Rhetorical Analysis Of Turbocharger Design Effect On...

Rhetorical Analysis Through centuries of technological advancements, the sharing of information has become painless process. Improvements in computers and smartphones allow for the nearly instantaneous retrieval of answers for curious and questioning minds. However, it is not in the sharing of information that there lies a problem. Rather, it is the ability of the researchers and academics to appropriately communicate their findings to others that is troublesome. Rhetorical analyses are critical in the understating and sharing of new scientific discoveries in the academic world. The authors must be clear and focused in their writing if their papers and articles are to be rhetorically effective. Ways to accomplish this include writing in the IMRAD format, being mindful of the intended audience, assuring that the subject is useful, and using an established and credible publisher. Authors Theodosios Korakianitis and T. Sadoi write about the relationship between engine size and turbocharger size in their article, â€Å"Turbocharger-Design Effects on Gasoline-Engine Performance†. Their research examined overall efficiency and performance of differently size combinations of engine and turbochargers (Korakianitis, Sadoi, 2005, p.525). This article proves to be an effective rhetorical analysis because the authors examine an important topic that is relevant, properly acknowledge their audience, gain credibility through an established publi sher, and follow the IMRAD format of

Inflation Is Assumed Free Essays

string(67) " stockholders have the same liability as members of a partnership\." Inflation is assumed Chapter 1 True / False Questions 1. Inflation is assumed to be a temporary problem that does not affect financial decisions. FALSE 2. We will write a custom essay sample on Inflation Is Assumed or any similar topic only for you Order Now Financial Capital is composed of long-term plant and equipment, as well as other tangible investments. FALSE 3. Real Capital is composed of long-term plant and equipment. TRUE 4. During the 1930s, financial practice revolved around such topics as the preservation of capital, maintenance of liquidity, reorganization of financially troubled corporations and bankruptcy. TRUE 5. In the mid 1950s, finance began to change to a more analytical, decision-oriented approach. TRUE 6. Recently, the emphasis of financial management has been on the relationship between risk and return. TRUE 7. The most common partnership arrangement carries limited liability to the partners. FALSE 8. In terms of revenues and profits, the corporation is by far the most important form of business organization in the United States. TRUE 9. Dividends paid to corporate stockholders have already been taxed once as corporate income. TRUE 10. One advantage of the corporate form of organization is that income received by stockholders is not taxable since the corporation already paid taxes on the income distributed. FALSE 11. A corporation must have more than 75 stockholders to qualify for Subchapter S designation. FALSE 12. Profits of a Subchapter S corporation are taxed at corporate tax rates. FALSE 13. Corporate governance issues have become less important to the financial community during the first decade of the new millennium. FALSE 14. Agency Theory examines the relationship between companies and their customers. FALSE 15. A major focus of the Sarbanes Oxley Act is to make sure that publicly traded companies accurately present their assets, liabilities and income in their financial statements. TRUE 16. The Sarbanes Oxley Act is primarily intended to increase public scrutiny of private companies that had previously been exempt from many public disclosure requirements. FALSE 17. Timing is not a particularly important consideration in financial decisions. FALSE 18. Maximizing the earnings of the firm is the goal of financial management. FALSE 19. Insider trading involves the use of information not available to the general public to make profits from trading in a company’s stock. TRUE 20. Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide. TRUE 21. Money markets refer to those markets dealing with short-term securities having a life of one year or less. TRUE 22. Money markets refer to markets where excess corporate cash is exchanged for foreign currencies that can earn a higher return than domestic money. FALSE 23. Capital markets refer to those markets dealing with short-term securities having a life of one year or less. FALSE 24. The primary market includes the sale of securities by way of initial public offerings. TRUE 25. High quality initial public offerings are usually sold in a primary market, such as the New York Stock Exchange. However, low-quality stocks must usually be sold in secondary markets, such as NASDAQ. FALSE 26. Although NASDAQ is a secondary market, some of the firms traded there, such as Microsoft, are large enough to move to the primary market if they so desire. FALSE 27. The secondary market characteristically has had stable prices over the past 20 years. FALSE 28. In the United States, stocks sold on either the New York Stock Exchange or NASDAQ are considered sold in the primary market. FALSE 29. New issues are sold in the secondary market. FALSE 30. Existing securities are traded in the secondary market. TRUE 31. Many companies have cross-listed their stock on multiple international stock exchanges and more than several hundred foreign companies have listed their shares on the New York Stock Exchange. TRUE 32. Financial management requires both short-term activities as well as long-term planning such as raising funds. TRUE Multiple Choice Questions 33. What is the primary goal of financial management? A. Increased earnings B. Maximizing cash flow C. Maximizing shareholder wealth D. Minimizing risk of the firm 34. In the past, the study of finance has included A. mergers and acquisitions. B. raising capital. C. bankruptcy. D. all of these. 35. Professor Merton Miller received the Nobel prize in economics for his work on   A. dividend policy. B. investment theory. C. working capital management. D. capital structure theory. 36. Professors Harry Markowitz and William Sharpe received their Nobel prize in economics for their contributions to the   A. options pricing model. B. theories of working capital management. C. theories of risk-return and portfolio theory. D. heories of international capital budgeting. 37. Proper risk-return management means that A. the firm should take as few risks as possible. B. the firm must determine an appropriate trade-off between risk and return. C. the firm should earn the highest return possible. D. the firm should value future profits more highly than current profits. 38. One of the major disadvantages of a sole proprietorshi p is   A. that there is unlimited liability to the owner. B. the simplicity of decision making. C. low organizational costs. D. low operating costs. 39. One of the major advantages of a sole proprietorship is   A. hat the owner has limited liability. B. that stock in the proprietorship can be easily transferred. C. that it is exempt from many tax rules that would otherwise apply when employees are hired by the firm. D. low operating costs. 40. The partnership form of an organization A. avoids the double taxation of earnings and dividends found in the corporate form of organization. B. usually provides limited liability to the partners. C. has unlimited life. D. simplifies decision making. 41. A corporation is A. owned by stockholders who enjoy the privilege of limited liability. B. easily divisible between owners. C. a separate legal entity with perpetual life. D. all of these. 42. With a Subchapter S corporation A. income is taxed as direct income to stockholders. B. stockholders have the same liability as members of a partnership. You read "Inflation Is Assumed" in category "Essay examples" C. the number of stockholders is unlimited. D. life of the corporation is limited. 43. A Subchapter S corporation A. is similar to a partnership in that is carries unlimited liability. B. is a separate legal entity which is treated like a normal corporation. C. has all the organizational benefits of a corporation and its income is only taxed once. D. all of these. 44. Corporate governance is the A. relationship and exercise of oversight by the board of directors of the company. B. relationship between the chief financial officer and institutional investors. C. operation of a company by the chief executive officer (CEO) and other senior executives on the management team. D. governance of the company by the board of directors with a focus on social responsibility. 45. Many companies such as Tyco, Enron, and WorldCom that suffered financial distress in the late 1990s and early 2000s,   A. committed fraud. B. had failed corporate governance oversight. C. went bankrupt. D. ll of these are true. 46. Agency theory examines the relationship between the A. shareholders of the firm and the firm’s investment banker. B. owners of the firm and the managers of the firm. C. board of directors and large institutional investors. D. shareholders and the firm’s transfer agent. 47. Agency theory would imply that conflicts are more likely to occur betw een management and shareholders when   A. the company is owned and operated by the same person. B. management acts in the best interests of maximizing shareholder wealth. C. the chairman of the board is also the chief executive officer (CEO). D. he board of directors exerts strong and involved oversight of management. 48. Agency problems are least likely to arise in which organizational form? A. sole proprietorship B. limited partnership C. corporation D. subchapter S corporation 49. Institutional investors are important in today’s business world because   A. as large investors they have more say in how businesses are managed. B. they have a fiduciary responsibility to the workers and investors that they represent to see that the firms they own are managed in an ethical way. C. as a group they can vote large blocks of stock for the election of board members. D. all of these. 50. The increasing percentage ownership of public corporations by institutional investors has   A. had no effect on corporate management. B. created higher returns for the stock market in general. C. created more pressure on public companies to manage their firms more efficiently. D. taken away the voice of the individual investor. 51. The Sarbanes-Oxley Act was passed in an effort to A. protect small business from large corporations dominating the market. B. ensure that partnerships divide profits among partners in a fair manner. C. guarantee outside auditors can control corporate accounting practices. D. control corrupt corporate behavior. 52. Maximization of shareholder wealth is a concept in which   A. increased earnings is of primary importance. B. profits are maximized on a quarterly basis. C. virtually all earnings are paid as dividends to common stockholders. D. optimally increasing the long-term value of the firm is emphasized. 53. Which of the following is not a true statement about the goal of maximizing shareholder wealth? A. It takes into account the timing of cash-flows. B. It is a short-run point of view which takes risk into account. C. It considers risk as a factor. D. None of these. 54. Insider trading occurs when A. someone has information not available to the public which they use to profit from trading in stocks. B. corporate officers buy stock in their company. C. lawyers, investment bankers, and others buy common stock in companies represented by their firms. D. any stock transactions occur in violation of the Federal Trade Commissions restrictions on monopolies. 55. The major difficulty in most insider-trading cases has been   A. that lenient judges have simply released the guilty individuals. B. that insider trading, even though illegal, actually serves a beneficial economic and financial purpose. C. that inside trades have not been legally well defined. D. inside trades actually have a beneficial effect on the wealth of all stockholders. 56. Money markets would include which of the following securities? A. common stock and corporate bonds. B. treasury bills and commercial paper. C. certificates of deposit and preferred stock. D. all of these. 57. Capital markets do not include which of the following securities:   A. common stock B. commercial paper C. government bonds D. preferred stock 58. When a corporation uses the financial markets to raise new funds, the sale of securities is made in the   A. rimary market. B. secondary market. C. on-line market. D. third market. 59. Corporate restructuring has been one result of more institutional ownership. Restructuring can cause   A. changes in the assets and liabilities of the firm. B. the sale of low-profit margin divisions. C. the removal of current management and/or large reductions in the workforce. D. all of these. 60. Th e internationalization of the financial markets has   A. allowed firms such as McDonalds to raise capital around the world. B. raised the cost of capital. C. forced companies to price everything in U. S. dollars. D. all of these. Chapter 2 True / False Questions 61. The income statement is the major device for measuring the profitability of a firm over a period of time. TRUE 62. The income statement measures the increase in the assets of a firm over a period of time. FALSE 63. Operating profit is essentially a measure of how efficient management is in generating revenues and controlling expenses. TRUE 64. Accounting income is based on verifiably completed transactions. TRUE 65. The P/E ratio is strongly related to the past performance of the firm. FALSE 66. When a firm has a sharp drop off in earnings, its P/E ratio may be artificially high. TRUE 67. The real value of a firm is the same from an economic and accounting perspective. FALSE 68. A balance sheet represents the assets, liabilities, and owner’s equity of a company at a given point in time. TRUE 69. The investments account represents a commitment of funds of at least one year or more. TRUE 70. Asset accounts are listed in order of their liquidity. TRUE 71. Accumulated depreciation shows up in the income statement. FALSE 72. Total assets of a firm are financed with liabilities and stockholders equity. TRUE 73. Book value per share and market value per share are usually the same dollar amount. FALSE 74. Book value per share is of greater concern to the financial manager than market value per share. FALSE 75. Book value is equal to net worth. TRUE 76. Equity is a measure of the monetary contributions that have been made directly or indirectly on behalf of the owners of the company. TRUE 77. Stockholders’ equity is equal to liabilities plus assets. FALSE 78. Retained earnings shown on the balance sheet represents available cash on hand generated from prior year’s earnings but not paid out in dividends. FALSE 79. Retained earnings represent the firm’s cumulative earnings since inception, minus dividends and other adjustments. TRUE 80. The statement of cash flows helps measure how the changes in a balance sheet were financed between two time periods. TRUE 81. Cash flow is equal to earnings before taxes minus depreciation. FALSE 82. An increase in an asset represents a source of funds. FALSE 83. Assume that two companies both have Net Income of $100,000. The firm with the highest depreciation expense will have the highest cash flow, assuming all other adjustments are equal. TRUE 84. An increase in inventory represents a source of funds. FALSE 85. An increase in a liability account represents a source of funds on the cash flow statement. TRUE 86. An increase in accounts receivable represents a reduction in cash flows from operations. TRUE 87. An increase in accounts payable represents a reduction in cash flows from operations. FALSE 88. The purchase of a new factory would reduce the cash flows from investing activities on the statement of cash flows. TRUE 89. The sale of corporate bonds held by the firm as a long-term investment would increase cash flows from investing activities on the statement of cash flows. TRUE 90. Paying dividends to common shareholders will not affect cash flows from financing activities. FALSE 91. The sale of a firm’s securities is a source of funds, whereas the payment of dividends is a use of funds. TRUE 92. Depreciation is an accounting entry and does not involve a cash expense. TRUE 93. Free cash flow is equal to cash flow from operating activities minus necessary capital expenditures and normal dividend payments. TRUE 94. An increase in accounts receivable results in a cash inflow on the statement of cash flows. FALSE 95. A decrease in bonds payable results in a cash outflow on the statement of cash flows. TRUE 96. An increase in accrued expenses results in a cash outflow on the statement of cash flows. FALSE Multiple Choice Questions 97. Which of the following is not one of the three basic financial statements? A. Income Statement B. Statement of Retained Earnings C. Statement of Cash Flows D. Balance Sheet 98. Which of the following is not subtracted out in arriving at operating income? A. interest expense B. cost of goods sold C. depreciation D. selling and administrative expense 99. Increasing interest expense will have what effect on EBIT? A. increase it B. decrease it C. no effect D. not enough information to tell 100. The residual income of the firm belongs to A. creditors. B. preferred stockholders. C. common stockholders. D. bondholders. 