Which of the following methods should be used if capital rationing needs to be considered when comparing capital projects?
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1 .When there are numerous property and equipment transactions during the year, an auditor who plans to assess control risk at a low level usually performs:
A Tests of controls and extensive tests of property and equipment balances at the end of the year. B Analytical procedures for current year property and equipment transactions. C Analytical procedures for property and equipment balances at the end of the year. D Tests of controls and limited tests o...
2 .Various methodologies can be used to develop the fair value of common shares. The most objective methodologies are considered to be:
A Price Sales Ratio. B Price Earnings (P/E) methods. C Price Earnings Growth (PEG) methods. D Discounted Cash Flow (DCF) methods.
3 .The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the:
A Human resources function from the controllership function. B Operational responsibility from the recordkeeping responsibility. C Administrative controls from the internal accounting controls. D Authorization of transactions from the custody of related assets.
4 .A multiperiod project has a positive net present value. Which of the following statements is correct regarding its required rate of return?
A Greater than the project's internal rate of return. B Greater than the company's weighted average cost of capital. C Less than the company's weighted average cost of capital. D Less than the project's internal rate of return.
5 .When a client company does not maintain its own stock records, the auditor should obtain written confirmation from the transfer agent and registrar concerning:
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7 .Which of the following is true about an auditor's responsibility with respect to accounting estimates?
A The auditor is responsible for evaluating the reasonableness of accounting estimates. B The auditor is responsible for preparing accounting estimates in accordance with generally accepted auditing standards. C The auditor is responsible for both preparing accounting estimates and evaluating their ...
8 .Which one of the following statements concerning cash flow determination for capital budgeting purposes is notcorrect?
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9 .Analytical procedures used in the overall review stage of an audit generally include:
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10 .A corporation is considering purchasing a machine that costs USD100,000 and has a USD20,000 salvage value. The machine will provide net annual cash inflows of USD25,000 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?
A USD28,875 B (USD2,405) C USD20,155 D USD8,875
