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Past CPA Board On MAS
Past CPA Board On MAS
c. The client is the ultimate decision maker and the auditor and/or
consultant should not make decisions for the client.
d. It is up to professional judgment and discretion of the
auditor/consultant to render decision for the client for as long as his
professional fees are commensurate to the benefits that the client
will derive from the engagement.
d. The CPA does not extend his services beyond the presentation of
recommendation or giving of advice.
PART II. Accounting Information System
10. An activity that is not considered part of the systems design phase is
a. File record layout
b. Document flowcharting
c. Specification of format and content of report
d. Systems survey
11. The main components of the Central Processing Unit (CPU) of a
computer include only
a. Control, arithmetic and logic, and memory
b. Input, processing and output
c. Software, register and primary memory
d. Memory, processing and register
12. How is an Accounting Information System (AIS) distinguished from a
management Information System (MIS)?
a. An AIS maybe either manual or computer-based and MIS is
computer-based.
b. An AIS is a subsystem within an MIS.
c. An AIS is controlled oriented and MIS is used exclusively for
planning.
d. An AIS deals with financial information and MIS handles all other
information.
13. Feedback, feed forward and preventive are important types of control
systems and procedures for accounting information systems. Which of the
following is in the correct order of feedback, feed forward and preventive
control systems?
a. Inventory control, capital budgeting and cash budgeting.
b. Cost accounting variances, separation of duties and cash planning.
c. Cash budgeting, capital budgeting and hiring qualified employees.
d. Cost accounting variances, cash budgeting and organizational
independence.
14. Bench Corp. operates in several regions, with each region performing
its data processing in a region data center. The corporate Management
Information System staff has developed a database management system to
handle customer service and billing. The Director of MIS recommended that
the new system be implemented in the Region 4 to ascertain if the system
operates in a satisfactory manner. This type of conversion is called a
a. Crash conversion
b. Parallel conversion
c. Pilot conversion
d. Direct conversion
MAY 2009 CPA
Board
15. A floppy disk (e.g., VERBATIM, MAXELL).
a. Diskette
b. Cassette tape
c. Disk
d. Hard disk
16. Important types of control systems and procedures for accounting
information systems are feedback, feed forward and preventive. Which one
of the following is in the correct order of feedback, feed forward and
preventive control systems?
a. Cost accounting variances, separation of duties and cash planning.
b. Cost accounting variances, cash budgeting and organizational
independence.
c. Cash budgeting, cost accounting variances and separation of duties.
d. Inventory control, capital budgeting and cash budgeting.
17. Which one of the following represents a lack of internal control in a
computer-based information systems?
a. The design and implementation is performed in accordance with
managements specific authorization.
b. Any and all changes in application programs have been
authorization and approval of management.
c. Provisions exist to ensure the accuracy and integrity of computer
processing of all files and reports.
1. Tax management
2. Finance reporting and interpretation
3. Credit management
4. Sourcing and investing funds
5. Reporting to government regulatory agencies
6. Risk management
7. Economic appraisal
8. Planning for control
Which of the following are the functions of the controller?
a. All eight items
b. Items 1, 2, 5, 7 and 8 only
c. Items 1, 2, 3, 4, 5, 7 and 8 only
d. Items 2, 3, 5, 7 and 8 only
22. To distinguish between management accounting and financial
accounting, the following statements are correct except:
a. Management accounting in view of its various integrated recipients
should have a separate data recording and retrieval system from
financial accounting.
b. Financial accounting is bound by Generally Accepted Accounting
Principles (GAAP), and management accounting need not be in
conformity with GAAP.
c. Financial accounting can be regarded as the process while
management accounting can be regarded as the product of that
process.
d. Management accounting output must be released on time so as not
to erode its usefulness; Financial accounting output can still be
useful even when delayed.
23. The activities in a management systems control can be grouped into
four
1. Measurement of actual performance
2. Deciding and implementing corrective actions
3. Determining standard of performance
4. Comparing actual performance versus standards and analyzing
results.
