Chapter Questions

1.     Explain why good research habits are important and how they relate to personal integrity and ethics. (Obj. 4)

2.     Howard Schultz, Starbucks president and CEO, has been described as a “classic entrepreneur: optimistic, relentless, mercurial, and eager to prove people wrong.” Schultz has followed his gut instinct mostly to success while scoffing at established management practices. Unlike other executives, until the Great Recession hit, he was not interested in cost control, advertising, and customer research. “I despise research,” he said. “I think it’s a crutch. But people smarter than me pushed me in this direction, and I’ve gone along.”Starbucks continues to be one of the most followed companies on Facebook. For the most recent year on record, Starbucks’ net income reached $359 million.What do you think Howard Schultz meant when he called consumer research a “crutch”? Can you explain why the corporate maverick hates it so much? (Obj. 3)

3.     Is information obtained on the Web as reliable as information obtained from journals, newspapers, and magazines? How about information derived from Wikipedia and blogs? (Obj. 3)

4.     Some people say that business reports never contain footnotes. If you were writing your first report for a business and you did considerable research, what would you do about documenting your sources? (Obj. 4)

13.5

Proposal: BioMed Sports Medicine Comes to Town (Obj. 1)

Sports medicine is increasingly popular, especially in university towns. A new medical clinic, BioMed Sports Medicine, is opening its doors in your community. A friend recommended your small business to the administrator of the clinic, and you received a letter asking you to provide information about your service. The new medical clinic specializes in sports medicine, physical therapy, and cardiac rehabilitation services. It is interested in retaining your company, rather than hiring its own employees to perform the service your company offers.

Your Task. First, decide what service you offer It could be landscaping, uniforms, uniform laundering, general cleaning, computerized no-paper fling systems, online medical supplies, patient transportation, supplemental hospice care, temporary office support, social media guidance, or food service.

Develop a letter proposal outlining your plan, staffing, and budget. Use persuasion to show why contracting your services is better than hiring in-house employees. In the proposal letter, request a meeting with the administrative board. .Send your proposal to Dr. Tim Krahnke, Director, BioMed Sports Medicine. Supply a local address.

Joe operates a business that locates and purchases specialized assets for clients, among other activities. Joe uses the accrual method of accounting but he doesn’t keep any significant inventories of the specialized assets that he sells. Joe reported the following financial information for his business activities during year 0.

Determine the effect of each of the following transactions on the taxable business income. (Select "No Effect" from the dropdown if no change in the taxable business income.)

Required:

Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Joe delivers $13,350 worth of gadgets to the city that will be tested in March. Joe purchased the gadgets especially for this contract and paid $9,450.

Joe paid $275 for entertaining a visiting out-of-town client. The client didn’t discuss business with Joe during this visit, but Joe wants to maintain good relations to encourage additional business next year.

On November 1, Joe paid $590 for premiums providing for $59,000 of “key man” insurance on the life of Joe’s accountant over the next 12 months.

At the end of year 0, Joe’s business reports $11,850 of accounts receivable. Based upon past experience, Joe believes that at least $2,570 of his new receivables will be uncollectible.

In December of year 0, Joe rented equipment to complete a large job. Joe paid $5,850 in December because the rental agency required a minimum rental of three months ($1,950 per month). Joe completed the job before year-end, but he returned the equipment at the end of the lease.

Joe hired a new sales representative as an employee and sent her to Dallas for a week to contact prospective out-of-state clients. Joe ended up reimbursing his employee $490 for airfare, $540 for lodging, $440 for meals, and $340 for entertainment (Joe provided adequate documentation to substantiate the business purpose for the meals and entertainment). Joe requires the employee to account for all expenditures in order to be reimbursed.

Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory. Last month, the business vehicle broke down and he was forced to use the BMW both to travel to and from the factory and to visit work sites. He drove 215 miles visiting work sites and 84 miles driving to and from the factory from his home. Joe uses the standard mileage rate to determine his auto-related business expenses. (Round your answer to whole number. Use standard mileage rate.)

Joe paid a visit to his parents in Dallas over the Christmas holidays. While he was in the city, Joe spent $145 to attend a half-day business symposium. Joe paid $390 for airfare, $126 for meals during the symposium, and $77 on cab fare to the symposium.

