Acing Auditing: Techniques for a Distinction-worthy Paper

Published: 4 months ago

Acing Auditing: Techniques for a Distinction-worthy Paper

35. Classify the following users of information as either: I- internal user T- external user: trading...

classify the following users of information as either:

I- internal user

T- external user: trading partner

S- external user: stakeholder

* Internal Revenue Service

*Internal control manager

*Board of directers

*Customers

* Lending institutions

* Securities and Exchange Commission

* Stockholders

* Chief Executive officer

* suppliers

*Bondholder

36. Prepare the sales ledger control account and purchases ledger control account from the following...

Prepare the sales ledger control account and purchases ledger control account from the following information:

Additional Information:

1. An amount of €75 owing to B. Armstrong was set off against an amount of €91 owed by him.

2. During the year there was a bad debt recovered of €170. This was not posted in the accounts.

37. Which of the following is another term for primary storage? a. ROM b. ALU c. CPU d. RAM e. CD-R

Which of the following is another term for primary storage? a. ROM b. ALU c. CPU d. RAM e. CD-R

38. The following is a listing of some of the balance sheet accounts and all of the income statement...

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc. as they appear on the company’s adjusted trial balance. Accounts Payable $ 8,000 Accounts Receivable 27,000 Inventory 23,200 Advertising Expense 20,000 Cost of Goods Sold 153,000 Delivery Expense 7,600 Income Tax Expense 4,000 Insurance Expense 1,000 Rent Expense 18,400 Sales Revenue 320,000 Sales Discounts 9,400 Sales Returns and Allowances 43,000 Income from Operations would be: $57,600 $71,600 $68,600 $67,600

39. A company uses the percent of sales method to determine its bad debts expense. At the end of the cur

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

 

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Debit Bad Debts Expense $4,300; credit Allowance for Doubtful Accounts $4,300.

Debit Bad Debts Expense $2,130; credit Allowance for Doubtful Accounts $2,130.

Debit Bad Debts Expense $5,300; credit Allowance for Doubtful Accounts $5,300.

Debit Bad Debts Expense $4,800; credit Allowance for Doubtful Accounts $4,800.

Debit Bad Debts Expense $2,630; credit Allowance for Doubtful Accounts $2,630.

40. 109.If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a...

109.If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a deposit of $4,000 was in transit at month end, and a check for $500 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

a.$27,500.

b.$28,500.

c.$20,500.

d.$43,500.

110.In preparing its bank reconciliation for the month of April 2011, Franklin, Inc. has available the following information.

Balance per bank statement, 4/30/11$39,140

NSF check returned with 4/30/11 bank statement450

Deposits in transit, 4/30/115,000

Outstanding checks, 4/30/115,200

Bank service charges for April20

What should be the adjusted cash balance at April 30, 2011?

a.$39,370.

b.$38,940.

c.$38,490.

d.$38,470.

111.The cash account shows a balance of $45,000 before reconciliation. The bank statement does not include a deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank of $940 and a customer’s check for $320 was returned because it was NSF. A customer’s check for $450 was recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the cash account was

a.$45,512.

b.$45,548.

c.$45,728.

d.$45,848.

112.The cash account shows a balance of $90,000 before reconciliation. The bank statement does not include a deposit of $4,600 made on the last day of the month. The bank statement shows a collection by the bank of $1,880 and a customer’s check for $640 was returned because it was NSF. A customer’s check for $790 was recorded on the books as $970, and a check written for $159 was recorded as $195. The correct balance in the cash account was

a.$91,024.

b.$91,096.

c.$91,456.

d.$95,696.

113.If the month-end bank statement shows a balance of $54,000, outstanding checks are $18,000, a deposit of $6,000 was in transit at month end, and a check for $750 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

a.$41,250.

b.$42,750.

c.$30,750.

d.$65,250.

114.In preparing its bank reconciliation for the month of April 2011, Gantner, Inc. has available the following information.

Balance per bank statement, 4/30/11$78,280

NSF check returned with 4/30/11 bank statement900

Deposits in transit, 4/30/1110,000

Outstanding checks, 4/30/1110,400

Bank service charges for April40

What should be the adjusted cash balance at April 30, 2011?

a.$78,740.

b.$77,880.

c.$76,980.

d.$76,940.

