October 201S Batch MAS PREWEEK - THEORIES MASPW - Theories shall be used in conjunction with MASPW ~ Problems and will be deemed incompiete without revisiting ALL multiple-choice questions indicated in the following rand-outs: MAS - A: Management Aecourt'g MAS - B: Management Aavisory Serv MAS - C: Streteaic Cost Management MAS - D: Project Feasibility Stucy. WAS ~E:Macroecorames MAS —F Microeconomics MAS - G: Varcus Tepics MAS Que 5 MAS Frist & Final Preboars Exams (theary tems) MANAGEMENT ADVISORY SERVICES Part I ~ Management Accounting (35 ttems = 50% of 79 items) Part If ~ Financial Management (28 items = 40% of 70 items) Parts III, IV - Management Consultancy & Economics (7 items = 10% of 70 iterns) NOTE: Please refer to last page of MASPW ~ Problerns for tne deteils of parts I to IV. KR RK Part I: Management Accounting ‘The primary objective of management accounting #5 a. To provide banks and other craditors with mfcrmaton useful in makung credit decisions . To provide management with information useful for planning and controling of operations €. Ts provide stockholders and pctential nvestors with useful fexmation for decison making 4. To provide supervising government agencies with information about the company’s management affaits 2. Management accourtarts, order tp sabsfy their intended information users, sheuid do all the folowing, EXCEPT 2. Provide users with hgh cuaity information b. Focus 01 prepanng information for extemal financial reporting Provide specialized information that specific managers cen use Continuously strive to provide better quality information faster and at a lower cost 3. Financial accounting provdes a historical perspective, whereas management “2. Emphasizes the future in addition to nstonieat parspectve reports b. Only enabies managers to make decisions Emphasizes reports to sherehoders i. Emprasizes @ current perspective 4, Managerial accounting is very Similar to financial accountng ir this parkcular aspect. Seen of OSS cy Eni DEEN past aid future b. Type of cata provided to users (GS) Reliance on the accounting database 5. Wheh face: execute Is onary responsible for bot fnsnegement and faancal ecounking? 2, Treasurer ¢. Chief financial officer b._ Controller c. Auditor 6. Apeation on the organizational chart that's cirectly related te aclveving tne basic objectives of an organization. 3. Controller <. Aline positon b. Chi financial officer regmtesen phan ten 7. Ineontrast to the positicr of a treasurer, the controller Is 2 ay, Line function Se Nanagerl position (6) Staff function 4. Rank-and-fle postion 8. Manizjement accounting is used by @ company’s management for a mutitude of purposes that DO NOT indude a. Panning Reporting BL Marketing 4. Evaluation 4. The lates versan of Standerds of Ethical Professional Practice for management. accountants comprise of (A) Foe eae fe) contdentaity, (C) iegrty and (D) cred. “Credit” requires management acrountant te: seacvratain 20 appropriate level of professional expertse by continually developing knowiedge and skills pnd perform dates in accordance vith relevant avs, regulations, ard technic! standards ~ cert Keep nformation conficental uriess disclosure ss authorized or legally required = cont: dental 2 Mingate actual ccaficts of interest and refrain from engaging in ary conduct that would prejudice carrying out duties ethically ~ inegahy ‘ (6 Caneniate information faity and objectively and disclose all relevant information expected t _) inflaenee an inter ded user’s understan ling of the reports, analysis afi recommendations _~ Ry 10. A maragemert accountant iho fai to comply wath appkcable law or legislation is acting contrary to which of the following ethical standards? a. Competence Integrity b. Confidentiality ad Crecibity 11, Ifa manayement accountant has @ aroblem jn resolving an ethical conflict of unethical behavior, the frst action hat should normally be taken is to ‘a. Notify the law enforcement agency Resign from the compary Q Discuss the problem with immediate superior tb. Consult with the board of directorsReSih- The Review School of Oosornctnrseg MASPW-Theories PREWEEK MATEMALS in MANAGEMENI RDVISONY SERVICES (October 2039 Baten) Page 2 12. The set of activties required to design, develop, produce, rarkel and deliver and services 3 2 Nesta a lop, Pr aes eee CT) to customers. Value added actaties c. Monvalue added actives 2 etna te | Nonvalue acted aonvies 2a. (5 9 basis fr cost planning and product costina “o-/ 15 3 way of understanding how a company aereretes ts output -S._ Determines what done jy whom a war cast ard he value added by each activity a systemaie approach to rezening targeted cest levels Gurng value chain analysis 5 9 targeted cost 4 ain analysis without reduciog 14,_Process value anaivas is a key component of actinty-based management that hnks product costing end 8 2 Reduction of the numberof cost pools c._Accumulation of heterogeneous cost pools b. Continuous improvement 4. Overnoad rates based on broad averages 15. Yalue-added activities abe Femoved or eliminates Cannet be distngurthet trom nen valux-adkied activities )Irwalve usage of resources inst customers are waling & pay for ~/ Cause addtional costs to a pretact ethout affecting the selling price 16. An example of a value-added activity 1s . a. Inspections c. Inventory storage b. Machinery repair 4. Engineering design 417. The process of managing various activities in the value chain, along with the associated costs, is commonly known 2s 8 a. Actvity-based costing cc. Total quality management b. Strategic cost management ¢. Computer integrate costing 18, The tree major types of compeutive strategie sestangragerent include ‘a. Diferentiation, focus and procuctiuty (cr) Cost leadership, focus and differentiation BL Cast Inncorsiip, focus ane prosuctvity “a” Cost leadership, ferentiation and productivity 419, The primary objective of just-in-time (17) preressing fs to A ‘2. Eliminate or reduce inventonas Identity relevant activity cost drivers b. Identify nor-value added actoities ¢. Accumulate overhead in activity cost pools 20. TFs based un wotion that work s initiated only in response to customer orders.’ This practice is described as (@) Demand-puli/ = Suppiy- ul ‘pe’ Demand push 4. Supply-push 21. Which of the ‘ellowing is among the benerits of adopting a 111 system? ‘a. Tncreace.in the number of supmiiers~ deutaat «.—Reduetian-in the number of deliveries: — wate b. Performance of ue addled aclyes ody Cl) Maximization of standard delivery quality 22. Which ite mg AST fo a D a. Production cost savings C. Reduction of rework costs b. Enhanced product quality d. Planning and control of significant inventory-halances~ 23. Which of the following internal cuntrots is act ore typically eliminated when a just-in-time inventory system is introduced? c ’a. Sophisticated inventory tracking system: Statistical methods for quality assurance @. Hard copy receiving report 24. Which one of the following is. characteristic of an innovative manufacturing company? A ‘a. Emphasis on existing products ‘¢. Improved customer satisfaction through product quality 1d. Responsiveness to changing manufectuting environment b. Emphasis on continuous mpravemnent 25, Whieh of the following quality tools is another term for geaua/ yet continuous improvernent? b. Central receiving dock ‘a, Theory of constraints corgi (By. Kaizen é. Lean manufacturing 36. 1 eda sepronch to continuous improvement shat focuses cn serving customrs and uses front-line workers to kentfy " ems systematically. = . og gst ©) Tota quaity maTageTARC TO 7. brocess valve analysis b, dust-in-time (JIT) system ‘Management (TQM) should be viewed 5 oo" eeGoal centres snd standard driven Customer centered and employee driven b._ Policy centered and procedure driven Management centered and techolagy driven ae, Whea ie eonumon characteristic ftetaLquatty management (TOM)? assy 2. Quality by final inspection %— Management by cbjectives (MBO) 7b. ) Education and self-improvement On the-jab training by some workers 29, In eich of the following organvzatvon does tore! Gully fTiaaeme (TOM) work best? Da Hierarchal “Tears of fom the sere speclty b. Specialists working individually (._Tearsal peal im deren specs 40. ouspess ovens Reenencerng (BPR) aerial approach eimyprewerert hat QM since BP + ee gequresachangem the companys OUTS CD) Involves completely redesignng business poe Ives wedesagang DiFainess provesses and A eaves ronine werkers to solve problems and Focuses on than on finger-pointing asses fy outst constants) inating vatue-aridect Activities attention on salving problems rather A\RSA. the Renew Schoot of Cecorntanen MASPW-Theories PREAVLES MATRAIALS/)ATANAGEMENT ADVISORY SERVICES (Oe 1019 Rate -Page 3 31. A company that wants to be known as a world-class manufacturer of quality product shall spendvore heavily on this: pe of quality casts. A Apprasal costs ty te NT ‘ Internal falure costs 5 ee cai d._ External failure costs 2. TRE Tost of sca Fework, ahd tooling changes in.z predict quality cast system s categorized as a(n) c (a. Training Fost c._Intemal failure cost : vant fea a sk seat neni yh oy the TOF Unity costs woul be thé MOSDaamaging to 9 company’s ailty to buld a reputation as a word a Ase ne c.. Internal fare costs b. Prevention cost (G.) External failure costs 34, Producti is msasiired by the ) " 