Audit Risk and Materiality MULTIPLE CHOICE: 1. An auditor compares 2002 revenues and expenses with those of the prior year and investigates all changes exceeding 10%. By this procedure the auditor would be most likely to learn that a. An increase in property tax rates has not been recognized in the client ’s accrual. b. The 2002 provision for uncollectible accounts is inadequate‚ because of worsening economic conditions. c. Fourth quarter payroll taxes were
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Definition Scenario Balance sheet A fiscal statement that summarizes a company ’s assets‚ liabilities‚ shareholders ’ equity at a specific point in time and net worth. This statement will display if the organization is in good fiscal standing or not and if they can meet their long-term fiscal responsibilities. The director asked for the titles of the four financial statements that included in an audited financial report‚ which are the following: Balance Sheet statement‚
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LinkedIn Case Analysis Executive Summary LinkedIn Corporation went public on the New York Stock Exchange on May 18th‚ 2011. The Initial Public Offering documents listed the stock at $45 per share. It started trading the next day at an opening price of $83.20‚ peaked at $122.70‚ and closed at $94.25. This was an increase of 109.44% over the IPO price. Almost two years later‚ the stock has had its low points‚ but still its market price remains well above the value calculated by many analysts
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By adding another experienced salesman that is working for a base salary plus commission‚ they can grow the revenues even more. By having this person work on commission‚ this will eat into the profit margin for the materials he is selling. But the net impact to the BLC will be positive. I would advise Mr. Butler to select the LOC for up to $465‚000 because he can take out as little as he needs. He does not need all $465‚000 this quarter‚ but he may need some in the first and last quarters of the
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the cost of goods sold until year end‚ and overstating the inventories. The over applied overhead will be recognized at year end by closing it to cost of goods sold. The adjustment for the over applied overhead will result in a big boost in net operating income at year end. Understating direct labor-hours results in artificially inflating the overhead rate‚ which will likely result in overapplied overhead for the year. Shaving 5% off the estimated direct labor-hours
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allocated to the General Administrative Team. The same applies to the Investment Team since its activities are independent of branch’s operation. Use of revenues as the only cost allocation basis leads to excess overhead costs‚ which lowers the net income of branches. Allocation of excess overhead costs provides disincentives among employees. Their effort paid on reducing costs is not rewarded with lower overhead costs and their earning targets are harder to be reached. From 2007 to 2008‚ Taejon
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more economical than buying Genie tech‚ where in the analysis is short term. This report is based on the analysis which is made for a long term study period of 5 years and the Net income of each year is calculated which includes the capital investments and the annual savings made by each model in each year considering the Net present worth of these two options (Buy and Build) a stronger and a reasonable
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with transactions‚ financial statements‚ and problems peculiar to the operations of partnership and corporations as distinguished from sole proprietorships. Topics include: partnership formation and operations including accounting for the admission of partners‚ changes in capital‚ and profit-and loss sharing ratios‚ the conversion of an unincorporated enterprise into a corporation; accounting for incorporated enterprises‚ including the preparation of financial statements for internal and external purposes;
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analysis in which compares ratios or line items in a company’s financial statements over a certain period of time. The horizontal analysis of Marriott International is shown below. | 2010 | 2009 | 2008 | Increase/(Decrease)Amount Percent | Revenue | $11‚691 | $10‚908 | $12‚879 | $(1‚188) | 9.2% | Expenses | $10‚996 | $11‚060 | $12‚114 | $(1‚118) | 9.2% | Operating income | $695 | $(152) | $765 | $(70) | 9.1% | Net income | $458 | $(346) | $362 | $96 | 27% | Earnings per share | 1.21 | (0
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Exercise 11-1 (10 minutes) 1. 2. 3. Exercise 11-2 (10 minutes) Average operating assets £2‚200‚000 Net operating income £400‚000 Minimum required return: 16% × £2‚200‚000 352‚000 Residual income £ 48‚000 Exercise 11-3 (20 minutes) 1. Throughput time = Process time + Inspection time + Move time + Queue time = 2.8 days + 0.5 days + 0.7 days + 4.0 days = 8.0 days 2. Only process time is value-added time; therefore the manufacturing cycle efficiency
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