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NEW QUESTION 24
Which one of the following temporary differences will result in a deferred tax asset?

• A. Installment sale profits accounted for on the accrual basis for determining accounting profit and on a cash basis for determining taxable profit tax loss.
• B. Use of the straight-line depreciation method for determining accounting profit and an accelerated method for determining taxable profit tax loss.
• C. Prepaid expenses accounted for on the accrual basis for determining accounting profit and on a cash basis for determining taxable profit tax loss.
• D. Advance rental receipts accounted for on the accrual basis for financial statement purposes and on a cash basis for tax purposes.

Answer: D

Explanation:
A deferred tax asset records the deferred tax consequences attributable to deductible temporary differences and carry forwards Advance rental receipts accounted for on the actual basis for determining accounting profit and on a cash basis for determining taxable profit tax loss) would give rise to a deferred tax asset. The financial statements would show no income and no related tax expense because the rental payments apply to future periods. The tax return, however, would show the rent as income when the cash was received, and a tax would be due in the year of receipt. Because the tax is paid prior to recording accounting profits, it represents an asset that will be no due in the year of receipt. Because the tax is paid to prior to recording accounting profits, it represents an asset that will be recognized as an expense when income me is finally recorded.

NEW QUESTION 25
All of the following are generally included in a cost-of-quality report except:

• A. Supplier evaluations.
• B. Design engineering.
• C. Lost contribution margin.
• D. Warranty claims.

Answer: C

Explanation:
A cost-of-quality report includes most costs related to quality, specifically the costs of prevention, appraisal, internal failure, and external failure.

NEW QUESTION 26
A means of limiting production delays caused by equipment breakdown and repair is to:

• A. Plan maintenance activity based on an analysis of equipment repair work orders.
• B. Schedule production based on capacity planning.
• C. Pre-authorize equipment maintenance and overtime pay.
• D. Establish a preventive maintenance program for all production equipment.

Answer: D

Explanation:
A preventive maintenance program reduces equipment breakdowns and repairs.

NEW QUESTION 27
A customer intended to order 100 units of product 296014, but incorrectly ordered nonexistent product 296015. Which of the following controls most likely would detect this error?

• A. Check digit verification.
• B. Hash total.
• C. Redundant data check.
• D. Record count.

Answer: A

Explanation:
Check digit verification is used to identify incorrect identification numbers. The digit is generated by applying an algorithm to the ID number. During input, the check digit is
recomputed by applying the same algorithm to the entered ID number.

NEW QUESTION 28
Organization X owns a 38 percent equity stake in Organization Y. Which of the following statements is true regarding the financial treatment for this relationship?

• A. Y should not be reported by X as X does not have a controlling interest
• B. Y should be listed as an investment asset on X's balance sheet
• C. Y should be reported as a footnote to X's financial statements
• D. X must consolidate the financial statements for both organizations

Answer: B

NEW QUESTION 29
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