3. Total quantity of input used to ganerate total quantity of output for 2 time period Total quantity of output generated from a mated amount of input curing a period AS) Quannty of gana cutput senerated from a specific amount of S._Quaitnty of Jaa 7eutDut generated trom the quantty of good, input used during a period 4 3S Uae Constraints (Toc), Anerovemant ets sus Dina) : Work center that is a constraint ~~~ eCosE citer tat incurs the highest costs that has no constramt 4. Cost center that has least number of constraints al cf a Theory of Constraint (TOC) analysis is to 2 direct materials cost b. Maximize contribution margia through the constraint c. Mawimce the effciery of the entire production process d. Smooth prosucton flow to eliminate backup in the system 37. The comparison of 3 company's practices and performance levels against those of ather organizations (or against the best possi ‘evel of performance) is mest commonty known as a A a. Benchmarking Comparative analysis b. Re-engineening 4. Continuous improvement 38. It refers to the efforts of a company to employ sustainable business practices regarding its employees and environment. > a. Value chain Environmental accourting . walty management Corporate soca! responsibilty 3, The shbue emiennce prem forsetoetgeea woul bo 2: > ‘a. Fined cost, period cost. are alrect Cost WAN regard to units of product Pl Paedcon, prove coat, ond diet cot wath regard fo units of proc & Vanal Ost, cirect cost wth reyatd (@ unis OF product Fixed cost, product cost, indirect cost with regard to units of product. 40, Adata Sas at falls fer away front atfer data points in scalter dagrarn is cal a (an) A a c._Stardard deviation b. Prrgin of error (8. ~Coetfcient of determination 41, Im the standard regression cquation y = 2 + by, the letter 65 best descrived as a(n) ‘a, Independent varable Constant coefficent b. Depercent variable 4) Variable coefficient 42, When activity changes, this cost shifts upward or dowtweérd by a certain interval A a. Step cost’ —_— Shifting cost . Cost interval d._Increrrental cost 43. The cost function derived by the simple least squares method 1s A a, Linear Parabolic b. Curvilinear d, Derived from the maximum and minimum points 44, Simple regression analysis provides the means to evaluate a line of regression which is fitted ta a plot of data and represents " The wey costs change in respect to the incependent variable. b. The way costs change in respect to the dependent variable, €. The variability of expense with doliars of operations. d. The variability of expense with dollars of praduction, 45. Tt is the measure of the co-variation between the dependent and independent variables. c a. Ratio —¢. Correlation b. Variance _ Standard error 46, The correlation coefficient that indicated tHe ar association betweenitwo variables is 8 A, 073 nae a (Cb) Onn d. 0.35 47, THESlope of the line of regression is. c The level oF fata TREC Torts. <. The rate at which the dependent variable varies.” b. The level of total vanable costs, d. The rate at which the independent variable varies. 48. The siope of the cost line does NOT in any way affect a. Fixed costs c Break-even peso sales b. Margin of safety: d, Degree of operating leverageReSQ. The Review School of Qecoun Tow. + Toe MASPW-Theories PREWELK MATERIALS MATERIAL Sin MANAGEMENT ADVISORY SERV-CES (Oricber 2019 batch) -Page 4 49. c 5h 92. 53. 54, 55. 56. 57. 59. 60. 61. 62. 63. peel Coase one a a a et en gece me 4, Waanwavoral capacity and that sily Fange slim response to smal changes e eae es 2 ey imortization of costs that wore capitalization in previcus periods eeeeny yi re gua tertocay NOTE: In contrast fo dsrenonery costs, eineeed costs are chor npcupet relatos the cost uf direct materials) ° ees eesieeis ieee Cost volue- rot (CV) analyses MOST essen nthe terran of he 2 Production vl that equal to sakes Volume of operates in oner fo reak ven Vana costs necessary to eaun tae costs ro tye BGtORSHI between revere; and oats varus ewe of operations ‘© which function of management 15 cust volume-profit (CYP) analysis mast applicable? 2 hones 5 ee titi SS a doer cre setae er rece ws et at al see ay b. Fixed costs must be eauial to PC 4. Sales price must be equal to variable costs As projected ct srs the 2. Breakeven Dont goes down Contribution argh goes Margin of safety stays constant 4 Dagtee of operating overage decines 1? Company Asso her degree of operating leverage than Company By hen a.” Company Ais ess rscy 8. Company Bs less protec Company A hes higher fined operabng oper rs 4. Company A’ praise rior enatve tc pe‘centage changes n sales Which of the following 1s NOT an assumiction of CVP analysis? Costs may be separated into sercete fet and variable components BL Total revenues and total costs are near retation to output uns ‘The unt sellng pice, unt varabie cst, ard ee costar kn. ‘Tere vl be 9 change between begin nd ending level of ventory « o. | A company paye @ 5% sales commission or @ach unt sold. {2 graph is prepared, with vertical axis rapresenting ‘per~ dnt cost’ 3nd horizontal axis representing “unit sales’ how woulda line thet depics sales commissions be drawn? a. Asa vertical line. fc. Asa straight clagona ine, slopng upward te the night b. Asa horizontal line 44. Asa straight diagoral ne, sloping downward to te ngit “The distinction between absorption costing and variable cosring is mest mportant for which type cf industy? ‘2. Manufacturing Reta 5 anc mont td ? ofthe following consicers the verhead co Which one of the 9 hates oe a. Full absorption costing Fable wasting B. Marginal costing ‘ . ‘ing, which of the following expenses are excluded inventory costs? te ‘and variable manufacturing overhead ¢ manufacturing labor a. Direct mange and varable manufacturna overhead b. Direct materials ané C.__Direct materials and manufacturing labor g. Maret est ce ta quoted for a special order that oil use le capac win a reduction In determining the lowest price that cay ‘area, the best allocation method to use 'S ’a. Process costing car isrming ana product pricing sed as a basis for cost plesini°? | 4 Indes ty man og stn ee a8 aS 6 ' : M casting (pricing) Job order casting Absorption costing b. hold target targe + ood Sold a b. 4.RSA. The Review 2A” The Review School of Oecouednney MASPW-Theories PREWEEK MATERIALS in MANAGEMENT ADVISORY SeRvIC 65. D 67. 68, 69, 70. na. 7? 74, 75. 76. g 80. ai. #5 (Outcber 2019 Batch) - Pages Predatory pricing isa type of price discrimination that 2. Allows prices to be cut tothe level of variable costs. b. lsvequcc eters crpany dees bankrpicy 25 htt can zl ts emaiing gods &; [Sued nthe ood nda or sershac goa edna 1. liberately sets orices very low, sometimes even beow: Costs, so as ta minimize com, Jon. ‘The formal process in which management chooses between akernsones oka Pet Analysis mode! rketing analysis m b._Decision model medion mot Ina decision-making case, which ofthe following costs is NOT likely to contain a relevant cost component? Labor cost ©. Factory overhead cost ©. Selling cost 4. Depreciation cost of an existing asset good buageting system forces managers to examine the business as they plan, so they can 3. Get promoted for doing a good job ‘G._Detect inefficiencies that might go unnoticed b. Complete the bucgeting task on time d. Detect over-budgeted areas from the iast period ‘Comparing actual results with a budget based on achieved (actual) volume is possible with the use of 4 a. Monthly budget c. Roling tudget b. Master budget d. Flexible budget The master bucget embraces the impact of 8. Operating and financing decisions Financing and managerial decisions D. Operating and managerial decisions d. Operating, managerial, and financing decisions The steps to follow wihen preparing the operating budget are a, Revenue budget, production budaet, and direct materials purchases budget. b. Costs of goods sold budget, production budget, and cash budget. ©. Revenue budaet, overhead budget, sind production budget. d. Revenue budget, cash inflows, and production expenditures. Unlike zero-based budgeting, incremental budgeting Starts from a base of zero (Zero-based bucueting} fb. Requires 2 manager to justify the entire buclaet for each year (Zero-based oudgeting} c._Simply adjusts the current year's budget to allow for changes planned for the coming year d. Eliminates the need to review all functions erotically to Obtain optimum use of resources - Alife-cycle buciget is a budacting tool or process ‘a. Which emphasizes the cost of actwities {Activity-based budget) b. Which summarizes all of 2 company's budgets and pians (Master budget} Which requires each manager to sustify the unit's entire budget each period {Zere-based budget} d. In which estimates of revenues and expenses are prepared for each product beginning with the product's research and development rhase and traced through its customer support phase “Kalzen’ budgeting refers to the budgeting process where a. The budget is based on only one levei of activity {Static budget} b. The budget is based on many levels of activity so that the budget may be adjusted based on actual activity (Flexible budget} cThe budget is based not on the existing system, but an changes or morovements that are to be made dA product's revenues and expenses are estimated over its entire life cycle (j.e., from R&D phase to ‘customer support phase) (ife-cyce bucget ‘The budget method that maintains a constart twelve month planning horizon by adding 2 new month on the end as the current month is completed is celled a. An operating budget ©. Acontinuous (rolling) budget b. Acapital budget d. master budget What is a budget that describes the long-term position; goals, and objectives of an entity? a. Capital budget €. Cash management burlget b. Operating budget d, Strategic budget In the budgeting and plansing pracess for @ firm, which one of the following should be completed first? 