USA: +1(669)289-8683 
Sign in
1
In 2003, FASB and IASB met and established four criteria for establishing revenue recognition. To recognize revenue, which of the following conditions must be present?
·
[removed]
A change in assets has occurred and can be appropriately measured.
· [removed]
Payment for the sale must be received prior to recognizing the revenue.
· [removed]
The product or deliverable, in the case of a service business, has been received by the customer.
· [removed]
A promise to deliver has been established.
2
Failure to provide any care in fulfilling a duty owed to another is called
· [removed]
gross
negligence
· [removed]
constructive fraud
· [removed]
breach of contract
· [removed]negligence 3
Which of the following is a fundamental characteristic of the market system?
· [removed]
Unselfish behavior
· [removed]
Central planning by government
· [removed]
Government-set wages and prices
· [removed]
Property rights
4
The income effect indicates that
· [removed]
consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same
· [removed]
a rise in money income will cause consumers to buy smaller quantities of normal goods
· [removed]
when the price of a product falls, a consumer will be able to buy more of it with a specific income
· [removed]
when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper
5
The price elasticity of demand coefficient measures
· [removed]
the slope of the demand curve
· [removed]
how far business executives can stretch their fixed costs
· [removed]
buyer responsiveness to price changes
· [removed]
the extent to which a demand curve shifts as incomes change
6
A normative statement is one that
· [removed]
applies only to microeconomics
· [removed]
is based on the law of averages
· [removed]
is based on value judgments
· [removed]
applies to macroeconomics
7
Many conflicts of interest in business contracts can be remedied ethically by which of the following?
· [removed]
Deception and disclosure
· [removed]
Camouflage and consent
· [removed]
Disclosure and consent
· [removed]
Conflicts of interest can never be remedied ethically
8
Four professional general standards and responsibilities for Certified Public Accountants are quality control and assurance, professional judgment, competence, and:
· [removed]
integrity
· [removed]
diligence
· [removed]
independence
· [removed]
knowledge
9
In 2002, Adelphia Cable filed bankruptcy when it was discovered that
· [removed]
excess fictitious expenses of $1 million were added to the income statement
· [removed]
bank debt in excess of $2.3 billion was not shown on the financial statements
· [removed]
assets on the financial statements were considerably undervalued
· [removed]
sales in excess of $72 billion were omitted from the financial statements
When budgets are used to measure performance, there is a danger that budgetary slack may occur. This happens when
· [removed]
sales budgets are set too high and cost budgets are set too low
· [removed]
sales budgets are set too low and cost budgets are set too high
· [removed]
sales budgets are set too low and cost budgets are set too low
· [removed]
sales budgets are set too high and cost budgets are set too high
11
ABC Company owes XYZ Enterprises $1 million for goods purchased from XYZ over a year ago. XYZ Enterprises continues to list the $1 million in their accounts receivable balance and does not record any allowance for doubtful accounts. XYZ Enterprises is failing to follow
· [removed]
SFAS 169
· [removed]
Financial Accounting Standards Board FAS 157
· [removed]
Financial Accounting Standards Board Statement No. 5
· [removed]
SFAS 101
12) The EU Privacy Directive presents problems for the United States in that
· [removed]
data may not be transferred to a non-EU entity unless guarantees are provided that equal security measures are in place
· [removed]
transferred data may not be translated into another language
· [removed]
high transfer charges are required to be paid by the recipient in the currency of the country transferring the data
· [removed]
several layers of approval are necessary before any data may be transferred to a non-EU entity
13) When revenue is recognized and shipment has not been made and the criteria for recognizing revenue on bill-and-hold transactions set out in SEC Staff Accounting Bulletin No. 101 have not been met, this is known as
· [removed]
timely revenue recognition
· [removed]
postrevenue recognition
· [removed]
premature revenue recognition
· [removed]
conservative revenue recognition
14
According to the Agency Theory, in a corporation there are two types of information consumers known as
· [removed]
principals and vendors
· [removed]
customers and agents
· [removed]
vendors and customers
· [removed]
agents and principals
15
Tom Donaldson and Tom Dunfee are proponents of ethical guidelines related to technology that are based on differentiating hypernorms from nonhypernorms. This theory is known as
· [removed]
Integrative Social Contracts Theory
· [removed]
Transparent Ethical Dilemma Theory
· [removed]
Electronic Communications Privacy Theory
· [removed]
Social Contract Network Theory
