a) What is considered insider trading?

Multiple Choice

• All of the other statements describe insider trading.

• Marlene, an individual investor, buys shares in a company because her financial analysis of the company suggests that it is undervalued.

• Bill buys shares after the company's earnings announcement because he personally knows the auditor who audited the company's earnings announcement / press release.

• Chris, a hedge fund manager, purchases a 5% stake in a company because he wants to install his colleagues on to the company's board of directors.

• Karen sells shares in a company before the earnings announcement because her brother-in-law, who's the CEO, said that EPS will fall short of market expectations.

b).

Which of the following statements is true about the classified income statement?

Multiple Choice

• Income tax expense is subtracted from operating income to obtain pre-tax income.

• Net income is computed by subtracting operating expenses from gross profit.

• Cost of goods sold is the difference between net sales revenue and gross profit.

• Gross sales revenue is the first line of the income statement; contra-revenues is the second line; and net sales revenue is the third line.

• Dividend expense is classified as a non-operating (other) item on the income statement.

1, One feature of a monopoly is that the monopolist is:

A, a producer of products with many close substitutes

B, a price maker

C, a price taker

D, one of several producers of a product

2, Which of the following is true?

A, For a perfectly competitive seller marginal revenue is always constant, but for a monopolist marginal revenue increases as it sells more output

B, Marginal revenue is always constant for both, a monopolist and a perfectly competitive seller

C, For a monopolist marginal revenue is always constant, but for a perfectly competitive seller marginal revenue decreases as it sells more output

D, For a perfectly competitive seller marginal revenue is always constant, but for a monopolist marginal revenue decreases as it sells more output

3, Monopolists may obtain economic profits in the long run because:

A, of increased competition

B, there are barriers to entry.

C, of rising average fixed costs

D, there are no barriers to entry

1. Revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur under which of the following accounting methods?

a. accrual basis accounting

b. cash basis accounting

c. tax basis accounting

d. revenue basis accounting

2. Which type of adjustment occurs when cash is not collected or paid, but the related income or expense is reportable in the current period?

a. accrual

b. deferral

c. estimate

d. cull

3. Rent collected in advance is an example of which of the following?

a. deferred revenue (unearned revenue)

b. accrued expense

c. accrued revenue

d. deferred expense (prepaid expense)

4. Rent paid in advance is an example of which of the following?

a. deferred expense (prepaid expense)

b. accrued expense

c. accrued revenue

d. deferred revenue (unearned revenue)

In early 2017, for the first time, Whispering Winds Corp. invested in the common shares of another Canadian company. It acquired 5,900 shares of Toronto Stock Exchange-traded Bayscape Ltd. at a cost of $81,125. Bayscape is projected to reach a value of $15.50 per share by the end of 2017 and $17.00 by the end of 2018, and has consistently paid an annual dividend of $0.90 per share. Whispering Winds is also a Canadian public corporation with a December 31 year end.

The controller of Whispering Winds is uncertain about which accounting method to use. The company is interested in establishing a closer relationship with Bayscape, but if that fails, Whispering Winds considers the investment a good opportunity to make a gain on its sale in the future. The controller has been advised that the investment could be accounted for at cost or at fair value. If at fair value, a decision would have to be made about whether to put the changes in fair value through net income or other comprehensive income. As one step in making a decision, the controller would like to know what the effect would be on total assets and net income in each of 2017 and 2018 if the predictions about Bayscape’s share prices and dividends are correct. Assume there would be no recycling of realized investment gains and losses.

Prepare journal entries for each of the three accounting alternatives indicated to recognize each of the following: (1) the 2017 dividend, (2) any December 31, 2017 adjustments, (3) the 2018 dividend, and (4) any December 31, 2018 adjustments. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1) Cost

(1) FV-NI

(1) FV-OCI

(2) Cost

(2) FV-NI

(2) FV-OCI

(3) Cost

(3) FV-NI

(3) FV-OCI

(4) Cost

(4) FV-NI

(4) FV-OCI

need a justification paragraph to the following case

Introduction

The story of Enron Corp.is the story of a company that reached dramatic heights, only to face a dizzying fall. Its collapse affected thousands of employees and shook Wall Street to its core. At Enron's peak, its shares were worth $90.75; when it declared bankruptcy on December 2, 2001, they were trading at $0.26. To this day, many wonders how such a powerful business, at the time one of the largest companies in the U.S, disintegrated almost overnight and how it managed to fool the regulators with fake holdings and off-the-books accounting for so long.