2. Sales budget cianaie” Cost management plan b. Financial budget 4d. Strategic plan Which one of the following schedules would be the dastitem to be prepared i) the normal budget preparation process? a. Direct labor budget Cash budget b. Cost of goods sold budget dd, Manufacturing overhead budget , Individual budge’. schedules are prepared to develop an annual comprehensive or master budget. The budget schedule that would provide the necessary Input data for the direct labor hudget would be the a. Sales forecast Schedule of cash receipts and disbursements b, Raw materials purchases budget 6. Production budget Pro forma financial statements are part of budgeting process. Normally, the last aro forma statement prepared is the a. Income statement Statement of cash flows b. Statement of cost of goods sold d.__ Statement of manufactunng costs In the preparation of a cash budget with clear-cut information on sources and uses of funds, ail of the following would classified as a cash flow under investing activities, EXCEPT: ‘a. Collection of a loan from subsidiary c. Sale of plant essets b. Purchase of a patent from an inventor 4d. Dividends received on stock investmentee AY SERVICES (October 2629 Baten) Page S PREWEER MATERIALS in MANAGEMENT ADV! 62. A firm most often uses a standard costing system in conjunction with: a. Flexible budgets © Target (hurdle) rate of return b. Management by objectives 4d. Parbeipative management programs 83. Standards represent best expected level of performance developed from a careful study and are expressed _. a a. Ona per unit bass. Through the organization's goals. b. By a management team. Through an organization's polices and procedures. 84. Variance analysts shovld be ws To understand why variances arise a b. To encourage emplayces Lo fos on meeting standards ©. As the only source of information for performance evaluation To adnainister approprate disciplinary action to employees that do not meet standards 4 85. The production department should generally be responsitie for material price variances that resulted from B 2. Purchases made in uneconamical lat-sizes.c. Purchase of the wrong arede of ratertals. d._ Changes in the markct prices of raw materials, b. Rush orders arising from poor scheduling. 96, ‘The difference between actual overhead incurred and budgeted overhead at actuat haurs worked represents: D a. Efficiency variance ¢. Volume variance b. Controllable variance 4. Spending veniance 87, A variance measuring the under-utiization or over-utica®inn of the plant is called c a Mix variance: ©. Volume variance b. Efficiency varlance Yield variance 88. A difference betvieen slandara costs use. for cost cenitol and the budgeted costs of the same manufacturing effort can exist because A a. Standard costs represent what costs should uc, whereas budgeted costs are expected actual costs 1b. Budgeted casts are historical costs, whereas standard casts are based on engineering studies €. Budgeted casts include some siack, whereas standard costs do not d._Standard costs include some slack, whereas budgeted costs do not 89. Variance analysis would be appropriate to tneasure performance in a. Cost conters Investment centers b. Profit centers a. Cost, profit and investment centers 90. A primary consideration in tracing a cost in responsiblity accounting 15 c a. Whether it's fixed or variable b. Whether i 1s production Gr administrate €. Who or what caused the cost to be mneurred d. Where in the o'ganzational structure the cost occurred 91, The format far internal reports in a responsibility accounting system is prescribed by the: A ‘a. Management c. Accounting system d. Generally accepted accounting principles b, Shareholders 92. Which of these items will LEAST likely appear in the internal performance report prepared by 2 profit center manager| ‘a. Intersegment and external sales . Direct variable cost jiscretionary fixed cost d. Commutted fixed cost iste the performance of a division manager is the division’s b. 93. Ordinarily, the most appropriate basic on wiiich to evalud B 2. Contribution margin 2 Net revenve minus controllable cvisiow costs cc. Gross profit d. Net income minus the devision’s fixed Coss 94, The most fun jamental responsibility center affectad by whe a ineniamas transfer prices is a(n) c e D ‘a. Production center at cat b. Investment center ante reo ethod for estabishing a transfer pie i 95. In theory, the optimal method for 9 ee est wth or wthout 2 mathup D a. Flexible budget cost ee B. Incremental cost ce tna ; secarmen 96. For performance evaluation, variable Neste ih > ei Hoe Se ie pe cage to operating departments usin 8 a, The actual varable at ratal level of activity for the period ted variable rate and tne 3 Be ible rate ard the inudgeted level ‘of activity for the period. cc. The budgeted wire Je period o: long-run average serwecang capacity. d. The actual vanable rate and the peak: p emma costs based On 97. Managers are most likely to: accepts allocations of <0 0 aims A . a, Cause and effect d. Benefits received b. Ability to bear 98. Common costs are ‘ Centra costs 3 Direct costs §._nirect co sane iy stot ° b, Current cost. a opposed to Actas contng (REC) result which oft al overhead allocations se foaset 99, Traditional overheat cannot be sed for FINAN Tang operations 0 3. Resulting allocations Carte A pened coat £9 Tae ng cos pal secant B. Overnead costs are assiane’ MT uitipe cust ater (or ow-volume products are sign be tocations are characteeZed DY UN em quertead Cons: Sigh volume products are * al wey too little overhead costs.ReSQ- The Re eed ewiew School of Oeco oncex iarnnsmuusacenn ta ceaumitoney MASPW-Theories va EMT ADSORYSTUCES vce 289 ae) Page? A128 epenenn oe 269800 ose Remain constant ar organization without any chenges being effected, total overhead costs will 6 tm Ind simply be spread over prociucts di 102.Which of he aaa Decauae of adebnal esannel nett ban dla on om eS ‘and cost pools b. Number of units —— 102.Which of the follow 5 Senet peace? ¢ LOEWE ot the showing necessary fe any val ptormanc eosreme rose gia a eeepc must promoted by Suse sonata tre i SSNs pu of Ue more account Sater in use 7 op the balanced scorecard approach, an orgarization evaluates manacerial pesformance based on a Rng tate east oferty seh 5 rescal FO Mats ance! and rostrancat eases € Multrienoetnonca measures ony a d. Multiple financial measures only 104.4 balanced scorecard is primarily concerned with 2. Stalt <. Systemns d0SW OA Structure >i \Which of the fallowing ts NOT @ component of the balanced scorecard? a. Strategic abjectives. c. Strateay initiatives b. Targets. d._ Assessment of human resources. 106. The balancer scorecard has been adopted by many corporations. Which best describes the balanced scorecard? ‘@. Astrategy that meets managements objectves. b.Aciagram ilusrating case and effect relationships. ©. Atable of key actions to achieve strategic objectives. G. Astrategic performance measurement and management framework 107.A balanced seorecaré c a Records variances between budgeted and actual revenues and expenses B Te most coneemed wath organizational financial solvency ond business processes De EMRS sed at mult ole orgamzatonal levels by redefining tne cetego-ies and measurements §Cenetiers quanttatve factors in measuring performance and ignores queltatiwe factors inthe process roB.whch tulanced scorecard. performance measure would be part of those used for internal business. Processes perspective? zi 2. Cycle time eCustomer retention = castors’ petit BS ofoyce satisfaction “learning graith — d._ Retumn on nwestment Prive 109.00 Bae Storacards which oF he felowang 's NOT an agpropriate measure of internal business Process performance? 2. Quaity costs c. Mano‘acturing cycle efficiency b. Delivery cycle time &. Number of customer complaints t10.Mansgerel performance can be measured in many ferent weys, curing return on wvestmert (ROL) and residual come. A good reason for using resiual income instead of ROT i tat B ome ee jual income can be comp.ted without regard to dentfyng an investment base 2 Ret congruence is mare likely to be promoted by using residual income be eet tal income is well understood and often used nthe Financia! press Geta oe take Into consideration bath the investment turnover rabo an retur-on-Sales PenesrTage sun pestual neome is 8 boter measure fr performance evaliate of an wovesmenk canter manager than retumn on Investment beczuse ester problems ascocated with measuring the asset base are eliminated 2 Cesitabie investment decisions wil not be neglected by high-retum divisions Dr Gniy the grass book value of assets needs to be calculated The arguments about tne implat cost of interest are clminated 1.whh one of the folowing tems would most ikely nt be mcorporated mo the calculation of a division's investment Which one ang the residual income approach for performance measurement ard evaluation? 