Betty Vinson was the director of management reporting at WorldCom. She had worked there for five years when the fraud was uncovered and received two promotions during that time. Vinson’s salary increased from $50,000 when she started to $80,000 in 2002. Vinson reported to Buford Yates, director of general accounting, who reported to David Myers, senior vice president, and controller, who then reported to CFO Scott Sullivan. (See Figure 1 for an organizational chart.) A hard worker who often stayed late or brought work home, Vinson considered herself lucky to land the job at WorldCom, as it was located in her hometown of Clinton, Miss. Vinson graduated from Mississippi College in 1978 and married her college sweetheart, Tom Vinson, a printing-equipment salesman who earned $40,000 a year. The couple had one daughter and lived a typical suburban lifestyle. Prior to working at WorldCom, Vinson worked as an accountant for various banking enterprises in Louisiana and Kansas City from 1978 to 1996. She also earned the Certified Public Accountant (CPA) credential during that time.

Problems began to emerge in the telecommunications industry in the late 1990s. The industry had over expanded, and every company was beginning to feel the effects, including WorldCom. By 2000, WorldCom’s expenses were increasing faster than revenues. In September 2000, WorldCom had to find $828 million to meet earnings targets expected by Wall Street. Vinson and her accounting colleagues found $50 million, but it wasn’t nearly enough. Senior management instructed her and her accounting coworkers to reduce reserve accounts for line costs to cover this shortfall. Reserves had been set aside based on estimates of potential losses, but they needed to have enough reason to reduce the reserve. Meeting earnings targets wasn’t a valid reason. Sullivan pressed Myers and Vinson’s boss, Yates, to make this adjustment. Yates told his accounting team that he had reservations, too, but that Sullivan promised this was a one-time adjustment. They all agreed to go along with the accounting adjustment. Vinson felt uncomfortable with this and considered resigning. The corporate accounting department’s discomfort with the entries prompted Sullivan to call the accountants into his office. He used an analogy that WorldCom was an aircraft carrier, and they needed to land the planes that were in the air. He urged them to wait until the planes had landed, and then they could leave the company if they still wanted to. Sullivan assured them that nothing they would do was illegal and that it wouldn’t be repeated. After talking to her husband, Vinson decided against resigning because of her family’s dependence on her salary and health insurance. In April 2001, the gap in meeting earnings targets was $771 million. The reserve pools weren’t large enough to cover this gap. Sullivan’s new strategy was to shift line costs, recorded as expenses, to capital expenditure accounts. Yates objected. Sullivan insisted it was the only way to cover this gap. Vinson and her coworker both felt cornered; this was clearly fraudulent accounting. The only choices now were to resign or make the entries. The three-person accounting team identified the capital accounts to use, and Vinson made the entries to transfer the $771 million. She backdated entries to February in the computer system and then indicated to colleagues at WorldCom that she was going to look for another job. These entries continued quarterly through April 2002. The Securities & Exchange Commission (SEC) was informed of the problem in June 2002 as a result of the efforts of the WorldCom internal audit team. The SEC would ultimately charge CFO Scott Sullivan, Controller David Myers, and accountants Buford Yates, Troy Normand, and Betty Vinson. According to the SEC complaint: “At the direction of WorldCom senior management, Vinson and other WorldCom employees caused WorldCom to overstate materially its earnings in contravention of generally accepted accounting principles (GAAP) for at least seven successive fiscal quarters, from as early as October 2000 through April 2002. Vinson knew or was reckless in not knowing, that these entries were made without supporting documentation, were not in conformity with GAAP, were not disclosed to the investing public, and were designed to allow WorldCom to appear to meet Wall Street analysts’ quarterly earnings estimates

Mr. Sullivan said:
Paraphrase    one    of    Sullivan’s    arguments?
This argument best describes the ____________________________________ “reason and rationalization” of GVV because
In response to Mr. Sullivan’s argument, Betty or Troy could have countered with something like:
Paraphrase another (a second) of Sullivan’s arguments, and follow the format above, etc. . . .

