A building contractor has a fixed-price contract to construct a large building. It is estimated that the building will take 2 years to complete. Progress billings will be sent to the customer at quarterly intervals. Which of the following describes the preferable point for revenue recognition for this contract if the outcome of the contract can be estimated reliably?

• A.After the contract is signed.
• B.As progress is made toward completion of the contract.
• C.As cash is received.
• D.When the contract is completed.

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Which of the following statements is correct regarding risk analysis?

• A.The highest risk assessment should always be assigned to the area with the largest potential loss.
• B.Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.
• C.The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
• D.The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.

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In forecasting purchases of inventory for a firm, all of the following are useful except:

• A.Knowledge of the behavior of business cycles.
• B.Internal allocations of costs to different segments of the firm.
• C.Information on the seasonal variations in demand.
• D.Econometric modeling.

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Based on its current operating levels Glucose LLC estimates that its annual level of taxable profit in the foreseeable future will be US $200,000 annually_ Enacted tax rates for the tax jurisdiction in which Glucose operates are 15% for the first US $50.000 of taxable profit.
25% for the next US $50.000 of taxable profit, and 35% for taxable profit in excess of US $100,000. Which tax rate should Glucose use to measure a deferred tax liability or asset?

• A.15%
• B.25%
• C.27.5%
• D.351

Correct Answer: C

In measuring a deferred tax liability DTL or asset DTA), the objective is to use the enacted or substantively enacted tax rate(s) expected to apply to taxable profit in the periods in which the deferred tax liability or asset is expected to be settled or realized. If different rates apply to different taxable profit levels, a DTA or DTL is measured based on the average rates expected to apply in the periods when the TDs are expected to reverse. Accordingly, the applicable tax rate is 21.5%.

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Which of the following statements is true regarding a bring-your-own-device (BYOD) environment?

• A.Incident response times are less critical in the BYOD environment. compared to a traditional environment
• B.There is greater sharing of operational risk in a BYOD environment.
• C.With fewer devices owned by the organization, there is reduced need to maintain documented policies and procedures.
• D.There is a greater need Kr organizations to rely on users to comply with policies and procedures.

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