8 a Fixed assets employed in division operations 8 Land being held by the division as @ ste for a new plant os aeren inventories when divison management exercises control over the ventory levels | oimon accounts payable when divsion management exerises contol over the amount of short-term cregit used 1113.8 firm earning a profit can increase its return on investment by > Tr “ncrassing sales revere and operating expenses by the same peso amount F Docreasing sales revenues and operating expenses by the same percentage © Taseasing investment and operating expenses by the samme peso amount increasing sales revenues and operating expenses by the same percentage id.whch monagement technique is NOT assocated with mariming the use of lined resources ( scarcity)? a. Linear programming ‘c.__ Incremental analysis ~ best product combination b. Capital rationing ~ profitability index 4d. Program Evaluation and Review Techmque ~ CPM ©ReSOi- The Review School of Occnanctoncy MASPW-Theories hv SERVICES COrtober 2039 Batch) Page H 115 In a PERT network, slack is the 2. Most likely time estimate tor an actvity Average of the time estimates for an actaty <.Path that requires the longest complelun tine 4G. Time an actwity can be delayed without causing délay to the entire project 126 ,Bepected value in decision analysts 2. Anarthmene mean using the probabrrties as we-ahts. 5. A standara ceviation using the probabilities z=, werghts The standaed dewiabun divided oy the coefficient of vanation ure of the difference between best possible autcome and outcome of the original decision a Am LIT. What 1s the cast factor that 1s LEAST likely to be affected by the learning curve? 2. Matenals| Indirect labor BL Dvrect labor |. variable overhead 118-The study of how outcome of a derision pracess changes as one or more assumpons used in the process change, ‘This results n presenting different scenaning, showing te outcome m each scenan as the assumptions change. D 2. OM Linear programming b. Queuing theory 1. Sensitivty analysis, 119.(0LD) A quantatve technique trac dzals withthe problem of suppiving suffizent facies to meet the needs of production lines or individuals that demand service unevenly 's c a. Regression analysis &.-Queumng theory b. PERT 6 Curviinear analysis 120.(OLD) Queuing theory minimizes the sum of the waiting costs and of the A 2. Cost of providing the service ‘c. Cost of jie resources waiting In line b. Average warting time in a queue d. Number of customers waiting in line Part 11: Finangiai Management | Werking capital management involve. .avesiment and financing decisions related to: c a. Sales and credit Current assets and current abilities b Current assets and capital structure 4. Prapesty, plant, equipment and current liabilities 2. Asa company becomes more conservative in working capital policy, it would tend to Nave 2 (an) 2. Decrease in acid test ratio Increase in the ratio of current assets to units of output fncresse in the raho of current lables Lo non-current habalities Ineresse in funds invested in cornmcn stock ancl a decrease in funds invested in securities 3. The primary objective of workang capital management is to Maximize an entity's total current assets ° 4. c a 1b. Minimize an entity's total current lias ©. Achieve a balance betweer tsk and retui S ehieve a balance between current ossets and current labiitles 4. when managing each and marketable secures, 9 corporate treasurer's primarily concerned with 8 Ss ainienzing taxes Bb. Luguicity and safety Mavimizng rate of return 6 Tevesting n ereseury bonds since they have no default sk 5. Which of the folowing 1s true about afm’ Raat = delng So rtves to minimize the Noa for bth cash ces and cash dsourseme ts a Serves to ante Me Hot fr beh cash rece a cash dstursements OA cat mami the fant for ca rece ond mimic the Bs et oh disbursements. Siem ses to maximize te oat or ash dsbursaments and minimize: the float for cash recep.» A rg requirement can be sepa, ated 10 8 The fer area permanent co Curenthabities and ong term fe ‘ Beer oases ane fied ass $Cument lates and kang term debts vaest nek of berg unable to meet the flm’s worki T nancing policy tat subjects the firm to the gre The working ae ere oicy that finances (where: CA = current assets) matynng 901ig20"5 ‘term deots Permanent CA wit fang term debts rf CA wih lone eer Permanent CA with short-term debts . a. Tempor debts a 8. Anat the following 2 a Ea maximum rtur on reetment ase stare ts Maintain adequate cash nee for transactions e pe est “ing bajance requirements hy 9. Aeonsultant recommen eed car Ructuate sub-tzntially throughout the year Reason #1: Cash needs 27 BAT qxcount may appear during the Year Reason #2: OppOrUN I jensom. gen above are corey classified as The cash palane ced to addr Reasal. we agason #1 Speculative balances ste lances ye balances 2 bal ’ Precautionary balances Precautionary balances AXRSA - The Review PREWEEK MATERIALS Fehool of Cecovnitianeg, MASPW-Theories In MANAGER 'ANAGEMENT ADVISORY SERVICES (October 2019 Batch) -Page 9 10. Some managers NGETS Express the opinion that their “cash management problems are ncthing more then Inventory problems.” They then ¢1 c 2 fare fs 4 occa us ‘cash management models, such as the EOQ model, to determine the: ble securities level Credit and collection pelines Proper blend of marketable securities and cash Proper relationship between current assets and current liabilities AL. The Baumol Cash m; The Baumol Cash Model 's used to determine the optimal split between cash and marketable securities. This mode! Imes all ofthe following, EXCEPT that >, : a. A 2. Cash ffow requirements are random 1. Interest rates are constart over the short run the future? 8 3. Increased computer control © Standardization of procucts 1. Increased rate of sales growth 4. inter vanety of products 17. Adecrease in inventory orcer costs wil tend to 8 3. Increese the reorder point Decrease the holding cost percentage BL Decrease the ecanemic order quantity 4. Have no effect on the economic order quantity 18, Acompany ould be wing to have 3 low Inventory turnover ratio tre 8 3 Lead eire is shert 2 Inventory erder costs stow BL Cost of stock out ss tugh &. Carrying zost of inventory is high 19, 1xu Compr hos computed fs £OQ as SOO units. However, management woula rather ender in quaraties of 640 FAL corte KC's tata’ purchase order cost and total armual carrying cost for an order quantity of 690 uns ‘compared t9 the respecave amounts for an EOQ of 500 units? D 2. Higher purchase order cost and higher carrying cost. B. Lowmer curchase order cost anc lower carrying cost. c._ Higher curchase order cost and lower carrying Cost @._Lomer purchase order cost anw higher carrying cost 20, Which statement Sest summarizes the foctor that affects the level of safety stock that a frm wil carry? ° oe seme amount of le cash that management believes it hes to investi safety stock B. The rapidity with which the inventory position wel turn ever ©The level of praduction the firm's bank is wiling to finance The level of uncertainty with respect to a stodcout condition that management is ving to accept 21. when a company analyzes credit applicants and increase the qualty of accounts rejected, 2 company is attempting fe: 8 a. Maximize sales ‘c. Increase bad debt lesses b. Maximize prot d_ Increase average collection period 22, Which of tre folowing does NOT represent a firm's average gross receivables balance? 3. Average daily sales x average collection period B. Annual credit sales + accounts receivable turnover fc. Average age in days cf receivables x average daily sales Annual credit sales ~ qumber of days sales in recewabies 23, an mcrease in sales resuting From an increased cash discount for prompt payment would be exoected to cause: 3. decrease in cash canversion cycle . Am increase n operating cycle B AGecrease in purchase ciscounts taken d,_ An increase in average collection period 24, The forms of short term borrowing that are unsecured credit are D 7 Hating lien, revolving ced, chattel mortgage, and commercia! paper b. Factoring, chattel mortgage, bankers’ acceptances, and line of crecit . Floabng len, chattel morzgage. bankers’ accegtances, and line of credit @. Revolving credit, bankers’ acceptances, line af credit, and commercial paper 25. Anentity obtaining short-term financing with trade credit will pay a higher percentage financhng cost when the D a. Discount percentage is lower c._ Ttems purchased have a lower price 'b. Items purchased have a higher price d. Supplier offers a longer discount period &ReSQ. The Review School of Gccoumtoney MASPW-Theories PREWEEE MATERIALS in MANAGEMENT ATE sy eg 763? Bate); Pape 30 Me renee ee tiat meneaheg lan fae Heck loan will have a Higher effective financing cost if it has which combination of characteristics? AD compersating bier rd we terest D.ALO% comperating aes end hues merest € 420%. compensating balan dnd requler wierest A 20% compensate dance and discount terest 27. Compensating vatnce reqaremerts 0 Represent orepand nterest on 2 aan b_ Decrease the etectve terest paid by the borrower € Carrot be sed for debuts ent tay bth the borower ac the bank {&_Compensote the bank for services rendered hy prowding i with deposit of funds 28. Short-term, unsecure promissory noes sed by iar ms are known as A ‘a. Commercial paper Bankers’ acceptances b. Agency secuities d. Repurchase agreements. 