Free Preparation Discussions
MENU
AICPA CPA-Business Exam Questions
- Topic 1: Auditing and Attestation
- Topic 2: Business Environment and Concepts
- Topic 3: Financial Accounting and Reporting.
Free AICPA CPA-Business Exam Actual Questions
Note: Premium Questions for CPA-Business were last updated On Feb. 24, 2025 (see below)
The following information pertains to Quest Co.'s Gold Division for 1993:
Quest's return on investment was:
Choice 'c' is correct. Return on investment equals net income divided by average invested capital:
Choices 'a', 'b', and 'd' are incorrect, per the above calculation.
In planning and controlling capital expenditures, the most logical sequence is to begin with:
Choice 'c' is correct. The most logical sequence in planning and controlling capital expenditures is to begin with identifying capital addition projects and other capital needs.
Choice 'a' is incorrect. Analyzing capital addition proposals omits other capital needs.
Choice 'b' is incorrect. Analyzing and evaluating all promising alternatives is beyond the scope of planning and controlling capital expenditures.
Choice 'd' is incorrect. Developing capital budgets is the same as planning and controlling capital expenditures.
The Frame Supply Company has just acquired a large account and needs to increase its working capital by $100,000. The controller of the company has identified four alternative sources of funds, which are given below.
A: Pay a factor to buy the company's receivables, which average $125,000 per month and have an average collection period of 30 days. The factor will advance up to 80 percent of the face value of receivables at 10 percent and charge a fee of 2 percent of all receivables purchased. The controller estimates that the firm would save $24,000 in collection expenses over the year. Assume the fee and interest are not deductible in advance.
B: Borrow $110,000 from a bank at 12 percent interest. A 9 percent compensating balance would be required.
C: Issue $110,000 of six-month commercial paper to net $100,000. (New paper would be issued every 6 months.)
D: Borrow $125,000 from a bank on a discount basis at 20 percent. No compensating balance would be required.
Assume a 360-day year in all of your calculations.
The cost of Alternative D . is:
Choice 'c' is correct.
Choices 'a', 'b', and 'd' are incorrect, per the above calculation.
In planning and controlling capital expenditures, the most logical sequence is to begin with:
Choice 'c' is correct. The most logical sequence in planning and controlling capital expenditures is to begin with identifying capital addition projects and other capital needs.
Choice 'a' is incorrect. Analyzing capital addition proposals omits other capital needs.
Choice 'b' is incorrect. Analyzing and evaluating all promising alternatives is beyond the scope of planning and controlling capital expenditures.
Choice 'd' is incorrect. Developing capital budgets is the same as planning and controlling capital expenditures.
A change in credit policy has caused an increase in sales, an increase in discounts taken, a reduction in the investment in accounts receivable, and a reduction in the number of doubtful accounts. Based upon this information, we know that:
Choice 'b' is correct. Whenever accounts receivable (AR) are decreasing when sales are increasing (and the decrease in AR is not due to an increase in bad debt write offs), this would indicate that the average collection period for AR has decreased.
Choices 'a', 'c', and 'd' are incorrect. There is insufficient information in the question to draw conclusions about these items.
- Select Question Types you want
- Set your Desired Pass Percentage
- Allocate Time (Hours : Minutes)
- Create Multiple Practice tests with Limited Questions
- Customer Support
Aleta
8 hours agoWynell
16 days agoKenda
20 days agoDell
30 days agoDesmond
1 months agoDoug
1 months agoIsreal
2 months agoKarl
2 months agoDaniel
2 months agoDewitt
2 months agoWilda
3 months agoTammi
3 months agoWenona
3 months agoVilma
3 months agoTerry
4 months agoLavera
4 months agoYesenia
4 months agoHubert
4 months agoAlex
5 months agoTemeka
5 months agoPortia
5 months agoGlory
5 months agoChauncey
5 months agoEttie
6 months agoJesusa
6 months agoYuonne
6 months agoJamey
7 months agoRoslyn
8 months agoZachary
8 months ago