101. Allen Lumber Company had earnings after taxes of $580,000 in the year 2006 with 400,000 shares outstanding on December 31, 2006. On January 1, 2007, the firm issued 35,000 new shares. Because of the proceeds from these new shares and other operating improvements, 2007 earnings after taxes were 25 percent higher than in 2006. Earnings per share for the year-end 2007 was   A. $1. 67 B. $1. 45 C. $1. 81 D. None of these 102. Consider the following information for Ball Corp. [pic] What is the Operating Profit for Ball Corp? A. $71,450 B. $90,000 C. 120,000 D. None of these 103. Candy Company had sales of $240,000 and cost of goods sold of $108,000. What is the gross profit margin (ratio of gross profit to sales)? A. 75% B. 55% C. 73. 3% D. None of these 104. Density Farms, Inc. had sales of $500,000, cost of goods sold of $180,000, selling and administrative expense of $70,000, and operating profit of $90,000. What was the value of depreciat ion expense? A. $170,000 B. $230,000 C. Less than $170,000 D. None of these 105. Elgin Battery Manufacturers had sales of $900,000 in 2006 and their cost of goods sold represented 65 percent of sales. Selling and administrative expenses were 9 percent of sales. Depreciation expense was $10,000 and interest expense for the year was $8,000. The firm’s tax rate is 30 percent. What is the dollar amount of taxes paid? A. $151,200 B. $145,800 C. More than $151,800 D. None of these 106. A firm with earnings per share of $5 and a price-earnings ratio of 15 will have a stock price of   A. $20. 00 B. $75. 00 C. $3. 00 D. the market assigns a stock price independent of EPS and the P/E ratio. 107. Earnings per share is A. operating profit divided by number of shares outstanding. B. et income divided by number of shares outstanding. C. net income divided by stockholders’ equity. D. net income minus preferred dividends divided by number of shares outstanding. 108. Reinvested funds from retained earnings theoretically belong to:   A. bond holders. B. common stockholders. C. employees. D. all of these. 109. The firm’s price-earnings (P/E) ratio is influenced by its   A. capital structure. B. earnings volatility. C. sales, profit margins, and earnings. D. all of these. 110. Which of the following factors do not influence the firm’s P/E ratio:   A. past earnings. B. shares outstanding. C. volatility in performance. D. none of these. 111. Which of the following would not be classified as a current asset? A. Marketable securities B. Investments C. Prepaid expenses D. Inventory 112. An item which may be converted to cash within one year or one operating cycle of the firm is classified as a   A. current liability. B. long-term asset. C. current asset. D. long-term liability. 113. Which of the following would not be included in the balance sheet investment account? A. stocks of other corporations B. long term government bonds C. marketable securities D. investments in other corporations 14. Which of the following is not a primary source of capital to the firm? A. assets B. common stock C. preferred stock D. bonds 115. The major limitation of financial statements is A. in their complexity. B. in their lack of comparability. C. in their use of historical cost accounting. D. in their lack of detail. 116. Net worth is equal to stockholders’ equity A. plus dividends . B. minus preferred stock. C. plus preferred stock. D. minus liabilities. 117. Book value is the same as A. stockholders’ equity. B. fixed assets minus long-term debt. C. net worth. D. current assets minus current debt. 118. Total stockholders’ equity consists of A. preferred stock and common stock. B. common stock and retained earnings. C. common stock and capital paid in excess of par. D. preferred stock, common stock, capital paid in excess of par and retained earnings. 119. The net worth of a firm A. is usually the same as the firm’s market value. B. is based on current asset costs. C. is based on current liabilities. D. none of these. 120. The orientation of book value per share is __________, while the orientation of market value per share is ___________. A. short term, long term B. future, historical C. historical, future D. ong term, short term 121. A statement of cash flows allows a financial analyst to determine   A. whether a cash dividend is affordable. B. how increases in asset accounts have been financed. C. whether long-term assets are being financed with long-term or short-term financing. D. all of these. 122. A firm’s purchase of plant and equipment would be consid ered a   A. use of cash for financing activities. B. use of cash for operating activities. C. source of cash for investment activities. D. use of cash for investment activities. 123. Depreciation is a source of cash inflow because A. it is a tax-deductible non-cash expense. B. it supplies cash for future asset purchases. C. it is a tax-deductible cash expense. D. it is a taxable expense. 124. Depreciation tends to A. increase cash flow and decrease income. B. decrease cash flow and increase income. C. affect only cash flow. D. affect only income. 125. Given the following, what is free cash flow? [pic] A. $115,000. B. $235,000. C. $185,000. D. $165,000. 126. Assuming a tax rate of 35%, depreciation expenses of $400,000 will   A. reduce income by $140,000. B. reduce taxes by $140,000. C. reduce taxes by $400,000. D. have no effect on income or taxes, since depreciation is not a cash expense. 27. Assuming a tax rate of 30%, the after-tax cost of interest expense of $200,000 is   A. $60,000 B. $140,000 C. $200,000 D. $120,000 128. Assuming a tax rate of 40%, the after-tax cost of a $200,000 dividend payment is   A. $200,000 B. $70,000 C. $130,000 D. none of these. 129. Farah Snack Co. has earnings after taxes of $128,750. Interest expense for the year was $20,000; preferred dividends paid were $18,750; and common dividends paid were $30,000. Taxes were $15,000. The firm has 100,000 shares of common stock outstanding. Earnings per share on the common stock was   A. $0. 90 B. $1. 10 C. $0. 5 D. $0. 80 130. Gerry Co. has a gross profit of $880,000 and $360,000 in depreciation expense. Selling and administrative expense is $120,000. Given that the tax rate is 40 percent, compute the cash flow for Gerry Co. A. $456,000 B. $240,000 C. $600,000 D. None of these 131. Hoover Inc. has current assets of $360,000 and fixed assets of $640,000. Current liabilities are $90,000 and long-term liabilities are $160,000. There is $90,000 in preferred stock outstanding and the firm has issued 10,000 shares of common stock. Compute book value (net worth) per share   A. $84. 00 B. $66. 00 C. $75. 00 D. None of these 132. The best indication of the operational efficiency of management is   A. net income. B. earnings per share. C. earnings before interest and taxes (EBIT). D. gross profit. 133. A corporation can increase their earnings per share by   A. increasing tax-deductible expenses B. increasing Treasury stock C. decreasing depreciation D. decreasing retained earnings From End of the Chapter 2 Problems 5. Given the following information, prepare, in good form, an income statement for Goodman Software, Inc. Selling and administrative expense$ 50,000 Depreciation expense80,000 Sales400,000 Interest expense30,000 Cost of goods sold150,000 Taxes18,550 2-5. Solution: Goodman Software, Inc. Sales$ 400,000 Cost of goods sold 150,000 Gross Profit250,000 Selling and administrative expense50,000 Depreciation expense 80,000 Operating profit120,000 Interest expense 30,000 Earnings before taxes90,000 Taxes 18,550 Earnings after taxes$ 71,450 6. Given the following information prepare in good form an income statement for the Kid Rock and Gravel Company. Selling and administrative expense$ 60,000 Depreciation expense70,000 Sales470,000 Interest expense40,000 Cost of goods sold140,000 Taxes45,000 2-6. Solution: Kid Rock and Gravel Co. Income Statement Sales$ 470,000 Cost of goods sold$ 140,000 Gross profit$ 330,000 Selling and administrative expense$ 60,000 Depreciation expense$ 70,000 Operating profit$ 200,000 Interest expense$ 40,000 Earnings before taxes$ 160,000 Taxes$ 45,000 Earnings after taxes$ 115,000 7. Prepare in good form an income statement for Virginia Slim Wear. Take your calculations all the way to computing earnings per share. Sales$600,000 Shares outstanding100,000 Cost of goods sold200,000 Interest expense30,000 Selling and administrative expense40,000 Depreciation expense20,000 Preferred stock dividends80,000 Taxes100,000 2-7. Solution: Virginia Slim Wear Income Statement Sales$600,000 Cost of goods sold 200,000 Gross profit400,000 Selling and administrative expense40,000 Depreciation expense 20,000 Operating profit340,000 Interest expense 30,000 Earnings before taxes310,000 Taxes 100,000 Earnings after taxes210,000 Preferred stock dividends80,000 Earnings available to common stockholders130,000 Shares outstanding100,000 Earnings per share$ 1. 30 8. Prepare in good form an income statement for Franklin Kite Co. , Inc. Take your calculations all the way to computing earnings per share. Sales$900,000 Shares outstanding50,000 Cost of goods sold400,000 Interest expense40,000 Selling and administrative expense60,000 Depreciation expense20,000 Preferred stock dividends80,000 Taxes50,000 2-8. Solution: Franklin Kite Company Income Statement Sales$900,000 Cost of goods sold400,000 Gross profit500,000 Selling and administrative expense60,000 Depreciation expense20,000 Operating profit$420,000 Interest expense40,000 Earnings before taxes$380,000 Taxes50,000 Earnings after taxes$330,000 Preferred stock dividends80,000 Earnings available to common stockholders250,000 Shares outstanding50,000 Earnings per share$5. 00 9. Lasar Technology, Inc. , had sales of $500,000, cost of goods sold of $180,000, selling and administrative expense of $70,000, and operating profit of $90,000. What was the value of depreciation expense? Set this problem up as a partial income statement, and determine depreciation expenses as the plug figure. 2-9. Solution: Lasar Technology, Inc. Sales$500,000 Cost of goods sold $180,000 Gross Profit$320,000 Selling and administrative expense70,000 Depreciation Expense (plug figure) 160,000 Operating profit$ 90,000 10. The Ace Book Company sold 1,500 finance textbooks for $185 each to High Tuition University in 2008. These books cost Ace $145 to produce. Ace spent $10,000 (selling expense) to convince the university to buy its books. In addition, Ace borrowed $80,000 on January 1, 2008, on which the company paid 10 percent interest. Both interest and principal of the loan were paid on December 31, 2008. Ace’s tax rate is 25 percent. Depreciation expense for the year was $15,000. Did Ace Book Company make a profit in 2008? Please verify with an income statement presented in good form. -10. Solution: Ace Book Company Sales (1,500 books at $185 each)277,500 Cost of goods sold (1,500 books at $145 each) 217,500 Gross Profit60,000 Selling expense10,000 Depreciation expense 15,000 Operating profit†¦Ã¢â‚¬ ¦35,000 Interest expense 8,000 Earnings before taxes27,000 Taxes @ 25% 6,750 Earnings after taxes20,250 11. Carr Auto Wholesalers had sales of $900,000 in 2004 an d their cost of goods sold represented 65 percent of sales. Selling and administrative expenses were 9 percent of sales. Depreciation expense was $10,000 and interest expense for the year was $8,000. The  firm’s tax rate is 30 percent. a. Compute earnings after taxes. b. Assume the firm hires Ms. Hood, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 12 percent of sales, sales can be increased to $1,000,000. The extra sales effort will also reduce cost of goods sold to 60 percent of sales (there will be a larger markup in prices as a result of more aggressive selling). Depreciation expense will remain at $10,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $15,000. The firm’s tax rate will remain at 30 percent. Compute revised earnings after taxes based on Ms. Hood’s suggestions for Carr Auto Wholesalers. Will her ideas increase or decrease profitability? 2-11. Solution: Carr Auto Wholesalers Income Statement a. Sales$ 900,000 Cost of goods old (65% of sales) 585,000 Gross Profit$ 315,000 Selling and administrative expense (9% of sales) 81,000 Depreciation 10,000 Operating profit 224,000 Interest expense 8,000 Earnings before taxes 216,000 Taxes @ 30% 64,800 Earnings after taxes $ 151,200 2-11. (Continued) b. Sales $1,000,000 Cost of goods sold (60% of sales) 600,000 Gross profit 400,000 Selling and administrative expense (12% of sales) 120,000 Depreciation 10,000 Operating profit 270,000 Interest expense 15,000 Earnings before taxes 255,000 Taxes @ 30% 76,500 Earnings after taxes$ 178,500 Ms. Hood’s ideas will increase profits. 15. Elite Trailer Parks has an operating profit or $200,000. Interest expense for the year was $10,000; preferred dividends paid were $18,750; and common dividends paid were $30,000. The tax was $61,250. The firm has 20,000 shares of common stock outstanding. . Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. b. What was the increase in retained earnings for the year? 2-15. Solution: Elite Trailor Parks a. Operating profit (EBIT)$200,000 Interest expense 10,000 Earnings before taxes (EBT)$190,000 Taxes 61,250 Earnings after taxes (EAT)$128,750 Preferred dividends 18,750 Available to common stockholders$110,000 Common dividends 30, 000 Increase in retained earnings$80,000 [pic] Dividends per Share = $30,000/20,000 shares = $1. 50 per share b. Increase in retained earnings = $80,000 16. Johnson Alarm Systems had $800,000 of retained earnings on December 31, 2008. The company paid common dividends of $60,000 in 2008 and had retained earnings of $640,000 on December 31, 2007. How much did Johnson earn during 2008, and what would earnings per share be if 50,000 shares of common stock were outstanding? 