BEC MCQs Test Questions & Answers 2024/2025
B-2 As a company becomes more conservative with respect to working capital policy, it would tend to have a - ANSWERSIncrease in the ratio of current assets to noncurrent assets
RULE: working capital policy is deemed to be more conservative as an i...
B-2 As a company becomes more conservative with respect to working capital policy, it would tend to
have a - ANSWERSIncrease in the ratio of current assets to noncurrent assets
RULE: working capital policy is deemed to be more conservative as an increasing portion of an
organization's long-term assets, permanent current assets, and temporary current assets are funded by
long-term financing
B-2 Determining the appropriate level of working capital for a firm requires: - ANSWERSOffsetting the
benefit of current assets and current liabilities against the probability of technical insolvency
changing capital structure has nothing to do with working capital required for day-to-day operations of
the business
B-2 Inventory management - ANSWERSNot too much - surplus --> carrying costs UP
Not too little - lost sales
B-2 Inventory Valuation - ANSWERSLIFO: Lower of Cost, Market
Net Realizable Value: FIFO/ WA
Inventory generally accounted for at cost, which is price paid to acquire an asset. When value of
inventory falls below original cost, the inventory must be restated to the lower of market value or net
realizable value
B-2 Market Ceiling - ANSWERSNet selling price LESS the costs to complete and dispose of the inventory
B-2 Market Floor - ANSWERSEqual to the market ceiling less a normal profit margin
, B-2 FIFO Inventory - ANSWERSLower of cost and net realizable value
B-2 Periodic Inventory System - ANSWERSInventory quantities are determined by physical counts
performed at least annually
B-2 Perpetual Inventory System - ANSWERSInventory balance is updated for each purchase and each sale
and is always current
COGS is determined and recorded with each sale
B-2 Which of the following financial instruments generally provides the largest source of short-term
credit for small firms? - ANSWERSTrade credit
B-2 Drafts - ANSWERSPaying by means of a draft allows the firm to take advantage of the float period.
Delays cash disbursements
B-2 Carrying Costs associated with Inventory - ANSWERSInsurance Costs
Cost of Capital invested in the inventory
Cost of obsolescence
B-6 Batch Processing - ANSWERSProcessing methodology, not a security measure. Batch processing
include collection and grouping of input documents/transactions by type of transaction
B-6 Intranet Users - ANSWERSyour own employees who know a lot about the company. Its organizational
structure, and special terminology and circumstances
B-6 PKI Public Key Infrastructure - ANSWERSRepresents the mechanisms used to issue keys and digital
certificates
B-6 Performance of Quality Assurance occurs in which of the following processes? -
ANSWERSImplementation
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