The value of the domestic currency in relation to foreign currencies is:

• A.Determined directly by the price of gold because the value of the domestic currency is tied to the price of gold.
• B.Set by the domestic government in consultation with foreign governments.
• C.Set along with the value of other currencies held by the International Monetary Fund.
• D.Determined by the forces of supply and demand on the foreign exchange markets.

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The most important reason to use risk assessment in audit planning is to:

• A.Enhance assurance provided to management.
• B.Improve budgeting accuracy.
• C.Identify redundant controls.
• D.Assist in developing audit programs.

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Which of the following statements is true regarding cost-volume-profit analysis?

• A.Contribution margin is the amount remaining from sales revenue after fixed expenses have been deducted.
• B.Breakeven point is the amount of units sold to cover variable costs.
• C.Breakeven occurs when the contribution margin covers fixed costs.
• D.Following breakeven, net operating income will increase by the excess of fixed costs less the variable costs per units sold.

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Which of the following costs would be incurred in an inventory stockout?

• A.Lost sales, lost customers, and safety stock.
• B.Lost customers, safety stock, and backorder.
• C.Lost sales, safety stock, and backorder.
• D.Lost sales, lost customers, and backorder.

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Refer to the exhibit.

If the profit margin of an organization decreases, and all else remains equal, which of the following describes how the "Funds Needed" line in the graph below will shift?

• A.The "Funds Needed" line will remain pointed upward, but will become less steep.
• B.The "Funds Needed" line will point downward with an extreme slope.
• C.The "Funds Needed" line will remain pointed upward, but will become more steep.
• D.The "Funds Needed" line will point downward with a minimal slope.

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