One of the six steps involved in performing analytical procedures includes the following:
In a normal audit, the relationship between the level of materiality used to plan the engagement and the level of materiality used to evaluate evidence is that
Which one of the following analytical procedures may indicate possible inventory obsolescence problems when ratios are large?
The control of all funds during the count of cash on hand is meant primarily to prevent
Whether the entity maintains effective controls to provide reasonable assurance that private customer information obtained because of e-commerce is protected is defined as
A lawyer’s refusal to respond to a letter of audit inquiry normally requires the auditor to
If standard costs are incorporated into the accounting system
Generally accepted accounting principles are
Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?
The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,
Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company’s net income increase?
Kershaw Bookstore had 600 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows:
Date Purchases Sales
Jan. 14 450 @ $28
17 300 @ $20
25 300 @ $22
29 300 @ $32
Kershaw does not maintain perpetual inventory records. According to a physical count, 450 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is:
The process of formally recording or incorporating an item in the financial statements of an entity is
The primary purpose of the statement of cash flows is to provide information
Which of the following is considered cash?
Which of the following is a tort?
A simple diagram that shows estimated completion times versus actual completion times for the various activities in a systems implementation project
What would be the best explanation for the absence of complete information on computer crime?
The retail inventory method is based on the assumption that the
When an item of expense is paid and recorded in advance, it is normally called
Antonio owns land held for investment with a basis of $28,000. The city of Lafayette exercises the right of eminent domain and Antonio receives a payment of $48,000. What is Antonio’s realized gain?
In April 2009 of this year, Emma acquired a machine for $50,000 for use in her business. The machine is classified as 7-year property. Emma elects out of bonus depreciation and does not expense the asset under Sec. 179. Emma’s depreciation on the machine this year is
During the current year, a corporation sells equipment for $300,000 that it had purchased and placed in service in 2007. The equipment cost $270,000, and $60,000 of depreciation deductions was allowed. The results of the sale are
Susie owns a ranch in Wyoming, which Pat offers to purchase. Susie is not willing to sell the ranch but is willing to exchange the ranch for an apartment complex in Louisiana. The complex is available for sale. Pat purchases the apartment complex in Louisiana from Jody and transfers it to Susie in exchange for Susie’s ranch. The ranch and the complex each have a $1,000,000 fair market value. Which of the following is true?
A married person who files a separate return can claim a personal exemption for his or her spouse if the spouse is not the dependent of another and has
Ricky has rented a house from Sarah since last year. The rent is usually $800 per month, but Sarah reduced the monthly rent down to $600 for all 12 months this year in exchange for Ricky constructing an addition to the house. The addition has a fair market value of $3,500. How much total rental income must Sarah report this year?
Alex is a calendar-year sole proprietor. He began business on December 1 of this year. He uses the accrual method of accounting. Alex had the following collections in the same month: He collected $7,000 in December from clients who paid cash for services to be performed next year. He collected $5,000 in December for services performed during December, which he deposited in an operating account on December 31 of this year. He collected $9,000 in December on accounts receivable for services performed in December, which he deposited in an operating account on January 2 of next year. What is the amount Alex must include in his income for December?
Bianca is beneficiary of an $80,000 insurance policy on her father’s life. Upon his death, she may elect to receive the proceeds in 5 yearly installments of $17,500 or may take the $80,000 lump sum. She elects to take the lump sum payment. What are the tax consequences in year one?
Nonrefundable tax credits
1. only offset a taxpayer’s tax liability.
2. may only be used if the taxpayer is receiving a refund.
3. have expired but may be reinstated with new tax legislation.
4. allow the excess over the taxpayer’s tax liability to be paid to the taxpayer.
Paul makes the following property transfers in the current year: $22,000 cash to his wife, $34,000 cash to a qualified charity, $120,000 house to his son, and $3,000 computer to an unrelated friend. The total of Paul’s taxable gifts, assuming he does not elect gift splitting with his spouse, subject to the unified transfer tax, is
Which of the following best describes the weight of a revenue ruling?
Which of the following statements is true?
One consequence of a property distribution by a corporation to a shareholder is
Joshua owns 100% of Steeler Corporation’s stock. Joshua’s basis in the stock is $8,000. Steeler Corporation has E&P of $40,000. If Steeler Corporation redeems 60% of Joshua’s stock for $50,000, Joshua must report dividend income of
In computing the ordinary income of a partnership, a deduction is allowed for
Which of the following would terminate a Subchapter S election?
Which of the following processes would be accounted for using a job order cost system?
In traditional costing systems, overhead is generally applied based on
Costs incurred internally to create intangibles are
The amount to be recorded as the cost of an asset under capital lease is equal to the
In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are
Debt securities that are accounted for at amortized cost, NOT fair value, are
Elvis Company purchases inventory for $70,000 on March 19, 2008, and sells it to Graceland Corporation for $95,000 on May 14, 2008. Graceland still holds the inventory on December 31, 2008, and determines that its market value (replacement cost) is $82,000 at that time. Graceland writes the inventory down from $95,000 to its lower market value of $82,000 at the end of the year. Elvis owns 75% of Graceland. Based on this information, what amount of inventory should be eliminated in the consolidation workpaper for 2008?
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