HJCPA BEC POP QUIZ ANSWERS.docx

HJCPA BEC POP QUIZ ANSWERS.docx

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HJCPABECPOPQUIZANSWERS

HJCPABECPOPQUIZSANSWERS

BEC-EconomicConcepts:

Microeconomics

20thJuly,2012

Question1:

Whichofthefollowingisnotacharacteristicofafree-marketeconomy?

A.Economicdecisionsaremadebyindividualdecisionmakers.

B.Thereisaninterdependentrelationshipbetweenindividualconsumersandbusinessfirms.

C.Economicresourcesareunlimited.

D.Whatgetsproduceddependsonthepreferencesofend-useconsumers.

ThecorrectanswerisC.

A.Incorrect...Inafree-marketeconomy,economicdecisionsaremadebyindividualdecisionmakers,notbygovernment.

B.Incorrect...Thereisaninterdependentrelationshipbetweenindividualconsumersandbusinessfirms.Individualsdependonbusinessesforincomeandforgoodsandservices.Businessesdependsonindividualsforeconomicresources（inputs）andasbuyersofitsgoodsandservices（outputs）.

C.Correct!

Underanyeconomicsystem,economicresources-labor,capital,andnaturalresources-arescarce.

D.Incorrect...Whatgetsproducedinafree-marketeconomydoesdependonthepreferences（needsandwants）ofconsumerswhohavetheabilitytopayforgoodsandservices.

Question2:

Whichoneofthefollowingfactorswouldnotcauseanincreaseinthesupplycurveofacommodity?

A.Improvementsinrelatedtechnology.

B.Adecreaseinthecostofproductioninputs.

C.Anincreaseinthenumberofmanufacturersofthecommodity.

D.Anincreaseinthepriceofthecommodity.

ThecorrectanswerisD.

A.Incorrect...Improvementsintechnologyfortheproductionofacommodityreducetheper-unitcostofproduction,whichwouldshiftthesupplycurvedownwardandtotheright,resultinginanincreaseinthesupplycurve.

B.Incorrect...Adecreaseinthecostofproductioninputswillreducetheperunitcostofproduction,causingashiftinthesupplycurvedownwardandtotheright,resultinginanincreaseinthesupplycurve.

C.Incorrect...Anincreaseinthenumberofmanufacturersofacommoditywillincreasethemarketsupplyofthecommodity,resultinginanincreaseinthesupplycurve.

D.Correct!

Achangeinpricechangesthequantitysupplied,whichisamovementalongasupplycurve,notashiftinthesupplycurve.Anincreaseinthepriceofacommoditywouldincreasethequantitysupplied,butwouldnotshiftthesupplycurve.

Question3:

Whichoneofthefollowingstatementsregardingperiodsofanalysisiscorrect?

A.Short-runanalysisassumesthatallinputscanbevaried.

B.Long-runanalysisassumesthatallinputscanbevaried.

C.Short-runanalysisassumesthatallinputsarefixed.

D.Long-runanalysisassumesthatallinputsarefixed.

ThecorrectanswerisB.

A.Incorrect...Intheshortrun,itisassumedthatoneormoreinputstotheproductionprocessarefixed,i.e.,cannotbevaried.Intheshortrun,manyinputstotheproductionprocesscanbevaried,includinglaborandrawmaterials,butatleastonefactorisassumedtobefixed.Typically,thenumberandsizeofproductionfacilitiesareassumedtobefixed.

B.Correct!

Inthelongrun,itisassumedthatallinputstotheproductionprocesscanbevaried,includingthenumberandsizeofproductionfacilities.

C.Incorrect...Intheshortrun,itisassumedthatmostinputsarevariableandthatonlysomeinputsarefixed.Neithershort-runnorlong-runanalysisassumesallinputsarefixed.

D.Incorrect...Inthelongrun,itisassumedthatallinputstotheproductionprocessarevariable,notfixed.Neithershort-runnorlong-runanalysisassumesthatallinputsarefixed.

Question4:

Whichoneofthefollowingwouldnotcauseanincreaseindemandforacommodity?

A.Anincreaseinthenumberofconsumers.

B.Anincreaseinthepriceofasubstitutecommodity.

C.Anincreaseinconsumers'preferenceforthecommodity.

D.Areductioninthepriceofthecommodity.

ThecorrectanswerisD.

A.Incorrect...Anincreaseinthenumberofconsumersforacommoditychangesthedemandforthecommodity,whichwillmovethedemandcurveupwardandtotheright.Agreaterquantitywouldbedemandedatanygivenprice.

B.Incorrect...Anincreaseinthepriceofasubstitutecommoditychangesthedemandforthecommodity,movingthedemandcurveupwardandtotheright.Anincreaseinthepriceofasubstitutecommoditywouldcausemoreofacommoditytobedemandedatanygivenprice.Asthepriceofthesubstitutecommodityincreases,consumerswoulddemandlessofthesubstitutecommodityandmoreofthereferentcommodity.

C.Incorrect...Anincreaseinconsumers'preferenceforacommoditychangesthedemandforthecommodity,movingthedemandcurveupwardandtotheright.Sincemoreconsumerspreferthecommodity,moreofthecommoditywouldbedemandedatanygivenprice.

D.Correct!

