disagrees with management on any significant matters, who else should the auditor communicate the differences to?

BEC1A016n

Which of the following are the 5 components of the COSO ERM framework?

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Which is an example of incompatible job functions regarding segregation of duties?

BEC1A018n

What are the 3 main job functions that should be separated to have effective segregation of duties?

BEC1A019n

Who is responsible for establishing internal controls in a public company?

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What is the most effective way that management can communicate a culture of ethical behavior throughout the company?

BEC1A021n

If a certain internal control accomplishes the same thing as another control, this is an example of a:

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In an internal control system, which is the most likely to cause an internal control failure?

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What is the first step in establishing internal controls?

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What is considered to be the foundation of effective monitoring of internal controls?

BEC1A025n

What organization provides the framework, code of ethics, and standards followed by internal auditors in the United States?

BEC1A026n

What do the ‘attribute standards’ of internal auditing relate to?

BEC2A001n

In a free market economy, what is the most significant factor that determines how resources are used and allocated?

BEC2A002n

In a free market economy, resources are:

BEC2B001n

What is the relationship between quantity demanded and price?

BEC2B002n

What is the difference in a change in demand and a change in quantity demanded?

BEC2B003n

What is the normal slope of a supply curve?

BEC2B004n

Which of the following would cause a change in supply of a commodity?

BEC2B005n

The point at which a demand curve and a supply curve for a commodity intersect is referred to as:

BEC2B006n

What is the best definition of market elasticity?

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If demand for a product is “highly elastic”, what does that mean?

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What is the formula for determining elasticity?

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What happens as an individual acquires more and more units of a commodity?

BEC2B010n

Which of the following is one of the 4 main market structures in economics?

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Which of the following can often create a natural monopoly?

BEC2A003n

Which of the following is included in GDP?

BEC2A004n

What is the difference between ‘personal income’ and ‘personal disposable income’ in macroeconomics?

BEC2A005n

Unemployment because the need for a certain type of job has been reduced or eliminated is referred to as:

BEC2A006n

How is the unemployment rate determined?

BEC2A007n

In macroeconomics, what does investment spending refer to?

BEC2A008n

In 2014 Jay-Z’s disposable income was $500 million, he paid $200 million in taxes, and he spent $250 million on consumable goods like private jets and Cristal. What was Jay-Z’s propensity to consume in 2014?

BEC2A009n

Which of the following would increase aggregate demand?

BEC2A010n

An increase in tax rates is most likely to cause:

BEC2B012n

What happens when a supply curve shifts inward?

BEC2A011n

How is a recession identified?

BEC2A012n

What are the 4 elements of a business cycle?

BEC2A013n

What is the purpose of the consumer price index (CPI)?

BEC2A014n

Which of the following is not an effect of inflation?

BEC2A015n

In terms of inflation, which of the following which of the following items do not reflect current present value?

BEC2A016n

If the Federal Reserve lowers the discount rate, this will usually lead to:

BEC2B013n

What is the difference between absolute advantage and comparative advantage?

BEC2B014n

If you have an agreement to buy or sell a certain amount of a foreign currency at a specified future date at a specific exchange rate, you have a:

BEC2B015n

What is the primary objective of the IMF (International Monetary Fund)?

BEC2B016n

What is the primary objective of the World Bank?

BEC2B017n

Which of the following are included in determining GDP?

BEC2B018n

Which of the following is not an advantage of global financial markets?

BEC2B019n

Which two countries are the largest exporters?

BEC2B020n

In business strategy, what is the first step in the strategic planning process?

BEC2A017n

In PEST analysis, what does the “S” stand for?

BEC2A018n

One type of macro-level analysis is PEST, but there is also PESTEL. What does the EL stand for in PESTEL analysis?

BEC2A019n

Which of the following is not one of Porter’s 5 Forces?

BEC2A020n

What type of analysis evaluates strengths and weaknesses, as well as opportunities and threats facing a business?

BEC2A021n

Porter identified 3 general business strategies. What are they?

BEC3C001n

Billy Corp is thinking about buying a new tractor for their business. The current tractor was purchased for $40,000 in 2002. The new model they are considering would cost $100,000 and have a useful life of 20 years.

What type of factor is the cost of the current tractor in the decision?

BEC3C002n

ABC corp has an old warehouse it can either sell or renovate. It can sell the warehouse and land for $2 million. ABC corp estimates that if the renovations are done, the increased efficiency will lead to an extra $5 million per year in profit from the warehouse. What is the opportunity cost of choosing to renovate?

BEC3A001n

Barnes corp has the following capital structure: Bonds payable of $100,000 at 7% interest, and common stock of $100,000 at 10% interest. What is Barnes corp’s weighted average cost of capital?

BEC3C003n

If you are going to give me $5,000 10 years from now, and we use a discount rate to determine that the $5,000 in the future is worth $3,800 today, what is this calculation called?

BEC3C004n

If we are trying to determine the value now of a series of equal payments to be made at the end of each period, what is that called?

BEC3C005n

If the face value of a bond is $1,000 at 10% interest, but the going market rate for similar bonds is 8%, what is that nominal rate of interest on the bond?

