For mutually exclusive projects, the net present value (NPV) method is generally preferred over the internal rate of return (IRR) when a conflict arises. NPV directly calculates the expected monetary increase in shareholder wealth, aligning with the goal of maximizing firm value. IRR can be misleading in cases of non-conventional cash flows or scale differences, which is common with mutually exclusive options. The condition that the cost of capital is below the crossover rate reinforces that NPV provides the correct decision rule.

In a period of rising costs (inflation), FIFO assigns the oldest, lower-cost inventory to cost of goods sold (COGS). This results in a lower COGS expense compared to methods like LIFO, which would assign the newer, higher costs to COGS. A lower COGS leads to a higher gross profit and, consequently, a higher reported net income in the initial periods of inflation.

This scenario describes a critical failure in internal control. Combining the custodial function (signing checks) with the authorization function (approving invoices) and the record-keeping/reconciliation function creates an opportunity for fraud. An individual with all three duties can easily perpetrate and conceal a scheme, such as making payments to a fictitious vendor they control. The other options describe inefficiencies or errors, but the primary and most severe risk is intentional fraud.

When a cash dividend is declared, Retained Earnings is decreased (debited) and a current liability, Dividends Payable, is increased (credited). When the dividend is paid, Cash and Dividends Payable are decreased. The net effect after the payment is complete is a reduction in both the Retained Earnings component of stockholders’ equity and the asset Cash. It does not affect paid-in capital directly, and after payment, the liability is removed.

SWOT analysis categorizes factors as Internal (Strengths, Weaknesses) or External (Opportunities, Threats). A competitor’s weakness is an external condition in the marketplace that the company can potentially exploit. Therefore, it represents an **Opportunity** for the company to gain market share, attract the competitor’s customers, or improve its own competitive position. It is not a Threat to the company, nor is it an internal factor.

Under responsibility accounting, managers should be evaluated only on revenues and costs under their control. Traceable fixed costs are directly attributable to the segment and are likely controllable by its manager. Allocated common corporate costs (like headquarters rent) are not controllable by the segment manager. Therefore, the most relevant performance metric is the segment’s operating income after traceable fixed costs ($200,000 CM – $300,000 traceable FC = a loss of $100,000). This holds the manager accountable for the segment’s direct profitability.

This scenario describes **transaction risk**, which is the risk that the value of a known future cash flow (the accounts receivable from the foreign customer) will change due to fluctuations in the exchange rate between the transaction date and the settlement date. If the foreign currency weakens against the U.S. dollar by the time payment is received, the U.S. company will receive fewer dollars than initially expected. Translation risk relates to converting financial statements, and economic risk is broader, relating to long-term market changes.

A more lenient credit policy (e.g., longer payment terms, lower credit standards) typically leads to two main negative effects: (1) **Higher bad debt expense** as less creditworthy customers are accepted, and (2) **Slower collection of receivables**. Slower collection is reflected in a lower accounts receivable turnover ratio (Net Credit Sales / Average Net Receivables). A decrease in this ratio means receivables are being collected less efficiently. Inventory costs are less directly linked to credit policy changes.

The **Control Environment** is the foundation of all other COSO components. It encompasses the integrity, ethical values, management’s operating style, and the attention and direction provided by the board of directors. It ‘sets the tone at the top’ and establishes the culture of control and accountability within which the other components (Risk Assessment, Control Activities, Information & Communication, and Monitoring) operate.

For mutually exclusive projects, the net present value (NPV) method is generally preferred over the internal rate of return (IRR) when a conflict arises. NPV directly calculates the expected monetary increase in shareholder wealth, aligning with the goal of maximizing firm value. IRR can be misleading in cases of non-conventional cash flows or scale differences, which is common with mutually exclusive options. The condition that the cost of capital is below the crossover rate reinforces that NPV provides the correct decision rule.0