CPA Business Environment and Concepts (BEC) : CPA Business Environment and Concepts (BEC)
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #1 : Learning Curve
What is a company's margin of safety if it has sales of $200,000, a contribution margin of $120,000, fixed costs of $90,000, and income taxes of $12,000?
$150,000
$50,000
$168,000
$182,000
$50,000
$90,000/($120,000/$200,000) = $150,000. $200,000 - $150,000 = $50,000.
Example Question #161 : Cpa Business Environment And Concepts (Bec)
Sales forecasts are formed considering all of the following factors except:
Sunk costs
Competitor plans
Past historical sales data
Estimates of future sales
Sunk costs
Sunk costs should not be considered as there is no recuperating them and they do not play a role in forecasts at all.
Example Question #11 : Operations Management: Planning Techniques
Probability (risk) analysis is:
An extension of sensitivity analysis
Incompatible with sensitivity analysis
Used only for situations involving five or fewer possible outcomes
Used only for situations in which the summation of probability weights is greater than one
An extension of sensitivity analysis
Probability analysis is an extension of sensitivity analysis.
Example Question #12 : Operations Management: Planning Techniques
Which of the following factors is inherent in a firm's operations if it utilizes only equity financing?
Business risk
Interest rate risk
Financial risk
Marginal risk
Business risk
Business risk represents the risk associated with the unique circumstances of a particular company, as they might affect the shareholder value of that company.
Example Question #1 : Risk Management
If an investor's certainty equivalent is greater than the expected value of an investment alternative, the investor is said to be:
Risk seeking
Risk averse
Cautious
Risk indifferent
Risk seeking
If an investor's certainty equivalent is greater than the expected value of an investment alternative, the investor is said to be risk seeking.
Example Question #2 : Risk Management
The mission and vision of an organization most closely relate with its:
Capabilities
Practices
Strategy
Culture
Strategy
Mission and vision are keywords associated with a firm's strategy.
Example Question #3 : Risk Management
The performance component of COSO's ERM framework is supported by which of the following principles?
Identifies risk
Analyzes business context
Establishes operating structure
Defines risk appetite
Identifies risk
Identifies risk is included under the umbrella of performance.
Example Question #6 : Risk Management
Proper risk management includes all of the following except:
Well balanced risk tolerance
Well compensated employees
Secure levels of safety stock
Ensuring proper internal controls
Well compensated employees
While choosing to compensate workers additionally is a good faith action, it does not assist in proper risk management.
Example Question #1 : Economic Markets
If the US dollar increases in value relative to other major currencies, aggregate demand should:
Not necessarily change
Decrease as US goods become less attractive overseas
Increase as US goods become more attractive overseas
Depends on supply of foreign goods
Decrease as US goods become less attractive overseas
If the dollar gains In value, net exports will suffer as US goods become more expensive overseas, hence aggregate demand will decrease.
Example Question #2 : Economic Markets
An increase (right shift) in aggregate demand causes:
An increase in the price level and a decrease in real GDP
A decrease in the price level and an increase in real GDP
An increase in the price level and an increase in real GDP
A decrease in the price level and a decrease in real GDP
An increase in the price level and an increase in real GDP
A right shifting increase in aggregate demand would cause an increase in the price level and increase in real GDP.
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