Enron was formed in 1985, following a merger between Houston Natural Gas Co. and Omaha-based InterNorth Inc. Following the merger, Kenneth Lay, who had been the chief executive officer (CEO) of Houston Natural Gas, became Enron's CEO and chairman and quickly rebranded Enron into an energy trader and supplier. Deregulation of the energy markets allowed companies to place bets on future prices, and Enron was poised to take advantage. In 1990, Lay created the Enron Finance Corp. To head it, he appointed Jeffrey Skilling, whose work as a Mckinsey consultant had impressed Lay. Skilling was at the time one of the youngest partners at Mckinsey.

The Enron scandal was publicized in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audits and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was cited as the biggest audit failure.

After the U.S Congress adopted a series of laws to deregulate the sale of natural gas in the early 1990s, the company lost its exclusive right to operate its pipelines. With the help of Jeffrey Skilling, who was initially a consultant and later became the company's chief operating officer, Enron transformed itself into a trader of energy derivative contracts, acting as an intermediary between natural - gas producers and their customers.

As the boom years came to an end and as Enron faced increased competition in the energy - trading business, the company's profits shrank rapidly. Under pressure from shareholders, company executives began to rely on dubious accounting practices, including a technique known as "mark-to-market accounting" to hide the troubles. Mark to market allowed the company to write unrealized future gains from some trading contracts into current income statements, thus giving the illusion of higher current profits.

The severity of the situation began to become apparent in mid-2001 as a number of analysts began to dig into the details of Enron's publicly released financial statements. An internal investigation was initiated following a memorandum from a company vice - president, and soon the Securities and Exchange Commission (SEC) was investigating the transactions between Enron and Fastow's SPEs.

As the details of the accounting frauds emerged, the stock price of the company plummeted from a high of $90 per share in mid-2000 to less than $1 by the end of November 2001, taking with it the value of Enron employee’s pensions, which were mainly tied to the company stock. Lay and Skilling resigned, and Fastow was fired two days after the SEC investigation started. On December 2, 2001, Enron filed for Chapter 11 bankruptcy protection. Many Enron executives were indicted on a variety of charges and were later sentenced to prison. Arthur Andersen came under intense scrutiny and eventually lost a majority of its clients. The damage to its reputation was so severe that it was forced to dissolve itself. In addition to federal lawsuits, hundreds of civil suits were filed by shareholders against both Enron and Anderson.

The scandal resulted in a wave of new regulations and legislation designed to increase the accuracy of financial reporting for publicly traded companies. The most important of those measures, the Sarbanes -Oxley Act (2002), imposed harsh penalties for destroying, altering or fabricating financial records. The act also prohibited auditing firms from doing any concurrent consulting business for the same clients.

Analysis

            Enron was a company that thrived use of latest technologies and had a code of ethics that prohibited managers and executives from being involved in another business entity that did business with their own company. However, the codes of ethics that was voluntary and was set aside by the board of directors and the top management. The legal structure allowed top management to enter these arrangements, that constituted a conflict of interest and while it's a fiduciary duty the managers and executives had to behave and act in the best interest of the company and its shareholders. But there was discretion for them to exercise their own business judgment regarding what was in the best interest of the company. A path filled with unethical and illegal activities was followed. Management was succumbing to greed and dishonesty by secretly exercising stock options and constructed faulty falsely financial report which enabled to hide billions of dollars of debt. Enron management abandoned the basic accounting standards of integrity and created a noncompliance that existed different than GAAP or SEC reporting standards.

Enron's chief financial offer, Andrew Fastow, was the alleged mastermind behind camouflaging an estimated one billion dollars of debt that resulted to the Enron's bankruptcy. practices. To misrepresent its true financial condition, he took the role by involving special purpose entities and unconsolidated partnerships. By concealing the debts, and presenting inaccurate financial condition he hide Enron's true financial standing. In the year 2000, Enron financially fell short and resulted to the long-awaited demise of bankruptcy. David Duncan had the responsibility of representing the interests of Arthur Andersen in Enron Company. He was acting as the head auditor thus hold the responsibility to maintain the highest professional accounting and auditing ethics, and leading his auditing team in an unbiased and responsible approach. However, he was acting negligently, and followed a complete lack of ethics throughout his involvement with Enron. Nancy Temple acted in sole interest of the client. Whistle blowing by an employee, Sherron Watkins, is termed to be an employee's moral responsibility. Sherron Watkins owed loyalty to herself as well as the investors, which is exactly why she blew the whistle at Enron. Andersen ruined their goodwill and having the charges overturned was not easy going to change how the government and the public view and rate them. The company had lost all of their credential investors. The investors shake hands with Anderson’s competitors. Without the money coming from the investors the Anderson company was not able to survive the business in the market.

