CPA BEC Practice Exam 4 Welcome to your CPA BEC Practice Exam 4 This test is designed to prepare you mentally for the actual CPA BEC Exam with the same number of (62 questions) and the same time allowed (76 minutes) as the actual exam. The CPA BEC Exam is breakdown into five (5) Parts. Here are the Five (5) Domains of the CPA BEC Exam with the weightage and number of questions in this practice exam: 1. Enterprise Risk Management, Internal Controls and Business Processes [16 Questions] - 20-30% 2. Economics [12 Questions] - 15-25% 3. Financial Management [10 Questions] - 10-20% 4. Information Technology [12 Questions] - 15-25% 5. Operations Management [12 Questions] - 15-25% Please click NEXT to start your Free CPA BEC Practice Exam right away. Best of Luck! 1. Which of the following employees of an issuer is required to certify the company's financial reports filed with the SEC? The chief executive officer, but not the chief financial officer. The chief financial officer, but not the chief executive officer. Neither the chief executive officer nor the chief financial officer. Both the chief executive officer and the chief financial officer. None 2. 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? Inherent risk. Residual risk. Event risk. Detection risk. None 3. Which of the following best describes a function of a company's board of directors? Execute company strategy. Prepare company financial statements. Review merger and acquisition proposals. Provide ongoing assessments of internal controls. None 4. Which of the following situations most clearly illustrates a breach of fiduciary duty by one or more members of the board of directors of a corporation? A corporation previously has distributed 50% of its earnings as dividends. This year, it has annual earnings per share of $2, and the board of directors voted 4 to 1 against paying any dividend to finance growth. A director of a corporation negotiated the purchase of a computer system on behalf of the corporation. The director co-owns the computer vendor, which he disclosed to the other board members. The purchase price was competitive, and the board (absent the vendor co-owner) unanimously approved the purchase. A director who has been on the board for five years has not attended a total of three meetings. A key vote was held at one of the missed meetings which resulted in a tie due to his absence. A director learned that the corporation was thinking of buying retail space. The director then purchased a vacant building in the same city that could have been suitable for use by the corporation. None 5. According to COSO, the presence of a written code of conduct provides for a control environment that can Override an entity's history and culture. Encourage teamwork in the pursuit of an entity's objectives. Ensure that competent evaluators are implementing and monitoring internal controls. Verify that information systems are providing persuasive evidence of the effectiveness of internal controls. None 6. According to COSO, what is the first ongoing monitoring step in evaluating the effectiveness of an internal control system? Establishing a control baseline. Identifying changes in internal control that have taken place. Re-evaluating the design and implementation to establish a new baseline. Periodically revalidating operations where no known change has occurred. None 7. Which of the following is the proper sequence of activities in the monitoring of internal control? Establish a control baseline, revalidate or update the baseline, identify the need to make changes, and manage the changes. Establish a control baseline, identify the need to make changes, manage the changes, and revalidate or update the baseline. Identify the need to make changes, manage the changes, establish a control baseline, and document the existing controls. Document existing controls, revalidate or update the baseline, identify the need to make changes, and manage the changes. None 8. According to the Sarbanes-Oxley Act of 2002, anyone who knowingly alters, destroys, covers up, or makes a false entry in any record or document with the intent to obstruct or influence the investigation of any matter within the jurisdiction of any department or agency of the United States may be fined and/or imprisoned for up to Five years. Ten years. Fifteen years. Twenty years. None 9. Which organization is responsible for the most commonly used framework to benchmark internal controls? Committee of Sponsoring Organizations of the Treadway Commission Financial Accounting Standards Board Institute of Internal Auditors U.S. Securities and Exchange Commission None 10. In a large public corporation, evaluating internal control procedures should be the responsibility of Accounting management staff who report to the CFO. Internal audit staff who report to the board of directors. Operations management staff who report to the chief operations officer. Security management staff who report to the chief facilities officer. None 11. Which of the following statements is correct regarding the requirements of the Sarbanes-Oxley Act of 2002 for an issuer's board of directors? Each member of the board of directors must be independent from management influence, based on the member's prior and current activities, economic and family relationships, and other factors. The board of directors must have an audit committee entirely composed of members who are independent from management influence. The majority of members of the board of directors must be independent from management influence. Board members can be