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AICPA Exam CPA-Business Topic 3 Question 69 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 69
Topic #: 3

[All CPA-Business Questions]

Which one of the following management considerations is usually addressed first in strategic planning?

AOverall goals of the firm.

BOrganizational structure.

CRecent annual budgets.

DBeing an industry leader.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. 7.0 percent cost of funds from retained earnings.

The cost of retained earnings is equal to the rate of return required by the firm's common shareholders (or, in effect, the return 'lost' by them when the firm chooses to fund with retained earnings). While oftentimes this rate is somewhat subjective, we are given the facts to exactly answer the question in this case. The stock is currently selling for $100/share, and the dividend is given at $7/share.

$7 / $100 = 7%

Choices 'b', 'c', and 'd' are incorrect, per the above Explanation:/calculation.

by Jenelle at Apr 24, 2023, 03:44 AM

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Clay

2 months ago

Haha, maybe they're testing our sense of humor. Annual budgets? That's like asking a chef to decide the restaurant's decor.

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Justine

10 days ago

C) Recent annual budgets.

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Erasmo

12 days ago

B) Organizational structure.

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Wilbert

14 days ago

A) Overall goals of the firm.

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Coleen

2 months ago

Recent annual budgets? Come on, that's just numbers, not the big picture. Obviously, it's about being an industry leader!

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Jeanice

5 days ago

D) Being an industry leader.

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Dana

13 days ago

B) Organizational structure.

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Stephanie

14 days ago

A) Overall goals of the firm.

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Refugia

15 days ago

D) Being an industry leader.

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Pilar

17 days ago

B) Organizational structure.

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Ashlyn

1 months ago

A) Overall goals of the firm.

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Carma

2 months ago

I'd say organizational structure is the key here. You need to understand your capabilities before setting goals.

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Ariel

2 months ago

Definitely the overall goals of the firm. You can't build a strategy without clear objectives in mind.

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Azzie

1 months ago

Definitely the overall goals of the firm. You can't build a strategy without clear objectives in mind.

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Charolette

2 months ago

A) Overall goals of the firm.

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Annelle

2 months ago

But what about D) Being an industry leader? Shouldn't that be the priority?

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Ryan

2 months ago

I agree with Dolores. Setting the overall goals is crucial for strategic planning.

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Dolores

2 months ago

I think A) Overall goals of the firm is usually addressed first.

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