1- Fashion Industries, Inc. manufactures dresses which it sells throughout the United States and South America. Among its 5,000 employees were 165 youngsters aged 14 and 15 who worked fulltime during the day and were paid at a rate less than the minimum wage. Which statement is true in accordance with the general rules of the Fair Labor Standards Act? A. Fashion did not violate the law since both male and female youngsters were paid at the same rate and worked only on Saturdays. B. Fashion violated the law by employing children under 16 years of age. C. Fashion was exempt from regulation because fewer than 5% of its employees were children. D. Fashion was exempt from regulation if more than 10% of its sales were in direct competition with foreign goods. 2- An employer having an experiencebased unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.2% federal unemployment tax rate of A. 5.4% B. 6.2% C. 0% D. 3.2% 3- Which of the following statements about the National Environmental Policy Act (NEPA) is most likely to be false? A. The NEPA allows the federal government to bring suit against any private person who violates NEPA's provisions. B. Under the NEPA, federal agencies do not have to give environmental considerations priority over other concerns in their decisionmaking processes. C. The NEPA augments the power of existing agencies with respect to considering environmental consequences of proposed actions. D. The NEPA requires federal agencies to consider environmental consequences in their decisionmaking process. 4- Workers have the right to strike but certain kinds of strikes are illegal. Which of the following statements is true? A. If the collective bargaining agreement is for an indefinite period, 30 days' notice must be given to the employer. B. If the strike concerns an employer's unfair labor practice, 60 days' notice must be given. C. If the collective bargaining agreement is for a definite period, a strike may only be called within that period. D. If the collective bargaining agreement is for a definite period, 60 days' notice must be given if the union wishes to strike to seek modification of the agreement. 5- Part D of a state implementation plan (SIP) is required to be submitted by a state that has not attained the NAAQS for any listed pollutant in one or more air quality control regions located within its borders. Which of the following is a provision that a Part D SIP must contain? A. Before full implementation of RACM, a requirement to use the best available control technology (BACT). B. A system for issuing permits to allow new or modified major stationary sources to emit air pollutants. C. Provision for the implementation of all reasonably available control measures (RACM) as expeditiously as possible. D. A mechanism for closing highways located in residential areas where the actual levels of pollution exceed primary and secondary NAAQSs. 6- Which of the following is the true statement with regard to materiality under the antifraud provisions of federal securities law? A. Materiality is a function of whether a reasonable person would attach importance to the information and includes the balancing of both the probability that the event may occur and its potential impact relative to the total company activities. B. The courts have ruled that any event or information that the buyer or seller of securities took into account is material. C. Material information does not concern future earnings that cannot be estimated with accuracy. D. The SEC has ruled for administrative convenience that any event involving less than $100,000 is not material. 7- The Flick Corp. manufactured almost exclusively a gizmo that was sold throughout the United States. Flick required all purchasers to take at least two other Flick products to obtain the gizmo over which it has almost complete market control. As a result of this plan, gross sales of the other items increased by an amount that was a substantial portion of the total market for those items. Which of the following best describes the legality of the above situation? A. It is an illegal tying arrangement. B. It is illegal only if the products are patented products. C. It is legal if the retailers do not complain about purchasing the other products. D. It is legal as long as the price charged to retailers for the other products is competitive. 8- James Fisk recently acquired Valiant Corporation by purchasing all of its outstanding stock pursuant to a tender offer. Fisk demanded and obtained the resignation of the existing board of directors and replaced it with his own slate of nominees. Under these circumstances, A. The former shareholders of Valiant are parties to a taxfree reorganization. Hence, they are not subject to federal income tax on their gain, if any, on transferring their stock to Fisk. B. Fisk had no right to demand the resignation of the existing board members; their resignations are legally ineffective, and they remain as directors. C. If Valiant is engaged in interstate commerce, the acquisition is exempt under the antitrust laws because the SEC has jurisdiction. D. If Valiant is listed on a national stock exchange, Fisk must file his tender offer with the SEC. 9- A CPA who performs primary actuarial services for a nonpublic client normally is precluded