Handout 14-F

Diagnosing Disorders

______________________________________________________________________________

Instructions: For each of the following cases, first identify the general category of each disorder (e.g., anxiety disorder, mood disorder, personality disorder, dissociative disorder, schizophrenia), and then indicate what the specific diagnosis would be.

Reggie is a college freshman who has registered for four classes, but cannot get himself up and out of bed to go to any of them. He feels like a complete failure. He believes he is too stupid to get a college degree, but he does not want to disappoint his family by letting them see what a loser he is. Instead, he just stays in bed all day with the shades drawn. He doesn’t even have enough energy to make himself something to eat, so he is rapidly losing weight.

Disorder:                                              Specific diagnosis:

Anastasia, well-prepared for a scheduled quiz, is getting ready to leave her dorm and walk to one of her classes, when she suddenly breaks out in a cold sweat and becomes weak and shaky. She realizes her heart is racing, and is afraid she might be having a heart attack.

Category:                                             Specific diagnosis:

Naseem reads the book “Lolita” and suddenly starts having nightmares and flashbacks about her own sexual abuse as a child.

Category:                                             Specific diagnosis:

Fourteen-year-old Jarrod has been getting in trouble ever since he was a small child. He has been a petty thief since the age of nine, has been drinking alcohol and smoking marijuana since he was twelve and now goes to school only long enough to bully other students and steal their lunch money.

Category:                                             Specific diagnosis:

Walking home after work one night, Gina chanced upon a drug deal turning sour. Guns were drawn and shots were fired. She heard the explosions and the whiz of bullets, saw a man fall bleeding to the ground, and watched a car race away with squealing tires. She was so shaken after this incident that she quit her job so that she would not have to go to that section of town. She refused to take another night job because she did not want to go out at night. Finally, she found that she could not bear the idea of getting any job because she did not feel safe leaving her apartment at all.

Category:                                             Specific diagnosis:

Handout 14-F (Continued)

Rafael, one of your new college dorm mates, appeared to be very shy and withdrawn at the beginning of the semester. He seemed sad and lonely but kept to himself and he seemed also to spend a lot of time sleeping. Now, suddenly, he has been transformed. He is the life of the party, carousing all night then dashing off to his classes, with no need at all for sleep. He claims to have a system for “aceing” his classes without doing any studying, but is not able to give any coherent explanation of his system.

Category:                                             Specific diagnosis:

You are walking downtown one day, when you see a homeless man sitting on the street with a cup next to him and a sign that says, “I’m Joe. I’m homeless and hungry. Please help.” You put some coins in his cup and continue on your way. Several weeks later, at the same location, you see a man that looks like Joe, but younger and more energetic, hurrying up and down the block saying, “I’m Henry and I’ve been saved. Bless the Lord. Thank you, Jesus.” You realize it is the same man you saw before, but even his voice sounds different.

Category:                                             Specific diagnosis:

Sitting in a hospital emergency room to have a cut on your hand stitched, you see a wild, disheveled looking man shouting disjointed words and phrases like, “I am the king…the Lord…. Amen…. Women…. Sex….sextets….sextuplets….”

Category:                                             Specific diagnosis:

One of your friends is consistently late for every class, every appointment, even every social get-together, because he cannot leave home without taking an hour-long shower, washing his hands ten times, changing his shirt three times, and locking, unlocking, and relocking the door five times.

Category:                                             Specific diagnosis:

Michael is just a mass of symptoms and complaints. Ask him how he is, and he will describe unbearable pain in various parts of his body. He can show you small bruises that he is sure will prove to be cancerous. He will cough lightly and ask if he could possibly have developed lung cancer by inhaling second-hand smoke. He will wonder if you’ve heard anything about this strange new symptom he seems to have whenever he drinks fluids of any sort.

