Major "Big 6" Certified Public Accounting firms have three sources of revenue or three divisions: Audit, tax, and Management Consulting. But the real power resides in the Audit Department because the Audit Partners earn between $100,000-750,000 per year. An annual audit of a large U.S. corporation can cost over $500,000 each year. The Securities and Exchange Commission (SEC) of the federal government requires that all corporations selling stock on the New York Stock Exchange be audited annually by an independent national CPA firm. The Audit Partner in-charge of the engagement directs the staff auditors to keep audit workpapers for evidence in case of a law suit. These workpapers show that the corporation is or is not maintaining generally accepted accounting principles (GAAP). During an audit in Hollywood, California a staff auditor was completing an audit of a home health care corporation. During the investigation it was noticed that some of the accounting records were missing. It was common knowledge that the prior corporate controller had embezzled hundreds of thousands of dollars from the corporation and had fled the United States. The staff auditor commented in the workpapers that the missing files could be due to the embezzlement. Upon reviewing the workpapers, the Audit Manager rebuked the staff auditor for mentioning the embezzlement in the workpapers. Questions:
1 What are the issues involved here? Explain in your own words ?
2 Should the audit workpapers be re-done? Explain in your own words?
3 What would you do? Explain in your own words?
4 What are the short and long term consequences of not reporting the embezzlement in the workpapers? Explain in your own words ?
5 What are the legal ramifications of this case? Explain in your own words?
6 Who is affected by the note in the papers: stockholders, employees, auditors, the community in general? Explain in your own words
In: Finance
Major "Big 6" Certified Public Accounting firms have three sources of revenue or three divisions: Audit, tax, and Management Consulting. But the real power resides in the Audit Department because the Audit Partners earn between $100,000-750,000 per year. An annual audit of a large U.S. corporation can cost over $500,000 each year.
The Securities and Exchange Commission (SEC) of the federal government requires that all corporations selling stock on the New York Stock Exchange be audited annually by an independent national CPA firm. The Audit Partner in-charge of the engagement directs the staff auditors to keep audit workpapers for evidence in case of a law suit. These workpapers show that the corporation is or is not maintaining generally accepted accounting principles (GAAP).
During an audit in Hollywood, California a staff auditor was completing an audit of a home health care corporation. During the investigation it was noticed that some of the accounting records were missing. It was common knowledge that the prior corporate controller had embezzled hundreds of thousands of dollars from the corporation and had fled the United States. The staff auditor commented in the workpapers that the missing files could be due to the embezzlement. Upon reviewing the workpapers, the Audit Manager rebuked the staff auditor for mentioning the embezzlement in the workpapers.
Questions:
1 What are the issues involved here? Explain in your own words
2 Should the audit workpapers be re-done? Explain in your own words
3 What would you do? Explain in your own words
4 What are the short and long term consequences of not reporting the embezzlement in the workpapers? Explain in your own words
5 What are the legal ramifications of this case? Explain in your own words
6 Who is affected by the note in the papers: stockholders, employees, auditors, the community in general? Explain in your own words
In: Accounting
Here is the R code for running a t-test:
t.test( numeric vector of data values, another optional numeric vector of data values,
alternative = c("two.sided", "less", "greater"),
mu = Ho, paired = c(TRUE, FALSE), var.equal = c(TRUE,FALSE),conf.level =1-)
1.) Suppose 30 students are all taking the same Math 115 and English 101 classes at CSUN. You want to know in which class students tend to do better. The data below represents the class averages of the students in both classes. Write the R code that does the following:
a.) Makes two boxplots one green for the Eng_101 and a blue one for Math_115 labels the main title as "Class averages for students taking Stats vs English” and names the Eng_101 data as “English 101” and the Math_115 data as “Intro to Statistics”.
b.) Computes the sample size, mean and standard deviation of the Eng_101 and Math_115.
c.) Performs a paired two-sided t-test with =.01 to Eng_101 and Math_115 to decide whether there has been a statistically significant difference between the class averages in English 101 and Math 115.
d.) Paste your R code into Run R Script and run the script.
e.) Paste the R output to the bottom R code.
f.) Looking at the p-value in the R output, decide if there is evidence to suggest that there is a statistically significant difference between the class averages in English 101 and Math 115. Write the p-value and your conclusion at the top of your R code.