Areductioninpricewillnotcauseanincreaseindemandforacommodity,butratherwillchange（increase）thequantitydemanded.Anincreaseindemandcausesashiftofthedemandcurve（upandtotheright）.Achangeinpricecausesmovementalongaspecificdemandcurve.

Question5:

Whenthecostofinputfactorstotheproductionprocessincreases,whichoneofthefollowingwilloccur?

A.Thedemandcurvewillshiftoutward.

B.Thesupplycurvewillshiftoutward.

C.Thedemandcurvewillshiftinward.

D.Thesupplycurvewillshiftinward.

ThecorrectanswerisD.

A.Incorrect...Anincreaseinthecostofinputfactorstotheproductionprocesswillnotcauseachangeinthedemandcurve;itwillnotshiftoutward（orinward）.Anincreaseinthecostofinputfactorstotheproductionprocesswillcausethesupplycurvetoshiftinward.

B.Incorrect...Anincreaseinthecostofinputfactorstotheproductionprocesswillnotcausethesupplycurvetoshiftoutward,butratherinward.

C.Incorrect...Anincreaseinthecostofinputfactorstotheproductionprocesswillnotcauseachangeinthedemandcurve;itwillnotshiftinward（oroutward）.Anincreaseinthecostofinputfactorstotheproductionprocesswillcausethesupplycurvetoshiftinward.

D.Correct!

Anincreaseinthecostofinputfactorstotheproductionprocesswillcausethesupplycurvetoshiftinward.Anincreaseininputcostswillcausetheper-unitcosttoincreaseandthesupplycurvewillshiftupwardandtotheleft（inward）.

20thJune,2012

BEC:

CorporateGovernanceandInternalControl

Question1:

WhichcomponentoftheCOSOERMframeworkisconcernedwithmanagement'sdecisiontoavoid,accept,reduce,orshareriskandtodevelopasetofactionstoalignriskwiththeentity'sriskpreferences?

A.Controlactivities.

B.Eventidentification.

C.Riskassessment.

D.Riskresponse.

ThecorrectanswerisD.

A.Incorrect...Controlactivitiesdonotincludemanagement'sdecisiontoavoid,accept,reduce,orshareriskandtodevelopasetofactionstoalignriskwiththeentity'sriskpreferences.

B.Incorrect...Eventidentificationdoesnotincludemanagement'sdecisiontoavoid,accept,reduce,orshareriskandtodevelopasetofactionstoalignriskwiththeentity'sriskpreferences.

C.Incorrect...Riskassessmentdoesnotincludemanagement'sdecisiontoavoid,accept,reduce,orshareriskandtodevelopasetofactionstoalignriskwiththeentity'sriskpreferences.

D.Correct!

Riskresponsedoesincludemanagement'sdecisiontoavoid,accept,reduce,orshareriskandtodevelopasetofactionstoalignriskwiththeentity'sriskpreferences.

Question2:

MiloCorp.maintainsdailybackupsofitsaccountingsysteminafireproofvaultinthefilelibrary.Weekly,monthly,andannualbackupsarestoredinasecure,fireproofvaultatanoff-sitelocation.Maintenanceofthebackupfilesisanexampleof

A.Adetectivecontrol.

B.Afeedbackcontrol.

C.Acorrectivecontrol.

D.Apreventivecontrol.

ThecorrectanswerisC.

Incorrect...Detectivecontrolsallowtheusertodeterminethatanerrororproblemhasoccurred.Detectivecontrolsarealwayspairedwithcorrectivecontrols.

B.Incorrect...Feedbackcontrolsprovideresultsofoperationsoractivities,whicharethencomparedtoplannedresults.

C.Correct!

Correctivecontrolsallowtheusertorecoverfromaproblemonceithasbeenidentified.

D.Incorrect...Preventivecontrolsaredesignedtostoperrorsandirregularitiesfromoccurring.

Question3:

WhichofthefollowingisnotamajorstepintheCOSOmodelofcontrolmonitoring?

A.Establishafoundationformonitoring.

B.Establishabaselineofaninternalcontrolknowntobeeffective.

C.Designandexecutemonitoringprocedures.

D.Assessandreportcontrolevaluationresults.

ThecorrectanswerisB.

A.Incorrect...EstablishingafoundationformonitoringisthefirststepintheCOSOmodelofcontrolmonitoring.

B.Correct!

Establishingabaselineofknowncontroleffectivenessispartoftheprocessofestablishingafoundationformonitoring.Hence,itisasub-activity,ratherthanamajorstep,intheCOSOmodelofcontrolmonitoring.

C.Incorrect...DesigningandexecutingmonitoringproceduresisthesecondmajorstepintheCOSOmodelofcontrolmonitoring.Hence,thisisnotthebestanswer.

D.Incorrect...AssessingandreportingcontrolofevaluationresultsisthethirdandfinalmajorstepintheCOSOmodelofcontrolmonitoring.Hence,thisisnotthebestanswer.

Question4:

AccordingtoCOSO,theuseofongoingandseparateevaluationstoidentifyandaddresschangesininternalcontroleffectivenesscanbestbeaccomplishedinwhichofthefollowingstagesofthemonitoring-for-changecontinuum?

A.Controlbaseline.

B.Changeidentification.

C.Changemanagement.

D.Controlrevalidation/update.

ThecorrectanswerisB.

A.Incorrect..."Establishingacontrolbaseline"isnott