Solution

            Enron’s bankruptcy scandal not only not effected Enron and its shareholders but it affected the market as well lower company’s values that were in the same industry. The scandal surrounding Enron bankruptcy has its impact on their competitors because of them being in the similar industry the thought that they too were doing the same thing that lead to the downfall of Enron. To avoid such conflict government regulations and rules are required to be updated for the new economy, not relaxed and eliminated. The government must regulate the constitution of the board of directors by including professionals such as accountants and auditors. Government can tighter regulation and monitoring on rogue board members by requiring for individual audits of the members. In certain ways, the culture of Enron was the main cause of the collapse. The company must advocate is strict adherence to proper corporate governance principles; and encourage their employees to act in the best interest for the company. A proper implemented and formulated structured control procedure also helps in minimizing the risks.

Furthermore, to limit errors and risks when auditing special projects, external auditors must ensure that the company gives detailed disclosures of the financial transactions occurred in the special projects along with detailed substantial communication that provides proper detailed description on the relevancy of the financial interest involved. Moreover, should be strict adherence to proper corporate governance principles. It will help senior leadership to act in the interest of the shareholders of the company instead of self-interest.

On July 1, 2020, Skysong Inc. made two sales: 1. It sold excess land in exchange for a four-year, non–interest-bearing promissory note in the face amount of $1,147,860. The land’s carrying value is $620,000. 2. It rendered services in exchange for an eight-year promissory note having a face value of $500,000. Interest at a rate of 3% is payable annually. The customers in the above transactions have credit ratings that require them to borrow money at 10% interest. Skysong recently had to pay 7% interest for money it borrowed from British Bank. 3. On July 1, 2020, Skysong also agreed to accept an instalment note from one of its customers in partial settlement of accounts receivable that were overdue. The note calls for four equal payments of $20,300, including the principal and interest due, on the anniversary of the note. The implied interest rate on this note is 9%. The tables in this problem are to be used as a reference for this problem. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Partially correct answer. Your answer is partially correct. Try again. Prepare the journal entries to record the three notes receivable transactions of Skysong Inc. on July 1, 2020 2.Prepare an instalment note receivable schedule for the instalment note obtained in partial collection of accounts receivable

a. Construct a scatterplot of the data and tell why a linear regression model is appropriate. (Include this graph in your report.)   b. Run the linear regression procedure on StatCrunch and include the output in your report. c. Give the regression equation using the correct notation. d. Give the Coefficient of Determination AND interpret it.   e. Check the assumptions of the model by constructing each of the following plots and commenting on what they suggest in terms of the assumptions. (Include these graphs in your report.) 1. Fitted line plot 2. QQ-Plot of the residuals 3. Predicted values vs residuals


f. Test to see if the ‘before reading’ is useful in predicting the ‘after reading’. (Use ? = 0.05.) g. Instruct StatCrunch to save the 95% confidence intervals for the mean response. BUT DO NOT INCLUDE THE TABLE IN YOUR PROJECT. IT’S VERY BIG.   h. Use the table you created in part g to give the 95% confidence interval for the average ‘after reading’, when the ‘before reading’ is 60 bpm. i. Test to see if the ‘before reading’ and the ‘after reading’ are positively linearly correlated. (Use ? = 0.05.)

NOTE: Opinions may differ on whether or not the assumptions are met. For the sake of instruction, assume you can continue with the linear regression model to complete the project.

#1 The population of scores on the in-person version of Dr. Hale’s first statistics test forms a normal distribution with μ = 72 and σ = 6. He thinks the online class will do significantly better because they do a TON of extra homework that the other class doesn’t do. He gives a random sample of n = 25 students the test, and this sample got an average of 75. What conclusion should he draw if this was a 2-tailed test with alpha = .05?

#2 The population of scores on the in-person version of Dr. Hale’s first statistics test forms a normal distribution with μ = 72 and σ = 6. He thinks the online class will do significantly better because they do a TON of extra homework that the other class doesn’t do. He gives a random sample of n = 25 students the test, and this sample got an average of 75. What was the null hypothesis for this study?

#3 When computing z for a sample mean, which quantity is the denominator?

#4 The population of scores on the in-person version of Dr. Hale’s first statistics test forms a normal distribution with μ = 72 and σ = 6. He thinks the online class will do significantly better because they do a TON of extra homework that the other class doesn’t do. He gives a random sample of n = 25 students the test, and this sample got an average of 75. What conclusion should he draw if this was a 2-tailed test with alpha = .01?

#5 Which of the following is not a step or rule in a hypothesis test?

#6 The population of scores on the in-person version of Dr. Hale’s first statistics test forms a normal distribution with μ = 72 and σ = 6. He thinks the online class will do significantly better because they do a TON of extra homework that the other class doesn’t do. He gives a random sample of n = 25 students the test, and this sample got an average of 75. What was the alternative hypothesis for this study?