29. Commercial paper c a. Has a matunty date greats thon 1 year b. Has an interest rate lower than Treasury Bi < Ordinanly does not have an active secondary market 4d. _I5 usually sold only through invesment banking dealers 30. Factoring is the 8 a inventery by ane entity by anther b ig of accounts receivable by one entity by another c. Adjustment of inventories on financial statements for supplies that have become obsolete. 4 Conversion of accounts receivabie to bad "oh ¢: fmancial statements for accounts that are long overdue 31, The theory underlying the cost of capital 15 primary concerned with the cost of ’@. Long-term funds and old funds Long-term funds and new funds b. Short-term funds and new fects ‘a. Short term funds and old funds 32. Itis generally more expensive for a company to finance with equily capital than with debt capital because '@. Leng term bonds have a maturity date and must therefore be repaid in the future 1b. Investors are exposed to greater risk with equity capital Equity copstal is n greater demans than devt capital d. Dividends fluctuate to 2 greater extant than interest rates 33. Generally, the most expensive source ef financiny for a fim is: o a. Debt Retained earnings b. Preferred! stock New common stack 34. The overall cost of financing for tte fms called tre: D a. Cost of comimon stock c. Retained earnings breakpoint b. Cost of preferred stock d. Weighted average cost of capital 35. Which of the following is NOT a component used in calculating the cost of capital? 8 3. Cost of long term debt ©. Cost of eammon stace B. _ Cost of short-term debt Cont of retained earings 46. If ks the cast of det and tie the marginal ax rate, the after-tax cost of debt (K) 1 best represented by the formula D 2 K=Kt =H) b. kek a kak(it) 37. The value of the stock increases as the b ‘2 Value ofthe debt decreases c. Required rate of retum increases B._Divdend grovah rate decreases |) Reauired rate of return decreases 4p, The weighted average cos of captal approach to cecision making ls NOT eect affected bythe c “a Value of common stock B Cost of debt outstanding mnt budget for expansion & Corrente remy, ensing As USE simplemente project er i ron nods) sus thatthe ran on sre of corstan ck: compris of 39. The Gor vidend yield and capital gas yd C. Coptal gins yeld and dividend growth ate a. Dividend vel a pred nce year Capt gs gfe rate ard dvdend grow ate bln Tiago! (CAPM) approach oF computing the cost of common equity and retained earings, et Pricing 40. Using the Capital Ass is conectly steted? mona ean 2M SS ct etc is! werage stock ees ‘aturn an the marketaverage ste Ker are rate of return Katt one a. Kar + (Km, (Ky - Ker) b. (Kar + Kw) B ve fer assuring risk? 41, The additional return one must expect fone Risk free rate of return Boa. Risk discount Expected rate of return BL Risk premium . res that the expected nal to its beta 42, The CAPM lates a tent 6 OPO ey 8 Rak wn investiment fs Prone ron the risk-free cate 7 premium on at dependent Rie return on investment 1 eee an sco rate and the market rae of recur n investment depe" Rate of return on ar aoePREWEEK MATERIALS in MANAGEMENT Reze- the Keview Se Review School of Acconeitanag MASPW-Theortes e 43, The term *beta® > term Weta can best be dese SEAVICES (October 2019 Bath) Powe 1 feightes bed as the Weighted-average eturn of an investment portfolio iH Yaraity of stand dewatin of the investment returts &_Imestnint rein sens 19 hangs ees 44 Trapp uesEMeAL tum s sera to changes nthe marke ens 8 Aye of wk that's no ives a affects the yao Pano chasing: power tisk “ee onmarket isk D. Market risk Gh Interest vate nk 45. When ‘when putchasry tempor vestments, wc one ot long Ue ess the risk associated with the abity ne vestment tra short period of time witout sigtieant pice CONCESSIONS? 6; a Interest-rate nek cc Financial risk 1b. Purchasing-power risk cd, Uquidity risk . 46. Political risk may be reduced by — Entering unto a jaint venture with another foreign company b. Making foreign operations depencient on the domestic c. Refusing to pay higher wages and higher taxes d. Financing with capital from a foreign country 47. The tisk of loss because of fluctuations in the relative value of foreign cumences 'S called c a. Expropriation risk ‘¢. Exchange rate risk b, Multinational beta dd. Unativersifiable risk 48, Each poste sutcome re mulpied bys probaly of occurrence and the sm uP IME products, a. Varanve co Expected rate of returT b, Standard deviation @ Coetfcent of variation 49, The standard deviation ofa stock investment is best described as the 2. Variabitty of expected returns sepa oft between risk andl return iL Senstivicy to market movements @ Vantin around the mean return | 50. The single investment risk tha: investor ‘would face if he or she hels only one financial asset. oo Dverstable 13k A ‘a. Stand-alone risk b, Portfolo risk d Systematic rss SA. Which of the following ts the variabilty of return on stocks oF portfolios associated with changes in return on the market as a whole? a, Systematic risk b. Standard deviation 52. Non-iiversifiable lisk 's assessed rel c a. Market return) b. Risk-free rate 53. Which of the following terms cannot c._Unsystematic risk d. Coefficient of variation ative to the risk of # diversified portfolio. This type ‘e. Beta coefficient J, Alpha covtficent bbe used to describe unsystematic isk? lf risk ts measured by the: a. Asset-specific “isk cc. Market risk: b. Diverstiable risk Unique risk 54, The type of risk that can be avoided through proper dversiication is called c. Total risk B 3. Systematic risk b. Unsyatematic risk 155, What relationsiup Coes risks end retums normally have? ‘a. Direct relationship Spurious relationship b. Inverse relationship d. ict and discreet relationship 56. Investments avaiable n Philippine capital markets generally consists a. Debt and equity securities b. Pag-big funds, mutual funds and UITFs C_ Real estate, multi-level marketing and networking § Franchising, entrepreneurship, loans and lending arrangements 57. oF the folowing four investments, wh ch is considered the safest? D ‘a. Commercial paper cc, Treasury bonds J. Portfolto risk b. Corporate bonds dd, Treasury bills 58. Additional funds needed (AFN) are Dest described as: D ‘a, The amount of assets required per peso of sales Bands that are obtained automatically from routine business transactions eM torecasting approach in which the forecasted percentage of sales foreach item is held constant Funds that 2 firm must ralse externally through Borrowing or by selling new common/preferred stock 59, External capital requirements (Le., AFN) are LOWER for entives with wich one oF the Follewing characteristics? ‘a. Lower proft margins c. Higher sales growth rates b. Lower retention ratios d. Lower capital intensity ratios 60. Tt considered 26 2 source OF hybrid financing (i.e, both debt and equity) that incurs a fixed charge and increases leverage, but payment of dividends 1s not a legal obligation. 8 a. Bonds c. Common stock b. Preferred stock 4. Commercial paper 64, Which of the following transactions results in adcitional capstal to the firm? A a, Exercise of warrants c. _ Issuance of stock dividend d. Conversion of bonds to common stocks B. Tworfor-one stock spit ) SsRe The Review Schock of Uccrunstonrors MASPW-Theories PREWEEK MATERIALS in MANAGEMEN! ADVISORY SERVICES (OAtabeN 2018 Baten) Page 12 62 8 63 65, 7, 7. 73. 7A. 75. 76. Ifa high percentage of an entity's total costs 1s xed, the entity operating leverage wil be 2 tow © Unchangedt Unable to be determned Secunng of funds for investment at a fixed rate of return te oh Securng of funds for ed rate of return te fund suppers, &O enhance the well being of the COmANON Bind rosmgerere i roves Which of the following is NOT a potertial source 0° fnanciat leverage” a, Long-term det G. Proferred stock Which of the following (Ss NOT’ key determinant of financat feverace” 2. Technology cc. Level of debt A decease inthe det rat wil eat ely fect B. Busnes sk Si Systema or market sk Frnancal rok eters to the a. Risk of owning equity securibes: Possibility that interest rates wall incr Generel basis ak of fe fe g, RPR itary paler wer act used Ifa company is profitatie and is effectively using feverage, which one of the following ratios 1s hkely to be the largest? = cape snag Suess emcee Wen estblsfing op! capten srt, fms shoul tive Boece ce pargeel oat oan ne mse the amount of debt thang Wed \Whieh of te Folevang rebos best meesutesshert-trm sahency (.e, aug? 3 Quek cto ec ety total assets Keanna per chara bean reworks oe is a tery balance sed in the eskulson fea ofthe lowly? Acid-test rato Inventory Tumover Ls Numerator Denominator © Netuses Benernat a ‘Not used Numerator ‘A company has an acid-test ratio of 1. 