CPA CPA Business Environment & Concepts

Question 1

Which economic concept describes the additional cost of producing one more unit of a good or service?

Accepted Answer

Marginal cost

Answer

Fixed cost

Answer

Sunk cost

Answer

Opportunity cost

Question 2

Under the COSO framework, which component addresses an entity's overall attitude toward risk?

Accepted Answer

Risk appetite

Answer

Control activities

Answer

Information & communication

Answer

Monitoring

Question 3

Which form of business organization provides limited liability to all owners while allowing pass-through taxation?

Accepted Answer

S Corporation

Answer

General partnership

Answer

Sole proprietorship

Answer

C Corporation

Question 4

In a perfectly competitive market, a firm's demand curve is best described as:

Accepted Answer

Perfectly elastic (horizontal)

Answer

Downward sloping

Answer

Upward sloping

Answer

Perfectly inelastic (vertical)

Question 5

Which concept states that a business is assumed to continue operating indefinitely unless there is evidence to the contrary?

Accepted Answer

Going concern

Answer

Matching principle

Answer

Materiality

Answer

Conservatism

Question 6

Which organizational structure groups employees by function, such as marketing, finance, and operations?

Accepted Answer

Functional structure

Answer

Divisional structure

Answer

Matrix structure

Answer

Flat structure