Recent Question

If no material differences are found using analytical procedures 1. A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a: a. test of controls. b. substantive test. c. test of attributes. d. monetary-unit sampling test. 2. Which of the following is not appropriate for purposes of testing the effectiveness of controls? a. Make inquiries of client perso ...

Other / Other 14 Apr 2016

There are three stages of the audit in which analytical procedures 1. Discuss the purposes of (1) substantive tests of transactions, (2) tests of controls, and (3) tests of details of balances. Give an example of each. 2. There are three stages of the audit in which analytical procedures are performed. Identify each of these three stages and, for each stage, discuss the purpose of performing analytical procedures in that stage. Als ...

Other / Other 14 Apr 2016

A company with a 15% tax rate buys preferred stock 1. During 2008, Bascom Bakery paid out $33,525 of common dividends. It ended the year with $197,500 of retained earnings versus the prior year’s retained earnings of $159,600. How much net income did the firm earn during the year? a. $71,425 b. $74,996 c. $78,746 d. $82,683 e. $86,818 2. A company with a 15% tax rate buys preferred stock in another company. The prefer ...

Other / Other 14 Apr 2016

Which of the following would not be considered an internal user 1. Communication of economic events is the part of the accounting process that involves a. identifying economic events. b. quantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information. 2. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? ...

Other / Other 14 Apr 2016

Fernando Designs is considering a project 1. Warr Company is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC or negative, in both cases it will be rejected. Year 0 1 2 3 4 Cash flows -$1,050 $400 $400 $400 $400 a. 14.05% b. 15.61% c. 17.34% d. 19.27% e. 21.20% 2. Ehrmann Data Systems is considering a project that has the fol ...

Other / Other 14 Apr 2016

Which of the following is NOT a relevant cash flow 1. Suppose Walker Publishing Company is considering bringing out a new finance text whose projected revenues include some revenues that will be taken away from another of Walker's books. The lost sales on the older book are a sunk cost and as such should not be considered in the analysis for the new book. a. True b. False 2. Which of the following is NOT a relevant cash flow and thus ...

Other / Other 14 Apr 2016

Foley Systems is considering a new investment 1. Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Equipment cost (depreciable basis ...

Other / Other 14 Apr 2016

Austin Financial recently announced that its net income increased sharply 1. Which of the following factors could explain why Michigan Energy's cash balance increased even though it had a negative cash flow last year? a. The company sold a new issue of bonds. b. The company made a large investment in new plant and equipment. c. The company paid a large dividend. d. The company had high depreciation expenses. e. The company repurchase ...

Other / Other 14 Apr 2016

The common characteristic possessed by all assets 1. The assumption that enables accounting to quantify (measure) economic events is the a. economic entity assumption. b. cost principle. c. historical cost principle. d. monetary unit assumption. 2. A business that enjoys limited liability is a a. proprietorship. b. partnership. c. corporation. d. sole proprietorship. 3. The common characteristic possessed by all assets ...

Other / Other 14 Apr 2016

One defect of the IRR method is that it does not take account of cash 1. The NPV method's assumption that cash inflows are reinvested at the cost of capital is generally more reasonable than the IRR's assumption that cash flows are reinvested at the IRR. This is an important reason why the NPV method is generally preferred over the IRR method. a. True b. False 2. For a project with one initial cash outflow followed by a series of posi ...

Other / Other 14 Apr 2016