5 to 1.0. Which will cause this ratio to deteriorate for the company? ‘a. Sale of equipment at a loss Borrowing short-term foan from a bank 8. Se ot nvertory on account §.Pettnene cash avkenos pres declared oe re ee cat newmaly Serene 4A eSut Ot Be An mereace if cash sales "n proportional to credit sales, B.A change in credit policy to lengthen the penod fo! cash discounts Senrfcant sales volume decrease near the c#.t of the accounting period < me ecount (aesure the use of aowanee for doubtful accounts meted) |. The write-off of an uncolectibic : iis esuft vn a hughet mventOry {umes fab@ An aA inflationary eeoHeAHY? cc. Weaghted average a d. Spence identficabon: ae iy i. ssset over eto ovestment maybe cakcuted By rung ft ae anon &¥ jection pertod E.Dett ati a. Average ete ° d. Fined charge coverage 3 me aperatuny prott may Wil on sales volume. eens c._ Tncrease as a result of the price mensase Remain Unchanged is merease di. Change, bu rection of change, et he WE Decne 5.2 esi Of ig as dered sual ove Uh st ee years ‘Whit ane ofthe ROROWND ABC Company's 9 margia has ins this decrease? renpect best er meatandse e¥entry MoM i expenses sd BL Cost af goods sol nas ee SY eee pening ventory Fer than expectes €._Aphyical count of Merchandise qaxreased wie ses ies have a! ae The cost of merchandise Wve" reat yearend have oF the Flown fates SF eect al the ssuance of OmNTIe” stock for cash at ¥ “ in 0 What return of Total DoE ae a: increase Foe ps Inerenst increase ¢ Decreast Decrease f se + ea of 7 Decree (TIE) cations pnw 1S prottasty erestcared (THE) {Asset management a. uuilty @ b. Solvency eSRFQ. The Review Schoot PREWEEK MATERIALS in My 1p Heentty the set oF 8 D A A D c D D A of Mecounctarcy MASPW-Theories ‘OVISORY SERVICES (October 2019 Batch) -Page 13 ratios that is mast useful in evaluating solvency. a. Debt ratio, current retio, and TIE bo Debt ratio, 1 Debt ratio, quick rato, aio, TIE, and falo, quick ratio, and TIE 81. When compared t3 4 debery on d. Debt ratio, THE, and cash flow to debt or erate 2 dato assets ratio, a debe torent ate woud: o> tbatenere han te cebt teases rato Be about the seme as the debt to-assets ratio Francal sree panne detours tao, | Mave no vlatonsi at alto debt-ases ratio Comenon-sie income statement ° j Liquidity and profitebil ° 3 practice that s LEAST likely to negatively impact a company’s auality of earings isthe intentional $ oer = ins sales staff of financial incentives fr increesing year Lend sales Burchase of every ofan obsolete mart a yearend 89 ITO Ug Estate ct uncle cous 2 of ais we vec the histoncal rate fs $2 of sales cording of an order from a reliable customer 25 4 sale on December 21 when the cash is received, eh, Honea mush te gods al nt ship wb anand 2 }. Horizontal and vertical analyses are techniques used by analysts in understanding the financial statements of companies. Which of the following is an examaie of @ vertical, ‘commonsize analysis? 2. Commision expense in 2018 ¢ 10% greater than f was in 2017 which serves as base Year b. A comparison in finanail ratio between to or more firins (0 ‘the same industry c._-Acomparisos it frnaneal bo aetween two of more firms in ciferent industries 4. Commission expense in 2028 15 5% cl sales 85, Capital bucgeting is concerned wth ’2._ Analysis oF long-range decisions bb. Analysts of short-range decisions Scheduling of office personne! in office buiciras d. Decisions affecting on!y capitel-intensive industries 86. In deciding whether fe replace a miachne, whicr of the folowing is NOT a sunk cost? 2. Book value othe existing macine ©. Deprecated cost af the existing machine B. Original cost ofthe existing machine @. Expected resale price of the existing machine 87, th capital budaesing. which of the followng is NOT considered in the net “investment for decision making purposes? Be Add tonal working cepital requirements Tax shied on loss of disposal of old macrine c. Salvaye value of the old machine to be replaced 6. Salvage value of the neve machine for replacement = donideral inmilre [earth phen £88. In computing the intial Investment for decision-making, taxes would be relevant for all of the following, EXCEPT: 2. Avoidable repait: of okt asset B brofit on sale of oid asset replaced by 2 new one oer ae in worang capital recuired to supper new capital fnvestrent S Lae an wnte-off of other assets disposed because of new capital nvestnett a0. Acmpany is considering a project tat requtes 2 50,000 workng captal nvestent. The company’s tax rate is 1 company (otal Buagetng analysis, he inal vestment in working capil should be: ‘a. Multiplied by (1-0.40) and shown as @ ‘net ? 30,000 cash outfiow & Multiplied by the rate (0.40) and shown as 2 net P 20,000 cash outfiow c. Shown as a cash outflow of P 50,000 4. Ignored ou Fo ee a eject te tum ht nesta demar fornvesting 3s kw a, OCF rate cf return c. Payback b. Net present value d. Cost of capital ‘94, Imam investment in plant asset, the return that Keeps the markt Ore of the firm stock unchanged is ‘a. Net present value Adjusted rate of return b. Cost of capital 4. Unadjusted rate of return 192, Tre discount rate that makes the present value of a tone! caymette equal to is price Is termed the: a, Coupon rate c. Rate of return b. Current yield d._ Yield to maturity 493, An advantage of using the payback method is that the rethed is: ‘a. Simple to compute ‘c. Precise in estimates of profitability b. Not bases) on cash flow data Gd. Insensitive to the ife of the project 94, As 9 capital budgeting technique, the payback period considers depreciation expense (DE) and time value of money (TMV) as follows: ‘a, _ DE, relevant and TVM, relevant DE, relevant and TVM, relevant DE, irrelevant and TYM, irrelevant 4. DE, relevant and TWM, irrelevant 95, The payback method avsures that al cash inflows are reinvested to yi 2 retur) eaval 12 a. The discount rate The internal rate of return b, The hurdle rate d. Zero 96, Which capital budgeting method assumes that the funds are reinvested at the company's cost of capital? ‘a, Payback cc. Net present value bb. Accounting rate of return , Time adjusted rate of returnSUA The Review School of lecouevhonr-g MASPW-Theories PREWEEK MATERIALS in MANAGEMENT ADVISORY SERVICES [October 2019 Batch) Page 18 97. The discount rate that equates the PV of expected cash flows with the cost of investments's the a. Net present vale &Accoutng rate o ._Intemalrate of return &._ Payback ered 5 % Evening ee eel the eral ae fea (RR) a vestent project be we ish inflows are larger The project has payback period B._Thesvestment costs lower G._Costeowa are rceeed crm rot M ae recived eine 98. Te project ota nex ad he teal at fet. Will always resutt in the sane preference ranking for nvestrent projects . Wilsometmes resi in ate-onprfersce rags for wes projects © Are less dependabie than the payback method in ranking mvestment projects, tonal Cog 33 dependable than net preset vate in ankng estment projects. O.A8 er factors erg etal, 2 age number prefered to 2 smaler umber for al thes captal project ewtion Payback period -lcwir lowir wisK —c_ Net present value b._ Proftabty index ©, Ingermal rate of returns 101.The use of der vatives to ether hedge or speculete (esuts a. Increased risk regardless of mative B. Decreased tsk regardless of motive ©. Offsetting risk when hedoing art increased risk when speculating Offering risk when speculating and w:creased ri when hedging 102.A forward contract involves a commitment today to purchase a product c On a specific future date at 2 price to be determined sometime in the Future b. At some time during the current day at chis present pce Ona speatic future date at a price dctermined today ¢. Only when is price increase above ts current exeraise price 103.1f a corporation holds a forward contract for the delivery of US Treasury Bonds in months and during those 6 months, interest rates decline, 2 the end ofthe 6 mcsins the value ofthe forward contract wil have 8 2. Decreased b. Increased <. Remained constant J. Any ofthe answers may be correct, depending on the extent ofthe decine in interest rates 104. Buying a wheat futures contract to protect sgainst price fluctuation of wheat would be classified as a B 8 a. Fair value hedge c. Foreign currency hedge b. Cash flow hedge d. Swap 1105, When a firm finances cach asset with financial instrument of the same approximate matunty as the Ife ofthe assek, it is applying > ‘a. Working capital management Financia! leverage b. Return maximization €. Ahedging approach ragement Consultancy & Economics Parts IIL & {V: M of Management Acvisory Services (MAS)? Which of the following Is @ charactenstc in each engagement o Human relations Go rot play 3 wal re Be Services rendered are for tira parties Engagements are usualy recuming 4. tinvotves problem solvng 2 cnt adie navatagens poston an nebo pts a en 1S Se Se ead far th he lent ates sess an ern the eves of eck ‘ BR CPAis a person with recognized standing Post CPAs are highly ecucated Has Oa apa xc, ebjectve and cational meth of solving problems cated “anahtel ; res » systema 3._In providing MAS, te CPA PE nyave which ofthe Flowing? spproac! * which DO! fh and process," which eee geeking and identifying objectives nent Facts anc circumstances b._Ascertaining pert 2 Evaluating and implementing Pur 4, _ Defining problem or o9PORUnY tice may engage al fo at authonzed or legally obligated 1 Ac ar ental information UNIS 2 ant sible Sol Py for mprovement sos ‘ . i other employment while ee nom oe indent aioe oe nists, rms TO "a. Periods of pnice changes because oF nfirban. cr Zearion b. The evolution 2f smal business fms inte |.ge companies Change in output wich occurs 92-a:156 uf technological changes Fluctuations in aggregate rai mcome above or below it> long-run growth path res the total emount of eapendituies for consumer goods and investment for a period of time, which includes purchases by customers, businesses, government and foreign entities a. Gross demestic product (GDP) Aggregate supply b. Gross natonal product (GNP) 4 Aggregate demand Gross domestic product (GDP) 5 the 3. Total purchases by consumers, business, government, and foreign entities (Agaregate demand} BL Total amount of expenditures tor consurwt aneds anal anvestment for a period of time {Agaregate demand) &.Value of all final goods ant sources 4d. Value of all goods, anc! services preduced by the country by domestic fiims, excluding these produced by fore.an-awned companies Which of the folowing may provide a feading indicator of # future increase in gross domestic product? a. A reduction in the mon2y suppty B.A decrease in the issuance of butlaing perinits An increase in the timeiiness of delivery by vendors d. An increase in the average hours worked per week of prociuction workers The two main variables that contrisute to increases in real GD? devived from labor inputs a. Inflation rate ©. {otal worker hours b. Quality oF output UL Potential abor force Which isa postive effect of inflation? 