[jeff]

@h0wdyus

Incorrect

The answer is B. Comparable sales.

“The use of comparable sales is not an income approach to valuation of a business, it is a market approach. Under the comparable sales approach, the value of a business is determined by comparing it to other entities with comparable characteristics for which the value is more readily determinable.”

This was a tricky one

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Kimboroni]

MOD, it's a potential psychological hangup *because* it isn't accurate. A single practice test simply does not duplicate a single real exam. But this isn't a good place for this tangent. I was hoping to quickly point it out and leave it at that.

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[stoleway]

@CPAin14 …is it 7.75?

sales……….600,000

cogs………(400,000)

admin……..(35,000)

Dep………..(10,000)

EBIT=155,000

Interest Expense=20,000

Time-Interest = EBIT/INTEREST EXPENSE =7.75

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[GoVPI]

@stole yea! your turn

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[stoleway]

Company A has a 12% rate of return on its common and declared $20 dividend per share at a time when effective interest rate on all outstanding debts has risen to 7%, what will be the stock price of company A ?

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[M.O.D.]

Question:

The basic difference between a master budget and a flexible budget is that a master budget is

A. For an entire production facility, but a flexible budget is applicable to single departments only.

B. Based on a fixed standard, but a flexible budget allows management latitude in meeting goals.

C. Prepared before the period begins, while a flexible budget is prepared after it ends.

D. Reporting the costs that should have been incurred given the achieved level of production.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[M.O.D.]

Answer:

EBIT/ Int exp

(600-35-400-10) / 20 = 7.75

Answer:

.12 = 20/stock price

stock price = 166.67

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[stoleway]

Prepared before the period begins, while a flexible budget is prepared after it ends.

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[stoleway]

Destructive testing will fall under which category of Cost of quality (COQ)?

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[M.O.D.]

I would say destructive testing is part of appraisal costs because it is a test (used for quality control).

It would not be internal failure costs because the destruction of the product was intentional.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[stoleway]

correct, it also falls under conformance cost

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[stoleway]

Which of the following effects would a lockbox most likely provide for receivables management?

A. Minimized collection float.

B. Maximized collection float.

C. Maximized disbursement float.

D. Minimized disbursement float.

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[M.O.D.]

A lockbox minimizes collection float. Regional banks collect checks faster (to their regional PO Boxes) and they deposit the checks faster, thus lowering the time customer's checks are outstanding.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[stoleway]

Bread and Laptop, which of these is relatively inelastic?

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[Zackrampage]

I only remember answers to questions being perfectly inelastic. So no idea .. bread should be inelastic

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[M.O.D.]

Agreed, bread is inelastic and laptops elastic.

Elasticity = % change in qty / % change in price

As the price increases, and qty decreases less that is low elasticity. This is due to people needing to eat.

Though I would think they would substitute rice, corn, potatoes, etc.

I think basic groceries is more inelastic.

Laptops are more discretionary: a big increase in price would result in a big decrease in qty.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Author]

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