2-16. Solution: Johnson Alarm Systems Retained earnings, December 31, 2008$800,000 Less: Retained earnings, December 31, 2007 640,000 Change in retained earnings$160,000 Add: Common stock dividends 60,000 Earnings available to common stockholders$220,000 Earnings per share [pic] 17. Mozart Music Co. had earnings after taxes of $560,000 in 2008 with 200,000 shares of stock outstanding. The stock price was $58. 80. In 2009, earnings after taxes increased to $650,000 with the same 200,000 shares outstanding. The stock price was $78. 00 a. Compute earnings per share and the P/E ratio for 2008. The P/E ratio equals the stock price divided by earnings per share. b. Compute earnings per share and the P/E ratio for 2009. c. Give a general explanation of why the P/E changed. 2-17. Solution: Mozart Music Co. a. EPS (2008)[pic] = $2. 80 P/E Ratio (2008)= Price/EPS =[pic] = 21X b. EPS (2009)[pic] = $3. 5 P/E Ratio (2009)= Price/EPS=[pic]= 24X c. The stock price increased by 34% while EPS only increased 16. 1%. 20. Nova Electrics anticipated cash flow from operating activities of $6 million in 2008. It will need to spend $1. 2 million on capital investments in order to remain competitive within the industry. Common stock dividends are projected at $. 4 million and preferred stock dividends at $. 55 million. a. What is the firm’s projected free cash flow for the year 2008? b. What does the concept of free cash flow represent? 2-20. Solution: Nova Electronics a. Cash flow from operations activities$6. 0 million – Capital Expenditures1. 20 – Common stock dividends. 40 – Preferred stock dividends . 55 Free cash flow$3. 85 million b. Free cash flow represents the funds that are available for special financial activities, such as a leveraged buyout, increased dividends, common stock repurchases, acquisitions, or repayment of debt. 21. The Rogers Corporation has a gross profit of $880,000 and $360,000 in depreciation expense. The Evans Corporation also has $880,000 in gross profit, with $60,000 in depreciation expense. Selling and administrative expense is $120,000 for each company. Given that the tax rate is 40 percent, compute the cash flow for both companies. Explain the difference in cash flow between the two firms. 2-21. Solution: Rogers Corporation – Evans Corporation | |Rogers |Evans | |Gross profit |$880,000 |$880,000 | |Selling and adm. expense |120,000 |120,000 | |Depreciation |360,000 60,000 | |Operating profit |$400,000 |$700,000 | |Taxes (40%) |160,000 |280,000 | |Earnings after taxes |$240,000 |$420,000 | |Plus depreciation expense |$360,000 |$60,000 | |Cash Flow |$600,000 |$480,000 | | | |Rogers had $300,000 more in depreciation which provided $120,000 (0. 40 ( $300,000) more in cash flow. | | | 22. Horton Electronics has current assets of $320,000 and fixed assets of $640,000. Current liabilities are $90,000 and long-term liabilities are $160,000. There is $90,000 in preferred stock outstanding and the firm has issued 40,000 shares of common stock. Compute book value (net worth) per share. 2-22. Solution: Horton Energy Company Current assets |$320,000 | |Fixed assets |640,000 | |Total assets |$960,000 | |–Current liabilities |90,000 | |–Long-term liabilities |160,000 | |Stockholders’ equity |$710,000 | |–Preferred stock obligation |90,000 | |Net worth assigned to common $620,000 | | | | |Common shares outstanding |40,000 | | | | |Book value (net worth) per share |$15. 50 | 23. The Holtzman Corporation has assets of $400,000, current liabilities of $50,000, and long-term liabilities of $100,000. There is $40,000 in preferred stock outstanding; 20,000 shares of common stock have been issued. a. Compute book value (net worth) per share. b. If there is $22,000 in earnings available to common stockholders and Holtzman’s stock has a P/E of 18 times earnings per share, what is the current price of the stock? c. What is the ratio of market value per share to book value per share? 2-23. Solution: Holtzman Corporation |a. Total assets |$400,000 | |–Current liabilities |50,000 | |–Long-term liabilities |100,000 | |–Stockholders’ equity |$250,000 | |–Preferred stock |40,000 | |Net worth assigned to common |$210,000 | |Common shares outstanding |20,000 | |Book values (net worth) per share |$10. 50 | |b. Earnings available to common |$22,000 | |Shares outstanding |20,000 | |Earnings per share |$1. 10 | | [pic] | |c. Market value per share (price) to book value per share $19. 80/$10. 50 = 1. 89 | 24. Bradley Gypsum Company has assets of $1,900,000, current liabilities of $700,000, and long-term liabilities of $580,000. There is $170,000 in preferred stock outstanding; 30,000 shares of common stock have been issued. a. Compute book value (net worth) per share. b. If there is $42,000 in earnings available to common stockholders and Bradley’s stock has a P/E of 15 times earnings per share, what is the current price of the stock? c. What is the ratio of market value per share to book value per share? 2-24. Solution: Bradley Gypsum Company |a. Total assets |$1,900,000 | |–Current liabilities |700,000 | |–Long-term liabilities |580,000 | |Stockholders’ equity |$ 620,000 | |–Preferred stock |170,000 | |Net worth assigned to common |$ 450,000 | |Common shares outstanding |30,000 | |Book values (net worth) per share |$ 15. 00 | |b. Earnings available to common | | |stockholders |$ 42,000 | |Shares outstanding |30,000 | |Earnings per share |$ 1. 40 | | [pic] | |c. Market value per share (price) to book value per share $21. 00/$15. 00 = 1. 40 | Chapter 14 True / False Questions 148. Capital markets consist of securities having maturities greater than one year. TRUE 149. The capital structure of the firm consists of long-term debt and equity. TRUE 150. Capital markets are becoming increasingly international as investors and issuers seek out the best risk-return opportunities. TRUE 151. Upon entering the capital markets, an investor might invest in common stocks, preferred stock, negotiable certificates of deposit, and convertible securities. FALSE 152. In the last decade, the US has invested substantially more in foreign countries than foreign countries have invested back in the US. FALSE 153. Municipal securities are called tax exempt because no federal taxes must be paid on interest received. TRUE 154. The stock market far exceeds the bond market in terms of size of new capital raised. FALSE 155. The capital markets serve as a way of allocating available capital to the most efficient user. TRUE 156. The main reason for the small amount of financing with preferred stock is that dividends on preferred stock are not tax deductible as are interest paid on bonds. TRUE 157. Retained earnings account for the majority of internally generated corporate funds. FALSE 158. When an investor buys stock in the stock market, he is purchasing shares from a company. FALSE 159. Internal funds generated by corporations include retained earnings and non cash expenses such as depreciation and deferred taxes. TRUE 160. Households and the government are mainly considered to be suppliers of funds while corporations are generally considered users of funds. FALSE 161. Financial intermediaries channel funds into the capital markets from the household sector. TRUE 162. Brokers on an organized stock exchange act as an agent for the person buying or selling securities. TRUE 163. Brokers actually own the securities they buy and sell on the floor of the exchange. FALSE 164. The NASDAQ National Market is composed of large nation-wide companies that are traded in the over-the-counter market. TRUE 165. The strong form of the efficient market hypothesis states that prices reflect all public information. FALSE 166. The efficient market hypothesis is generally concerned with the impact of information on the behavior of stock prices. TRUE 167. The weak form of the efficient market hypothesis states that an investor can profit by using past price data. FALSE 168. Markets are efficient when prices adjust rapidly to new information, continuous markets exist and large dollar trades can be absorbed without large price movements. TRUE 169. The Sarbanes-Oxley Act of 2002 holds the CEO legally accountable for the accuracy of their firm’s financial statements. TRUE 170. The Sarbanes-Oxley Act of 2002 holds a firm’s internal auditors legally accountable for the accuracy of their firm’s financial statements. FALSE 171. The future of the NYSE is uncertain due to their unwillingness to adapt to the increase in internationalization and electronic trading in the markets. FALSE Multiple Choice Questions 172. Evidence of how global markets are linked was provided in 1997 and 1998 when international markets reacted to   A. the collapse of Asian currencies in Thailand, Indonesia, Malaysia and Korea. B. Russia’s default on its sovereign debt. C. Japan’s seven years of economic stagnation. D. a and b are true. 173. When global capital markets collectively react to international events like Russia’s default on its sovereign debt, it is common to find   A. that there is no impact on multinational companies’ ability to raise capital. B. an impact on the ability to raise capital. C. that Wall Street firms are so diversified that they are not affected by this event. D. All of these are true. 174. Which of the following is not a money market instrument? A. Treasury bills B. Commercial paper C. Negotiable certificates of deposit D. Treasury bonds 175. Global capital markets are influenced by A. interest rates. B. investor confidence. C. elative economic growth. D. all of these. 176. Companies list their stock around the globe to A. capitalize on the inefficiency inherent in foreign markets. B. increase liquidity for their stockholders. C. provide opportunities for the sale of new stock in foreign countries. D. b and c are correct. 177. Foreign investors have p referred to invest in the United States due to all but one of the following reasons:   A. less stringent regulation of securities markets. B. political stability of the U. S. government. C. the U. S. dollar is the world’s international currency. D. all of these are reasons that foreign investors prefer to invest in the United States. 178. With respect to the United States and its relationship with the rest of the world, it can be said that   A. the U. S. has invested more dollars in the rest of the world than foreign countries have invested in the U. S. B. the U. S. has actively helped foreign countries finance their government deficits. C. foreign investors hold large positions in U. S. government securities. D. All of these. 179. Financial instruments in the capital markets generally fall under what category in the Balance Sheet? A. Short-term liabilities and equities. B. Long-term liabilities and equities. C. Near cash assets. D. None of these. 180. Corporations prefer bonds over preferred stock for financing their operations because   A. referred stocks require a dividend. B. bond interest rates change with the economy while stock dividends remain constant. C. the after-tax cost of debt is less than the cost of preferred stock. D. none of these. 181. Federally sponsored credit agencies include all but which of the following? A. Securities Investor Protection Corporation (SIPC) B. Federal Home Loan Banks (FHLB) C. Student Loan Marketing Association (Sallie Mae) D. Federal National Mortgage Association (Fannie Mae) 182. Which of the following is an internal source of funds? A. Cash flow from depreciation (tax shield) B. Net loss C. Repurchase of debt securities D. Bank loan 183. The major supplier of funds for investment in the whole economy is   A. businesses. B. households. C. government. D. financial institutions. 184. Financial intermediaries serve which of the following purposes? A. Financial intermediaries allow for indirect investment in the capital markets by households. B. Aid in the flow of funds through the economy. C. Help provide allocation of funds to the best investments. D. All of these. 185. Which of the following are benefits of financial intermediaries? A. Increase market liquidity B. Provide a direct market for investors C. Act as agents of the government D. Only a and b 186. The purpose of secondary trading is to A. rovide liquidity and competition between investments. B. provide a market to issue securities not handled in primary trading. C. provide jobs for brokers and dealers. D. provide lower commissions than on the organized exchanges. 187. The most important capital markets in the world (in terms of dollar value) are located in   A. New York. B. London. C. Toronto. D. Tokyo. 188. Which Stock Exchange is known as the most liquid? A. NASDAQ B. AMEX C. CBOT D. NYSE 189. Middle to small size companies that are centered in one city or state would most likely be found on the   A. NASDAQ National Market. B. NASDAQ Small Cap Market. C. Supplemental list. D. New York Stock Exchange. 190. The emergence of trading via ECNs has A. offer a unique advantage not offered by the NYSE B. lowered the cost of trading. C. made trading more difficult for small investors. D. all of these are true. 191. Which of the following is not a criterion for an efficient market? A. Prices adjust rapidly to new information. B. Large dollar amounts of securities can be absorbed without price destabilization. C. Each successive trade is made at a price close to the previous trade. D. Computerized handling of transactions. 192. Security markets are efficient when each of the following exist except   A. security prices follow the leading indicators such as the DJIA very closely. B. he markets can absorb large dollar amounts of stock without destabilizing the price. C. prices adjust rapidly to new information. D. there is a continuous market where each successive trade is made at a price close to the previous trade. 193. The efficient market hypothesis deals primarily with   A. random speculat ion in securities. B. the degree to which prices adjust to new information. C. degrees to which price movements are the result of past trends. D. how an investor can significantly outperform the market in general. 194. The efficient market hypothesis has several forms. The weak form states that   A. past price data is unrelated to future prices. B. prices reflect all public information. C. ll information both public and private is immediately reflected in stock prices. D. none of these 195. Security markets provide liquidity A. by allowing corporations to raise funds by selling new issues. B. by creating a market in which owners may easily turn an investment into cash through its sale. C. a and b are both correct. D. neither a nor b are correct. 196. The semi-strong form of the efficient market hypothesis states that   A. past price data is unrelated to future prices. B. prices reflect all public information. C. all information both public and private is immediately reflected in stock prices. D. none of these 197. The strong form of the efficient market hypothesis states that   A. ast price data is positively correlated to future prices. B. prices reflect all public information. C. all information both public and private is immediately reflected in stock prices. D. none of these 198. Security markets are affected by all of the following except:   A. interest rates B. global crises C. book values of equity D. emotions 199. Financial intermediaries include all of the following except:   A. commercial banks B. life insurance companies C. corporations D. pension plans 200. The purposes of security legislation include all of the following except:   A. protect against fraud B. ensure market efficiency C. reduce insider trading D. provide a global competitive advantage How to cite Inflation Is Assumed, Essay examples