2. Uncertainty about future inflation may discourage mvestinent and saving BL Loss im stability in the real value of mcriey and other sranetary items over time Mitigation of economic recessions and debt reef fy reducing the real level of debt GL Shortages of gouds if consumers begin hoarding m anticipation of price increase n the future which of the fcllowing statements 1s true abou: deflation? ‘a. It results in economic expansion c. Tt motivates consumers to Dorrow money b. It resutts in very low mtcrest rates d. It motwates usinesses to make investments In macroeconomics, @ cetlationary spiralis 2 situation whee 2. Decreases in production lead to dezcases in prices, which in turn lead to lower wages and cemand B. Decreases in prices lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases it prices Decreases in prices lead to higher produceon, which in turn leads to higher wages and demand, which results into increase 19 prices dd. _Tneteases in press lead to a viuous cyde, and a problem exacerbates tts own cause “The most effecaive FISCAL policy program “or reducing cemanc- pull inflation i to: a. Decrease government spending and increase taxes B._ Inerease government spending and decrease taxes ©. Increase both government spencing and taxes 4. Decrease the money supoy wmch of Oe following is NOT am instrument of MONETARY policy by which money supply 's controied? ‘2. Opensmarket operations ‘e_ Changing the discount rate be Changing tne reserve ratio €._Manpulation of aoverrmment spending “the rate that genral bank charges for oan to conmrercil Barnes called ‘a. Discount rate ©. afin premium ._ Default premium i, fofation rae the country’s currency wil most likely tr Bhngee Senta ass interest ates Say te cours cen wil mos 3. Inctease in relative value Decrease in ceatve value inchanged in ¥ cnterest rate is extremely INO When the ergy cost of olding money 5108, ices piodized by the country by both domestic and foreign-owned are labor productivity and ¢ Suply of money will be relatively smal! a. Opporun d= Mo cost to holding money (purchasir ‘sconstamt) dng money grr owe coe Opportunity cost Pe en veal ae Yana ere rates? What factor explains the a DDefauit premium a. Credit nN Gd. Inflation premium market nl Fe vewaniage ers 10 the In 1 ernptioral ade, ABSOLUTE acarians merce beacon exper a can produce Bb to sel athe a than oer nations yt prec 8 ROU Tey ows core at than ane ation coma - hon to Fr Sty to one 02SA - BU. The Revson School of Qcconastony MASPW-Theories EWEEK MATERIALS in MANAGEMENT 4 NGORY StAVICES (Cetober 2019 Batch) Page L7 35. When a count wintry imports more than 8 B Flacmepadie ake tne cole net imports Oy 15 suffering from inf b. Has negative Js suffering from inflaton 36, Which ofthe fellow ene @._Iexpeniencig an nicore boom ng 15 an economic ratlonale for government sntervenition wn trade? Protecting infant industries Dealing vath friendly countries b. Prose eserving national ident eg aplares of uvtvence 37. Which of the following sa tant” d._Mantaming spheres of fens 2. Ucensngrequrerents Consumption taxes on imported goods 38 (Which meneretinee ne S Grrearanable standards peranirg to product s=fehy 7 }asure creates the MOST restrctve barter to exporting to a country?” oe Embargos 3 me Quotas, d. Exchange controls pb ichange rates are determined by 3. The International Menetary Fund c._ Exporters and importers of manufactured goods femand ia the foreigh currency market b. Each industry count government a & and de nf ab a ase 10.95 Euros to US $1 = 0.90 Euros, 40. If the value of US delta foreign currency markers changes from US $1 = a. US exports to Europe shall decrease b. The Euro has depreciated against the dolar €._ Products mported from Euroge tothe US. wil become more exPeashs & Products na od tert capable of buying more European oR AL, TERE vauw al the U.S dolar in forggn currency market changes from $1 =.75 euros to $1=.70 euros 2. The eurohas depreaated agarist the dolar b. Products imported from Europe to the U. 'S. will became more expensive at ere europe wl find thet dors wll buy mare European Prosucts d. US. exports tu Europe should decrease da won earch hn tolonang statements supparts the concusion that the US: JOHar has gained purchasing power against the Japanese yen? c ae ation has recently been higher in the U.S. than in Japan b. The dollar is current trading at a premium in the Forward market with respect to the yen ©The yen's spot rate with respect to the dollar has just fallen d. Studies recently published in the financial press have shed doubt on the interest rate parity (IRP) theory 43. A country’s currency foreign exchange rate Is LEAST likely affected by the country’s A a. Texrate ‘c.Inflation rate b. Interest rate ¢._ Poiltical stabiity 4 Theteis enposely undertaken Inthe foreign curency market, the invest in foreign currency then becomes 8 a. An exporter cc. Avarbitrageur b. A speculator gd, involved in hedging 45, A Phiippine importer of English clothing has contracted to pay an noun xed in British pounds three manths from a earn porter worries thatthe Philippine peso may depreciate sharply against he British pound in the interim, it would be well advised to He es pourds inthe forward exchange market ¢. Sell pesos wn We fanes market 2 cy pounds in the forward exchange market ¢. Buy pesos in the futures anit 46, An enuty nas a foregn currency denominated teae payable, due In 60 days. To eliminate the foreign currency arcnanige rte risk associated with the payable, the entity could: 8 ‘a, Sell foreign currency forward today b. Buy foreign currency forward today vic 80 days and pay the invoice by purchasing] foreign currency inthe spot market a that hime «Pow foreign currency today, convert ft Fo domestic currency on the spot market, and Invest the fords in a domestic bank deposit until the invorce payment date 47. one US dolar is being quoted at 100 Japanese yen on the spot market and at 102 5 Japanese . re ard market; hence, the anme/effect in the Forvard market is that U.S dalla 5 at pase Verve ieee A a. Premium of 10% Discount af 19% b. Premium of 2.5% d. Discount of 0.025% 448, Acompany has recently purchased some stock of 2 competitor. However tis somewhat concerned Bat the market Pace of this stock coul! decrease over the short un. The company could hedge against the possible decline in the stock's market price by: 8 ’a. Selling a put aption on that stock Purchasing a call option on that stock b. Purchasing a put option on that stock d. Obtaining a warrant opuian an that stock 49. Which of the following is not a poltical risk of investing in # foreign country? D ‘a. Rebellions could result in destruction of property b. Assets could be expropriated ‘c._Foreign-exchange controls cold mit the repatriation of profits d. A foreign customer might default on its debt 50, Allof the following are concerns that are unique to foreign investments except c a, Exchance rate changes Changes in interest rates b. Purchasing power parity d. ExpropriationKeSU.- The Review School of Accawmtonen, MASPW-Theories PREWEEK MATERIALS in MANAGEMENT ADVISURY SERVICES (October 2019 Batch) - Page 18 si. 52 83. 54. 55, 46, 57. 58, 59. 61. 62. 63 65, 66. 67. 