held liable for poor business decisions, even if they acted in good faith. None 12. Pursuant to the Sarbanes-Oxley Act of 2002, an accountant who destroys documents to impede an investigation by a U.S. agency can be Suspended or barred from being associated with a registered public accounting firm or can be required to end such association. Temporarily or permanently limited on the activities, functions, or operations conducted on behalf of a registered public accounting firm. Fined and/or imprisoned not more than 20 years. Fined and/or imprisoned not more than 10 years. None 13. According to the Association of Certified Fraud Examiners' Report to the Nations on Occupational Fraud & Abuse, which of the following is least likely to be an appropriate duty of the audit committee? Seeking counsel when responding to allegations of fraud. Considering the risk of management override of controls. Evaluating the design and operation of antifraud controls. Monitoring fraud risk throughout the entity. None 14. To comply with a director's duty of loyalty to a corporation, what action(s) should a director take when presented with a corporate opportunity? Reject the opportunity and not offer it to the corporation. Accept the opportunity and not offer it to the corporation. Accept the opportunity and disclose the acceptance to the corporation. Offer the opportunity to the corporation and accept it if the corporation rejects it. None 15. Which of the following sets of duties would not be performed by a single individual in a company with the most effective segregation of duties in place? Posting accounts payable transactions and entering additions and terminations to payroll. Having custody of signed checks yet to be mailed and maintaining depreciation schedules. Approving sales returns on customers' accounts and depositing customers' checks in the bank. Preparing monthly customer statements and maintaining the accounts payable subsidiary ledger. None 16. 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 The internal audit department. The chief executive officer. A manager within the department. The audit committee. None 17. If NAIRU is 5%, the actual rate of unemployment is 9%, real GDP is below that at the peak of the previous expansion, and the rate of real economic growth is 3%. The economy is in a recession. Actual GDP is higher than potential GDP. The economy is experiencing a recovery. The economy has completed its recovery and is experiencing a full expansion. None 18. The full employment gross domestic product is $1.3 trillion, and the actual gross domestic product is $1.2 trillion. The marginal propensity to consume is 0.8. When inflation is ignored, what increase in government expenditures is necessary to produce full employment? $100 billion $80 billion $20 billion $10 billion None 19. According to economic theory, technological advances in the production of a product would result in An outward shift in the supply curve that would lead to lower prices and higher quantities of the produced product. An inward shift in the demand curve that would lead to lower prices and lower quantities of the produced product. An inward shift in the supply curve that would lead to higher prices and lower quantities of the produced product. An outward shift in the demand curve that would lead to higher prices and higher quantities of the produced None 20. The Federal Reserve wishes to reduce interest rates. Which of the following approaches will be the most successful? Sell government securities. Reduce reserve requirements. Decrease government spending. Increase regulation of banks. None 21. "A manufacturer performed an analysis of its product's price point in an effort to meet its customers' demand without experiencing excess inventory. Price point Supply Demand $4 20 10 $3 15 15 $2 10 20 $1 5 25 The manufacturer uses just-in-time inventory processes, and demand for the product is elastic. Which of the following prices should management use in order to address the efforts above while maximizing profits?" $1 $2 $3 $4 None 22. Which of the following economic terms describes a general decline in prices for goods and services and in the level of interest rates? Expansion. Inflation. Deflation. Recession. None 23. Company A and Company B are subsidiaries of Company C, a multinational company. A has a fixed corporate tax rate of 15% and B pays a 25% fixed corporate tax rate. A sells a component to B at a price ranging from $100 to $200 per unit. Which of the following statements is correct regarding the transfer price from A to B? A transfer price of $100 will maximize after-tax profits of B and C. A transfer price of $100 will maximize after-tax profits of A and C. A transfer price of $200 will maximize after-tax profits of B and C. A transfer price of $200 will maximize after-tax profits of A and C. None 24. An increasing federal deficit implies which of the following conditions? Increased tax revenues and decreased entitlement payments. Decreased tax revenues and increased entitlement payments. The U.S. is importing more than it is exporting. The economy is in an inflationary phase. None 25. An importing partnership has experienced a dramatic surge in its exporting business and is looking for ways to minimize its risks from foreign currency fluctuations. The partnership's imports and exports to European Union countries are at similar levels. Which of the following methods most effectively minimizes risk? Purchase futures of the currency in which the payables will be paid. Hold payables and receivables due in the same