from expressing an opinion on the financial statements of that client if the A. CPA prepared an actuarial report using assumptions not approved by the client. B. Actuarial assumptions used are not in accordance with GAAS. C. Actuarial services are a major determinant of the pension expense. D. Fees for the actuarial services have not been paid. 10A CPA firm was purchased by a public company. The acquirer performs other professional services and has banking, insurance, and brokerage subsidiaries. The owners and employees became employees of a subsidiary. Also, the previous owners formed a new CPA firm that provides attest services. It leases employees, offices, and equipment from the parent, which also provides advertising, billing, and collection services. Independence is not impaired when A. An indirect superior is a promoter of an attest client of the new CPA firm. B. An indirect superior has a material investment in an attest client of the new CPA firm. C. A bank subsidiary in the consolidated group provides asset custody services in the ordinary course of business to an attest client of the new CPA firm. D. The new CPA firm audits another subsidiary in the consolidated group. 11Which entity has the authority to prohibit an individual from practicing public accounting? A. A state board of accountancy. B. A state CPA society. C. The Division for CPA Firms. D. A joint trial board of the AICPA. 12When a CPA is associated with financial statements that do comply with promulgated GAAP because the statements would misleading without the departure, the CPA is not required to disclose A. The reasons compliance would have been misleading. B. The approximate effects of the departure in comparison to application of GAAP. C. The reason the departure does not have a material effect on statements. D. The departure. not be the the 1 Fashion Industries, Inc. manufactures dresses which it sells throughout the United States and South America. Among its 5,000 employees were 165 youngsters aged 14 and 15 who worked fulltime during the day and were paid at a rate less than the minimum wage. Which statement is true in accordance with the general rules of the Fair Labor Standards Act? A. Fashion did not violate the law since both male and female youngsters were paid at the same rate and worked only on Saturdays. B. Fashion violated the law by employing children under 16 years of age. C. Fashion was exempt from regulation because fewer than 5% of its employees were children. D. Fashion was exempt from regulation if more than 10% of its sales were in direct competition with foreign goods. Answer is B (children under age 16 can not do job in Manufacturing industry) 2 An employer having an experiencebased unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.2% federal unemployment tax rate of A. 5.4% B. 6.2% C. 0% D. 3.2% Answer is B 6.2% Federal Tax Rate The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state. Therefore, the net FUTA tax rate is generally 0.8% (6.2% - 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00). State law determines individual state unemployment insurance tax rates. 3 Which of the following statements about the National Environmental Policy Act (NEPA) is most likely to be false? A. The NEPA allows the federal government to bring suit against any private person who violates NEPA's provisions. B. Under the NEPA, federal agencies do not have to give environmental considerations priority over other concerns in their decisionmaking processes. C. The NEPA augments the power of existing agencies with respect to considering environmental consequences of proposed actions. D. The NEPA requires federal agencies to consider environmental consequences in their decisionmaking process. Answer is C 4 Workers have the right to strike but certain kinds of strikes are illegal. Which of the following statements is true? A. If the collective bargaining agreement is for an indefinite period, 30 days' notice must be given to the employer. B. If the strike concerns an employer's unfair labor practice, 60 days' notice must be given. C. If the collective bargaining agreement is for a definite period, a strike may only be called within that period. D. If the collective bargaining agreement is for a definite period, 60 days' notice must be given if the union wishes to strike to seek modification of the agreement. Answer is C 5 Part D of a state implementation plan (SIP) is required to be submitted by a state that has not attained the NAAQS for any listed pollutant in one or more air quality control regions located within its borders. Which of the following is a provision that a Part D SIP must contain? A. Before full implementation of RACM, a requirement to use the best available control technology (BACT). B. A system for issuing permits to allow new or modified major stationary sources to emit air pollutants. C. Provision for the implementation of all reasonably available control measures (RACM) as expeditiously as possible. D. A mechanism for closing highways located in residential areas where the actual levels of pollution exceed primary and secondary NAAQSs. Answer is C 6 The Flick Corp. manufactured almost exclusively a gizmo that was sold throughout the United States. Flick required all purchasers to take at least two other Flick