Character Analysis AP by John Updike free essay sample

Kristopher Brown English II, Maciel Essay 2†Short Story, Character Analysis 26 February 2010 How to Know When to Stand Up for What You Believe In the short story AP by John Updike, Sammy, the main character, finds himself in the middle of a situation he believes is being taken care of improperly. He is a young man who is Just beginning to learn how to deal with difficult situations on his own. He seems to enjoy working at the place where his parents got him the Job and finds himself very intrigued by analyzing the people who walk into his work. Sammy has a ot to learn about life, and this experience is Just one of the many stepping stones he has to take in figuring out how to deal with tough situations. Sammy is a nineteen year old boy who is Just trying to fgure out his place in this world. We will write a custom essay sample on Character Analysis AP by John Updike or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page He is a clerk at a supermarket where his parents were able to get him the Job. He finds himself standing behind the cash register entertained by analyzing the people who walk in trying to fgure out what is going on in their minds. He stands up for what he believes, but Just hasnt quite fgured out how or when to confront a erson when he finds himself disagreeing with them. More specifically Sammy finds himself analyzing these three girls who walk into the supermarket one day in their bathing suits. Now keep in mind this story took place in 1961 so it was not very appropriate to be walking around a supermarket in nothing but a bathing suit. Sammy was intrigued by watching and analyzing the behaviors of these girls; as was another clerk, Stokesie. As Sammy said, you never know for sure how girls minds work (260). As the story goes on Sammy tries to analyze what is really going on in each of these girls minds. Such as he had decided that this one in the dirty-pink-beige bathing suit was the queen. As Sammy says, She was the queen. She didnt look around, not this queen, she Just walked straight on slowly, on these long white prima-donna legs (260). Sammy goes on later in the story to say now she was showing them how to do it, walk slow and hold yourself high (260). He has come to the conclusion that the other two girls mostly Just do as the Queenie does. Sammy finds the girls also physically attractive, mostly the Queenie, but he was generally Just intrigued by watching and analyzing their ehaviors. As the girls walk up to Sammys check-out line the manager notices that these girls are wearing nothing but their bathing suits. Although Sammy is very flattered and excited that the girls choose his line over Stokesie, he knows his luck is about to take a turn for the worse now that the manager, Lengel, has noticed what little clothes the girls are wearing. Lengel, being the manager and trying to be professional, walks up to the girls and confronts them about what they are wearing. He says to them, girls this isnt the beach (262). As Queenie tries to explain why they are dressed in only bathing suites, Lengel says again thats all right, but this isnt the beach (262). Further into their conversation he says We want you decently dressed when you policy (262). Even though Lengel took care of the situation professionally Sammy did not agree with the way it was handled so Sammy, hoping to say it quick enough for the girls to still hear him, tells his manager l quite (263). miou didnt have to embarrass them (263), says Sammy. Lengel tells Sammy you dont want to do this to our Mom and Dad, In return Sammy says, its true, I dont (263) Sammy chose to stand up for what he believes, but quitting his Job is a little extreme. Sammy chose to be a nonconformist in this situation. He made a decision to quit his Job, one he only made to get the attention and gratification of being noticed as the girls unsuspected hero, but that backfired when he realized that the girls were already out the door and didnt hear any of what he was saying. It was too late to take it all back though because as he said it seems to me that once you begin gesture its fatal not to go through with it (263). So he followed through, turned over his apron, and walked out. He has made a decision that this time he cannot undo, but if he so chooses may be able to learn from and go about things a little differently the next time he is confronted with a situation he does not agree with. He also needs to step back and decide if what he is doing is rational or if its Just for the attention of others. Sammy states in the end of the story my stomach kind of fell as I felt how hard the world was going to be to be hereafter (264). He is realizing that he is growing up and wont have his Mom and Dad there to stand up for him all the time. He is going to be put in situations like this for the rest of his life and its going to be difficult, but he is going to have to figure out a way to confront someone without overreacting. He has many more stepping stones to take in life and he will continue to learn from each one. Works Cited Updike, John. AP. Literature: Reading, Reacting, Writing. 7th ed. Ed. Laurie G. Kirszner and Stephen R. Mandell. Boston: Wadsworth, 2009. 259-64.

Social Problems of Having a Human Zoo Like the One Described in the Book free essay sample

People would not think it would be alright or ok to have a zoo like that. There would be a big ethical question, especially if we experimented on them. People would protest and demonstrate against it. The government would probably step in and shut it down. A long time ago there were these kinds of human zoos, they were called freak shows. People would come from all around and pay to see people who had freakish genetic defects. Most of the time people were not held against their will but sometimes people who made them lots of money were forced to sign contracts and almost held prisoner. Police finally did something about this and shut this kind of under contract imprisonment down. Just like the old freak shows, this is probably how a modern human zoo would have started and ended. People would pay to come see people who were â€Å"freaks† and them after a while these â€Å"freaks† would be put in cages or cells and not allowed to leave. We will write a custom essay sample on Social Problems of Having a Human Zoo Like the One Described in the Book or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Then people would say that not right, and unconstitutional and that they were going against their rights. The owners of this zoo would make up some lies and excuses and the police and government would step in and shut it down. This is how I believe having a human zoo like Talfamadore described in the book Slaughterhouse-five would go down.

The Xinjiang Qanat System of the Turpan Oasis

The Xinjiang Qanat System of the Turpan Oasis The Xinjiang Qanat System is a remarkable feat of irrigation engineering skill, and it is considered one of the three great wonders of China, after the Han Dynasty (206 BCE–220 CE) Great Wall and the Sui Dynasty (581–618 CE) Beijing-Hangzhou Grand Canal. The qanat (also known as a karez) system is a rich water source for the Turpan Oasis, tapping groundwater stored in the deep subsurface gravel layers of the Gobi belt. What makes this all the more interesting is the fact that scholars are still not agreed upon when the qanat system was built... and that begs the question of who built it. Climate of the Turpan The Turfan (or Turpan) basin, located to the east of the more famous Tarim Basin, is one of the driest areas in China, with a total precipitation of 15-25 millimeters (under one inch) per year, and an elevation about 160 meters (524 feet) below sea level. The average temperature of the basin is 32.7 degrees Celsius (90.8 degrees Fahrenheit) in July, but the winters are rather chilly, and in January the average temperatures are about 9.5 degrees C (49.6 degrees F), and can fall as low as -28 degrees C (18 degrees F). The Turfan Basis, while a desert, is much more hospitable than its southern neighbor, the harsh Taklamakan Desert. Wedged between the Taklamakan and the Tianshan Mountains, the Turfan was a much preferred, not to say feasible, route for travelers on the Silk Road: its oasis was a critical stopover. Irrigating the Turfan Theres no doubt that the oasis had a natural beginning. A total of 4,000 sq km (1,500 sq mi) of the Turfan Basin lies below sea level; the Turpan Oasis lies in the lowest part, at an elevation of 154 m (505 ft) below average sea level. The oasis is nestled at the foot of the Tianshan (Flaming or Heavenly) mountains, and from autumn to spring, water from snowmelt off the Tienshan rushes into Turpan, revitalizing the oasis naturally. But at some time in its past- scholars argue that occurred anywhere from 200 to 2,000 years ago- the residents of Turpan built a massive qanat system that reached into the water table and tapped the aquifer, in some cases up to 200 m (650 ft) below the surface. That system included over 5,000 km (3,100 mi) of underground tunnels and thousands of wells. Whether it was built as a result of an environmental disaster or merely insurance against one, the Xinjiang qanat system is evidence that the Turpan was a highly prized stop on the Silk Road. Qanats in the Deserts A qanat is a system of underground tunnels and wells that tap deeply buried aquifers in arid and semi-arid places. In brief, a well is dug into the aquifer, a horizontal tunnel is excavated from the well to a surface collection place and ventilation shafts are placed at intervals along the tunnel to provide maintenance access. Invented by the Persians in the 7th century BCE, qanat technology was spread by imperialism: outside of Persia by the 6th century BCE Achaemenid king Darius the Great; into Syria and Jordan by the Romans in the first and second century CE; into North Africa and Spain by the Islamic civilization in the 12th and 13th centuries CE; and finally into North and South America during the 16th century Spanish conquest. The only place in China where qanats exist at all is in Xinjiang Uyghur Autonomous Region, in the Turfan basin on the far western edge of Chinas realm. Deserts make up 43 percent of Xinjiang province, oases only about 4.3 percent and the rest is mountains. In the 2nd century BCE, the international trade network called the Silk Road was dependent on a line of strategically situated oases wedged between the Tianshan Mountains and the Taklamakan Desert in the Tarim and Turfan basins. Turpan was an important oasis in the eastern-most segment of the Silk Road, and, even today, more than 95 percent of the total population and almost all the agriculture, settlements and industries in Xinjiang are concentrated in the Turpan Oasis. The Size and Complexity of the Turpan Qanat System The Turpan qanat system includes at least 1,039 qanats (some sources suggest as many as 1,700), with underground channels stretching for a length of more than 5,000 kilometers, or about 3,100 miles. While there is no doubt that the origins of the Turpan Oasis were natural, there is also no doubt that the Xinjiang Qanat System was built to increase the available access to water. Whether the qanats were built as a result of climate change or to support a population increase or even provide year-round water is open to debate: probably a little of all those things. Estimates for the construction date of the qanats vary from the first century BCE to the 19th century CE. The system is so successful that grapes are grown in a region of what is essentially a continental desert- the earliest grapes in Turpan are from the Subeixi culture Yanghai tombs, with an  AMS radiocarbon date of about 300 BCE. What we know for sure is that in the 1950s, an intense increase in well irrigation was established in Turpan, over-exploiting the aquifer: since then the majority of the qanats have dried and become abandoned. Only 238 were functioning in 2009. The Karez Wells in Turpan were inscribed into UNESCOs Tentative List of World Heritage Sites in 2012. Sources Beck U, Wagner M, Li X, Durkin-Meisterernst D, and Tarasov PE. 2014. The invention of trousers and its likely affiliation with horseback riding and mobility: A case study of late 2nd millennium BC finds from Turfan in eastern Central Asia. Quaternary International 348:224-235. Chen T, Yao S, Merlin M, Mai H, Qiu Z, Hu Y, Wang B, Wang C, and Jiang H. 2014. Identification of Cannabis Fiber from the Astana Cemeteries, Xinjiang, China, with Reference to Its Unique Decorative Utilization. Economic Botany 68(1):59-66. Jiang H-E, Zhang Y, Là ¼ E, and Wang C. 2015. Archaeobotanical evidence of plant utilization in the ancient Turpan of Xinjiang, China: a case study at the Shengjindian cemetery. Vegetation History and Archaeobotany 24(1):165-177. Luo L, Wang X, Guo H, Liu C, Liu J, Li L, Du X, and Qian G. 2014. Automated extraction of the archaeological tops of qanat shafts from VHR imagery in Google Earth. Remote Sensing 6(12):11956-11976. Luo L, Wang X, Liu J, Guo H, Lasaponara R, Ji W, an d Liu C. 2017. Uncovering the ancient canal-based tuntian agricultural landscape at Chinas northwestern frontiers. Journal of Cultural Heritage 23(Supplement):79-88. Tang Y-N, Li X, Yao Y-F, Ferguson DK, and Li C-S. 2014. Environmental Reconstruction of Tuyoq in the Fifth Century and Its Bearing on Buddhism in Turpan, Xinjiang, China. PLoS ONE 9(1):e86363.Wang S, and Zhao X. 2013. Re-evaluating the Silk Roads Qinghai Route using dendrochronology. Dendrochronologia 31(1):34-40.

Genealogical Historical Documents at Footnote

Genealogical Historical Documents at Footnote The Bottom Line Important historic documents from the U.S. National Archives are now making their way online due to an agreement with Footnote.com. Digitized copies of documents such as Revolutionary War pension records and Civil War service records can be viewed and even annotated through what is possibly the best image viewer Ive seen on the Web. You can also create free personal story pages to track your research or share your documents and photos. Search results are also free, although youll have to subscribe to view, print and save most of the actual document images. In my opinion, Footnote.com is a bargain for the money. Pros One of the best image viewers Ive seen for accessing images onlineOffers access to millions of historic documents previously unavailable onlineThe ability to annotate and/or add comments to any individual document page7-day free trial available Cons Requires the lastest version of Flash. In some cases, the site wont even load without it.No soundex search. Some advanced search features are available, but not obvious.No FAQ or easy answers to support questions such as the Flash issue.Many document series are still in progress Description Over 5 million images of historical American documents and photos from the 17th, 18th, 19th and 20th centuries.Records include: Revolutionary Civil War pension service records, state naturalization records and case files of the FBI.Annotate, comment, print and save digital document images.Story pages allow you to create a simple Web page with point and click editing.Upload and post your own historical documents for free.Under the nonexclusive agreement, Footnotes images will be available on the National Archives Web site after five years. Guide Review - Footnote.com Footnote.com allows you to search and view over 5 million digitized documents and photos from American history. Members can view, save and print the documents they find. A nifty feature allows you to highlight a name, place or date and add an annotation. Comments can also be added to post corrections or add additional information for anyone else who views the same image. The image viewer works as quickly and seamlessly as any Ive seen, and the jpeg images are of very high quality. Since many of the titles are in progress, I recommend that you use the Browse by Title feature to view the full description of the each document series, as it includes a nice completion status feature. Titles and documents are being added quickly and regularly, however. If you have a problem with the site loading slowly, be sure you have downloaded the latest version of Flash player for your browser. This usually fixes many such problems. Simple search is just that - simple. You enter search terms and then choose whether to search across all documents, or within a specific document set, such as PA Western Naturalizations. There is presently no soundex search, but you can narrow the search by document type, such as across all naturalization records, or within a particular title (first browse to the document subset you wish to search, and then enter your search terms). Advanced search hints can be accessed by clicking on the ? next to search. Footnote.com has the framework in place to be one of the most flexible and user-friendly sites on the Web for American genealogists. Once they add more records (and there are many in the works), upgrade the search feature, and do some tweaking, it has the potential to be a 5 star site. Despite being a newcomer to the world of digitized historic documents, Footnote has definitely risen the bar.

