ACG 3173 UCF - Exam 4 Practice
Questions and All Correct Answers
2025-2026 Updated.
Margin of Safety = - Answer Current Sales - BreakEven Sales
The independent auditors' report usually: - Answer includes an opinion that the financial
statements present fairly, in all material respects, financial information about the company.
Units (for sale) = - Answer (Fixed Expenses + Operating Income) / CM
Current Sales = - Answer BreakEven Dollars + Margin of Safety
or
Units * Price per unit
Margin of Safety Ratio = - Answer Margin of Safety / Current Sales
BreakEven Units = - Answer Fixed Expenses / CM per Unit
CM Ratio = - Answer CM / Sales
BreakEven Revenue = - Answer Fixed Expenses / CM Ratio
or
BreakEven Units * Price per Unit
Degree of Operating Leverage = - Answer (S - V) / (S - V - F)
or
CM / Operating Income
, Maximum Charge (Price) = - Answer (Change in CM) / (1 + required ROI)
Sarbanes-Oxley Act (SOX) of 2002 - Answer - most powerful legislation to date
- this created the Public Accg. Oversight Board (PCAOB) as the authoritative watchdog over the
accounting and auditing profession
Dodd-Frank Act - Answer - response of the 2008 financial crisis
- allowed gov't to break up financial institutions that were "too big to fail" (institutional point of
view)
- prohibited predatory lending (consumer point of view)
Income Statement Financial Misstatements - Answer - recording revenue too soon
- recording bogus revenue
- boosting income using one-time or unsustainable activities
- shifting current expenses to a later period
Cash Flow Financial Misstatements - Answer - shifting financing cash inflows to the operating
section
- shifting normal operating cash outflows to the investing section
- inflating operating cash flow using acquisitions or disposals
- boosting operating cash flow using unsustainable activities
Reporting to the SEC - Answer companies registered with the SEC file 10-K or 10-Q
10-K - Answer annual AUDITED financial statements
10-Q - Answer quarterly financial statements
Managerial ACG - Answer - internal
- relevance
Financial ACG - Answer - external
- reliability
Total VARIABLE costs - Answer change when activity changes (wages, supplies, warranty)
Questions and All Correct Answers
2025-2026 Updated.
Margin of Safety = - Answer Current Sales - BreakEven Sales
The independent auditors' report usually: - Answer includes an opinion that the financial
statements present fairly, in all material respects, financial information about the company.
Units (for sale) = - Answer (Fixed Expenses + Operating Income) / CM
Current Sales = - Answer BreakEven Dollars + Margin of Safety
or
Units * Price per unit
Margin of Safety Ratio = - Answer Margin of Safety / Current Sales
BreakEven Units = - Answer Fixed Expenses / CM per Unit
CM Ratio = - Answer CM / Sales
BreakEven Revenue = - Answer Fixed Expenses / CM Ratio
or
BreakEven Units * Price per Unit
Degree of Operating Leverage = - Answer (S - V) / (S - V - F)
or
CM / Operating Income
, Maximum Charge (Price) = - Answer (Change in CM) / (1 + required ROI)
Sarbanes-Oxley Act (SOX) of 2002 - Answer - most powerful legislation to date
- this created the Public Accg. Oversight Board (PCAOB) as the authoritative watchdog over the
accounting and auditing profession
Dodd-Frank Act - Answer - response of the 2008 financial crisis
- allowed gov't to break up financial institutions that were "too big to fail" (institutional point of
view)
- prohibited predatory lending (consumer point of view)
Income Statement Financial Misstatements - Answer - recording revenue too soon
- recording bogus revenue
- boosting income using one-time or unsustainable activities
- shifting current expenses to a later period
Cash Flow Financial Misstatements - Answer - shifting financing cash inflows to the operating
section
- shifting normal operating cash outflows to the investing section
- inflating operating cash flow using acquisitions or disposals
- boosting operating cash flow using unsustainable activities
Reporting to the SEC - Answer companies registered with the SEC file 10-K or 10-Q
10-K - Answer annual AUDITED financial statements
10-Q - Answer quarterly financial statements
Managerial ACG - Answer - internal
- relevance
Financial ACG - Answer - external
- reliability
Total VARIABLE costs - Answer change when activity changes (wages, supplies, warranty)