When the economist says that economic wants are insatiable, this means that
· [removed]
economic resources—land, labor, capital, and entrepreneurial ability—are scarce
· [removed]
these wants are virtually unlimited and therefore incapable of complete satisfaction
· [removed]
the structure of consumer demand varies from time to time and from country to country
· [removed]
economic resources are valuable only because they can be used to produce consumer goods
17
The pursuit of self-interest
· [removed]
is highly detrimental to the market system
· [removed]
means the same as selfishness
· [removed]
gives direction to the market system
· [removed]
is reflected in the behavior of firms, but not in the behavior of consumers
18) The bankruptcy of WorldCom in 2002 was due to the company’s actions in
· [removed]
expensing equipment purchases rather than capitalizing these purchases
· [removed]
failing to record revenues
· [removed]
classifying expenses as assets
· [removed]
recording fictitious liabilities
19) Productive efficiency refers to
· [removed]
the production of the product-mix most wanted by society
· [removed]
production at some point inside of the production possibilities curve
· [removed]
the full employment of all available resources
· [removed]
the use of the least-cost method of production
20
Agency costs arise when agents fail to act in the best interests of the principals. One example of losses from poor decisions would be
· [removed]
purchasing inferior material to earn yearly bonus
· [removed]
investing additional funds in profitable projects
· [removed]
prioritizing projects, according to the best interests of the corporation
· [removed]
increasing the scope of the audit of the financial statements
21) If the price of normal good X rises, the income
· [removed]
effect will induce the consumer to buy more of X and the substitution effect will induce him to buy less
· [removed]
and substitution effects will both induce the consumer to buy more of X
· [removed]
effect will induce the consumer to buy less of X and the substitution will induce him to buy more
· [removed]
and substitution effects will both induce the consumer to buy less of X
22) Section 55 of the Principles of Professional Conduct of the AICPA states that
· [removed]
members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism
· [removed]
a member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities
· [removed]
a member should observe the profession’s technical and ethical standards, strive continually to improve competence and quality of services, and discharge professional responsibility to the best of the member’s ability
· [removed]
members should perform all professional responsibilities with the highest sense of integrity
23) The concept of economic efficiency is primarily concerned with
· [removed]
the limited wants-unlimited resources dilemma
· [removed]
the conservation of irreplaceable natural resources
· [removed]
considerations of equity in the distribution of wealth
· [removed]
obtaining the maximum output from available resources
24
Which of the following is a normative statement?
· [removed]
The temperature is high today.
· [removed]
It is too hot to play tennis today.
· [removed]
It will cool off later this evening.
· [removed]
The humidity is high today.
25
Suppose that as the price of Y falls from $2.00 to $1.90 the quantity of Y demanded increases from 110 to 118. Then, the price elasticity of demand is
· [removed]
4.00
· [removed]
3.94
· [removed]
2.09
· [removed]
1.37
26) Other things equal, an excise tax on a product will
· [removed]
increase its supply
· [removed]
increase the quantity sold
· [removed]
increase its demand
· [removed]
increase its price
27) If a conflict of interest arises prior to entering into a business contract, the parties should
· [removed]
cease and desist because all conflicts of interest are irreconcilable
· [removed]
determine the type of conflict and if disclosure of the conflict of interest is sufficient to proceed with the contract
· [removed]
commence a cooling-off period until the conflict is removed
· [removed]
stop negotiations immediately and contact a mediator to negotiate the terms of the contract
28) Assuming an economy has fixed quantities of resources, that economy
· [removed]
is able to produce the same amount of output regardless of the production technologies it chooses
· [removed]
is able to satisfy all consumer wants
· [removed]
is more efficient, the larger the amount of goods and services it produces
· [removed]
will produce the same output whether or not resources are used efficiently
29) When evaluating the performance of managers in investment centers, performance metrics should be based on
· [removed]
only costs under their control
· [removed]
revenues, costs, and investments under their control
· [removed]
only investments under their control
· [removed]
revenue and costs under their control
30
When applying for a bank loan or trade credit, one way a company can appear to be in a healthier financial position would be to
· [removed]
overstate its expenses
· [removed]
understate its sales
· [removed]
undervalue its assets
· [removed]
understate its liabilities