Eng_101<-c( 80, 72, 73, 76, 79, 79, 79, 75, 75, 68, 70, 76, 79, 74, 73, 81,72, 74, 77, 83, 79,78, 72, 79,60,54,50,40,65,59)
Math_115<-c( 74, 67, 74, 70, 76, 60,56,45,66,81, 67, 63, 71, 76, 66, 73, 77, 68, 71, 75,
68, 79, 73, 85, 78, 77, 72, 77, 59,65)
In: Statistics and Probability
On December 27, 2017, Mint Company placed an order to purchase merchandise on account from a seller, Lemon, Inc. Lemon’s listed catalog price for the merchandise is $13,000. Lemon’s historical cost for these items is $4,000. Mint has been a customer of Lemon’s for years and was able to negotiate these terms: (i) a 7% trade discount and (ii) payment terms of 2/10, n/30. The goods were shipped by Lemon FOB shipping point on December 30, 2017 and arrived at Mint’s facility on January 5, 2018. At the time of shipment, Lemon paid $700 in shipping costs. On January 6, Mint returned $2,000 worth of merchandise to Lemon, which had an original cost to Lemon of $615. Mint paid Lemon in full on January 7.
Show all of your work and calculations, and make sure you answer all parts of the question.
Required:
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Facts (Problems 6-7):
On June 29, 2019 Hulu Company placed an order to purchase 10,000 units of “This is Us” Merchandise from the seller The Big Three Company. Unit price for the merchandise was $4.50 while The Big Three company originally paid a cost of $3.00.
As The Big Three Company was trying to attract more customers and expand, it began its promotion of providing a discount of 15% to any customers that order 10,000 units or more with an additional discount of 2/10, n/30. Both companies use the gross method for purchases and discounts. On July 2, 2019 The Big Three Company shipped the merchandise on F.O.B. Shipping Point, and the merchandise arrived on July 10th. Shipping cost of $3,000 was pre-paid by The Big Three Company. On July 11th, Hulu paid off the balance after returning 500 units.
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
In: Accounting
Facts (Problems 1-4)
On December 27, 2017, Mint Company placed an order to purchase merchandise on account from a seller, Lemon, Inc. Lemon’s listed catalog price for the merchandise is $13,000. Lemon’s historical cost for these items is $4,000. Mint has been a customer of Lemon’s for years and was able to negotiate these terms: (i) a 7% trade discount and (ii) payment terms of 2/10, n/30. The goods were shipped by Lemon FOB shipping point on December 30, 2017 and arrived at Mint’s facility on January 5, 2018. At the time of shipment, Lemon paid $700 in shipping costs. On January 6, Mint returned $2,000 worth of merchandise to Lemon, which had an original cost to Lemon of $615. Mint paid Lemon in full on January 7.
Show all of your work and calculations, and make sure you answer all parts of the question.
Required:
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
Facts (Problems 6-7):
On June 29, 2019 Hulu Company placed an order to purchase 10,000 units of “This is Us” Merchandise from the seller The Big Three Company. Unit price for the merchandise was $4.50 while The Big Three company originally paid a cost of $3.00.
As The Big Three Company was trying to attract more customers and expand, it began its promotion of providing a discount of 15% to any customers that order 10,000 units or more with an additional discount of 2/10, n/30. Both companies use the gross method for purchases and discounts. On July 2, 2019 The Big Three Company shipped the merchandise on F.O.B. Shipping Point, and the merchandise arrived on July 10th. Shipping cost of $3,000 was pre-paid by The Big Three Company. On July 11th, Hulu paid off the balance after returning 500 units.