115.In preparing its August 31, 2011 bank reconciliation, Acme Corp. has available the following information:

Balance per bank statement, 8/31/11$21,650

Deposit in transit, 8/31/113,900

Return of customer’s check not sufficient funds, 8/30/10600

Outstanding checks, 8/31/112,750

Bank service charges for August100

At August 31, 2011, Acme’s adjusted cash balance is

a.$22,800.

b.$22,200.

c.$22,100.

d.$20,500.

116.Tyler, Inc. had the following bank reconciliation at March 31. 2011:

Balance per bank statement, 3/31/11$37,200

Add: Deposit in transit  10,300

47,500

Less: Outstanding checks  12,600

Balance per books, 3/31/11$34,900

Data per bank for the month of April 2011 follow:

Deposits$46,700

Disbursements49,700

All reconciling items at March 31, 2011 cleared the bank in April. Outstanding checks at April 30, 2011 totaled $6,000. There were no deposits in transit at April 30, 2011. What is the cash balance per books at April 30, 2011?

a.$28,200

b.$31,900

c.$34,200

d.$38,500

117.On a bank reconciliation, deposits in transit are

a.added to the bank balance.

b.deducted from the bank balance.

c.added to the book balance.

d.deducted from the book balance.

118.A bank reconciliation should be prepared

a.whenever the bank refuses to lend the company money.

b.when an employee is suspected of fraud.

c.to explain any difference between the depositor's balance per books and the balance per bank.

d.by the person who is authorized to sign checks.

41. 61.Which of the following is not characteristic of a corporation? A.The financial loss that a...

61.Which of the following is not characteristic of a corporation?

A.The financial loss that a stockholder may suffer from owning stock in a public company is limited.

B.Cash dividends paid by a corporation are deductible as expenses by the corporation.

C.A corporation can own property in its name.

D.Corporations are required to file federal income taxreturns.

62.Characteristics of a corporation include

A.shareholders who are mutual agents

B.direct management by the shareholders (owners)

C.its inability to own property

D.shareholders who have limited liability

63.One of the main disadvantages of the corporate form is the

A.professional management

B.double taxation of dividends

C.charter

D.corporation must issue stock

64.A disadvantage of the corporate form of business entity is

A.mutual agency for stockholders

B.unlimited liability for stockholders

C.corporations are subject to more governmental regulations

D.the ease of transfer of ownership

65.Under the corporate form of business organization

A.ownership rights are easily transferred.

B.a stockholder is personally liable for the debts of the corporation.

C.stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.

D.stockholders wishing to sell their corporation shares must get the approval of other stockholders.

66.Those most responsible for the major policy decisions of a corporation are the

A.management.

B.board of directors.

C.employees.

D.stockholders.

67.Which one of the following would not be considered an advantage of the corporate form of organization?

A.Government regulation

B.Separate legal existence

C.Continuous life

D.Limited liability of stockholders

68.Which of the following is not true of a corporation?

A.It may enter into binding legal contracts in its own name.

B.It may sue and be sued.

C.The acts of its owners bind the corporation.

D.It may buy, own, and sell property.

69.The ability of a corporation to obtain capital is

A.less than a partnership.

B.about the same as a partnership.

C.restricted because of the limited life of the corporation.

D.enhanced because of limited liability and ease of share transferability.

70.Which of the following statements concerning taxation is accurate?

A.Corporations pay federal income taxes but not state income taxes.

B.Corporations pay federal and state income taxes.

C.Only the owners must pay taxes on corporate income.

D.Corporations pay income taxes but their owners do not.

42. Entries and schedules for unfinished jobs and completed jobs Hildreth Company uses a job order...

Entries and schedules for unfinished jobs and completed jobs

Hildreth Company uses a job order cost system. The following data summarize the op­ erations related to production for April 2016, the first month of operations:

a.     Materials purchased on account, $147,000.

b.     Materials requisitioned and factory labor used:

c.     Factory overhead costs incurred on account, $6,000.

d.     Depreciation of machinery and equipment, $4,100.

e.     The factory overhead rate is $40 per machine hour. Machine hours used:

f.      Jobs completed: 101, 102, 103, and 105.

g.     Jobs were shipped and customers were billed as follows: Job 101, $62,900; Job 102,

$80,700;  Job  105, $45,500.