Essential Elements of a Crime Essay Example | Topics and Well Written Essays - 1000 words

Essential Elements of a Crime - Essay Example Under our scenario, it is evident that conduct of Stephen of punching Vincent in the stomach is, the actus reus of battery. Battery in itself is unlawful taking into consideration that it is often meant at hurting the other party intentionally. In other words, Stephens’s unlawful offensive physical contact against Vincent is tantamount to a criminal offence. Commission acts is a significant proof for the actus reus of a crime. The case at hand can also be examined from causation point of view whereby action of the defendant resulted on a particular consequence. For instance, it can be established that Stephen’s act of punching Vincent was the major cause of Vincent’s illness. This clearly proves that in case a definition of the actus reus calls for a proof of an occurrence of a particular consequences then the prosecutor carries the responsibility of proving that the defendant’s conduct directly caused the consequences. For instance, if the prosecutor beli eves that Stephen conduct of battery was the reasonable cause of Vincent death then he/she has to prove this assertion. A conduct in criminal law does not need to be a commission only but also omission. V asserts that Clarkson (2005: 102) Omission refers to failure to take a positive action and consequently results in injury. Under general common law not only in the United Kingdom but also in other countries practicing common law, no individual can be held criminally liable for an act of omission. However, there are exceptions to omission rule such as in cases where there is: statutory duty, contractual obligation, voluntary assumption of responsibility, duty due to defendants previous conduct, and public duty. Failure to act and or respond positively to the above exceptions can result to committing actus reus by omission. In our scenario Stephen was guilty of committing the actus reus of omission. This claim can be justified by the fact that he failed respond to his prior act of ca using bodily harm to Vincent and consequently led to victim’s death. Under the common law defendant is often expected to correct a dangerous situation, which he/she is directly responsible for its occurrence (Emanuel, 2007: 95). Instead of helping Vincent who was, gasping for air on the floor Stephen just chose to run away even after punching him. Meanwhile Jim cannot be held criminally liable for committing actus reus of omission taking into consideration that he was under any statutory or contractual duty to help Vincent and there his inaction cannot attract any penalty under common law. Task 2: principles of novus actus interveniens and the ‘egg shell rule’ Principle of novus actus interveniens is widely used in the context of causation and it is used to explain interference with the chain of causation or to mean 'a new intervening act' (Hodgson, & Lewthwaite, 2007: 61). The chain of causation in criminal law refers to the series of events triggered by the def endant that leads to a particular event and consequent injury. For instance, it can be established through a post-mortem that a serious stab wounds is the major cause of a victim’s death. The relationship between a guilty action and its consequences is an important premise for establishing guilt and final liability not only in

Corporate governance Essay Example | Topics and Well Written Essays - 1500 words

Corporate governance - Essay Example 12). This paper seeks to compare and contrast the theoretical framework of corporate governance, and explain how agency theory can be used to explain corporate governance arrangements in modern companies. The agency theory emanates from the separation of control from ownership such that professional managers manage the firm on behalf of the original owners. The theory draws strength in the rise of conflicts when the owner of a firm perceives that professional managers do not follow the best interests of the owners (Wong and Mwanzia, 2011, p., 2011, p. 16). The theory focuses on analyzing and resolving relationship between owners and shareholders of a firm and the agents or top management, this is based on the basic assumption that the role of a firm is to maximize the wealth and investment of its owners and shareholders. The agency theory works based on a form operating with limited information and uncertainty in its operations. As a result, the firm remains exposed to possibilities of agency issues such as adverse selection and moral hazard. Adverse selection in this case occurs when principals fail to determine, with certainty, whether an agent accurately portrays his or her ability to execute the duties with which they are charged. On the other hand, moral hazard refers to a condition under which a principal cannot ascertain the probability of an agent putting or giving their best towards the wellbeing of a firm (Wong and Mwanzia, 2011, p. 16). The theory also purports that availing superior information on a firm to professional managers gives an edge to agents over the owners. This is because the top managers of a firm may bear more interest in individual welfare than that of the firm or its shareholders and owners. This way, managers fail to act maximally towards the returns of a firm unless proper governance structures are out in place as a means to safeguard the interest of shareholders (Wong and Mwanzia, 2011, p. 16). As a result, the agency theory call s for curtailing the potential of managers to behave in ways that contradict the best interests of shareholders and owners of any given firm. In addition, the theory brings to light the strength of top management in having the stock of a firm held in a wide manner by many shareholders, and the composition of the board of directors being that of people with little knowledge on the firm. According to this theory, the management should be in a position to own stocks of the firm they manage in order to create a positive relationship between corporate governance and the amount of stock owned by the top management (Wong and Mwanzia, 2011, p. 16). This way, the agency managing the form can put the interests of the firm ahead of their own, and the conflict between ownership and agency can end. Thus, because of having a substantial amount of stock in their name, top management becomes more willing to take responsibility for the decisions it makes concerning the firm. In addition of concern, is the issue of generating rules and incentives

General course on philosophy Essay Example for Free

General course on philosophy Essay The world is comprised of various types of personalities and my personal experience can attest to that. My class is composed of young male and female adults of varying shapes, sizes, heights and colors. During class, I could also imagine that our instructor would perceive us as a sea of hues, all blending together within the space of the classroom. If our instructor did not focus of each one of our faces, it would be impossible for him to differentiate each one of us because we get along well enough to proceed and complete each classroom meeting. Despite the nature of viscosity of our identities, there are also times when certain members of our class would go to opposite directions, especially when philosophical concepts are being discussed. When our instructor would present a controversial topic such as euthanasia, there would be at least three distinct responses from our class. In general, there would be the group that would approve of the concept and the other group would extend an outright disapproval of the topic. The third yet silent group would be that of the neutral ones, who are always known to be nonreactive amidst all the outbursts around them. One should understand that the variations in the responses of the members of our class are not simply comprised of three general reactions. Our instructor is aware that each broad group can be further differentiated according to the principles and beliefs of each individual. For example, if euthanasia were approved in the entire country, the members of the group that is against euthanasia would aggressively react to this. The implementation of euthanasia could be equivalent to the crumbling of their world, as they would envision deaths that are at the mercy of physicians and other healthcare personnel. Looking closer into the reasons behind the disapproval of these individuals to euthanasia may be different for each individual. It is possible that one student disapproves of euthanasia because he is a strong believer of the Catholic religion, which raises the bar in terms of the value of life. Another student may not be in support of the concept of euthanasia because he has lost a loved one through such medical-ethical approach. It is also possible that another student disapproves the topic of euthanasia because his estranged father is a physician who actively participates in such technique, and thus his disagreement is not really about the topic but against his former role model. In order to shed more detail into the finer variations behind the reactions, the instructor should thus know each one of the members of the class. The class is big, as it is mainly a general course on philosophy and thus there are around 200 students in the room. When the instructor walks over to the podium and starts his lecture for the day, our eyes may seem to be tiny lights that would flicker at the very point when he utters a serious topic that needs to be discussed for an hour. He may or may not push some buttons in some of us, resulting in our reactions of support and condemnation. As for the other explosive topics, it may not be a simple button pushing for a number of students, but more of shoving a concept to our faces and asking us to express of thoughts and ideas. The course may be considered as general subject for undergraduate students, yet little do we know that we are unconsciously learning skills on how to analyze concepts. More importantly, these classroom discussions could pave the way to a clear journey for all of us, as we start our movement through an endless tunnel. It may be dark inside this tunnel of the unknown, yet after this long walk, there would be light at the end of the tunnel, leading us to a place that would cushion our identities and provide us slumber. PART II A metaphor can affect a person’s emotions because it allows the writer to symbolize his ideas using things, as well as adjectives, in order that the reader may have a better feel of the narration. A metaphor therefore facilitates in the cognition of an idea, thing or event that the writer wants to describe. This form of language can increase the impact of a narration because it can fully describe thoughts, as well as actions, by the use of transference (Hovecses, 2010). This approach allows the writer to define a certain topic through the use of comparison of two concepts that are generally considered as fully dissimilar yet may be the same in some aspect, viewpoint or perception. A metaphor can affect a person’s emotions because it assists in describing a topic through the use of descriptors of another matter (Wormeli, 2009). It should be understood that the other matter could be something else that is totally different from the topic in mind, yet the application of the descriptors of this matter can increase the weight and impact of the topic in focus. It is probably human nature to employ certain descriptors of one thing in order to provide information on another topic. The use of metaphor allows the narrator to transfer certain features that are unique to one item onto the topic of interest, resulting in a better understanding of the idea that needs to be conveyed. A simple example of a metaphor that could stimulate the emotions of a reader is to use items that are important to the reader, such as the words life, love and world. When a small item means so much to a certain person, the writer could signify this importance by claiming that this small item is equivalent to the life of that person. Once the reader sees this description, he will then feel that the item being presented is indeed so important, thus influencing his emotions to go with the narration. Language can empower or limit the expression of our thoughts because it allows the writer to use analogy in describing a certain topic (Kennedy Gioia, 2009). The writer is therefore given the freedom to choose which words to employ for his narration. If the writer chooses to use strong words, his ideas are then delivered with great impact, influencing the reader to perceive the same emotions that the writer feels about the topic. On the other hand, a writer may employ subtle words when he feels that there is no need to purposely impart strong emotions regarding a specific matter. Language is therefore a strong tool because it could sway the reader into any direction that the writer wants provide. Every writer has a large reservoir of words that he could employ when describing or explaining a particular topic. In narration, language can be forceful if there is a need to emphasize a certain emotion. Language is empowered through the use of metaphors and other forms of speech because it allows the writer to represent certain topics by analogy (Applebee et al. , 2005). It focuses on describing a certain topic by tapping on the perceptions of the reader through the use of symbolism and analogy. The choice of words that generate a sentence may impact a reader because the writer has the capacity of employ analogy in presenting his ideas. He is capable of identifying one topic by describing features of a separate item, using the latter’s features to emphasize certain points of the former topic. Language is thus a powerful tool that could affect the perceptions and emotions of readers and this is mainly based on the writer’s capacity to apply certain form of speech such as metaphors and similes. Language can take the reader to a place where the writer has been, without physically going to that place. This successful and complete narration of a certain place mainly depends on the capacity of the writer to select words that would fully convey how he feels and sees in the place of interest. It is possible to perceive all the information that we create if we use the correct words that would impart the same effect on the reader. If we would like an audience to feel what we are actually feeling, we can use two general approaches. One approach would be to describe that condition in a straightforward manner, expressing the actual emotion. Another approach would be to employ metaphors, which assist in describing certain topics through the use of analogy. We can therefore present features that are inherent in other matters yet when applied as a descriptor for our topic, it purposefully imparts a sensation in the reader. Metaphors employed as form of speech are thus very helpful in describing and imparting certain emotions that the reader may be directly feel, yet when presented through the use of transference and analogy, could be equivalent to what the writer actually feels. In order to deliver a complete description of a certain topic, we should initially describe the general environment of the topic. For example, if we are describing a person, then the general physical features from a farther point of view should first be presented. These features may include the adjectives such as tall or short in height, lean or heavy in body size and so on. Once this has been provided, finer details of the individual can then be presented, such as wide eyes, or puckered lips or unkempt hair. The organization of the presentation of details of a certain topic is essential in conveying a message to the reader or the audience. This organization of information could significantly influence the reader’s understanding and perception of the topic being presented. If the writer or narrator does not employ this approach, the reader may not fully comprehend the scenario or the topic that is being presented. A disorganized delivery of information to the audience may therefore result in a different understand, emotion and perception of the topic and it may be totally different from what the writer intended to convey. REFERENCES Applebee, A. N. , Bermudez, A. B. Blau, S. (2005). The language of literature. San Francisco: Holt MacDougal, 1548 pages. Hovecses, Z. (2010). Metaphor: A practical introduction, 2nd ed. London: Oxford University Press, 400 pages. Kennedy, X. J. Gioia, D. (2009). Literature: An introduction to fiction, poetry, drama and writing. Los Angeles: Longman Publishers, 2256 pages. Wormeli, R. (2009). Metaphors and analogies: Power tools for teaching any subject. New York: Stenhouse Publishers, 264 pages.