products to obtain the gizmo over which it has almost complete market control. As a result of this plan, gross sales of the other items increased by an amount that was a substantial portion of the total market for those items. Which of the following best describes the legality of the above situation? A. It is an illegal tying arrangement. B. It is illegal only if the products are patented products. C. It is legal if the retailers do not complain about purchasing the other products. D. It is legal as long as the price charged to retailers for the other products is competitive. Answer is D 7 James Fisk recently acquired Valiant Corporation by purchasing all of its outstanding stock pursuant to a tender offer. Fisk demanded and obtained the resignation of the existing board of directors and replaced it with his own slate of nominees. Under these circumstances, A. The former shareholders of Valiant are parties to a taxfree reorganization. Hence, they are not subject to federal income tax on their gain, if any, on transferring their stock to Fisk. B. Fisk had no right to demand the resignation of the existing board members; their resignations are legally ineffective, and they remain as directors. C. If Valiant is engaged in interstate commerce, the acquisition is exempt under the antitrust laws because the SEC has jurisdiction. D. If Valiant is listed on a national stock exchange, Fisk must file his tender offer with the SEC. Answer is D 8- A CPA who performs primary actuarial services for a nonpublic client normally is precluded from expressing an opinion on the financial statements of that client if the A. CPA prepared an actuarial report using assumptions not approved by the client. B. Actuarial assumptions used are not in accordance with GAAS. C. Actuarial services are a major determinant of the pension expense. D. Fees for the actuarial services have not been paid. Answer is B 9- A CPA firm was purchased by a public company. The acquirer performs other professional services and has banking, insurance, and brokerage subsidiaries. The owners and employees became employees of a subsidiary. Also, the previous owners formed a new CPA firm that provides attest services. It leases employees, offices, and equipment from the parent, which also provides advertising, billing, and collection services. Independence is not impaired when A. An indirect superior is a promoter of an attest client of the new CPA firm. B. An indirect superior has a material investment in an attest client of the new CPA firm. C. A bank subsidiary in the consolidated group provides asset custody services in the ordinary course of business to an attest client of the new CPA firm. D. The new CPA firm audits another subsidiary in the consolidated group. Answer is B 10Which entity has the authority to prohibit an individual from practicing public accounting? A. A state board of accountancy. B. A state CPA society. C. The Division for CPA Firms. D. A joint trial board of the AICPA. Answer is D 1 Fashion Industries, Inc. manufactures dresses which it sells throughout the United States and South America. Among its 5,000 employees were 165 youngsters aged 14 and 15 who worked fulltime during the day and were paid at a rate less than the minimum wage. Which statement is true in accordance with the general rules of the Fair Labor Standards Act? A. Fashion did not violate the law since both male and female youngsters were paid at the same rate and worked only on Saturdays. B. Fashion violated the law by employing children under 16 years of age. C. Fashion was exempt from regulation because fewer than 5% of its employees were children. D. Fashion was exempt from regulation if more than 10% of its sales were in direct competition with foreign goods. Answer is B (children under age 16 can not do job in Manufacturing industry) 2 An employer having an experiencebased unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.2% federal unemployment tax rate of A. 5.4% B. 6.2% C. 0% D. 3.2% Answer is B 6.2% Federal Tax Rate The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state. Therefore, the net FUTA tax rate is generally 0.8% (6.2% - 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00). State law determines individual state unemployment insurance tax rates. 3 Which of the following statements about the National Environmental Policy Act (NEPA) is most likely to be false? A. The NEPA allows the federal government to bring suit against any private person who violates NEPA's provisions. B. Under the NEPA, federal agencies do not have to give environmental considerations priority over other concerns in their decisionmaking processes. C. The NEPA augments the power of existing agencies with respect to considering environmental consequences of proposed actions. D. The NEPA requires federal agencies to consider environmental consequences in their decisionmaking process. Answer is C 4 Workers have the right to strike but certain kinds of strikes are illegal. Which of the following statements is true? A. If the collective bargaining agreement is for an indefinite period, 30 days' notice must be given to the employer. B. If the strike concerns an employer's unfair labor practice, 60 days' notice must be given. C. If the collective bargaining agreement is for a definite