Solved by verified expert :final exam part 1Instructions This exam consist of 25 multiple choice questions and covers the material in Chapters 5 through 7.• Question 1An Internal Revenue Code rule that impacts the design of pension plans is• Question 2The cost of retroactive benefits granted in a plan amendment or at the initial adoption of a pension plan is called• Question 3Which of the following is not a component of the net periodic pension expense to be reported on a company’s income statement?• Question 4The Pension Benefit Guaranty Corporation’s purpose is to• Question 5Benefits for which the employee’s right to receive a present or future pension benefit is no longer contingent on remaining in the service of the employer are called• Question 6Unrecognized prior service cost would be reported on the balance sheet and affect the amount(s) reported for• Question 7The projected benefit obligation is equal to the• Question 8According to current GAAP, termination benefits paid to an employee should be• Question 9A pension plan provides for future retirement income based on the employee’s income and length of service with the company. This type of pension plan is termed a• Question 10Generally, the best way to prevent fraud in e-business settings is to focus on:• Question 11Traditional ___ reduces the risk of falsified identity.• Question 12One of the greatest fallacies of e-commerce security is a prevention measure known as security through ___________.• Question 13___________ are self-contained programs that spread via direct transfer, email, or another mechanism.• Question 14What is biometrics?• Question 15Passwords, biometrics, and digital signatures are examples of:• Question 16Spoofing is which of the following?• Question 17Viewing information that passes along a network communication channel is referred to as:• Question 18Phillips Corp. purchased raw materials with a catalog price of $60,000. Credit terms of 3/15, n/60 apply. If Phillips uses the net price method, the purchase should be recorded at• Question 19For companies that have little change in the characteristics of their inventory items, the most appropriate method for computing a cost index for dollar value LIFO is the• Question 20The cost of goods sold can be determined only after a physical count of inventory on hand under the• Question 21A manufacturing company typically has how many inventory accounts?• Question 22Relevance of the gross profit margin depends upon• Question 23The most common approach to implementing the lower of cost or market rule for inventory valuation is to apply it• Question 24For valuation of inventory, the lower of cost or market rule may be applied to• Question 25The account, Accrued Loss on Purchase Commitments, used when the year-end market price is less than the fixed purchase price for non-cancellable purchase obligations is reported as a(n)final exam part 2A CPA firm is considered independent when it performs which of the following services for a publicly traded audit client?• Question 2Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct?• Question 3A member of the AICPA must safeguard the confidentiality of client information. Auditors, however, must disclose information to non-clients for the following reasons except to:• Question 4Which one of the following is an example of a conflict of interest for a CPA?• Question 5Which of the following represents a situation in which the auditors may disclose client information to outside parties?• Question 6Rule 201, dealing with General Standards that are applicable to all CPAs no matter the type of services that are rendered, does not include which factor?• Question 7In determining the types of activities, engagements and interactions an auditor should have with a client, the CPA and the audit firm must do which of the following?• Question 8Independence is not required for which of the following types of services?• Question 9Which of the following suggests a weakness in the internal control environment?• Question 10The importance to the accounting profession of the Sarbanes-Oxely Act is that• Question 11Control activities under SAS 109/COSO include• Question 12Control risk is• Question 13Which of the following is a preventive control?• Question 14The fundamental difference between internal and external auditing is that• Question 15The office manager forgot to record in the accounting records the daily bank deposit. Which control procedure would most likely prevent or detect this error?• Question 16Tests of controls include• Question 17An accounting system that maintains an adequate audit trail is implementing which internal control procedure?• Question 18Music, Inc., a domestic corporation, owns 100% of Vinyl, Ltd., a foreign corporation and Digital, Inc., a domestic corporation. Music also owns 12% of Record, Inc., a domestic corporation. Music receives no distributions from any of these corporations. Which of these entities’ net income are included in Music’s income statement for current year financial reporting purposes?• Question 19Which of the following taxes are included in the total income tax expense of a corporation reported on its Federal tax return?• Question 20Which of the following represent temporary book-tax differences?• Question 21Which of the following items are not included in the income tax note for a publicly traded company?• Question 22How are deferred tax liabilities and assets categorized on the balance sheet?• Question 23Larson, Inc., hopes to report a total book tax expense of $160,000 in the current year. This $160,000 expense consists of $240,000 in current tax expense and an $80,000 tax benefit related to the expected future use of an NOL by Larson. If the auditors determine that a valuation allowance of $30,000 must be placed against Larson’s deferred tax assets, what is Larson’s total book tax expense?• Question 24Hot, Inc.’s primary competitor is Cold, Inc. When comparing relative deferred tax asset and liability accounts with Cold, which of the following should Hot do?• Question 25Paint, Inc., a domestic corporation, owns 100% of Blue, Ltd., a foreign corporation and Yellow, Inc., a domestic corporation. Paint also owns 40% of Green, Inc., a domestic corporation. Paint receives no distributions from any of these corporations. Which of these entities’ net income are included in Paint’s income statement for current year financial reporting purposes?
