Business Environment & Concepts Flashcards
6 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Business Environment & Concepts flashcards as text
Which type of business structure provides limited liability protection to all owners while allowing pass-through taxation?
Answer: Limited Liability Company (LLC)
An LLC combines limited liability protection (like a corporation) with pass-through taxation (like a partnership), avoiding double taxation.
What does a positive net present value (NPV) indicate about a capital investment project?
Answer: The project will generate value above the required rate of return
A positive NPV means the project's expected cash flows, discounted at the required rate of return, exceed the initial investment, creating shareholder value.
In cost accounting, which method assigns manufacturing overhead based on the actual usage of cost drivers in each activity?
Answer: Activity-based costing
Activity-based costing (ABC) assigns overhead costs to products based on their actual consumption of specific activities and cost drivers.
What is the primary function of the Foreign Corrupt Practices Act (FCPA) for US-based companies?
Answer: Prohibit bribery of foreign government officials
The FCPA prohibits US persons and companies from bribing foreign government officials to obtain or retain business, and requires accurate record-keeping.
Which financial statement analysis technique expresses each line item as a percentage of a base figure within the same period?
Answer: Vertical analysis
Vertical analysis (common-size analysis) expresses each financial statement line item as a percentage of a base amount, such as total revenues or total assets.
What is the breakeven point in units for a company with fixed costs of $50,000, selling price of $25 per unit, and variable costs of $15 per unit?
Answer: 5,000 units
Breakeven units = Fixed Costs / Contribution Margin per unit = $50,000 / ($25 - $15) = $50,000 / $10 = 5,000 units.