This question requires you to interpret and communicate the findings of two linear regression models. The data is from an article that studies the relationship between salaries of legislators and representation of the working-classes in state legislatures in the US.

Background

If politicians in the United States were paid better, would more working-class people become politicians? It is often argued that if politicians are paid too little, then it is economically too difficult for lower-income citizens to hold positions of office. This could mean that low-paying political jobs lead to the under-representation of working-class people in politics. On the other hand, if politicians are paid more, then holding political office might become more attractive to wealthy people, and this might also lead to the under-representation of working-class people. To investigate these two contrasting hypotheses, we will examine data on the salaries paid in different state legislatures in the US and the percentage of legislators who come from working-class backgrounds.

Dataset The dataset includes salaries of state legislators from all 50 states in the US. It also includes variables measuring information unique to each state such as the length of the legislative session and the number of staffers in each legislature. The occupational backgrounds of legislators are also included, as well demographic data on the makeup of the population in each state. A detailed description of the dataset is provided in the table below.

Variable                           Description

pct_worker                    Percentage of legislators from working-class backgrounds

salary.                            Average salary of legislators in $100,000s

session_len                     Length of legislative session (in days)

staff_size                       Average number of full-time permanent staffers in the legislature.

term_limits.                  Binary indicator (0 or 1) of term limits for state legislators

income.                          Average per-capita income (in $1000s)

income_inequality        Percentage of income to top 1% of earners

pct_union.                    Percentage of workers belonging to a labour union

pct_black                       Percentage of state residents who are Black

pct_urban                       Percentage of state residents living in urban areas

poverty_rate.               Percent of state residents living below the poverty line

3a. Multiple Linear Regression

This question requires you to interpret and communicate the findings of two linear regression models from Table 1.

Model 1 presents results from a simple linear regression, where the independent variable is salary. Model 2 presents results from a multiple linear regression which includes a number of explanatory variables. The dependent variable for both models is the percentage of legislators from working-class backgrounds.

Your task is to interpret the models and write up the results as if you were writing the discussion for publication in a major journal/book. Interpret the two models statistically and substantively, and in comparison to one another. You should focus on determining which variables have coefficients that are significantly different from zero, and what the effect sizes mean in substantive terms. Simply listing the significant effects will be insufficient to receive full marks. You should also comment on how the estimates differ between the two models, and on the fit statistics of the two models.

              Table 1: Legislative salaries and working-class representation

Model1                              Model2

(Intercept)                                      155.49                               −199.48

(41.00)                              (103.85)

Salary                                              −0.56                                −0.61

(0.10)                                 (0.13)

term_limits                                     0.26                                   (0.84)

income                                           −0.03                                 (0.05)

income_inequality                        −0.26                                 (0.11)

poverty_rate                                  −0.05                                 (0.07)

pct_union                                       0.12                                   (0.04)

pct_black                                        −0.06                                (0.02)

pct_urban                                       −0.03                                 (0.02)

R2(Rsquared)                                 0.19                                   0.35

Adj.(Rsquared)                              0.18                                   0.31

Num. obs.                                       200                                     200

Note: Figures in parentheses are the standard errors of the regression coefficients.

DGP, Inc. sells 100,000 Gizmos to a retailer in Europe for €100,000 (Euros) on terms of 30 days from the date of invoice. The current rate of the EUR/USD is 1.3868; therefore, DGP, Inc. books the sale as an accounts receivable of US $138,680.