period, a strike may only be called within that period. D. If the collective bargaining agreement is for a definite period, 60 days' notice must be given if the union wishes to strike to seek modification of the agreement. Answer is C 5 Part D of a state implementation plan (SIP) is required to be submitted by a state that has not attained the NAAQS for any listed pollutant in one or more air quality control regions located within its borders. Which of the following is a provision that a Part D SIP must contain? A. Before full implementation of RACM, a requirement to use the best available control technology (BACT). B. A system for issuing permits to allow new or modified major stationary sources to emit air pollutants. C. Provision for the implementation of all reasonably available control measures (RACM) as expeditiously as possible. D. A mechanism for closing highways located in residential areas where the actual levels of pollution exceed primary and secondary NAAQSs. Answer is C 6 The Flick Corp. manufactured almost exclusively a gizmo that was sold throughout the United States. Flick required all purchasers to take at least two other Flick products to obtain the gizmo over which it has almost complete market control. As a result of this plan, gross sales of the other items increased by an amount that was a substantial portion of the total market for those items. Which of the following best describes the legality of the above situation? A. It is an illegal tying arrangement. B. It is illegal only if the products are patented products. C. It is legal if the retailers do not complain about purchasing the other products. D. It is legal as long as the price charged to retailers for the other products is competitive. Answer is D 7 James Fisk recently acquired Valiant Corporation by purchasing all of its outstanding stock pursuant to a tender offer. Fisk demanded and obtained the resignation of the existing board of directors and replaced it with his own slate of nominees. Under these circumstances, A. The former shareholders of Valiant are parties to a taxfree reorganization. Hence, they are not subject to federal income tax on their gain, if any, on transferring their stock to Fisk. B. Fisk had no right to demand the resignation of the existing board members; their resignations are legally ineffective, and they remain as directors. C. If Valiant is engaged in interstate commerce, the acquisition is exempt under the antitrust laws because the SEC has jurisdiction. D. If Valiant is listed on a national stock exchange, Fisk must file his tender offer with the SEC. Answer is D 8- A CPA who performs primary actuarial services for a nonpublic client normally is precluded from expressing an opinion on the financial statements of that client if the A. CPA prepared an actuarial report using assumptions not approved by the client. B. Actuarial assumptions used are not in accordance with GAAS. C. Actuarial services are a major determinant of the pension expense. D. Fees for the actuarial services have not been paid. Answer is B 9- A CPA firm was purchased by a public company. The acquirer performs other professional services and has banking, insurance, and brokerage subsidiaries. The owners and employees became employees of a subsidiary. Also, the previous owners formed a new CPA firm that provides attest services. It leases employees, offices, and equipment from the parent, which also provides advertising, billing, and collection services. Independence is not impaired when A. An indirect superior is a promoter of an attest client of the new CPA firm. B. An indirect superior has a material investment in an attest client of the new CPA firm. C. A bank subsidiary in the consolidated group provides asset custody services in the ordinary course of business to an attest client of the new CPA firm. D. The new CPA firm audits another subsidiary in the consolidated group. Answer is B 10Which entity has the authority to prohibit an individual from practicing public accounting? A. A state board of accountancy. B. A state CPA society. C. The Division for CPA Firms. D. A joint trial board of the AICPA. Answer is D 1 Fashion Industries, Inc. manufactures dresses which it sells throughout the United States and South America. Among its 5,000 employees were 165 youngsters aged 14 and 15 who worked fulltime during the day and were paid at a rate less than the minimum wage. Which statement is true in accordance with the general rules of the Fair Labor Standards Act? A. Fashion did not violate the law since both male and female youngsters were paid at the same rate and worked only on Saturdays. B. Fashion violated the law by employing children under 16 years of age. C. Fashion was exempt from regulation because fewer than 5% of its employees were children. D. Fashion was exempt from regulation if more than 10% of its sales were in direct competition with foreign goods. Answer is B (children under age 16 can not do job in Manufacturing industry) 2 An employer having an experiencebased unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.2% federal unemployment tax rate of A. 5.4% B. 6.2% C. 0% D. 3.2% Answer is B 6.2% Federal Tax Rate The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state. Therefore, the net FUTA tax rate is generally 0.8% (6.2% - 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00). State law determines individual state unemployment insurance tax rates. 