Essay example --

History / Educational Influences Marina City, as a modernist urban solution, was possible by Bertrand Goldberg because of his formal architectural training as well as his early practice and interaction with key architects. Exposure to architectural, socioeconomic, and cultural context that shaped modernist architecture developed him as an architect. Influence began early on from his physics teacher, George Vaubel, which inspired him with a lifelong love for logic and â€Å"reasoning backwards† and finding evidence for what was taught to him. Goldberg studied at the Cambridge School of Architecture and Landscape then at the Bauhaus in Berlin, Germany and lastly, at the Armour Institute of Technology in Chicago. He discovered architecture while studying at Harvard in 1930. The dean, Henry Frost, allowed Goldberg to study with his graduate studio as an undergraduate. During the Great Depression, Goldberg was studying at Harvard where debates with professors and fellow students centered on the political and soc ial problem, dealing with poverty. It unleashed and influenced his lifelong consciousness of social and political factors because he took social and political problems into consideration when designing. Harvard exposed Goldberg to the Beaux-Arts architecture and he desired to go to Paris to study but instead went to the Bauhaus after being advised. The Bauhaus introduced Goldberg to the new ideals of art and architecture. The Bauhaus emphasized on vision and spatial skills. Goldberg was greatly influenced by Mies van de Rohe and Josef Albers. Goldberg embraced â€Å"less is more† and was disciplined to work out details of the total design by creating an aesthetic out of structure and seeking alliance with an industrial world. At the B... ... solution of a central core and columns made the structure safe and efficient. The concrete also acted provided security against uplift because of concrete nature of heaviness. Mechanical systems were engineered within the floors which allowed for more spatial freedom. The efficient solution to the foundation was also achieved through engineering and the use of caissons. Construction initiated after structural issues were resolved. Machine and hand became the medium to create the building. While the tower crane allowed for the fast construction of Marina City, artisanship was also required. The use of formwork to create the petals require of artisanship while being mass produce implied machine. The hand work can be seen in the uneven surfaces were molding was required. Marina City became the biggest structural and residential building at the time of its completion.