Instructions

1. Define and discuss the concepts of currency exposure risk, translation exposure, and economic exposure.
2. If the exchange rate of EUR/USD was 1.2868 in 30 days, what would be the impact on the company’s profit and loss at the time of the receipt of payment from the European customer? Include calculations.
   • What would be the economic exposure for the company? Include calculations.
   • What would be the translation exposure, if any? Include calculations.
3. What would be the impact on the company’s profit and loss at the time of the receipt of payment from the European customer if the exchange rate was EUR/USD 1.4868 in 30 days? Include calculations.
   • What would be the economic exposure for the company? Include calculations.
   • What would be the translation exposure, if any? Include calculations.
4. How could DGP, Inc. eliminate or reduce these exposure risks? Provide 2 hypothetical examples to support your answer.

Arnez Company’s annual accounting period ends on December 31, 2018. The following information concerns the adjusting entries to be recorded as of that date.

1. The Office Supplies account started the year with a $4,350 balance. During 2018, the company purchased supplies for $17,966, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2018, totaled $3,828.
2. An analysis of the company's insurance policies provided the following facts.

The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)

3. The company has 15 employees, who earn a total of $1,600 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2018, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2019.
4. The company purchased a building on January 1, 2018. It cost $615,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $19,000.
5. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,500 per month, starting on November 1, 2018. The rent was paid on time on November 1, and the amount received was credited to the Rent Earned account. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 15. The tenant has agreed not to fall behind again.
6. On November 1, the company rented space to another tenant for $3,171 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.

Required:
1. Use the information to prepare adjusting entries as of December 31, 2018.
2. Prepare journal entries to record the first subsequent cash transaction in 2019 for parts c and e.

Arnez Company’s annual accounting period ends on December 31, 2017. The following information concerns the adjusting entries to be recorded as of that date.

The Office Supplies account started the year with a $3,475 balance. During 2017, the company purchased supplies for $14,352, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2017, totaled $3,058.

An analysis of the company's insurance policies provided the following facts.

The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)

The company has 15 employees, who earn a total of $2,200 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2017, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2018.

The company purchased a building on January 1, 2017. It cost $900,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $28,500.

Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $2,400 per month, starting on November 1, 2017. The rent was paid on time on November 1, and the amount received was credited to the Rent Earned account. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 15. The tenant has agreed not to fall behind again.

On November 1, the company rented space to another tenant for $2,174 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.

Required:
1. Use the information to prepare adjusting entries as of December 31, 2017.
2. Prepare journal entries to record the first subsequent cash transaction in 2018 for parts c and e.
  

Arnez Company’s annual accounting period ends on December 31, 2017. The following information concerns the adjusting entries to be recorded as of that date.

The Office Supplies account started the year with a $4,000 balance. During 2017, the company purchased supplies for $13,400, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2017, totaled $2,554.

An analysis of the company's insurance policies provided the following facts.

The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)

The company has 15 employees, who earn a total of $1,960 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2017, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2018.

The company purchased a building on January 1, 2017. It cost $960,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $30,500.

Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,000 per month, starting on November 1, 2017. The rent was paid on time on November 1, and the amount received was credited to the Rent Earned account. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 15. The tenant has agreed not to fall behind again.

On November 1, the company rented space to another tenant for $2,800 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.

Required:
1. Use the information to prepare adjusting entries as of December 31, 2017.
2. Prepare journal entries to record the first subsequent cash transaction in 2018 for parts c and e.

1. How does the Bank of Canada’s open market operation of purchasing bonds from chartered banks effect the individual components of the GDP = C+I+G+X-M?

Essay format:

In 320 word write in essay format how an individual may overcome adversity caused by disability ( attention deficit disorder ADD) and what they learned from the experience.

1. We fear the judgement of our peers, which causes us to become _____ in our thinking? Discuss.

2.Before we take risks we need some kind of security. Explain what this means.

3.Playfulness helps us to get better creative solutions, do our jobs better, and help us feel better when we do them. Give an example from your own experience.

4.When we first encounter any new material, we ask “what can we do with it”. Provide an example from a child and adult.

5.A barrier to adult creativity is self-editing. Explain.

6. He discusses “informal prototyping” and available materials to allow for exploration and design. Why do offices and schools remove most adaptive materials.