[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

[M.O.D.]

@mikech

If more money is allocated to production, that implies a good fixed variance because it means production was higher than expected.

And vice versa.

Keep in mind that volume variances are completely theoretical because the fixed overhead is fixed and cannot be anything but fixed. Fixed costs can never vary with production, otherwise they would be variable costs.

By treating fixed variances as if they were variable you enter the realm of theory. This theoretical variance is only meant to compare expected/budgeted production (or sales) volume with actual volume. It has no practical purpose in the field of manufacturing, like the other variances, because it is not a result of manufacturing efficiency or costs, rather the result of outside demand for the products.

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]

The purchase of treasury stock with a firm’s surplus cash

Increases a firm’s assets.

Increases a firm’s financial leverage.

Increases a firm’s interest coverage ratio.

Dilutes a firm’s earnings per share.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[M.O.D.]

purchasing treasury stock with cash:

Reduces cash, thus reduces assets

Financial leverage = change in EPS/change in EBIT

less stock but keeping earnings constant increases EPS thus financial leverage is increased

It has no effect on earnings or interest, thus interest coverage ratio is not affected

If increases EPS not dilutes it.

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

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[stoleway]

What is the major advantage of a zero-balance account system?

It helps insure that cash is available for contingencies.

It maximizes the amount of interest earned on demand deposits.

It maximizes the float involved in cash disbursements.

It maximizes the float involved in cash receipts.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[M.O.D.]

Zero balance account is an account in which the bank transfers money from an interest paying account to a checking account, just enough to cover the daily checks presented.

Thus it maximizes the interest earned on demand deposits.

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]

Its C…..zba maximizes disbursement float

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[M.O.D.]

I suppose that is true because the money need not be in the account until the day the bank received the checks for payment.

Still, Gleim's book implies that it is used to maximize interest.

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)

[h0wdyus]

@M.O.D

It saves interest on disbursement float, since it extends float for payment as regional banks take longer to clear checks. Answer C is correct

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[M.O.D.]

@ howdy

Zero balance account has nothing to do with regional banks, and taking longer to clear checks.

Zero balance account (ZBA) means that the money in the account is always zero. The bank transfers money from an interest paying account into the ZBA only when necessary, to cover outstanding checks received by the bank that day (or night).

ZBA has nothing to do with accounting float, defined as the length of time from when the checks are written to when they clear, because clearing happens or does not happen independent of whether an account is ZBA or not. If it were not a ZBA account, the checks would still clear on the same day, (or bounce on the same day), thus the float would be the same.

So C is incorrect in terms of a technical float definition.

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)

[GoVPI]

Hi everyone, exam day is tomorrow at 12:30PM EST. I will be doing MCQ all day.

Special thanks to MOD, Stoleway, and Zackrampage. Thanks to everyone else on the forum also. I will let everyone know how it goes!

BEC 8/14/14 - Passed
Graduated from college 12/13/14
AUD 8/31/15 - 74. Retake - Passed
REG
FAR

[TigerWoods]

Is it normal to think B1 & B2 suck?

[stoleway]

@CPAin14

Good luck tomorrow, I wish I can sit for mine earlier. I think I'm ready but I'm pushing it to the last day.

Keep us posted:)

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[jbiele22]

Becker added some newly released AICPA questions a couple of days ago. I'm going through then now and I feel like there are several of them I have never seen material on before. Anyone else having this problem? Just a couple examples: I've never seen the terms Herfindahl index, Game Theory model, Repatriation restrictions, or American depository receipts before.

FAR 81
AUD 87
REG 77
BEC 8/16/14

[M.O.D.]

@ CPA14

Good luck, let us know how it went

@stoleway

Keep studying, dig deeper. Over-studying is an insurance policy. Is it time to start posting your essays answers?

@ jbiele

I remember monopoly measurement indexes from economics (Herfindahl?), Repatriation restrictions on profits, and American Depository receipts (ADRs) from CMA. Game theory I am not so sure. Please post some of those questions.

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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