Controllership in Accounting
Topic: Revenue & Misrepresentation by Clients
Characters: Rachel Hanson, Senior in CPA firm
Jim Thompson, Owner/manager of Fashion Line
Sharon, part-time bookkeeper of Fashion Line
In addition to the usual mix of compilation, review and audit clients for which Rachel Hunt
serves as a senior in a small office of a regional CPA firm, she has been assigned a new
client that recently engaged the firm. Fashion Line, an incorporated retail outlet, is a thriving
local store. The business is run by a single owner/manager, Jim Thompson, who makes
all major decisions. The business has not previously used the services of a CPA firm. In
addition to preparation of financial statements, the CPA firm will handle tax returns for the
business.
At her Line visit to the client’s office, Rachel is introduced to Sharon, the part-time
bookkeeper who is also a full-time accounting student at the local university. At a
subsequent meeting, Sharon confides to Rachel that she found the job at the beginning of the
semester after an extensive search. Sharon really needs the money to help finance her
education, and feels lucky to have found a good-paying job during the current economic
downturn. Feeling that Rachel is someone she can talk to and get advice from, Sharon
describes a situation that has been on her mind for some time now.
Sharon’s concern relates to the handling of sales revenues. When monies from sales revenues
are counted and deposited on a weekly basis, a chart is filled out with categories carefully
delineating the type of payment: cash, checks, American Express, or Visa/Mastercard.
Sharon’s employer, after depositing the weekly total, brings this chart back with his own
written-in total of the actual amount deposited.
After looking over some of these weekly deposit chats, Sharon noticed that $500 cash was
missing from each deposit. After a more thorough inspection of monthly tax documents that
Jim Thompson has filled out, Sharon noticed that the reported monthly gross revenue was
$2,000 less than what had been actually counted.
The employer is the only person handling the money after it has been counted. He is also the
only one to deposit the money. When Sharon asked Mr. Thompson about revenue not being
reported for tax purposes, he assured her that every dollar of income was reported on the tax
forms. Furthermore, Jim asserted, since Sharon wasn’t the person who signed the forms,
she shouldn’t be concerned.
Answer the following question from the case above :-
1. What are the relevant facts of the case?
2. What, if any, are the ethical issues?
3. Who are the stakeholders?
4. What are the possible alternatives including any ethical concerns?
5. What are the practical constraints?
6. What action(s) should be taken?
In: Accounting
According to Rescorla-Wagner, combining two or more conditioned stimuli with a single US:
A. Strengthens the association between both of the CS and the US
B. Blocks the association between both of the CS and the US
C. Blocks the association between one of the CS and the US
D. Weakens the association between both CS and the US
In: Psychology
Horizon Corporation manufactures personal computers. The company began operations in 2016 and reported profits for the years 2016 through 2019. Due primarily to increased competition and price slashing in the industry, 2020’s income statement reported a loss of $20 million. Just before the end of the 2021 fiscal year, a memo from the company’s chief financial officer to Jim Fielding, the company controller, included the following comments:
If we don’t do something about the large number of unsold computers already manufactured, our auditors will require us to write them off. The resulting loss for 2021 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.A. Sales in Nevada. I know the company’s president and he will accept the merchandise and acknowledge the shipment as a purchase. We can record the sale in 2021 which will boost profits to an acceptable level. The J.A. Sales will simply return the merchandise in 2022 after the financial statements have been issued.
In: Accounting
Your brother Joe is a surgeon who suffers badly from the overconfidence bias. He loves to trade stocks and believes his predictions with 100% confidence. In fact, he is uninformed like most investors. Rumors are that Vital Signs (a startup that makes warning labels in the medical industry) will receive a takeover offer at $0.62 per share. Absent the takeover offer, the stock will trade at $15.05 per share. The uncertainty will be resolved in the next few hours. Your brother believes that the takeover will occur with certainty and has instructed his broker to buy the stock at any price less than $20.62. In fact, the true probability of a takeover is 50%, but a few people are informed and know whether the takeover will actually occur. They also have submitted orders. Nobody else is trading in the stock.
a. Describe what will happen to the market price once these orders are submitted if in fact the takeover will occur in a few hours. What will your brother's profits be: positive, negative or zero?
b. What range of possible prices could result once these orders are submitted if the takeover will not occur. What will your brother's profits be: positive, negative or zero?
c. What are your brother's expected profits?
In: Finance
| A payment is received from a customer who paid in full the amount owed on its account. | ||||||||
| What effect does this transaction have upon the accounting equation? | ||||||||
In: Accounting
In order for a person to collect from a life insurance policy, the beneficiary who purchases the policy must have ___________ in the life of the insured.
