T/F
46. If an auditor is engaged by a client after the entity’s year end, the auditor will automatically encounter a scope limitation with respect to the entity’s ending inventory.
47. When issuing a review or compilation report, should there be a reference to the country of origin of the accounting principles used to prepare the financial statements, similar to the requirement when issuing audited financial statements.
a. SSARS does not require the reference
b. SSARS does require the reference.
48. SSARS #21 requires a title for:
a. A compilation report only.
b. A review report only.
c. Both a compilation report and a review report.
d. None of the above, because only an audit report requires a title and an addressee.
49. The accountant is required to obtain a representation letter from the client in which of the following engagements:
a. Audit
b. Review
c. Compilation
d. Audit and Review
e. Audit, review, and compilation
50. When performing which of the following services is the accountant required to perform specific procedures to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern.
a. Compilation
b. Review
c. Both a compilation and review
d. Neither a compilation or review
In: Accounting
The net income reported on the income statement for the current year was $318,700. Depreciation recorded on equipment and a building amounted to $93,980 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
End of Year
Beginning of Year
Cash
$90,370
$95,280
Accounts receivable (net)
111,660
118,570
Inventories
232,780
203,250
Prepaid expenses
12,000
15,310
Accounts payable (merchandise creditors)
96,420
104,940
Salaries payable
15,310
13,420
Required:
A.
Prepare the Cash Flows from Operating Activities section of the statement of cash flows <javascript:void(0)>, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
B.
If the direct method <javascript:void(0)> had been used, would the net cash flow from operating activities have been the same?
In: Accounting
Consider the following information for the Intermediate Company for the year 2018:
Units in Beginning Inventory 0
Units produced 9,500
Units Sold 5,700
Units Selling Price $350
Variable costs per unit:
Direct Materials $106
Direct Labor $42
Variable Overhead $30
Fixed costs:
Fixed Costs per unit produced $23
Fixed Selling & Administrative Costs $440,000
A) Compute Unit Product Cost under Absorption Costing & Variable Costing
B) Compute total operating profit under absorption costing
C) Compute total operating profit under variable costing
D) Compute the value of ending inventory
In: Accounting
The Aluminum Association reports that the average American uses 56.8 pounds of aluminum in a year. A random sample of 50 households is monitored for one year to determine aluminum usage. If the population standard deviation of annual usage is 12.2 pounds, what is the probability that the sample mean will be each of the following?
Appendix A Statistical Tables
a. More than 61 pounds
b. More than 56 pounds
c. Between 55 and 57 pounds
d. Less than 54 pounds
e. Less than 49 pounds
(Round the values of z to 2 decimal places. Round your
answers to 4 decimal places.)
a. enter the probability that the sample mean will
be more than 61 pounds
b. enter the probability that the sample mean will
be more than 56 pounds
c. enter the probability that the sample mean will
be between 55 and 57 pounds
d. enter the probability that the sample mean will
be less than 54 pounds
e. enter the probability that the sample mean will
be less than 49 pounds
In: Statistics and Probability
Gerald is a CEO in Brainies Consulting, Inc. His income in the first year is m1 = $200 and in the second m2 = $200. Assume that the interest rate is r = 100%. His time horizon is limited to these two years.
(a) Find PV and FV of Gerald’s income
(b) Show on the graph (C1; C2) Gerald’s budget set. Mark PV, FV, and the slope of his budget line.
(c) Explain what borrowing/lending strategy gives Gerald each of the two “extreme” consumption points. How much does he borrow/lend in the first period, how much does he pay back/receive in the second period?
(d) Suppose his utility function is:
U(C1; C2) = ln(C1) + ln(C2)
Find Gerard’s optimal choice analytically and show it on the graph. Does the optimal consumption involve saving or borrowing?
In: Economics
GROUPWORK (Entries for Various Dilutive Securities)
The stockholders’ equity section of Martino Inc. at the beginning of the current year appears below.
