Wiley CPAexcel Exam Review 2014 Study Guide: Business Environment and Concepts, Vol. 9

480 Pages·3.621 MB·English

by  Whittington O.R.

4 Wiley
1 C PA e x c e l®
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E X A M R E V I E W
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S T U DY G U I D E

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C PA e x c e l®
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EXAM REVIEW
ST U DY G U I D E
2
BUSINESS ENVIRONMENT
AND CONCEPTS
O. Ray Whittington,
CPA, PhD
Cover Design by David Riedy
Cover image: © turtleteeth/iStockphoto
The following items, copyright © by the American Institute of Certifi ed Public Accountants, Inc., are reprinted (or adapted) with
permission.
1. Material from Uniform CPA Examination Questions and Answers, 1978 through 2000.
2. Information for Uniform CPA Examination Candidates, Board of Examiners, 2000.
Material from the Certifi ed Internal Auditor Examination, Copyright © 1994 through 1997 by the Institute of Internal Auditors, Inc. are
reprinted and/or adapted by permission.
Material from the Certifi ed Management Accountant Examination, Copyright © 1993 through 1997 by the Institute of Certifi ed
Management Accountants are reprinted and/or adapted by permission.
Reproduction and adaption of pronouncements, copyright © Financial Accounting Standards Board, Norwalk, Connecticut 06856-5116,
with permission.
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10 9 8 7 6 5 4 3 2 1
CONTENTS
Preface vii
About the Author ix
About the Contributor ix
INTRODUCTION 1
Chapter 1: Beginning Your CPA Review Program 3
Chapter 2: Examination Grading 15
Chapter 3: The Solutions Approach 17
Chapter 4: Taking the Examination 25
Chapter 5: Exam Content Overview 29
BUSINESS ENVIRONMENT AND CONCEPTS 35
Module 40: Corporate Governance, Internal Control, and
Enterprise Risk Management 37
Module 41: Information Technology 69
Module 42: Economics, Strategy, and Globalization 133
Module 43: Financial Risk Management and Capital Budgeting 191
Module 44: Financial Management 241
Module 45: Performance Measures and Management Techniques 297
Module 46: Cost Measurement and Assignment 337
Module 47: Planning, Control, and Analysis 375
APPENDICES
Appendix A: Business Environment and Concepts Sample Examination 419
Appendix B: Sample Business Environment and Concepts Testlet
Released by AICPA 437
Appendix C: 2013 Released AICPA Questions for Business
Environment and Concepts 439
INDEX 455
v

PREFACE
Passing the CPA exam upon your fi rst attempt is possible!
The Wiley CPAexcel Exam Review 2014 Study Guide: Business
Environment and Concepts preparation materials provide you with
the necessary materials (visit our website at www.wiley.com/cpa for
more information). It’s up to you to add the hard work and commit-
ment. Together we can beat the pass rate on each section of about
50%. All Wiley CPAexcel products are continuously updated to
provide you with the most comprehensive and complete knowledge
base. Choose your products from the Wiley preparation materials
and you can proceed confi dently. You can select support materials
that are exam-based and user-friendly. You can select products that
will help you pass!
Remaining current is one of the keys to examination success.
Here is a list of what’s new in this edition of the Wiley CPAexcel
Exam Review 2014 Study Guide: Business Environment and
Concepts text.
• The new AICPA Content Specifi cation Outlines on Business
Environment and Concepts for the Computerized CPA
Examination beginning in 2014
D ’
ON T FORGET TO
• New task-based simulations involving communication

VISIT OUR WEBSITE • AICPA questions released in 2013

AT
The objective of this work is to provide you with the knowl-
. . /
WWW WILEY COM CPA edge to pass the Business Environment and Concepts portion of
FOR SUPPLEMENTS the Uniform Certifi ed Public Accounting (CPA) Exam. The text is
. divided up into eight areas of study called modules. Each module
AND UPDATES
contains written text with discussion, examples, and demonstra-
tions of the key exam concepts. Following each text area, actual
American Institute of Certifi ed Public Accountants (AICPA) unof-
fi cial questions and answers are presented to test your knowledge.
We are indebted to the AICPA for permission to reproduce and adapt
examination materials from past examinations. Author constructed
questions are provided for new areas or areas that require updating.
All author constructed questions are modeled after AICPA ques-
tion formats. The multiple-choice questions are grouped into topical
areas, giving candidates a chance to assess their areas of strength
and weakness. Selection and inclusion of topical content is based
upon current AICPA Content Specifi cation Outlines. Only testable
topics are presented. If the CPA exam does not test it, this text does
not present it.
The CPA exam is one of the toughest exams you will ever take. It
will not be easy. But if you follow our guidelines and focus on your
goal, you will be thrilled with what you can accomplish.
Ray Whittington
November 2013
vii