In: Operations Management
A researcher with the Department of Education followed a cohort of students who graduated from high school in a certain year, monitoring the progress the students made toward completing a bachelor's degree. One aspect of his research was to determine whether students who first attended community college took longer to attain a bachelor's degree than those who immediately attended and remained at a 4-year institution. The data in the table attached below summarize the results of his study. Complete parts a) through e) below.
|
Community College Transfer |
No Transfer |
|
|---|---|---|
|
n |
263263 |
11811181 |
|
Sample mean time to graduate, in years |
5.315.31 |
4.414.41 |
|
Sample standard deviation time to graduate, in years |
1.153 | 1.004 |
a) What is the response variable in this study? What is the explanatory variable?
A. The response variable is the number of students. The explanatory variable is the time to graduate.
B. The response variable is the use of community college or not. The explanatory variable is the time to graduate.
C. The response variable is the time to graduate. The explanatory variable is the use of community college or not.
D. The response variable is the time to graduate. The explanatory variable is the number of students.
b) Explain why this study can be analyzed using inference of two sample means. Determine what qualifications are met to perform the hypothesis test about the difference between two means. Select all that apply.
A. The samples can be reasonably assumed to be random.
B. The sample sizes are not more than 5% of the population.
C. The samples are independent.
D. The sample sizes are large (both greater than or equal to 30).
E. The population is given to be normally distributed.
c) Does the evidence suggest that community college transfer students take longer to attain a bachelor's degree?
Use an α=0.01 level of significance. Perform a hypothesis test. Determine the null and alternative hypotheses.
A. Upper H 0H0: mu Subscript community college Baseline equals mu Subscript no transferμcommunity college=μno transfer,
Upper H 1H1: mu Subscript community college Baseline greater than mu Subscript no transferμcommunity college>μno transfer
B. Upper H 0H0: mu Subscript community college Baseline greater than mu Subscript no transferμcommunity college>μno transfer,
Upper H 1H1: mu Subscript community college Baseline less than mu Subscript no transferμcommunity college<μno transfer
C.Upper H 0H0: mu Subscript community college Baseline less than mu Subscript no transferμcommunity college<μno transfer,
Upper H 1H1: mu Subscript community college Baseline greater than mu Subscript no transferμcommunity college>μno transfer
D.Upper H 0H0: mu Subscript community college Baseline equals mu Subscript no transferμcommunity college=μno transfer,
Upper H 1H1: mu Subscript community college Baseline less than mu Subscript no transferμcommunity college<μno transfer
Determine the test statistic.
t=_______ (Round to two decimal places as needed.)
Determine the P-value.
P-value=_______ (Round to three decimal places as needed.)
Should the hypothesis be rejected?
▼(Do not reject, Reject) the null hypothesis. The evidence ▼(does, does not) suggest that community college transfer students take longer to attain a bachelor's degree at the
α=0.01 level of significance.
d) Construct a 99% confidence interval for mu Subscript community college Baseline minus mu Subscript no transferμcommunity college−μno transfer
to approximate the mean additional time it takes to complete a bachelor's degree if you begin in community college.
The confidence interval is the range from _______ to ________.(Round to three decimal places as needed.)
e) Do the results of parts c) and d) imply that community college causes you to take extra time to earn a bachelor's degree?
No
Yes
In: Statistics and Probability
Countries such as Malaysia, who refused to work with the IMF, were able to recover from the crisis as quickly as countries such as South Korea which accepted the IMF advices and conditions. Given this fact and the potential moral hazard problem the IMF creates, some question the importance of such an institution. The IMF was also criticized for taking the responsibilities that were better left to the World Bank and other regional development banks. As a result, several proposals are suggested to reform and reduce the role of the IMF.
Define 'moral hazard' and give one example of moral hazard.
Is IMF necessary today? And if so, what should its functions include? Take position, discuss, cite sources.
In: Economics
Estimate the heat loss rate from a person who can be approximated as a cylinder of diameter 0.3 m and height 1.8 m. The (clothing) surface temperature is 23 °C and the cross wind flow velocity is 15 m/s. The ambient temperature is –23 °C. Neglect end effects from the cylinder. Assume steady state.
In: Mechanical Engineering
A researcher with the Department of Education followed a cohort of students who graduated from high school in a certain year, monitoring the progress the students made toward completing a bachelor's degree. One aspect of his research was to determine whether students who first attended community college took longer to attain a bachelor's degree than those who immediately attended and remained at a 4-year institution. The data in the table attached below summarize the results of his study. Complete parts a) through e) below.
|
Community College Transfer |
No Transfer |
|
|---|---|---|
|
n |
252 |
1131 |
|
Sample mean time to graduate, in years |
5.45 |
4.53 |
|
Sample standard deviation time to graduate, in years |
1.134 |
1.022 |
Determine the Test Statistic
T= ___ (round to two decimal places as needed)
Determine the P-Value
P-value= ___ (round to three decimal places as needed)
D) Construct a 95% confidence Interval for community college - no transfer to approximate the mean additional time it takes to complete a bachelor's degree if you begin in community college.
The confidence intervals in the range from ___ to ___
E) Do the results of parts c) and d) imply that community college causes you to take extra time to earn a bachelor's degree?
Yes or No
In: Statistics and Probability