Common stock, $10 par value, authorized 1,000,000
shares, 300,000 shares issued and outstanding $3,000,000
Paid-in capital in excess of par—common stock 600,000
Retained earnings 570,000
During the current year, the following transactions occurred.
1. The company issued to the stockholders 100,000 rights. Ten rights are needed to buy one share of stock at $32. The rights were void after 30 days. The market price of the stock at this time was $34 per share.
2. The company sold to the public a $200,000, 10% bond issue at 104. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $30 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8.
3. All but 5,000 of the rights issued in (1) were exercised in 30 days.
4. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing.
5. During the current year, the company granted stock options for 10,000 shares of common stock to company executives.
The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $30.
The options were to expire at year-end and were considered compensation for the current year.
6. All but 1,000 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract.
Instructions
(a) Prepare general journal entries for the current year to record the transactions listed above.
(b) Prepare the stockholders’ equity section of the balance sheet at the end of the current year. Assume that retained earnings
at the end of the current year is $750,000.
In: Accounting
A Corporation is deciding whether to engage in a 2-year project that requires an initial cash outflow of I (CF0) = $2,000,000. CF1 is expected to be a cash inflow of $4,670,000 and CF2 is expected to be another cash outflow of $2,722,500. Altogether there are three cash flows—an initial cash outflow, followed by a cash inflow, followed by a second cash outflow at the end of the 2-year project life.
Explain your reasoning in each of these three cases.
In: Finance
In 2003, 5.9% of people used illegal opioids.
This year, a company wishes to use their employment drug screening to test a claim. They take a simple random sample of 2880 job applicants and find that 136 individuals fail the drug test for illegal opioids. They want to test the claim that the proportion of the population failing the test is lower than 5.9%. Use .10 for the significance level. Round to three decimal places where appropriate.
Hypotheses:
Ho:p=5.9%Ho:p=5.9%
H1:p<5.9%H1:p<5.9%
Test Statistic: z =
Critical Value: z =
p-value:
Conclusion About the Null:
Conclusion About the Claim:
Do the results of this hypothesis test suggest that fewer people use illegal opioids? Why or why not?
In: Statistics and Probability
The real risk-free rate is 2.00%. Inflation is expected to be 2.00% this year and 4.75% during the next 2 years. Assume that the maturity risk premium is zero.
What is the yield on 2-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
%
What is the yield on 3-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
%
In: Finance
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 79,000 units of product: net sales $1,580,000; total costs and expenses $1,829,800; and net loss $249,800. Costs and expenses consisted of the following.
|
Total |
Variable |
Fixed |
||||
|---|---|---|---|---|---|---|
| Cost of goods sold | $1,163,400 | $637,000 | $526,400 | |||
| Selling expenses | 516,400 | 93,000 | 423,400 | |||
| Administrative expenses | 150,000 | 60,000 | 90,000 | |||
| $1,829,800 | $790,000 | $1,039,800 |
Management is considering the following independent alternatives
for 2020.
| 1. | Increase unit selling price 25% with no change in costs and expenses. | |
| 2. | Change the compensation of salespersons from fixed annual salaries totaling $195,000 to total salaries of $39,000 plus a 5% commission on net sales. | |
| 3. | Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. |
(a) Compute the break-even point in dollars for
2019. (Round contribution margin ratio to 4 decimal
places e.g. 0.2512 and final answer to 0 decimal places, e.g.
2,510.)
| Break-even point |
$Enter the break-even point in dollars rounded to 0 decimal places |
b) Compute the break-even point in dollars
under each of the alternative courses of action for 2020.
(Round contribution margin ratio to 3 decimal places
e.g. 0.251 and final answers to 0 decimal places, e.g.
2,510.)
|
Break-even point |
||||
|---|---|---|---|---|
| 1. | Increase selling price |
$Enter a dollar amount |
||
| 2. | Change compensation |
$Enter a dollar amount |
||
| 3. | Purchase machinery |
$Enter a dollar amount |
Which course of action do you recommend? Select an option
In: Accounting