Category:                                             Specific diagnosis:

Case Scenario: Mrs. P is an 80-year-old retired school teacher who receives visits from a nursing agency for congestive heart failure. Mrs. P was diagnosed with dementia 4 years ago. She lives with her daughter, who is also her caregiver. In addition to dementia. Mrs. P has macular degeneration. She is blind at her left eye and has significantly impaired vision in her right, she fell and fractured her left hip 1 year ago. She walks with the assistance of a walker. She has a moderate amount of ankle and foot edema bilaterally. She always suffered from frequent constipation. Her current medication include; hydrochlorothiazide, a calcium channel blocker and a stool softener, Mrs. P is able to get in and out bed by herself but requires assistance with all other ADLs. She has been incontinent of urine for 2 years.Mrs. P voids but leaks urine before she gets to the bathroom. Mrs. P wears incontinence undergarments. She also has enuresis and usually wet in the morning

1. Enumerate and describe each different types of urinary incontinence.

2. Make a drug study of hydrochlorothiazide and stool softener

3. What is the common cause of urinary incontinence of Mrs.P?

4. How can you stop incontinence in older adult?5. Is incontinence a normal part of aging, explain?

Marcy recently started her first job after graduating from business school with her accounting degree. She is very excited to be working in her field and although she knows she still has a lot to learn, she already feels like she is getting a good feel for what it takes to be successful. She has been assigned to work under one of the senior accountants, Mrs. Bradlee, and so far, she has been easy to work with and very helpful. For the last several weeks Marcy has spent most of her time entering data into the firm’s computer system in preparation for the issuance of their clients’ annual reports. On Friday, as she is preparing to leave for the day her supervisor calls her into her office.

“Well, Marcy, still enjoying your work here with us?” Mrs. Bradlee asks.

“Oh, yes ma’am, very much. I know I am still new and have a great deal to learn, but I am very happy with my job,” Marcy replies.

“That’s good to hear, Marcy. We are all very happy that you are here and I think you will be a valuable asset to the firm. In fact, I have something that I would like for you to do for me. I understand you are available to work over the weekend, is that correct?” Mrs. Bradlee inquired.

“Yes, I am happy to come in over the weekend if you need me to!” Marcy replied.

“Excellent,” Mrs. Bradlee said as she pulled a folder from her desk drawer. Handing the folder to Marcy she continued, “we identified some errors in the data that was entered for the Dale account and I would consider it a personal favor if you could get these numbers corrected over the weekend. I have already taken the liberty of alerting building security so you won’t need to worry about getting into the office. I don’t expect anyone else to be here, are you okay with being in the office alone?”

Marcy took the folder from Mrs. Bradlee’s outstretched hand and opened it to see what she had committed to. There were several pages of entries to be corrected, but Marcy breathed a sigh of relief when she realized that the work was not that different from what she had been doing for the last several weeks.

“Oh, I will be just fine. I should be able to get all of these corrections made in a few hours, ma’am.” Marcy said.

“Well, then, that’s that,” said Mrs. Bradlee, smiling at Marcy.

Taking that as her queue to leave, Marcy gathered up the folder and her belongings and headed towards the door. Just as she got to the door Mrs. Bradlee spoke again.

“Oh, and Marcy, I would appreciate it very much if you didn’t discuss this matter with your colleagues. It, um, might be an embarrassment to Mark Murphy. He made the original entries and I would hate for him to look bad in front of the other junior partners. You understand I’m sure.” Mrs. Bradlee said.

“Of course, Mrs. Bradlee, I wouldn’t want Mr. Murphy to be put in a bad position. He has been very helpful and I really like him.” Marcy replied.

“Then it’s settled. If you just get these few minor corrections made over the weekend we will be back on track to get the Dale annual report out on time. And please make sure that you put in overtime for your hours. I will sign off on them personally on Monday morning.” Mrs. Bradlee said as she turned her attention to the stack of phone messages on her desk.

Marcy thanked Mrs. Bradlee for giving her the opportunity to be of assistance as she walked out of her office, pulling the door closed behind her.

On Saturday morning Marcy got dressed and was seated at her desk at 8 am. As she waited for her computer to boot up, she began looking through the documents Mrs. Bradlee had given her the day before. There were several pages of entries that had to be made and it slowly dawned on Marcy that all of the entries had something in common – they either increased revenue or decreased an expense. Several of the entries re-classified long-term debt as capital improvements.

“Well, these entries will totally change the financial position of the company,” Marcy said to herself. “How could Mr. Murphy have made this many errors?” she thought. “Something about this isn’t right,” Marcie thought out loud. Slouching back in her chair she suddenly found herself liking her job and Mrs. Bradlee less than she did when she had gotten up that morning.

1. Putting yourself in Marcy’s position, what do you do next? Consider the outcome of her various courses of action and the long-term effects of her actions.
2. What are the implications of the work Marcy has been asked to perform? Consider all of the stakeholders of accounting information when responding.
3. Why would someone in Mrs. Bradlee’s position ask an employee to perform this kind of task?