Date: MM/DD/YY
Dr. Account………...XX
Cr. Account…………...XX
In: Accounting
Famous Failures in Finance: Shady Trading at Enron Before it was known for its financial problems, Enron, a utility firm operating pipelines and shipping natural gas, had become famous as a business pioneer, blazing new trails in the market for trading risk. In the 1980s the price of natural gas was deregulated, which meant that its price could go down and up, exposing producers and consumers to risks. Enron decided to exploit new opportunities in the commodities business by trading natural gas futures. The natural gas futures that traded on the New York Mercantile Exchange did not take into account regional discrepancies in gas prices. Enron filled this void by agreeing to deliver natural gas to any location in the United States at any time. In addition to trading natural gas and other energy contracts, in the late 1990s Enron began trading weather derivatives for which no underlying commodities existed. These were just bets on the weather. Its weather-derivatives transactions were worth an estimated $3.5 billion in the United States alone. Thanks to its near-monopoly position in derivatives products, Enron’s trading business was initially highly profitable. At one point, the company offered more than 1,800 different contracts for 16 product categories, ranging from oil and natural gas to weather derivatives, broadband services, and emissions rights, and it earned 90% of its revenues from trading derivatives. And unlike traditional commodity and futures exchanges and brokers, Enron’s online commodity and derivative business was not subject to federal regulations. However, Enron eventually lost its unique position as the energy business started to mature. When other firms entered the online derivatives-trading business, they competed by charging lower commissions and exploiting the same regional price discrepancies that had been Enron’s bread and butter. Enron’s trading operations became less profitable. To find new markets and products, the company expanded into areas such as water, foreign power sources, telecommunications, and broadband services. The farther it moved from its core businesses of supplying gas, the more money Enron lost. The company sought to hide those losses by entering into more risky and bizarre financial contracts. When financial institutions began to realize that Enron was essentially a shell game, they withdrew their credit. At that point, despite rosy assurances from its founder and CEO Ken Lay, Enron went into a death spiral that ended in bankruptcy on December 2, 2001. In July 2004 Lay was indicted on 11 counts of securities fraud and related charges. He was found guilty on May 25, 2006, of all but one of the counts. Each count carried a maximum 5- to 10-year sentence and legal experts said Lay could face 20 to 30 years in prison. However, about three and a half months before his scheduled sentencing, Ken Lay died on July 5, 2006, while vacationing in Snowmass, Colorado. On October 17, 2006, as a result of his death, the federal district court judge who presided over the case vacated Lay’s conviction.
Please answer the questions.
Critical Thinking Questions: Could the Enron debacle have been prevented? If so, what actions should have been taken by auditors, regulators, and lawmakers? Please respond to the above questions.
In: Finance
Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day.
In: Economics
CA2-5 (Revenue Recognition Principle) After the presentation of your report on the examination of the financial statements to the board of directors of Piper Publishing Company, one of the new directors expresses surprise that the income statement assumes that an equal proportion of the revenue is recognized with the publication of every issue of the company’s magazine. She feels that the “crucial event” in the process of earning revenue in the magazine business is the cash sale of the subscription. She says that she does not understand why most of the revenue cannot be “recognized” in the period of the cash sale.
Instructions Discuss the propriety of timing the recognition of revenue in Piper Publishing Company’s accounts with:
(a) The cash sale of the magazine
subscription.
(b) The publication of the magazine every
month.
(c) Over time, as the magazines are published and delivered
to customers.
In: Accounting
1) A financial analyst would like to construct a 95% confidence interval for the mean earnings of a company. The company's earnings have a standard deviation of $12 million. What is the minimum sample size required by the analyst if he wants to restrict the margin of error to $2 million?
2) A budget airline wants to estimate what proportion of customers would pay $10 for in-flight wireless access. Given that the airline has no prior knowledge of the proportion, how many customers would it have to sample to ensure a margin of error of no more than 5% for a 95% confidence interval?
3) A job candidate with an offer from a prominent investment bank wanted to estimate how many hours she would have to work per week during her first year at the bank. She took a sample of six first-year analysts, asking how many hours they worked in the last week. Construct and interpret a 95% confidence interval with her results: 64, 82, 74, 73, 78, and 87 hours.
In: Statistics and Probability
Your company is using a plant of size 10,000 sq. ft. that was constructed in 2006 for $300,000. The cost indices that correspond to this size of a plant for 2006 and 2014 are 145 and 186 respectively. If the power-sizing exponent is 0.55, how much would it cost to build a 40,000 sq. ft. warehouse in 2014?
Note: Answer would be $816,026. Please include complete explanation and step-by-step solution.
In: Economics