3 Which of the following statements about the National Environmental Policy Act (NEPA) is most likely to be false? A. The NEPA allows the federal government to bring suit against any private person who violates NEPA's provisions. B. Under the NEPA, federal agencies do not have to give environmental considerations priority over other concerns in their decisionmaking processes. C. The NEPA augments the power of existing agencies with respect to considering environmental consequences of proposed actions. D. The NEPA requires federal agencies to consider environmental consequences in their decisionmaking process. Answer is C 4 Workers have the right to strike but certain kinds of strikes are illegal. Which of the following statements is true? A. If the collective bargaining agreement is for an indefinite period, 30 days' notice must be given to the employer. B. If the strike concerns an employer's unfair labor practice, 60 days' notice must be given. C. If the collective bargaining agreement is for a definite period, a strike may only be called within that period. D. If the collective bargaining agreement is for a definite period, 60 days' notice must be given if the union wishes to strike to seek modification of the agreement. Answer is C 5 Part D of a state implementation plan (SIP) is required to be submitted by a state that has not attained the NAAQS for any listed pollutant in one or more air quality control regions located within its borders. Which of the following is a provision that a Part D SIP must contain? A. Before full implementation of RACM, a requirement to use the best available control technology (BACT). B. A system for issuing permits to allow new or modified major stationary sources to emit air pollutants. C. Provision for the implementation of all reasonably available control measures (RACM) as expeditiously as possible. D. A mechanism for closing highways located in residential areas where the actual levels of pollution exceed primary and secondary NAAQSs. Answer is C 6 The Flick Corp. manufactured almost exclusively a gizmo that was sold throughout the United States. Flick required all purchasers to take at least two other Flick products to obtain the gizmo over which it has almost complete market control. As a result of this plan, gross sales of the other items increased by an amount that was a substantial portion of the total market for those items. Which of the following best describes the legality of the above situation? A. It is an illegal tying arrangement. B. It is illegal only if the products are patented products. C. It is legal if the retailers do not complain about purchasing the other products. D. It is legal as long as the price charged to retailers for the other products is competitive. Answer is D 7 James Fisk recently acquired Valiant Corporation by purchasing all of its outstanding stock pursuant to a tender offer. Fisk demanded and obtained the resignation of the existing board of directors and replaced it with his own slate of nominees. Under these circumstances, A. The former shareholders of Valiant are parties to a taxfree reorganization. Hence, they are not subject to federal income tax on their gain, if any, on transferring their stock to Fisk. B. Fisk had no right to demand the resignation of the existing board members; their resignations are legally ineffective, and they remain as directors. C. If Valiant is engaged in interstate commerce, the acquisition is exempt under the antitrust laws because the SEC has jurisdiction. D. If Valiant is listed on a national stock exchange, Fisk must file his tender offer with the SEC. Answer is D 8- A CPA who performs primary actuarial services for a nonpublic client normally is precluded from expressing an opinion on the financial statements of that client if the A. CPA prepared an actuarial report using assumptions not approved by the client. B. Actuarial assumptions used are not in accordance with GAAS. C. Actuarial services are a major determinant of the pension expense. D. Fees for the actuarial services have not been paid. Answer is B 9- A CPA firm was purchased by a public company. The acquirer performs other professional services and has banking, insurance, and brokerage subsidiaries. The owners and employees became employees of a subsidiary. Also, the previous owners formed a new CPA firm that provides attest services. It leases employees, offices, and equipment from the parent, which also provides advertising, billing, and collection services. Independence is not impaired when A. An indirect superior is a promoter of an attest client of the new CPA firm. B. An indirect superior has a material investment in an attest client of the new CPA firm. C. A bank subsidiary in the consolidated group provides asset custody services in the ordinary course of business to an attest client of the new CPA firm. D. The new CPA firm audits another subsidiary in the consolidated group. Answer is B 10Which entity has the authority to prohibit an individual from practicing public accounting? A. A state board of accountancy. B. A state CPA society. C. The Division for CPA Firms. D. A joint trial board of the AICPA. Answer is D