Auditing Problems Quiz

Following are multiple choice questions recently released by the AICPA. These questions were released by the AICPA with letter answers only. Our editorial board has provided the accompanying explanations. Please note that the AICPA generally releases questions that it does NOT intend to use again. These questions and content may or may not be representative of questions you may see on any upcoming exams. 2007 AICPA Newly Released Questions – Auditing 1. CPA-05465 Which of the following categories is included in generally accepted auditing standards? a. b. c. d. Standards of review.Standards of planning. Standards of fieldwork. Standards of evidence. ANSWER: Choice â€Å"c† is correct. Generally accepted auditing standards include three categories: general standards, standards of fieldwork, and standards of reporting. Choices â€Å"a†, â€Å"b†, and â€Å"d† are incorrect, based on the above explanation. 1 2007 AICPA Newly Released Questions – Auditing 2. CPA-05466 A retailing entity uses the Internet to execute and record its purchase transactions. The entity's auditor recognizes that the documentation of details of transactions will be retained for only a short period of time.To compensate for this limitation, the auditor most likely would: a. b. c. d. Compare a sample of paid vendors' invoices to the receiving records at year-end. Plan for a large measure of tolerable misstatement in substantive tests. Perform tests several times during the year, rather than only at year-end. Increase the sample of transactions to be selected for cutoff tests. ANSWER: Choice â€Å"c† is correct. When an entity transmits, processes, maintains, or accesses significant information electronically, some accounting data and source documents may be available only in electronic form, or only at a certain point in time.The auditor would generally perform tests of controls several times during the year to compensate for this limitation. Choice â€Å"a† is incorrect. Comparing a sample of paid vendors' invoices to receiving records provides evidence that the company received the goods for which it paid, but only if records are available in sufficient detail to make such a comparison. If detailed records are retained for only a short period of time, such comparisons would need to be performed throughout the year, not just at year-end.Choice â€Å"b† is incorrect. The auditor's judgment as to an appropriate level of tolerable misstatement is based on considerations of materiality and audit risk. Increasing this level implies that the auditor is willing to accept a larger error, which would not be an appropriate response to the limitation described. Choice â€Å"d† is incorrect. Increasing the sample size related to cutoff testing will not provide evidence about transactions occurring throughout the period under audit, since cutoff testing relates to year-end. 2 007 AICPA Newly Released Questions à ¢â‚¬â€œ Auditing 3. CPA-05467 (Adapted) After testing a client's internal control activities, an auditor discovers a number of significant deficiencies in the operation of a client's internal controls. Under these circumstances the auditor most likely would a. b. c. d. Issue a disclaimer of opinion about the internal controls as part of the auditor's report. Increase the assessment of control risk and increase the extent of substantive tests. Issue a qualified opinion of this finding as part of the auditor's report.Withdraw from the audit because the internal controls are ineffective. ANSWER: Choice â€Å"b† is correct. The auditor uses tests of controls to evaluate control risk. In situations where there are a number of significant deficiencies in the operation of the client's internal controls, the auditor would increase the assessment of control risk (and the risk of material misstatement) and revise substantive testing accordingly (for example, by increasing the extent of substantive tests). Choice â€Å"a† is incorrect.An auditor is required to communicate significant deficiencies to management and those charged with governance, and a disclaimer of opinion on the effectiveness of controls would be included in this communication. However, such disclaimer would not be part of the auditor's report on the financial statements. Choice â€Å"c† is incorrect. Since the auditor's report provides an opinion on the financial statements (and not on internal control), significant deficiencies in internal control do not result in a qualified opinion. Choice â€Å"d† is incorrect.The auditor need not withdraw from an audit simply because internal controls are ineffective, but rather would increase the assessment of control risk and revise substantive testing accordingly. 3 2007 AICPA Newly Released Questions – Auditing 4. CPA-05468 Which of the following procedures would be most effective in reducing attestation risk? a. b. c. d. Disc ussion with responsible individuals. Examination of evidence. Inquiries of senior management. Analytical procedures. ANSWER: Choice â€Å"b† is correct. Evidence obtained directly by the accountant (e. . , through physical examination) provides more persuasive evidence than evidence obtained through inquiry, discussion, or analytical procedures, and therefore reduces attestation risk. Choices â€Å"a†, â€Å"c†, and â€Å"d† are incorrect, based on the above explanation. 4 2007 AICPA Newly Released Questions – Auditing 5. CPA-05469 Which of the following is an inherent limitation in internal control? a. b. c. d. Incompatible duties. Lack of segregation of duties. Faulty human judgment. Lack of an audit committee. ANSWER: Choice â€Å"c† is correct.Inherent limitations in internal control are limitations that exist despite implementation of appropriate controls. For example, faulty human judgment may result in errors in the design or use of i nternal controls. Choice â€Å"a† is incorrect. Assigning incompatible duties to a particular individual indicates a missing control, rather than an inherent limitation in internal control. Choice â€Å"b† is incorrect. Lack of segregation of duties indicates a missing control, rather than an inherent limitation in internal control. Choice â€Å"d† is incorrect.Lack of an audit committee indicates a missing control, rather than an inherent limitation in internal control. 5 2007 AICPA Newly Released Questions – Auditing 6. CPA-05470 Which of the following statements is correct regarding a review engagement of a nonpublic company's financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)? a. An accountant must establish an understanding with the client in an engagement letter. b. An accountant must obtain an understanding of the client's internal control when performing a review. . A review pro vides an accountant with a basis for expressing limited assurance on the financial statements. d. A review report contains an accountant's opinion of the financial statements taken as a whole. ANSWER: Choice â€Å"c† is correct. A review report is issued when inquiry and analytical procedures provide a reasonable basis for the expression of limited assurance on the financial statements. Choice â€Å"a† is incorrect. While the accountant is required to establish an understanding with the client, preferably in writing, an engagement letter is not required.Choice â€Å"b† is incorrect. When performing a review under SSARS, the accountant is not required to obtain an understanding of the client's internal control. Choice â€Å"d† is incorrect. A review results in the expression of limited assurance that no material modifications are necessary for the financial statements to be in conformity with generally accepted accounting principles. The limited nature of the work performed during a review does not provide sufficient evidence for an opinion on the financial statements taken as a whole. 6 2007 AICPA Newly Released Questions – Auditing 7.CPA-05471 Which of the following procedures does a CPA normally perform first in a review engagement in accordance with Statements on Standards for Accounting and Review Services (SSARS)? a. b. c. d. Inquiry regarding the client's principles and practices and the method of applying them. Inquiry concerning the effectiveness of the client's system of internal control. Inquiry to identify transactions between related parties and management. Inquiry of the client's professional advisors, including bankers, insurance agents, and consultants. ANSWER: Choice â€Å"a† is correct.In performing a review engagement in accordance with SSARS, the accountant should inquire of management regarding the accounting principles and practices used, and the method of applying them. Choice â€Å"b† is i ncorrect. When performing a review under SSARS, the accountant is not required to make inquiries concerning the client's system of internal control. Choice â€Å"c† is incorrect. The accountant may inquire about the existence of related party transactions, but would likely make a more basic inquiry, about the client's accounting principles and practices, first. Choice â€Å"d† is incorrect.In performing a review engagement in accordance with SSARS, the accountant generally directs his/her inquiries to members of management, not to external parties. 7 2007 AICPA Newly Released Questions – Auditing 8. CPA-05472 (Adapted) Which of the following cash transfers results in a misstatement of cash at December 31, 20X1? Bank Transfer Schedule Transfers a. b. c. d. Disbursement date per books per bank 12 /31/X1 01/05/X2 01/04/X2 01/11/X2 12/31/X1 01/04/X2 01/04/X2 01/05/X2 Receipt date per books per bank 12/31/X1 01/04/X2 01/04/X2 01/04/X2 12/31/X1 12/31/X1 12/31/X1 01/04 /X2ANSWER: Choice â€Å"d† is correct. Since the disbursement was not recorded until January 20X2 while the receipt was recorded in December 20X1, cash will be overstated at December 31, 20X1. Choices â€Å"a† and â€Å"c† are incorrect. Both the disbursement and the receipt are recorded in 20X1, so there will be no misstatement of cash at December 31, 20X1. Choice â€Å"b† is incorrect. Both the disbursement and the receipt are recorded in 20X2, so there will be no misstatement of cash at December 31, 20X1. 8 2007 AICPA Newly Released Questions – Auditing 9.CPA-05473 Which of the following describes how the objective of a review of financial statements differs from the objective of a compilation engagement? a. The primary objective of a review engagement is to test the completeness of the financial statements prepared, but a compilation tests for reasonableness. b. The primary objective of a review engagement is to provide positive assurance that the financial statements are fairly presented, but a compilation provides no such assurance. c. In a review engagement, accountants provide limited assurance, but a compilation expresses no assurance. . In a review engagement, accountants provide reasonable or positive assurance that the financial statements are fairly presented, but a compilation provides limited assurance. ANSWER: Choice â€Å"c† is correct. A review provides limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles, whereas a compilation provides no assurance. Choice â€Å"a† is incorrect. A review does not test for completeness, nor does a compilation test for reasonableness.A review provides limited assurance about the financial statements based on inquiry and analytical review procedures, while a compilation provides no assurance and includes no testing for reasonab leness. Choice â€Å"b† is incorrect. A review provides limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles, and it is based on inquiry and analytical review procedures. Positive assurance (such as an audit opinion) is only provided when more extensive procedures have been erformed. Choice â€Å"d† is incorrect. A review provides limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles, and it is based on inquiry and analytical review procedures. Positive or reasonable assurance (such as an audit opinion) is only provided when more extensive procedures have been performed. A compilation provides no assurance at all. 9 2007 AICPA Newly Released Questions – Auditing 10.CPA-05474 (Adapted) Prior t o commencing fieldwork, an auditor usually discusses the general audit strategy with the client's management. Which of the following matters do the auditor and management agree upon at this time? a. b. c. d. The appropriateness of the entity's plans for dealing with adverse economic conditions. The determination of the fraud risk factors that exist within the client's operations. The control weaknesses to be included in the communication with those charged with governance. The coordination of the assistance of the client's personnel in data preparation.ANSWER: Choice â€Å"d† is correct. Prior to commencing fieldwork, an auditor would establish an understanding with the client as to the services to be performed and the overall audit strategy. This understanding may include arrangements involving the conduct of the engagement, such as timing, client assistance, and the availability of documents. Choice â€Å"a† is incorrect. The auditor does not evaluate the appropriate ness of the entity's plans for dealing with adverse economic conditions prior to commencing fieldwork.The auditor might consider this as part of evaluating the client's ability to continue as a going concern, but this would not occur prior to commencing fieldwork. Choice â€Å"b† is incorrect. Determination of existing fraud risk factors is generally made during the fieldwork stage of the audit, as information and evidence is obtained. Also, fraud risk factors are assessed by the auditor, and would not necessarily be agreed upon with management. Choice â€Å"c† is incorrect. Identification and evaluation of control weaknesses generally occurs during the fieldwork stage of the audit, as information and evidence is obtained.Only those weaknesses that rise to the level of being significant deficiencies (or material weaknesses) are required to be communicated to those charged with governance. 10 2007 AICPA Newly Released Questions – Auditing 11. CPA-05475 (Adapted) An auditor's engagement letter most likely would include a statement that: a. b. c. d. Lists potential significant deficiencies discovered during the prior year's audit. Explains the analytical procedures that the auditor expects to apply. Describes the auditor's responsibility to evaluate going concern issues.Limits the auditor's responsibility to detect errors and fraud. ANSWER: Choice â€Å"d† is correct. An auditor's engagement letter typically includes discussion of limitations of the engagement, such as the fact that the auditor will obtain only reasonable assurance, and therefore a material misstatement may remain undetected. Choice â€Å"a† is incorrect. An auditor's engagement letter typically covers the objectives of the engagement, management's responsibilities, the auditor's responsibilities, limitations of the engagement, and other matters involving the conduct of the audit.Potential significant deficiencies discovered during the prior year's audit would n ot typically be included in the engagement letter. Choice â€Å"b† is incorrect. While the auditor's engagement letter might include a discussion of the overall audit strategy, it typically would not include specific audit procedures. Choice â€Å"c† is incorrect. While the auditor's engagement letter might include a discussion of the auditor's responsibilities, this is usually discussed in fairly general terms. An engagement letter would not describe the auditor's responsibility with respect to specific issues (such as going concern issues). 1 2007 AICPA Newly Released Questions – Auditing 12. CPA-05476 Which of the following factors most likely would cause a CPA to decline to accept a new audit engagement? a. b. c. d. The CPA does not understand the entity's operations and industry. Management acknowledges that the entity has had recurring operating losses. The CPA is unable to review the predecessor auditor's working papers. Management is unwilling to permit inquiry of its legal counsel. ANSWER: Choice â€Å"d† is correct. If a prospective client is unwilling to permit inquiry of its legal counsel, the CPA must consider the implications of this refusal.Such refusal may indicate a lack of cooperativeness on the part of management, or an attempt to be less than forthright with respect to litigation, claims, and assessments. Furthermore, a client's refusal to permit inquiry of its legal counsel ordinarily would result in a disclaimer of opinion. It would be unlikely that a CPA would accept a new engagement under these circumstances. Choice â€Å"a† is incorrect. An understanding of the client's operations and industry should be obtained during the planning stage of the audit.It does not necessarily need to be obtained before acceptance of the engagement. Choice â€Å"b† is incorrect. The fact that the entity has had recurring operating losses may increase the auditor's assessment of risk on the engagement, but it would not preclude acceptance of the engagement. Choice â€Å"c† is incorrect. Although the predecessor's audit documentation provides some audit evidence with respect to opening balances, consistency of accounting principles, and other matters of continuing significance, alternative means of obtaining such evidence generally do exist. 2 2007 AICPA Newly Released Questions – Auditing 13. CPA-05477 An enterprise engaged a CPA to audit its financial statements in accordance with Government Auditing Standards (the Yellow Book) because of the provisions of government grant funding agreements. Under these circumstances, the CPA is required to report on the enterprise's internal controls either in the report on the financial statements or in: a. b. c. d. The report on the performance audit. The notes to the financial statements. A letter to the government funding agency.A separate report. ANSWER: Choice â€Å"d† is correct. The report on the audit of the financial statemen ts should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting, and should either present the results of those tests or refer to a separate report containing that information. Choice â€Å"a† is incorrect. The CPA was engaged to audit financial statements in accordance with the Yellow Book, not to perform a performance audit. Choice â€Å"b† is incorrect.The notes to the financial statements are a management representation and would not be used by the CPA to comply with requirements to either report or opine in conformity with Yellow Book requirements. Choice â€Å"c† is incorrect. Governmental Auditing Standards require that the auditor describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting and present the results of those tests as part of their report or in a separate report, not simply in a letter to the fundi ng agency. 13 2007 AICPA Newly Released Questions – Auditing 14.CPA-05478 An auditor determines that the entity is presenting certain supplementary financial disclosures of pension information that are required by the GASB. Under these circumstances, the auditor should: a. Add an explanatory paragraph to the auditor's report that refers to the required supplementary information. b. State that the audit is not being performed in accordance with generally accepted auditing standards. c. Document in the working papers that the required supplementary information is presented, but should not apply any procedures to the information. . Compare the required supplementary information for consistency with the audited financial statements. ANSWER: Choice â€Å"d† is correct. The auditor should perform certain limited procedures on supplementary information accompanying the financial statements, including evaluating whether the information is consistent with the audited financial statements. Choice â€Å"a† is incorrect. Generally, the auditor's report on the financial statements would not include a reference to required supplementary information unless there were a problem with it (e. . , it was omitted, inappropriately prepared, or the auditor was unable to satisfactorily complete required procedures). Choice â€Å"b† is incorrect. An audit can and should be performed in accordance with generally accepted auditing standards even when required supplementary information is presented. Choice â€Å"c† is incorrect. The auditor should perform certain limited procedures on supplementary information accompanying the financial statements. 14 2007 AICPA Newly Released Questions – Auditing 15. CPA-05479 Comfort letters ordinarily are: a. . c. d. Addressed to the client's Audit committee Underwriter of securities Audit committee Underwriter of securities Signed by the client's Independent auditor Senior management Senior management Indepen dent auditor ANSWER: Choice â€Å"d† is correct. A comfort letter is a letter from the independent auditor to the named underwriter just before the registration of the client's securities. Choices â€Å"a†, â€Å"b†, and â€Å"c† are incorrect, based on the above explanation. 15 2007 AICPA Newly Released Questions – Auditing 16.CPA-05480 Which of the following factors would most likely influence an auditor's consideration of the reliability of data when performing analytical procedures? a. b. c. d. Whether the data were developed in a computerized or a manual accounting system. Whether the data were prepared on the cash basis or in conformity with GAAP. Whether the data were developed under a system with adequate controls. Whether the data were processed in an online system or a batch entry system. ANSWER: Choice â€Å"c† is correct. Strong, effective internal controls improve the reliability of data.Choice â€Å"a† is incorrect. The type of accounting system used does not affect the reliability of data. Both computerized and manual accounting systems can provide reliable data, as long as there are appropriate controls in place. Choice â€Å"b† is incorrect. The accounting basis used does not affect the reliability of data. Reliable data may be provided regardless of whether the cash basis or accrual basis (GAAP) is used, as long as there are appropriate controls in place. Choice â€Å"d† is incorrect. The type of processing system used does not affect the reliability of data.Both online systems and batch systems can provide reliable data, as long as there are appropriate controls in place. 16 2007 AICPA Newly Released Questions – Auditing 17. CPA-05481 When an auditor tests the internal controls of a computerized accounting system, which of the following is true of the test data approach? a. Test data are coded to a dummy subsidiary so they can be extracted from the system under actual oper ating conditions. b. Test data programs need not be tailor-made by the auditor for each client's computer applications. c.Test data programs usually consist of all possible valid and invalid conditions regarding compliance with internal controls. d. Test data are processed with the client's computer and the results are compared with the auditor's predetermined results. ANSWER: Choice â€Å"d† is correct. The test data approach refers to a technique in which the client's application program is used to process a set of test data, the results of which are already known by the auditor. If the client's program is operating effectively, it should generate the same results determined by the auditor. Choice â€Å"a† is incorrect.An integrated test facility (not a test data approach) utilizes dummy accounts. For example, using an integrated test facility (ITF) approach, test data is initially commingled with live data, but coding to a dummy account allows later extraction from the system under actual operating conditions. Choice â€Å"b† is incorrect. Test data programs should be tailor-made by the auditor for each client's computer applications, to ensure that the data is in an appropriate form for that client's system, and that it includes the types of invalid conditions in which the auditor is interested. Choice â€Å"c† is incorrect.Test data contains the types of valid and invalid conditions in which the auditor is interested (it is not necessary to test all combinations of valid and invalid conditions). 