Instructions

1.     Journalize the entries to record the summarized operations.

2.     Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.

3.     Prepare a schedule of unfinished jobs to support the balance in the work in process account.

4.     Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.

43. Halliford Corporation expects to have earnings this coming year

Halliford Corporation expects to have earnings this coming year of $3 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 50% of its earnings. It will retain 20% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 25% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford’s share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford’s equity cost of capital is 10%, what price would you estimate for Halliford stock?

44. When production levels are expected to increase within a relevant range, and a flexible budget is...

When production levels are expected to increase within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following costs?

45. Margaret started her own business in the current year and will report a profit for her first year

Margaret started her own business in the current year and will report a profit for her first year. Her results of operations are as follows:



Gross income $50,000

Travel 1,000

Transportation 6,173 miles, using standard mileage method

Entertainment in" total 4,000

Seven gifts at $50 each 350

Rent and utilities for apartment in total 10,000

(20% is used for a home office)



What is the net income Margaret should show on her Schedule C? Show the calculation of her taxable business income.

46. Pink Corporation acquired land and securities in a § 351 tax-free exchange in 2011. On the date of

Pink Corporation acquired land and securities in a § 351 tax-free exchange in 2011. On the date of the transfer, the land had a basis of $720,000 and a fair market value of $1 million, and the securities had a basis of $110,000 and a fair market value of $250,000. Pink Corporation has two shareholders, Maria and Paul, who are unrelated. Maria owns 85% of the stock in the corporation, and Paul owns 15%. Pink adopts a plan of liquidation in 2012. On this date, the value of the land has decreased to $500,000. What is the effect of each of the following on Pink Corporation? Which option should be selected?

a. Distribute all of the land to Maria.

b. Distribute all of the land to Paul.

c. Distribute 85% of the land to Maria and 15% to Paul.

d. Distribute 50% of the land to Maria and 50% to Paul.

e. Sell the land and distribute the proceeds of $500,000 proportionately to Maria and to Paul.

47. Selected transactions for M. Anderson

Selected transactions for M. Anderson, an interior decorator, in her first month of business, are as follows.

Jan. 2 Invested $10,000 cash in business.

3 Purchased used car for $4,000 cash for use in business.

9 Purchased supplies on account for $500.

11 Billed customers $2,100 for services performed.

16 Paid $350 cash for advertising.

20 Received $700 cash from customers billed on January 11.

23 Paid creditor $300 cash on balance owed.

28 Withdrew $1,000 cash for personal use by owner.

48. The financial statements of Louis Vuitton are presented in Appendix A. Instructions for accessing...

The financial statements of Louis Vuitton are presented in Appendix A. Instructions for accessing and using the company's complete annual report, including the notes to its financial statements, are also provided in Appendix F Click here to view Appendix F Use the company's 2014 annual report to answer the following questions. what was the company's profit margin for 20147 (Round profit margin percentage to 1 decimal place, e.g. 15.2%.) The company's profit margin for 2014 35 Has it increased or decreased from 2013? Increased What was the company's operating profit for 2014? The 2014 operating profit -19837 The company reported comprehensive income of 3,267 billion in 2014. What are the other comprehensive gains and losses recorded in 2014? B- decreaseof 3267 Other comprehensive gains and losses was a net million.

49. TIE AND ROIC RATIOS The H.R. Pickett Corp. has $500,000 of interest-bearing debt outstanding, and...

TIE AND ROIC RATIOS The H.R. Pickett Corp. has $500,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 10%. In addition, it has $700,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $2 million, its average tax rate is 30%, and its profit margin is 5%. What are its TIE ratio and its return on invested capital (ROIC)?

50. DISCUSSION ACTIVITY All workers' compensation agencies have Experience Rating programs. Explain...

DISCUSSION ACTIVITY

All workers' compensation agencies have Experience Rating programs. Explain the main purpose and goals of an Experience Rating Program, as well as the qualifications for participation. Discuss any safety incentive programs in place in your organization. If you are not currently employed, what safety incentive programs would you suggest an organization implement?