B. Acy Bachelor of Accountancy Bachelor of Science in Accountancy: BEC 2

Question 1

A company's weighted average cost of capital (WACC) is best described as:

Accepted Answer

The minimum return a company must earn to satisfy all capital providers

Answer

WACC represents the blended cost of all capital sources weighted by their proportion, serving as the minimum acceptable return on investments.

Question 2

Under the economic order quantity (EOQ) model, which pair of costs are being balanced?

Accepted Answer

Ordering costs and carrying costs

Answer

EOQ minimizes total inventory cost by finding the order quantity where ordering costs and carrying (holding) costs are equal.

Question 3

Which corporate governance body is primarily responsible for overseeing the financial reporting process and the external auditors?

Accepted Answer

Audit committee

Answer

The audit committee, a subcommittee of the board composed of independent directors, oversees financial reporting integrity and external auditor relationships.

Question 4

A firm has a current ratio of 2.5 and a quick ratio of 1.0. This most likely indicates:

Accepted Answer

The firm carries a large amount of inventory relative to current assets

Answer

A large gap between the current ratio and quick ratio signals that inventory makes up a substantial portion of current assets, since inventory is excluded from the quick ratio.

Question 5

In a competitive market, when supply decreases while demand remains constant, the equilibrium price will:

Accepted Answer

Increase and quantity will decrease

Answer

A leftward shift in supply (decrease) raises equilibrium price and lowers equilibrium quantity when demand is held constant.

B. Acy Bachelor of Accountancy Practice Test

B. Acy Bachelor of Accountancy Practice Test

B. Acy Bachelor of Accountancy Bachelor of Science in Accountancy: BEC 2