Aaron Heath is seeking part-time employment while he attends school. He is considering purchasing technical equipment that will enable him to start a small training services company that will offer tutorial services over the Internet. Aaron expects demand for the service to grow rapidly in the first two years of operation as customers learn about the availability of the Internet assistance. Thereafter, he expects demand to stabilize. The following table presents the expected cash flows.

In addition to these cash flows, Aaron expects to pay $21,400 for the equipment. He also expects to pay $3,500 for a major overhaul and updating of the equipment at the end of the second year of operation. The equipment is expected to have a $1,100 salvage value and a four year useful life. Aaron desires to earn a rate of return of 10 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Required

1. Calculate the net present value of the investment opportunity. (Negative amount should be indicated by a minus sign. Round intermediate calculations and final answer to 2 decimal places.)

2. Indicate whether the investment opportunity is expected to earn a return that is above or below the desired rate of return and whether it should be accepted.

a. Net present valueb ____________________

b. Will the return be above or below the cost of capital? Above

Should the investment opportunity be accepted? Accepted

Marta has never been physically active. In high school she didn't enjoy physical education classes because she just wasn't good at competitive sports like basketball and soccer. Now 20 years old and a sophomore in college, Marta typically drives her car to campus rather than walking the six blocks from her apartment. Her idea of a complete meal is a large pepperoni pizza delivered to her door and washed down with a large soda. To relax, she watches TV or chats with friends. Recently Marta heard about the adverse health effects of a sedentary lifestyle and no longer wants to be a couch potato.

Many people develop bad health habits as young children that carry through adulthood. The growth in popularity of television and the advent of video games and personal computers has put more people in front of video monitors and fewer outside exercising. While we are constantly hearing about a fitness craze, all the fitness studies indicate that Americans are more sedentary than ever, particularly young children. And yet we continually hear of state legislatures eliminating physical education requirements in our public schools.

1. Why do you think young people are so inactive?

2. What are the potential long-term effects of their inactivity?

3. Why do you think some people see the elimination of school physical education programs as sending a mixed message to the public?

4. Do you think it's too late for Marta to change her lifestyle?

5. How should she begin?

6. After years of not exercising, with what types of exercises should she begin?

7. Should Marta see her family physician before starting any exercise program?

8. How long will she need to continue a physical activity program before she notices the positive effects of regular exercise?

Twenty-five students from Harry High School were accepted at Magic University. Of those students, 10 were offered athletic scholarships and 15 were not. Mrs. Hermione believes Magic University may be accepting people with lower ACT scores if they are athletes. The newly accepted student ACT scores are shown here. Athletic scholarship: 16, 24, 20, 25, 24, 23, 21, 22, 20, 20 No athletic scholarship: 23, 25, 26, 30, 32, 26, 28, 29, 26, 27, 29, 27, 22, 24, 25 Part A: Do these data provide convincing evidence of a difference in ACT scores between athletes and nonathletes? Carry out an appropriate test at the α = 0.10 significance level. (5 points) Part B: Create and interpret a 90% confidence interval for the difference in ACT scores between athletes and nonathletes. (5 points)

Michael is a 17-year-old high school football player who has recently been doing “two a day” practices in preparation for the upcoming season. He is in good physical condition at 5 feet 10 inches and 165 pounds. He is attempting to gain weight, so he has increased his intake of protein foods and estimates and eats approximately 3500 kcalories a day. One particularly hot afternoon, Michael is sweating profusely and begins to feel weak and has a difficult time keeping up with his usual practice routines. Noticing that his face is visibly flushed, his coach has him sit out of practice. Michael reports having eaten two peanut butter and jelly sandwiches, potato chips, and a can of soda for lunch about 2 hours before practice. He had a breakfast burrito with eggs and cheese for breakfast with a 12-ounce glass of orange juice.

1. Based on these signs of dehydration, what percentage of body fluid would you estimate Michael has lost?

2. Using his reported caloric intake, estimate Michael’s fluid needs?

3. Besides fruit juice and soda, what foods and beverages could help meet Michael’s fluid requirements?

4. What food groups appear to be deficient in Michael’s usual diet? What essential minerals are likely to be lacking as a result of his limited diet?

5. Explain how the kidneys help to maintain fluid balance.