QUESTION: 93

There are two main approaches to corporate governance: rules-based and principle-based.
Which THREE of the following are correct?

Rules-based corporate governance applies to the USA and principle-based corporate governance applies to the UK.
Rules-based corporate governance applies to the UK and principle-based corporate governance applies to the USA.
Sarbanes Oxley Act (SOX) is a rules-based approach to corporate governance.
Sarbanes Oxley Act (SOX) is a principle-based approach to corporate governance.
A principle-based approach will mean the entity must comply or explain and a rules-based approach will have appropriate penalties for transgression.
Best practice will use a rules-based approach to corporate governance and will have appropriate penalties for transgression.

Answer(s): A,C,E

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QUESTION: 94

Which THREE of the following are costs that a business might incur as a result of holding insufficient inventory of raw materials?

Lost production
Purchasing inventory at a higher price
Additional storage costs
Increased risk of obsolescence
Loss of sales

Answer(s): A,B,E

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QUESTION: 95

Which THREE of the following matters should an entity consider when determining the credit terms granted to a customer?

Typical credit terms operating within the industry
Risk of non-payment
Selling price of the goods being sold to the customer
Bargaining power of the customer
Number of suppliers
Discount offered by suppliers for early payment

Answer(s): A,B,D

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QUESTION: 96

Select THREE actions that should be taken by a business offering credit to its customers to ensure that amounts owing are collected as quickly as possible.

Chase up slow payers with reminder letters.
Monitor outstanding trade receivables.
Extend the credit terms available to customers.
Issue invoices quickly.
Monitor outstanding trade payables.
Take longer to settle trade payables than collect trade receivables.

Answer(s): A,B,D

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QUESTION: 96