68. |. When the government imposes 1 An individual has taxable income of P 2.3 00 axable income ther 7 P23. per year and paid P 800, 1 indivi creased to P'3M per year resulting in a P 1 M incor ax Mabity. The poreonal teresa anal . essed 19 P2 sete system in this case 1s The sconme res 9 dictating that each natin spe ‘tne that it produces relative ie reason ing that each nation specialize in the production of yoods More efficentiy than other nations and import those goods that are ‘rely ime nny oy eae roe ecety than eer na Por ‘goods that are produced relately more efficently by other 2. Effient trade © Relative competition ney omnnsting retumns 3 Comparative advantage avr of comparative advantage, the country whi shoud produce a speccoroduct is determined by a Tests Opportunity coms tomate .Evonomic order quantities cope expect the pic of coffee tose next month, the demand for coffe vl & Deere now ©. Stay the same now and increase next month mt now 4. Stay the same now and next month movement along the demand curve ftom one prce-quantty combination to aather i called a(n) ‘Change in demand ©. Change in the quantity demanded . Shift in the demand curve 8. Increase in demand If both the suppiy and the demana for a good increase. the market price will a. Increase Not change b. Decrease 4, Not be predictable with only these facts Ifa large percentage increase in the price of a goed results in a small percentage reduction in the quantity demanded Of the good, demand is said to be 2. Horizontal c. Relatively elastic b. Relatively inelastic 6. Income proof Ifa small percentage increase in the price of a good results ina rather large percentage reduction in the demanded of the good, demand is said to be a. Vertical Relatively elastic b. Relatively inelastic d. robust If product has @ price elasticity of demand of 2.0, the demand is considered to be: a. Perfectly elastic Relatively elastic b. Perfectly inelastic dd, Relabvely incastic When the demand fur a product 1s olastic, a decrease in the price of a product will ‘a, Increase competition cc. Decrease total revenue b. Increase total revenue d. Not affect total revenue Ifthe price elasbaty of demand for a normal good is estimated to be 2.5, a 596 reduction inthe price causes. a. Total revenue to fall by 5% ‘c. Quantity demanded to rise by 12.5% 1b. Total revenue to fall by 12.5% 4. Quantity demanded 10 decrease by 5% ‘According to the law of supply, a. Producers are willing to supply iarger amounts of a good as its price increases 2 Roirect relationship ensts between the pnce of a gond and the amount buyers chase to buy on inverse relationship exists between the price af a good and the amount buyers wish lo buy GF iinverse relationship exits between te price of yood and the amount eroducers Supply [A shift in the sunply curve may result from te follssing, EXCEPT '2.__Chianges in production technolccy B Ghanges in the number af sears in he market Changes in the number of buyers in the market rae ear eas «oman ea ogal te nk Mee Greater tax revenves for the government. crest consumo fe 5 NS me » mpettve model "er supply and demand precicts that a surplus can arse only if there i 3 Tae se sbove tne eauilibrium price. Maximum price below tne ‘equilibrium price mers ed es Yarn ee Supplies el ht uve unt an eqabrie established at Khe ons The demand ca shift up ut Sn equilibrium 5 established at the existing price d. The supply curve sl nll Cause ease in quantity demanded se in supply cc. Adecrease 1 A decrease tre nd Sete an se in dere ad demant for 2 good, which of the fOlowns wil defintely occur b._ A decrease both te supply and cea Selim quanty wl ase af there is 2 wal ner eose $. The equilibrium quantity wil decrease fee of te good wl oe Tre price of the good will dette: : 4PREWEEK MATERIALS in Mawace wens sp Ee onep MASPW-Theories ENT AD ADVISORY services (October 2019 Batch) Ps 69. In econcmies, eS, Bersalin 2. eter OME ns pera ese «Income ater ta © Take hone say 70. The marginal properista tg 4. Disposable income 3 Dvdng et consume scale by Dividing disposes nO” bY disposable income ei Seasate income by cosmaton @. Dang ee Shanae in apostle come by he change in consumption 71. am indangein he change in consumption bythe change in disposable income | Uses P 10,000 from savings account, nich was paying 5% wterest annual, to invest in saloon, then A SUA ct ct this investment woud analy Be betes < P10,500 2 tempol &. The dividend paid by the coffee shop a pared with ts ina perfect compestive marke, a menapost tends to 2. Produce submantialy less but charge a ngher price roduce substantially more and charge a higher price reduce the same output and charge a higher price 73. Mega k Tsute stand iss and charge # ower pice 3. Monopolstic competion is characterized by 2. Arelativey large group of sellers who produce differentiated orocucts 5. Arelatwely smal group of sellers wno produce differentiated products ©. Armonopaisie marset where the consumer i persuaded thet there is perfect competition 4. Ateiatvely large group of selless who rroduce a homogenous product 74. Acharacterstic of a monopoly i that A '2.Amonopoly vill produce when marginal revenue is equal to marginal cost B. There is a unque relationship between the market price and the quantity supped €Imoptimring profs, a monopcly wil increase 1s cupply cuNe fo where the demanc curve becomes inelastic . There are mutigle prices for the product to the consumer 75. An employer ts 2 monoDsorist with respect o hiring labor, butit sells ts product in a competitive market, Compared goth a firm that must hire from a compettive labor market, the monopsonist vill pay 2 A a. Lower wage and hire fewer workers c. Higher wage ane hire fewer workers b, Lower wage and hire more workers d._igner wage and hire more workers 76. An oligopolist faces a "k nked” demand curve. This terminology indicates that A a. When an cligopciist lowers its price, the other frms in the oligopoly will match the price reduction, but if the olgopolist raises ts price, the other firms wil ignore the price change b, An oligopclist faces a nan-lnear deriand for its product, and price changes will have ittle effect on demand for that change c. An ligopclist can sel its product at any price, but after the "saturation point”, another ligopolist will lower its price and, therefore, shift the demand curve to the left d. Consumers have no effect on the demend curve, and an cligopolist can shape the curve to optimize its own efficiency 7. Mr, ABC wants to establish an environmental testing company that would specialize in evaluating the quality of water found in rivers and streams. However, Mr. AGC needs elther certification or approval from the five separate local governmental agencies before commencing business. Also, the necessary equipment to beoin would cost several fnilion pesos. Nevertheless, Mr. ABC believes that if necessary capital resources are obiained, a large market share can be gained from two major competitors. The large capital outlay necessary for the equipment is an example of a(n): A a. Entry barrier Created bare b. Minimum efficient scale 4. Production possibility boundary 78, A profit-maximizing monopolist will produce at an output level where: c ‘a, Marginal revenue equals average total cost ¢. Marginal revenue equals marginal cost b. Marginal’ cost equals average total cost 4. Demand equals average total cost 79, In market structures, a Tigh concentration ratio is A a. An indicator of monopolistic power ©. Consistent with the law of demand b. An indicator of a highly competitive industry d. Consistent with monopofistic competition 80. Misappropriation of assets is most often perpetrated by a. Employees, c. Management b. Customers d. Auditors 81. Inappropriate earnings management is typically considered ane form of B a. Embezzlement Theft of assets b. Fraudulent financial reporting dd. Misapproprate of assets 82. High tisk of emplcyee fraud is most likely when there is pressure, rationalization, and ‘a. Opportunity Personal intearty 4 4 b. Internal contrat d. Limited responsibiltyReSU- the Review School of Alcconnrtorey MASPW-Theories ®REWETK MATERIALS n MANAGEMENT ADVISORY SERS Ot 2015 Rte) age 29 85. Managements often able to rationale the eammision of ha Blaming it on others ssn of " Forcing sto perpetrate Hiding € 4. Reasoning thot sn the best interests est interests of the coinpeny 84. The fraud rik factor that may be aigatal by eral cons 2. Ratonalizton Pressure DHowwe 41 Oporun 85. When none of he fd nk facto ave resem, an acainte eng Can rule ot te presence b. Should consider the likelihood of fraud to be high Should not rule out tie preser:ce of fraud completely d. Will likely search more aligently for fraud Intemal control CANNOT be designed to provide reasonable assurance regarding the achievement of objectives concerning 8 2. Reliability of financial reporting ‘Compliance with applicable laws and regulations b. Elimination of ait fraus 6. Effectiveness and efficiency of operations 87. A proper segregation of duties requires that an incividual D ‘a. Authorizing a transaction recor Authorizing a transaction maintain custody of the asset that resulted from the transaction b. Maintaining custody of an asset de entitled to access the accounting records for the asset d. Recording a transaction not compere the accounting record of the asset with the asset itself The frequency of the comparison of recorded accountability with assets (for the purpose of safeguarding assets) 88. should be determined by 8 ‘2. The amount of assets independent of the cost of the comparison b. The nature and amount of the assot ani the cost of making the comparison ¢._The cost of the comparison and whather the susceptibility to loss results from errors or fraud d, The auditor in consultation wit client managerrent internat controls fs most Hhly to detect a fraud perpetrated by a ‘Group of mangers in collusion, 89. An adequate system ‘a. Group of employees in collusian © G. Single manager the intemal . Single employee oa vere a fundamental concept in an effective system of internal control. Nevertheless, . tion of duties - 0 or that this safeguard can be compromised through Irregular employee reviews auditor must be avrere : ining of employees « Geis ae d, Absence of internal auditing b. Collusion among employees osEND