Question 1

ABC Company has recently moved away from paper-based invoicing systems and has begun implementing e-commerce solutions. Realizing that its e-commerce implementation may have a negative impact on the float of its trading partners, ABC can do which of the following to help address this concern?

Options :

A : Change the payment discount terms for the trading partners.

B : Allow the trading partners to use the company-s e-commerce solution.

C : Negotiate larger order quantities from the trading partners.

D : Agree to a uniform data transfer protocol for all trading partners

Answer: A

Question 2

ABC Company, a publicly held U.S. multinational, owns several manufacturing plants in Latin America as well as several ships to transport its products globally. 60% of its sales are from its euro-based subsidiaries. The company uses various derivative instruments to mitigate exposure to fluctuations in fuel prices and FX rates. The hedging deals are longterm and placed withmany counterparties. ABC Company is also a net borrower and has a syndicated credit facility in place. Which of the following actions to mitigate counterparty risk would MOST benefit the company?

Options :

A : Eliminate specific AAA rated counterparties.

B : Adopt a third-party custodian for investments.

C : Implement or adjust single counterparty balance limits.

D : Add to the number of counterparties to increase diversification.

Answer: C

Question 3

Company ABC experienced a loss in the past when an employee in the treasury department was able to transfer $1.5 million to a personal account offshore. The company is working with a security agent to prevent this from happening in the future. ABC also accepts a large number ofchecks as payment. The agent has suggested upgrades to ABC’s payment process. What step should be taken to help mitigate this type of risk in the future?

Options :

A : Securely store check stock.

B : Set up international bank security.

C : Implement dual approval.

D : Implement data security standards.

Answer: C

Question 4

A company purchases a machine tool with an expected life of 3 years. Under the accrual accounting method, the equipment would be treated in which of the following ways?

Options :

A : As an asset, recorded on the balance sheet at acquisition cost and depreciated

B : As an asset, recorded on the balance sheet at purchase price and amortized

C : As a purchase, netted against retained earnings

D : As a purchase, recorded as an operating expense in the current period

Answer: A

Question 5

DGB Inc.’s CEO and founder retired shortly after the company went public two years ago. DGB Inc. has recently struggled, and the founder has agreed to return as an independent director. What violation, if any, has occurred?

Options :

A : The cooling-off period has not been met.

B : Section 404 of the Sarbanes-Oxley Act has been violated.

C : ERISA disclosure requirements have not been met.

D : No violation has occurred.

Answer: A

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