currency and amount. Enter into an interest rate swap to mitigate the effects of exchange rate fluctuations. Conduct all foreign transactions in U.S. dollars None 26. A company currently sells 100,000 units of product A at $10 per unit. The company also sells 100,000 units of product B at the same price. The company raises the price of both products by 10%. Product A has an elasticity of 1.5. Product B has an elasticity of 3.0. Which of the following effects will the price increase most likely have on company revenues? Company revenues will increase for both products. Company revenues will decrease for both products. Company revenues will increase for product A but not product B. Company revenues will increase for product B but not product A. None 27. Under which of the following conditions is the supplier most able to influence or control buyers? When the supplier's products are not differentiated. When the supplier does not face the threat of substitute products. When the industry is controlled by a large number of companies. When the purchasing industry is an important customer to the supplying industry. None 28. 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? Country risk. Principal risk. Interest rate risk. Commodity price risk None 29. What would be the primary reason for a company to agree to a debt covenant limiting the percentage of its long-term debt? To cause the price of the company's stock to rise. To lower the company's bond rating. To reduce the risk for existing bondholders. To reduce the interest rate on the bonds being sold. None 30. When estimating cash flow for use in capital budgeting, depreciation is Included as a cash or other cost. Excluded for all purposes in the computation. Utilized to estimate the salvage value of an investment. Utilized in determining the tax costs or benefit. None 31. What does Beta measure in the capital asset pricing model? The volatility of a stock relative to its competitors. The volatility of a stock relative to the market. The additional return required over the risk-free rate. Unsystematic risk. None 32. A corporation is considering purchasing a machine that costs $100,000 and has a $20,000 salvage value. The machine will provide net annual cash inflows of $25,000 per year and has a six-year life. The corporation uses a discount rate of 10%. The discount factor for the present value of a single sum six years in the future is 0.564. The discount factor for the present value of an annuity for six years is 4.355. What is the net present value of the machine? -$2,405 $8,875 $20,155 $28,875 None 33. Which of the following is not a strategy through which a financial institution (or any business) could manage the risk that its customers may fail to make the contractual payments they have committed to? Diversifying the firm’s customers. Purchase interest rate derivatives Purchase credit default swaps. Requiring customers to post guarantees or collateral. None 34. Which of the following is a measure of the volatility of an investment? Expected return. Standard deviation. Graphical evaluation and review technique (GERT). Coefficient of variation. None 35. In calculating the breakeven point for a multiproduct company, all of the following assumptions are correct except Sales mix remains constant. Variable costs are constant per unit. All production is sold. Fixed costs are constant per unit. None 36. Which of the following types of costs are prime costs? Direct materials and direct labor. Direct materials and overhead. Direct labor and overhead. Direct materials, direct labor, and overhead. None 37. Egan Co. owns land that could be developed in the future. Egan estimates it can sell the land for $1,200,000, net of all selling costs. If it is not sold, Egan will continue with its plans to develop the land. As Egan evaluates its options for development or sale of the property, what type of cost would the potential selling price represent in Egan's decision? Sunk. Opportunity. Future. Variable. None 38. What is Sender's estimated cost for mailing 12,000 parcels? $36,000 $45,000 $51,000 $60,000 None 39. Cloud computing can best be defined as a model that Streamlines business processes onto a well secured and highly available in-house e-commerce platform to optimize customers' online experience. Is designed for rapid application deployment by making several virtual servers run on one physical host. Allows users to access network resources from remote locations through a virtual private network. Allows organizations to use the Internet to access and use services and applications that run on remote third party technology infrastructure. None 40. Which of the following controls is a processing control designed to ensure the reliability and accuracy of data processing? A limit test, not a validity check test. A validity check test, not a limit test. Both a limit test and a validity check test. Neither a limit test nor a validity check test. None 41. A research-based firm in the medical field could use each of the following Internet-based tools for collaboration, except An e-mail application. Videoconferencing. Groupware systems. Electronic data interchange. None 42. Which of the following characteristics distinguishes electronic data interchange (EDI) from other forms of electronic commerce? EDI transactions are formatted using standards that are uniform worldwide EDI transactions need not comply with generally accepted accounting principles. EDI transactions ordinarily are processed without the Internet. EDI transactions are usually recorded without