BEC3B001n

Rocky corp has a loan 0f $100,000 at 10% interest. Rocky has to keep a compensating balance of 50% of the borrowed amount in the bank. What is the effective interest rate on the loan?

BEC3B002n

Los Pollos Hermanos borrowed $1,000 for 120 days. At the end of the 120 days, they paid a fixed interest payment of $100. What is the APR that Los Pollos paid on the loan?

BEC3B003n

The “price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants” is the definition of:

BEC3C006n

Under the fair value framework, the inputs in determining fair value that would be the most reliable evidence would include:

BEC3C007n

What are the 3 valuation approaches to determining fair value?

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What is ‘beta’ a measure of?

BEC3C009n

What is the risk-free rate of return in the United States?

BEC3B004n

Capital budgeting is:

BEC3B005n

What is the advantage of the payback period approach?

BEC3B006n

What is the difference between the ‘discounted payback period approach’ and the ‘payback period approach’?

BEC1A001n

Cass Inc implemented decision aid software linked to its data warehouse which helps senior management monitor changes in production capacity in real time to its factories in France. This is an example of:

BEC1A002n

According to COSO, which of the following is the process of identifying, analyzing, and managing the risks involved in achieving the organization’s objectives?

BEC1A003n

Which is the core component of any internal control system?

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Which of the following is not one of the components of the COSO internal control framework?

BEC1A006n

If employees of an organization feel pressure to do the right thing, and the “right thing” and ethical behavior is frequently modeled and discussed by management, this is referred to as:

BEC1A007n

If a company is experiencing social engineering attempts to gain access to sensitive employee data, this information should be communicated to:

BEC1B001n

Which of following is correct regarding the establishment of an enterprise risk management system?

BEC1B002n

Which of the following is not one of the benefits of implementing the COSO ERM framework?

BEC1B003n

Golden Company is a startup that provides finance and security services to clients. Golden hosts a series of meetings with investors, its management, and its employees to discuss and and establish responsibilities for risk management and define the ethical tone and values of the organization. This is most likely occurs as which component of the COSO ERM framework?

BEC4C001nsim

ABC Corp sells corporate branded swag items to several large corporate clients, and purchases items from hundreds of different vendors. Recently an audit of internal controls revealed several weaknesses in ABC’s accounts payable system and processes. Choose the correct risk and recommended control based on the following control problem:

Sometimes discounts that are offered by vendors are lost.

BEC4C002nsim

ABC Corp sells corporate branded swag items to several large corporate clients, and purchases items from hundreds of different vendors. Recently an audit of internal controls revealed several weaknesses in ABC’s accounts payable system and processes. Choose the correct risk and recommended control based on the following control problem:

Sometimes vendors enter incomplete or incorrect information into the system.

BEC4C003nsim

ABC Corp sells corporate branded swag items to several large corporate clients, and purchases items from hundreds of different vendors. Recently an audit of internal controls revealed several weaknesses in ABC’s accounts payable system and processes. Choose the correct risk and recommended control based on the following control problem:

Sometimes ABC receives fewer goods than were ordered.

BEC4C004nsim

ABC Corp sells corporate branded swag items to several large corporate clients, and purchases items from hundreds of different vendors. Recently an audit of internal controls revealed several weaknesses in ABC’s accounts payable system and processes. Choose the correct risk and recommended control based on the following control problem:

Sometimes payments to vendors weren’t properly authorized.

BEC4C005nsim

ABC Corp sells corporate branded swag items to several large corporate clients, and purchases items from hundreds of different vendors. Recently an audit of internal controls revealed several weaknesses in ABC’s accounts payable system and processes. Choose the correct risk and recommended control based on the following control problem:

Sometimes returned goods were recorded but are missing.

BEC4C006nsim

ABC Corp sells corporate branded swag items to several large corporate clients, and purchases items from hundreds of different vendors. Recently an audit of internal controls revealed several weaknesses in ABC’s accounts payable system and processes. Choose the correct risk and recommended control based on the following control problem:

Some vendor invoices end up being paid more than once.

BEC4C007nsim

Jeremy is opening an online store where he’ll sell baseball gloves made from duct tape. If Jeremy is worried about making sure the payment process is secure, which of the following would Jeremy use to mitigate this risk?

BEC4C008nsim

Mary is opening an online store where she’ll sell a huge range of kitchen products. If Mary is worried about making sure that whatever appears on the website is actually in stock, which of the following would Mary use to mitigate this risk?

BEC4C009nsim

Jeremy is opening an online store where he’ll sell baseball gloves made from duct tape. If Jeremy is worried about maintaining and growing his relationship with customers even though they won’t see each other face to face, which of the following would Jeremy use to address this?

BEC4C010nsim

Jeremy is opening an online store where he’ll sell baseball gloves made from duct tape. If Jeremy is worried about his website crashing when he has a sale or during the holidays, which of the following would Jeremy use to address this?

BEC1C005n

Which of the following is not part of a “three-way match” control over the expenditure process?

BEC1C007n

Which of the following is not a key document involved in the revenue process:

BEC1C006n

Which of the following key business processes involves sales orders, delivery of services or products, customer billing, and collection of payments?