29. What was Lara Companys break-even point in number of units last
year?
a. 6, 000 b. 15, 000 c. 21, 000 d. 18, 000
30. How many units of product would Lara Company have had to sell in the
last year to earn P77, 000 in net income after taxes?
a. 29, 000 b. 23, 000 c. 22, 700 d. 29, 300
31. If Lara Company holds the sales price constant and makes the
suggested changes, how many units of product must be sold in the coming
year to break-even?
a. 15, 300 b. 18, 750 c. 19, 125 d. 21, 000
32. If Lara Company holds the sales price constant and makes the
suggested changes, how many units of the product will the company have
to sell to make the same net income after taxes as last year?
a. 31, 625 b. 31, 250 c. 33, 500 d. 25, 300
33. If Lara Company wishes to maintain the same contribution margin ratio,
what selling price per unit of product must it charge next year to cover the
increased material costs?
a. P27.00 b. P25.00 c. P32.50 d. P28.33
VI. COMPREHENSIVE BUDGETING
34. For May 19x1, Young Company has budgeted its cash receipts at P125,
000 and its cash disbursements at P138, 000. The companys cash balance
on May 1 is P17, 000. If the desired May 31 cash balance is P20, 000, then
how much cash must the company borrow during the month (before
considering any interest payments)?
a. P4, 000 b. P8, 000 c. P12, 000 d. P16, 000
VII. STANDARD COSTS AND PERFORMANCE EVALUATION
35. Which of the following factors is not likely to be considered by
management in determining whether a variance should be regarded as an
exception?
a. Consistency of occurrence over time.
b. Ability to control the item related to the variance.
39. Picnic Items, Inc. manufactures coolers that contain a freezable ice bag.
For an annual volume of 10, 000 units, fixed manufacturing costs of P500,
000 are incurred. Variable costs per unit amounts are:
Direct materials P80
Direct Labor 15
Variable Factory Overhead 20
Bags Corporation offered to supply the assembled ice bag for P40 with a
minimum order of 5, 000 units. If picnic accepts the offer it will be able to
reduce variable labor and overhead costs by 50%. The direct materials for
the freezable ice bag will cost Picnic P20 if it will produce it. Considering
Bags Corporation offer, Picnic should
a. Buy the freezable ice bag due to P150, 000 advantaged.
b. Produce the freezable ice bag due to P225, 000 advantaged.
c. Produce the freezable ice bag due to P25, 000 advantaged.
d. Buy the freezable ice bag due to P50, 000 advantaged.
c. Purchase from South Inc., pay in 60 days and borrow any money
needed from the bank.
d. Purchase from North Corp. and pay in 30 days.
XIII. CASH AND SHORT TERM INVESTMENT MANAGEMENT
44. Ken Lumber Company obtained short term bank loan for P1, 000, 000.00
at an annual interest rate of 12%. As a condition of the loan Ken is required
to maintain a compensating balance of P200, 000.00 in its checking
account. The checking account earns interest at an annual rate of 6%. Ken
would otherwise maintain only P100, 000.00 in its checking account for
transactional purposes. Kens effective interest cost of the loan is
a. 12%
b. 14%
c. 13.50%
d. 12.67%
MAY 2009 CPA
Board Exam
45. Fabella Company budgeted sales on account of P120, 000 for July,
P211, 000 for August and P198, 000 for September. Collection experience
indicates that 60% of the budgeted sales will be collected the amount after
the sale, 36% the second month, and 4% will be uncollectible. The cash
receipts from accounts receivable that should be budgeted for September
would be
a. P169, 800
b. P147, 960
c. P197, 880
d. P194, 760
XIV. RECEIVABLES MANAGEMENT
46. Changing a firms credit terms from 2/20, net/60 to 2/10, net/30 will
generally
a. Increase the average collection period and increase sales
b. Increase the average collection period and reduce sales
c. Reduce the average collection period and increase sales
d. Reduce the average collection period and reduce sales.