security and privacy concerns. None 43. Review of the audit log is an example of which of the following types of security control? Governance. Detective. Preventive. Corrective. None 44. A company wants to protect its IT system from unauthorized users accessing the system. Which of the following controls would best serve to mitigate this risk? A keystroke log. A transaction log. A biometric device. Public key encryption. None 45. Which of the following transaction processing modes provides the most accurate and complete information for decision making? Batch. Distributed. Online. Application. None 46. An information technology director collected the names and locations of key vendors, current hardware configuration, names of team members, and an alternative processing location. What is the director most likely preparing? Data restoration plan. Disaster recovery plan. System security policy. System hardware policy. None 47. Which of the following statements is not true of the test data approach to testing an accounting system? Test data are processed by the client's computer programs under the auditor's control. The test data need consist of only those valid and invalid conditions that interest the auditor. Only one transaction of each type need be tested. The test data must consist of all possible valid and invalid conditions. None 48. An organization is loading data into the EMPLOYEE table in a relational database. Each time a record is inserted into the EMPLOYEE table, another record is inserted in another table called EMPLOYEE_AUDIT_LOG. This log table contains a record of all changes made to the EMPLOYEE table. The update to the EMPLOYEE_AUDIT_LOG table is significantly slowing the loading process. Which of the following items should be temporarily disabled to improve the loading speed? Referential integrity. Constraints. Triggers. Mandatory fields None 49. Each of the following is considered to be a characteristic of big data, except Versatility. Volume. Velocity. Variety. None 50. Each of the following is a type of data analytic technique that management may use in strategic planning and decision-making, except Descriptive analytics. Diagnostic analytics. Primary analytics. Predictive analytics. None 51. For the current period production levels, Woodwork Co. budgeted 11,000 board feet of production and purchased 15,000 board feet. The material cost was budgeted at $7 per foot. The actual cost for the period was $8.50 per foot. What was Woodwork's material price variance for the period? $6,000 unfavorable. $16,500 unfavorable. $19,500 unfavorable. $22,500 unfavorable. None 52. Management has reviewed the standard cost variance analysis and is trying to explain an unfavorable labor efficiency variance of $8,000. Which of the following is the most likely cause of the variance? The new labor contract increased wages. The maintenance of machinery has been inadequate for the last few months. The department manager has chosen to use highly skilled workers. The quality of raw materials has improved greatly. None 53. "Financial data related to a company's unit production for the current month are as follows: What amount is the company's variable factory overhead variance for the current month?" -$70,000 -$25,000 $65,000 $125,000 None 54. "Baby Frames, Inc., evaluates manufacturing overhead in its factory by using variance analysis. The following information applies to the month of May: What is the production volume variance?" $1,000 favorable. $1,000 unfavorable. $2,000 favorable. $2,000 unfavorable. None 55. Which of the following standard costing variances would be least controllable by a production supervisor? Overhead volume. Overhead efficiency. Labor efficiency. Material usage. None 56. A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. Budgeted ending inventory is 10% of the next month's sales. What is the budgeted cost of purchases for January? $54,000 $60,000 $61,500 $75,000 None 57. "A company manufactures a product using one material per unit. The following information for the upcoming budget year is available: Number of units sold 14,500 Budgeted beginning finished goods inventory units 1,500 Budgeted ending finished goods inventory units 3,000 Budgeted beginning direct materials inventory units 2,000 Budgeted ending direct materials inventory units 1,500 Direct manufacturing material cost per unit $5 What amount is the total direct materials purchasing budget?" $67,500 $72,000 $77,500 $80,000 None 58. Which of the following methods is best suited for evaluating the performance of a firm's capital in any given year? Internal rate of return. Net present value. Economic value-added. Payback None 59. What is the process by which products and services of a business entity are measured and evaluated relative to the best possible levels of performance? Measuring the performance gap. Standard measurement. Benchmarking. Variance management. None 60. Each of the following business functions is considered part of a company's value chain, except Accounting. Customer Service. Marketing. Research and development. None 61. Which of the following terms represents the residual income that remains after the cost of all capital, including equity capital, has been deducted? Free cash flow. Market value-added. Economic value-added. Net operating capital. None 62. In a quality control program, which of the following is categorized as an internal failure cost? Rework. Responding to customer complaints. Statistical quality control procedures. Product recalls. None 1 out of 62 Time is Up! Time's upTime is Up!
