FREE Bachelor of Science in Accountancy: BEC Questions and Answers


Which of the following statements on enterprise risk management addresses a company's adherence to fundamental principles as per the Committee of Sponsoring Organizations (COSO) of the Treadway Commission?

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The enterprise rise management framework's governance and culture component identifies challenges that affect the organization's tone as well as the culture, establishing and operating structure, and dedication to core values.

Each year, EDF Corp. sells 5,000 widgets. The widgets are produced in 1,000-unit batches and require a 4-week lead time. Additionally, EDF Corp. has an 800-piece safety supply as a bare minimum.
Calculate the widget reorder point for EDF Corp. assuming a 50-week year and continuous demand.

Correct! Wrong!

BDE Corp Sells 100 widgets per week (5,000 widgets per year/50 weeks)
Re-order point = Safety Stock + (Lead Time x Sales During Week)
Re-order Point = 1,000 + (4 x 100) = 1,400 widgets
BDE Corp will manufacture additional widgets when inventory falls to 1,400

The price of the company's common stock is 9.4%, the price of its preferred stock is 7.8%, and the weighted interest rate on its debt is 5%. Assume that each element of the capital structure has a market value proportion of 55% common stock, 20% preferred stock, and 25% debt. 30% is the business tax rate.

What is the Weighted Average Cost of Capital (WAAC) for BDE Company?

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WAAC= (9.4% x 55%) + (7.8% x 20%) + (4.2% x 25%)

True or False: Process costing is a technique for calculating product costs that averages expenses across a large number of similar items?

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True is the right response. A method of product costing known as process costing averages costs and applies them to a large number of homogeneous goods in the five steps that follow:
A. Explain the flow of physical units in brief.
B. Compute the output for the "equivalents unit"
C. Add up all of the expenses that need to be reported.
D. Using the overall expenses and equivalent units, determine the average unit costs.
E. To the units that have been completed and the units that are still in the ending work-in-process inventory, apply the average costs.

Interest will accrue at a specified rate of 8% for a promissory note for $20,000 and be paid in two equal installments. The state levies a documentation tax of $50 and a loan origination cost of $100.
Which yearly percentage rate is it?

Correct! Wrong!

Step 1 – calculate interest paid = (20,000 x 8% x (6/12)) = 800
Note: 6/12 is used because payments are made semiannually
Step 2 – Calculate available funds = (20,000 – 100 -75) = 19,850
Step 3 = Step 1/Step2 = 800/19,850 = 4.03%
Step 4 = Step 3 times payments made during year = %4.03 x 2 = 8.06%

Which of the following scenarios would cause a corporation to lower its average level of inventory?

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All other options would encourage a business to raise the average amount of inventory held on hand. A corporation would be encouraged to decrease the amount of inventory retained in storage by the expense of carrying inventory.

True or False: When performing financial analysis at year's end, a corporation wishes to have a high quick ratio?

Correct! Wrong!

A higher quick ratio means that the company has a greater ability to pay off current liabilities in the near term.
Quick Ratio = (Cash and Cash Equivalents + Short Term Marketable Securities + Net Receivables) / Current Liabilities.

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