47. If a firm purchases raw materials from its supplier on a 2/10, net/60 cash
discount basis, the equivalent annual interest rate (using a 360-day year) of
foregoing the cash discount and making payment on the 60 th day is
a. 14.7%
b. 73.5%
c. 12.2%
d. Some amount other than those given above
48. If a firms credit terms require payment within 45 days but allow a
discount of 2% if paid within 15 days (using a 360-day year), the
approximate cost/benefit of the trade credit terms is
a. 2%
b. 16%
c. 48%
d. 24%
49. When a company offers credit terms of 2/10, net/30, the annual interest
cost, based on a 360-day year, is
a. 24.0%
b. 24.5%
c. 35.3%
d. 36.7%
XV. INVENTORY MANAGEMENT
50. The size of safety stocks for inventory is important for most firms.
Though several factors can be cited as contributing to the determination of
the size of safety stocks that a firm should carry, the issue can often be
reduced to a single factor. Which one of the following statements best
summarizes the factor that affects the level of safety stock that a firm will
carry?
a. The amount of idle cash management believes it has to invest in
safety stock.
b. The rapidity with which the inventory position will turn over.
c. The level of production the firms bank is willing to finance.
d. The level of uncertainty with respect to an out-of-stock condition that
management is willing to accept.
Allo foundation, a tax exempt organization, invested P200, 000 in a fiveyear project at the beginning of 19x5. Allo estimates that the annual cash
savings from this project will amount to P65, 000. The P200, 000 of assets
will be depreciated over their five-year life on the straight line basis. On
investments of this type, Allos desired rate of return is 12%.
d. P125, 000
MAY 2009 CPA
Board Exam
55. Rano Co. has the opportunity to invest in a two-year project which is
expected to produce cash flow from operation, net of income taxes, of
P100, 000 in the first year and P200, 000 in the second year. Rano has a
cost of capital of 20%. For this project, Rano should be willing to invest
immediately a maximum of
a. P283, 300
b. P249, 900
c. P222, 100
d. P208, 200
MAY 2009 CPA
Board Exam
56. The net present value capital budgeting technique can be used when
cash flows from period to period are:
Uniform Uneven
a. No Yes
b. No No
c. Yes No
d. Yes Yes
57. It is assumed that cash flows are reinvested at the rate actually earned
by the investment in which of the following capital budgeting techniques?
Time-adjusted rate of return Net present value
a. Yes Yes
b. Yes No
c. No No
d. No Yes
60. For the new machine, the simple rate of return based on initial
investment would be
a. 12%
b. 20%
c. 30%
d. 40%
MAY 2009 CPA
Board Exam
61. If income taxes are ignore, the payback period for the new machine
would be
a. 1.67 years
b. 2.50 years
c. 4.17 years
d. 5.00 years
62. For 19x9, Nelson Industries increased earnings before interest and
taxes by 17%. During the same period, net income after tax increased by
42%. The degree of financial leverage that existed during 19x9 is
a. 1.70
b. 4.20
c. 2.47
d. 5.90
64. Among the following major parts of a project feasibility study, which
grouping is considered critical?
a. Management, financial and social returns
b. Technical. Financial and environmental aspects
c. Economic benefits, management, financial
d. Marketing, engineering or technical and financial
65. The statements below about project feasibility studies are the true
except:
a. Any change which can materially alter the assumptions used in the
preparation of the forecast will render it useless
b. It is important for government agencies in order to determine
entitlement to government incentives
c. It also covers the social desirability aspects of a proposed
undertaking
ANSWER KEY
1. A
44. D
2. A
45. A
3. C
46. D
4. C
47. A
5. B
48. D
6. C
49. D
7. A
50. D
8. A
51. B
9. D
52. A
10. D
53. D
11. A
54. C
12. B
55. C
13. D
56. D
14. C
57. B
15. A
58. A
16. B
59. A
17. D
60. B
18. A
61. B
19. C
62. C
20. A
63. A
21. B
64. D
22. A
65. D
23. B
66. B
24. D
25. A
26. B
27. C
28. C
29. B
30. A
31. C
32. A
33. D
34. D
35. D
36. C
37. D
38. A
39. C
40. A
41. B
42. C
43. A
We must prepare for every fight that were going to face. When at times you
feel you wanted to give up, make a rest but never stop pursuing your
dreams. Every winning is worthy when we strive hard to achieve it.
When we left nothing but God, we will realize that God is enough. Lot of
people say mahirap maging CPA but always bear in mind that walang
mahirap kay God.
KAYA NATIN YAN I believe, merong lalabas ulit sa mga compilation na ito
sa October Board Exam kase nasa test bank na ng examiner ang mga yan. I
hope mapasadahan nyo kahit saglit lang ito. Every point is important
Good luck to all!!!
Kairus