Homework Answers
1. b) Financial risk
Movement in the operating expense percentage will affect operating leverage and also operating ratios. Financial risk consists of operational risk and it can experience when they have poor management or flawed financial reasoning. Inconsistency occurring in financial ratios arises financial risk.
Management risk arises due to failed actions and plans arises from the part of the management.It is the risk associated with the management. Market risk is the chance of an investor facing risk losses due to the factors arising in the financial market. Accounting risk arises due to change in accounting policies or exchange rate fluctuations affecting financial statements.
Movement in the operating expense percentage will have greatest impact on financial risk so most probably the answer will be b) financial risk.
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QUESTION 13 1. Why is it important to compare a business's operating expense percentage to industry benchmarks 1. It helps management do a better job of collecting receivables II. It helps determine the business's financial risk III. It reflects how well the business is managing its expenses compared to its peers. IV. It provides important insight into management integrity a. I and II only. b. I and III only. c. II and III only. d. III and IV only
QUESTION 12 1. From among the following choices, identify those which are correct about operating expense...
QUESTION 12 1. From among the following choices, identify those which are correct about operating expense percentage 1. It is a financial indicator over which management can exert significant control over the longer term. II. As management's control over operating expenses improves, business's operating expense percentage declines and cash flow improves. III. It is a financial indicator that is unaffected by changes in the competitive environment 1. It is a risk (cash) driver over which management typically has little innuence....
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QUESTION 6 1. when is operating expense percentage often used as a benchmark indicator? a. When...
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From among the following choices, identify those which are correct about operating espense perve L.It is...
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QUESTION 13 1. Why is it important to compare a business's operating expense percentage to industry benchmarks 1. It helps management do a better job of collecting receivables II. It helps determine the business's financial risk III. It reflects how well the business is managing its expenses compared to its peers. IV. It provides important insight into management integrity a. I and II only. b. I and III only. c. II and III only. d. III and IV only
QUESTION 12 1. From among the following choices, identify those which are correct about operating expense percentage 1. It is a financial indicator over which management can exert significant control over the longer term. II. As management's control over operating expenses improves, business's operating expense percentage declines and cash flow improves. III. It is a financial indicator that is unaffected by changes in the competitive environment 1. It is a risk (cash) driver over which management typically has little innuence....
10. Which of the following ratios, used in analytical review would not assist the auditor in planing ee audit? A. Gross profit margin B. Inventory turnover C. Receivables collection period D. Earnings per share 11. In which of the following stages of audit, would it be inap propriate to conduct an analytical review? A. Audit completion 8. Substantive testing C. Compliance testing D. Audit planning 12. Which of the following statements are true in respect of detection risk? 1) If...
QUESTION 6 1. when is operating expense percentage often used as a benchmark indicator? a. When comparing a company's financial performance to that of its peers. b. When assessing the impact of macroeconomic trends on the company's balance sheet. c. When comparing a company's pricing strategies to that of its peers. d. When assessing management integrity.
QUESTION 9 1. What does the operating expense percentage measure? a. The amount of profit left in a business after deducting cost of goods sold from b. The relative amount of operating expenses (excluding financing costs) incurred comparte goods sold. c. The percentage of sales incurred for operating expenses and income taxes d. The percentage of sales absorbed by operating expenses, excluding interest
6. Attestation risk is limited to a low level in which of the following engagements? a Both examinations and reviews. b. Examinations, but not reviews. C Reviews, but not examination d. Neither examinations nor reviews. a b 7. Which of the following is not an underlying premise of an audit? Management must provide the auditor with all information relevant to the preparation and fair presentation of the financial statements Management and the auditors have responsibility for the preparation of financial...
1. Which area of accounting aims at serving the needs of external users? A) Bookkeeping B) External auditing C) Management accounting D) Financial accounting 2. Which account appears on the After-Closing Trial Balance? A) Service revenue B) Share capital C) Dividends D) Insurance expense 3. Which of the following events is NOT a transaction that would be recorded in a company's accounting records? A) The purchase of equipment for cash B) The purchase of equipment on account C) The death...
From among the following choices, identify those which are correct about operating espense perve L.It is a financial indicator over which management can evert significant control over the longer tm IL As management's control over operating expenses improves, business's operating expense percentage declines and cash flow improves. III. It is a finaricial indicator that is unaffected by changes in the competitive environment IV. It is a risk (cash) driver over which management typically has little influence a. I and II...
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