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CPA-Test – Certified Public Accountant Test: Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, Regulation

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Showing 19–20 of 20 questions

Question 19 (Business Environment and Concept)

A firm with a higher degree of operating leverage when compared to the industry average implies that the:

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    Firm has higher variable costs.
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    Firm's profits are more sensitive to changes in sales volume.
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    Firm is more profitable.
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    Firm uses a significant amount of debt financing.
Question 20 (Auditing and Attestation)

Sound internal control dictates that, immediately upon receiving checks from customers by mail, a responsible employee should:

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    Add the checks to the daily cash summary.
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    Verify that each check is supported by a prenumbered sales invoice.
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    Prepare a duplicate listing of checks received.
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    Record the checks in the cash receipts journal.