Answer True or False

1. Recognition is the process of formally recording or incorporating an item into the financial statements.
2. When initially recording the cost of land purchased, most companies use the current value.
3. Under the accrual method expenses are recognized when revenue is earned.
4. Most companies use the cash basis of accounting.
5. Three months before year end Billings Company signed a $100,000 12%, 6- month note. Principal and interest will be paid at maturity. No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Match the independent entities in the table on the following page with the most likely objective from the list below:

Stewardship

Income tax deferral

Cash flow prediction

Contract compliance

Performance evaluation

If more than one answer applies, provide a brief explanation justifying your response. Explanations are not required otherwise.

Case Study Pork from Canada Case Name and tribunal Fresh, chilled, or Frozen pork from Canada (ECC, 1991) Facts In 1990, the US International trade Commission found that the US domestic pork industry was threatened with material injury from imports of fresh, chilled, or frozen pork from Canada. In reviewing the decision of the U.S. International Trade Commission, the binational panel remanded the decision to the ITC with instructions to re-determine the matter. The panel had determined that the ITC erred in reviewing evidence outside the scope of what it ought to have reviewed.

Issue

Did the binational panel seriously depart from a fundamental rule of procedure or manifestly exceed its powers, authority or jurisdiction in instructing the ITC to re-determine the matter with a reduction in the evidence it should consider ?

Assume that your company or agency is concerned about near-term economic conditions and wishes to obtain a qualitative forecast of sales or service in the upcoming quarter. Assume also that you are the market analyst for your company or agency planning to use one or more of the leading economic indicators (LEI) published by the US Department of Commerce to formulate your qualitative forecast. You can Google TheLeading Economic Indicator

1. Assume you own a company with 50 employees – all salaried – earn on average 60,000/year. What are the company’s full costs associated with payroll. Assume the company pays the base rate for State Unemployment Tax and therefore gets the full deduction on Federal Unemployment Tax.

2. On October 12, 2011, Kern Company arranged with a supplier to replace its overdue $10,000 accounts payable by paying $2,500 in cash and signing a note for the remainder. The note matures in 90 days and has a 12% interest rate. Prepare the entries for October 12, December 31 and when the note matures.

3. Sally Bline works for Kern Company. For the pay period ended November 30, her gross earnings are $3,000. Bline has $800 deducted for federal income taxes and $200 for state income taxes from each paycheck. Additionally, a $35 premium for health insurance and a $10 donation to the united Way are deducted. Bline pays FICA Social Security taxes at 6.2% and Medicare taxes at 1.45%. She has not earned enough this year to be exempt from any FICA taxes.  Journalize the accrual of salaries expense of Bline’s wages by Kern Company.

4. On November 1, Kern borrows $5,000 cash from a bank in return for a 60-day, 12% note. Record the note’s issuance on November 1 and its repayment with interest on December 31.

5. On 8/12, Kern sold materials for $6,000 cash that are subject to a 5% state income tax.  The cost of the goods sold was $4,400.  On 8/31, Kern remitted the tax to the state taxing authority. Journalize both entries.

4) Which of the following reflects a hedge of future receivables invoiced in GBP by a U.S. firm?

A) Purchase a currency call option in GBP.

B) Purchase GBP forward.

C) Borrow GBP, convert these funds to USD, invest these in USD assets with same maturity as the receivables.

D) Both (A) and (B) but not (C).

E) None of the above.

5) Which of the following reflects a hedge of future payables invoiced in GBP by a U.S. firm?

A) Purchase a currency call option in GBP.

B) Purchase GBP forward.

C) Borrow USD, convert these funds to GBP, invest these in GBP assets with same maturity as the payables.

D) All of the above

7) A domestic firm produces goods which compete in both the domestic and foreign markets with foreign produced substitutes. Appreciation of the domestic currency will likely:

A) Increase the firm’s domestic sales by reducing the competitiveness of foreign substitutes.

B) Increase the firm’s foreign sales.

C) Increase the firm’s cash outflows for foreign raw materials invoiced in foreign currencies.

D) Increase net returns earned on the firm’s foreign bank deposits.

E) none of the above.

9) Suppose that a US MNC holds JPY-denominated receivables totaling ¥500,000, due 12 months from today. If this MNC uses the money market hedge, then it can obtain a ______ cash flow of _____ or so a year later.

A) certain; $5,192

B) certain; $5,097

C) uncertain; $5,200

D) uncertain; $5,105

10) Suppose that a US MNC holds JPY-denominated receivables totaling ¥500,000, due 12 months from today, as in the above question. If the MNC uses the forward market hedge instead, then, ignoring the decimals:

A) it will obtain a certain USD cash flow equal to that based on the money market hedge.

B) it will obtain a certain USD cash flow greater than that based on the money market hedge.

C) it will obtain a certain USD cash flow less than that based on the money market hedge.

D) none of the above, because the USD cash flow remains subject to the future spot rate.

Please respond too this statement with 2 paragraphs on why you agree with this statement and providing additional information (Explanation):

How are conventional banks different than the Grameen Bank?--Conventional banks differ from Grameen Bank in many numbers of ways. It begins with the goal of the institution. Conventional Banks’ goal is to maximize profits. They want to create a company and products that are intended to create profit to the company. Grameen Bank is not intended to create profit for the person who created. Mohammad Yunus, the founder of Grameen Bank, wanted to create a social business that is intended to be self-sustaining, but not created to make him rich. They also differ from conventional banks by having the barrowers benefit from the company’s profits. The profits from Grameen Bank go back to the barrowers.

My commute to university, follows a NORMAL distribution with a 35.5 minutes as mean and a standard deviation of 2.5 min. If my commute starts at 8:20 am and ideally I must be at university by 9am.

Define two random variables and formulate two questions, one involving binomial distribution and the other involving geometric distribution.

One of the arguments against NAFTA is that it hurt organized labor in the US and prevented it from gaining more members. How is this possible? Please elaborate

Are US exporters subject to income tax in importing countries? How does taxation of a branch firm differ from that of a subsidiary? Provide examples.