17 2007 AICPA Newly Released Questions – Auditing 18. CPA-05482 Under which of the following circumstances would an auditor's expression of an unqualified opinion be inappropriate? a. b. c. d. The auditor is unable to obtain the audited financial statements of a significant subsidiary. The financial statements are prepared on the entity's income tax basis. There are significant deficiencies in the design and operation of the enti ty's internal control.Analytical procedures indicate that many year-end account balances are not comparable with the prior year's balances. ANSWER: Choice â€Å"a† is correct. If the auditor is unable to obtain the audited financial statements of a significant subsidiary, a scope limitation exists. Assuming the effect is material, the auditor would issue either a qualified opinion or a disclaimer of opinion. Choice â€Å"b† is incorrect. Financial statements prepared on an entity's income tax basis are â€Å"other comprehensive basis of accounting† (OCBOA) financial statements.The auditor may issue a special report, which can include an unqualified opinion, on OCBOA financial statements. Choice â€Å"c† is incorrect. Significant deficiencies in the design and operation of an entity's internal control do not preclude issuance of an unqualified opinion, although they do increase the risk of material misstatement and will likely result in modifications to th e nature, timing, and extent of the auditor's testing. Choice â€Å"d† is incorrect. An unqualified opinion may still be expressed when there are significant changes in year-end account balances as compared to prior year balances, as long as the auditor as obtained sufficient appropriate audit evidence about the current balances. 18 2007 AICPA Newly Released Questions – Auditing 19. CPA-05483 An auditor's principal objective in analyzing repairs and maintenance expense accounts is to: a. b. c. d. Determine that all obsolete plant and equipment assets were written off before the year-end. Verify that all recorded plant and equipment assets actually exist. Discover expenditures that were expensed but should have been capitalized. Identify plant and equipment assets that cannot be repaired and should be written off. ANSWER: Choice â€Å"c† is correct.The auditor reviews repair and maintenance expense accounts to test for completeness of asset additions (i. e. , the auditor is looking for items recorded as repairs or maintenance that would more properly have been capitalized as betterment of an asset). Choice â€Å"a† is incorrect. Analyzing the repairs and maintenance account does not provide evidence about obsolete assets. The auditor might review asset records for old assets, or observe assets that are not being used, in an effort to determine whether obsolete plant and equipment assets were written off before year-end.Choice â€Å"b† is incorrect. Analyzing the repairs and maintenance account does not provide evidence about the existence of assets. The auditor might select recorded plant and equipment assets, and then physically locate and observe them, in order to verify existence. Choice â€Å"d† is incorrect. Analyzing the repairs and maintenance account does not provide evidence about assets that cannot be repaired. The auditor might review asset records for old assets, or observe assets that are not being used, in an effort to determine whether assets that cannot be repaired have been properly written off. 9 2007 AICPA Newly Released Questions – Auditing 20. CPA-05484 Which of the following statements is correct concerning materiality in a financial statement audit? a. Analytical procedures performed during an audit's review stage usually decrease materiality levels. b. If the materiality amount used in evaluating audit findings increases from the amount used in planning, the auditor should apply additional substantive tests. c. The auditor's materiality judgments generally involve quantitative, but not qualitative, considerations. d.Materiality levels are generally considered in terms of the smallest aggregate level of misstatement that could be considered material to any one of the financial statements. ANSWER: Choice â€Å"d† is correct. Because the financial statements are interrelated, materiality levels are generally considered in terms of the smallest level of misstateme nt that could be material to any one of the financial statements. Choice â€Å"a† is incorrect. Analytical procedures are performed during an audit's review stage to evaluate the overall financial statement presentation and to assess the conclusions reached.They generally would not result in a change in materiality levels. Choice â€Å"b† is incorrect. If the materiality amount used in evaluating audit findings increases from the amount used in planning, the auditor should consider whether the audit plan needs to be modified. Typically, an increase in materiality levels would result in a decrease in audit risk, which would result in less substantive testing, not more. Choice â€Å"c† is incorrect. Qualitative considerations may lead to situations in which misstatements that do not exceed materiality limits are still likely to influence the economic decisions of users.In such cases, an otherwise immaterial misstatement is deemed to be material. 20 2007 AICPA Newl y Released Questions – Auditing 21. CPA-05485 As a result of tests of controls, an auditor assesses control risk too high. This incorrect assessment most likely occurred because: a. Control risk based on the auditor's sample is less than the true operating effectiveness of the client's control activity. b. The auditor believes that the control activity relates to the client's assertions when, in fact, it does not. c. The auditor believes that the control activity will reduce the extent of substantive testing when, in fact, it will not. . Control risk based on the auditor's sample is greater than the true operating effectiveness of the client's control activity. ANSWER: Choice â€Å"d† is correct. The risk of assessing control risk too high is the risk that the assessed level of control risk based on the sample is greater than the true risk based on the actual operating effectiveness of the control. Choice â€Å"a† is incorrect. The risk of assessing control risk too low is the risk that the assessed level of control risk based on the sample is less than the true risk based on the actual operating effectiveness of the control.Choice â€Å"b† is incorrect. Assessing control risk too high relates to an incorrect evaluation of risk by the auditor, not to whether the control activity relates to the client's assertions. Choice â€Å"c† is incorrect. If the auditor believes that a control activity will reduce the extent of substantive testing when, in fact, it will not, this implies that the control risk based on the auditor's sample was less than the true risk based on the actual operating effectiveness of the control. This would be an example of assessing control risk too low, not too high. 21 007 AICPA Newly Released Questions – Auditing 22. CPA-05486 At the conclusion of an audit, an auditor is reviewing the evidence gathered in support of the financial statements. With regard to the valuation of inventory, the auditor co ncludes that the evidence obtained is not sufficient to support management's representations. Which of the following actions is the auditor most likely to take? a. b. c. d. Consult with the audit committee and issue a disclaimer of opinion. Consult with the audit committee and issue a qualified opinion. Obtain additional evidence regarding the valuation of inventory.Obtain a statement from management supporting their inventory valuation. ANSWER: Choice â€Å"c† is correct. If an auditor has doubts about a material assertion (such as the valuation of inventory), he/she should gather sufficient evidence to eliminate the doubt. Choices â€Å"a† and â€Å"b† are incorrect. The auditor would not consult with the audit committee regarding the sufficiency of audit evidence obtained, as this is determined based on the auditor's own judgment. In addition, if the auditor is able to obtain additional evidence, it might be possible to issue an unqualified opinion.Finally, e ven if no additional evidence is available, the auditor will still need to decide whether a qualified opinion or a disclaimer of opinion is more appropriate, depending on materiality. Choice â€Å"d† is incorrect. Since management representations are in fact â€Å"statements from management,† obtaining additional statements from management would not provide additional support. 22 2007 AICPA Newly Released Questions – Auditing 23. CPA-05487 An audit supervisor reviewed the work performed by the staff to determine if the audit was adequately performed. The supervisor accomplished this by primarily reviewing which of the following? a. b. c. d.Checklists. Working papers. Analytical procedures. Financial statements. ANSWER: Choice â€Å"b† is correct. Audit documentation, or working papers, comprises the principal record of audit procedures performed, evidence obtained, and conclusions reached. Reviewing the working papers allows a supervisor to understand the work performed and the evidence obtained, and to evaluate whether the audit was adequately performed. Choice â€Å"a† is incorrect. Checklists might be used within the audit documentation, but checklists alone would not provide a comprehensive record of the audit procedures performed, the evidence obtained, and conclusions reached.Choice â€Å"c† is incorrect. Analytical procedures might be documented within the working papers, but such procedures alone would not provide a comprehensive record of the audit procedures performed, the evidence obtained, and conclusions reached. Choice â€Å"d† is incorrect. Reviewing the financial statements would provide no information regarding the audit procedures performed, the evidence obtained, or conclusions reached, and therefore would provide no basis on which to review the work performed by the staff. 23 2007 AICPA Newly Released Questions – Auditing 24.CPA-05488 The auditor's inventory observation test counts are traced to the client's inventory listing to test for which of the following financial statement assertions? a. b. c. d. Completeness. Rights and obligations. Allocation and valuation. Understandability and classification. ANSWER: Choice â€Å"a† is correct. The auditor should test the physical inventory report by tracing test counts taken by the auditor to the report, thereby verifying its completeness. Choice â€Å"b† is incorrect. Tracing from test counts to the client's inventory listing does not test rights and obligations.Rights and obligations might be tested by examining paid vendors' invoices, inspecting consignment agreements and contracts, or by confirming inventory held at outside locations. Choice â€Å"c† is incorrect. Tracing from test counts to the client's inventory listing does not test allocation and valuation. Allocation and valuation might be tested by examining paid vendors' invoices, evaluating direct labor rates, recalculating overhead ra tes, or examining an analysis of inventory turnover. Choice â€Å"d† is incorrect. Tracing from test counts to the client's inventory listing does not test understandability and classification.Understandability and classification might be tested by confirming inventories pledged under loan agreements, examining drafts of the financial statements for appropriate balance sheet classification, etc. 24 2007 AICPA Newly Released Questions – Auditing 25. CPA-05489 Which of the following is an analytical procedure that an auditor most likely would perform when planning an audit? a. b. c. d. Confirming bank balances with the financial institutions. Scanning accounts receivable for amounts over credit limits. Recalculating inventory extensions of physical inventory counts.Comparing the current-year account balances for conformity with predictable patterns. ANSWER: Choice â€Å"d† is correct. During planning, analytical procedures consist of a review of data aggregated at a high level, with an objective of enhancing the auditor's understanding of the client. Comparing the current-year account balances for conformity with predictable patterns would fulfill this purpose. Choice â€Å"a† is incorrect. Confirmation of bank balances is a substantive audit procedure (not an analytical procedure) that would be performed during the fieldwork stage of the audit. Choice â€Å"b† is incorrect.Scanning accounts receivable for amounts over credit limits is a detailed procedure related to one specific account, and it would be performed during the fieldwork stage of the audit. Choice â€Å"c† is incorrect. Recalculating inventory extensions of physical inventory counts is a detailed procedure related to one specific account, and it would be performed during the fieldwork stage of the audit. 25 2007 AICPA Newly Released Questions – Auditing 26. CPA-05490 In which of the following circumstances is substantive testing of accounts receivabl e before the balance sheet date most appropriate? . b. c. d. The client has a new sales incentive program in place. Internal controls during the remaining period are effective. There is a high turnover of senior management. It is a first engagement of a new client. ANSWER: Choice â€Å"b† is correct. The higher the auditor's risk assessment, the closer to period end substantive procedures should be performed. Conversely, effective controls reduce control risk and reduce the risk of material misstatement, allowing more interim testing to occur. Choice â€Å"a† is incorrect.A new sales incentive program results in an increase in the risk of material misstatement, making it less likely that interim testing will be performed. Choice â€Å"c† is incorrect. High turnover of senior management results in an increase in the risk of material misstatement, making it less likely that interim testing will be performed. Choice â€Å"d† is incorrect. In the first engage ment of a new client, the auditor will have less knowledge of the client and therefore would be less inclined to utilize interim testing, which increases audit risk. 26 2007 AICPA Newly Released Questions – Auditing 27.CPA-05491 An auditor reads the letter of transmittal accompanying a county's comprehensive annual financial report and identifies a material inconsistency with the financial statements. The auditor determines that the financial statements do not require revision. Which of the following actions should the auditor take? a. b. c. d. Request that the client revise the letter of transmittal. Include an explanatory paragraph in the auditor's report. Consider withdrawing from the engagement. Request a client representation letter acknowledging the inconsistency. ANSWER: Choice â€Å"a† is correct.When information accompanies audited financial statements in a client-prepared document, the auditor is required to read the information. If such information is materi ally inconsistent with the financial statements and the financial statements do not require revision, the auditor should request that the information (in this case the letter of transmittal) be revised. Choice â€Å"b† is incorrect. The auditor would only revise the report to include discussion of the material inconsistency if the client were unwilling to revise the transmittal letter appropriately. Choice â€Å"c† is incorrect.The auditor would only consider withdrawing from the engagement if the client were unwilling to revise the transmittal letter appropriately. Choice â€Å"d† is incorrect. The auditor would not request a client representation letter acknowledging the inconsistency, as correction (and not simply acknowledgment) of the error is desired. 27 2007 AICPA Newly Released Questions – Auditing 28. CPA-05492 An analysis of which of the following accounts would best aid in verifying that all fixed assets have been capitalized? a. b. c. d. Cash. Depreciation expense. Property tax expense. Repairs and maintenance.ANSWER: Choice â€Å"d† is correct. An analysis of the repairs and maintenance account would best aid the auditor in verifying that all fixed assets have been capitalized. This account is generally analyzed to test for completeness of asset additions (i. e. , the auditor is looking for items recorded as repairs or maintenance that would more properly have been capitalized as betterment of an asset). Choice â€Å"a† is incorrect. An analysis of cash would not identify fixed assets that were not properly capitalized, since cash would be paid for the purchase regardless of whether the item were expensed or capitalized.Choice â€Å"b† is incorrect. An analysis of depreciation expense would not identify fixed assets that were not properly capitalized, since no depreciation would be included for items not already classified as assets. Choice â€Å"c† is incorrect. An analysis of property tax e xpense would not identify fixed assets that were not properly capitalized, since no property tax would be included for items not already classified as assets. 28 2007 AICPA Newly Released Questions – Auditing 29. CPA-05493 When companies use information technology (IT) extensively, evidence may be available only in electronic form.What is an auditor's best course of action in such situations? a. b. c. d. Assess the control risk as high. Use audit software to perform analytical procedures. Use generalized audit software to extract evidence from client databases. Perform limited tests of controls over electronic data. ANSWER: Choice â€Å"c† is correct. When companies use information technology (IT) extensively and evidence is available only in electronic form, generalized audit software packages generate the programs necessary to interrogate the files and extract and analyze the data. Choice â€Å"a† is incorrect.The use of information technology does not automat ically imply that control risk is high. The auditor would need to evaluate the client's controls to make this determination. Choice â€Å"b† is incorrect. Although audit software might be used to perform analytical procedures, the data would first need to be extracted from the client's system. A generalized audit software package is the best way to do this. Choice â€Å"d† is incorrect. If information technology is used extensively, the auditor would likely perform more than limited tests of controls over electronic data. 29 2007 AICPA Newly Released Questions – Auditing 30.CPA-05494 The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the risk that: a. b. c. d. Specific internal control activities are not operating as designed. The collective effect of the control environment may not achieve the control objectives. Tests of controls may fail to identify activities relevant to assertions. Material misstatements may exist in the financial statements. ANSWER: Choice â€Å"d† is correct. The auditor's ultimate purpose assessing control risk is to evaluate the risk of financial statement misstatement.Choice â€Å"a† is incorrect. The auditor's evaluation of whether or not specific internal control activities are operating as designed is part of his/her assessment of control risk; however, the ultimate purpose of making this assessment is to evaluate the risk of financial statement misstatement. Choice â€Å"b† is incorrect. The auditor's evaluation of the collective effect of the control environment is part of his/her assessment of control risk; however, the ultimate purpose of making this assessment is to evaluate the risk of financial statement misstatement. Choice â€Å"c† is incorrect.Tests of controls are not used to identify activities relevant to assertions. Tests of controls are used to evaluate the operating effectiveness of internal control in preventing or detecti ng material misstatements. 30 2007 AICPA Newly Released Questions – Auditing 31. CPA-05495 After making inquiries about credit granting policies, an auditor selects a sample of sales transactions and examines evidence of credit approval. This test of controls most likely supports management's financial statement assertion(s) of: Rights and obligations Yes Yes No No Allocation and valuation Yes No Yes No a. b. c. d. ANSWER: Choice â€Å"c† is correct.By ensuring that credit approval is obtained before goods are shipped to customers, the auditor is testing management's assertion that accounts receivable are collectible (allocation and valuation). Ensuring that credit approval is obtained before goods are shipped does not support the rights and obligations assertion. Choices â€Å"a†, â€Å"b†, and â€Å"d† are incorrect, based on the above explanation. 31 2007 AICPA Newly Released Questions – Auditing 32. CPA-05496 Which of the following chara cteristics most likely would be an advantage of using classical variables sampling rather than probability-proportional-to-size (PPS) sampling? . b. c. d. The selection of negative balances requires no special design considerations. The sampling process can begin before the complete population is available. The auditor need not consider the preliminary judgments about materiality. The sample will result in a smaller sample size if few errors are expected. ANSWER: Choice â€Å"a† is correct. Inclusion of negative balances requires special design considerations with PPS sampling, but it does not require special design considerations with classical variables sampling. Choice â€Å"b† is incorrect.All items in the population should have an equal chance to be included in the sample. Therefore, the sampling process should not begin before the complete population is available, regardless of whether classical variables sampling or PPS sampling is used. Choice â€Å"c† i s incorrect. When planning a particular sample for a substantive test of details, the auditor should consider preliminary estimates of materiality. Choice â€Å"d† is incorrect. If no errors are expected, PPS sampling generally requires a smaller sample than other methods. 32 2007 AICPA Newly Released Questions – Auditing 33.CPA- 05497 Which of the following matters is an auditor required to communicate to those charged with governance? a. Adjustments that were suggested by the auditor and recorded by management that have a significant effect on the entity's financial reporting process. b. The auditor's consideration of risk factors in assessing the risk of material misstatement arising from the misappropriation of assets. c. The results of the auditor's analytical procedures performed in the review stage of the engagement that indicate significant variances from expected amounts. d.Changes in the auditor's preliminary judgment about materiality that were caused by pro jecting the results of statistical sampling for tests of transactions. ANSWER: Choice â€Å"a† is correct. The auditor is required to communicate significant audit findings to those charged with governance. Significant audit findings include material, corrected misstatements brought to management's attention as a result of the audit. Unless all of those charged with governance are also involved with managing the entity, such findings should be communicated by the auditor. Choice â€Å"b† is incorrect.The auditor is not required to communicate with those charged with governance regarding his/her fraud risk assessment. Choice â€Å"c† is incorrect. The auditor is not required to communicate with those charged with governance regarding the results of specific audit procedures. Choice â€Å"d† is incorrect. The auditor is not required to communicate with those charged with governance regarding changes to his/her preliminary judgment about materiality. 33 2007 AICPA Newly Released Questions – Auditing 34. CPA-05498 For which of the following audit tests would a CPA most likely use attribute sampling? . b. c. d. Identifying entries posted to incorrect accounts. Estimating the amount in an expense account. Evaluating the reasonableness of depreciation expense. Selecting receivables for confirmation of account balances. ANSWER: Choice â€Å"a† is correct. Attribute sampling is used to estimate a rate of occurrence, and often involves a yes-no question. Attribute sampling could be used to determine the error rate in posting journal entries, perhaps by asking, â€Å"Is the entry posted to the proper account? † Choice â€Å"b† is incorrect.Variables sampling is typically used to estimate a numerical quantity, such as the amount in an expense account. Choice â€Å"c† is incorrect. Variables sampling is typically used to estimate a numerical quantity, such as a reasonable amount for depreciation expense. Choice â€Å"d† is incorrect. Attribute sampling is used to estimate a rate of occurrence, not to select the items to include in a sample. 34 2007 AICPA Newly Released Questions – Auditing 35. CPA-05499 Which of the following strategies most likely could improve the response rate of the confirmations of accounts receivable? a. b. c. d.Restrict the selection of accounts to be confirmed to those customers with large balances. Include a list of items or invoices that constitute the customers' account balances. Explain to customers that discrepancies will be investigated by an independent third party. Ask customers to respond to the confirmation requests directly to the auditor by fax. ANSWER: Choice â€Å"b† is correct. The auditor should consider the types of information respondents will be readily able to confirm. For instance, some accounting systems facilitate the confirmation of single transactions rather than entire balances.In such cases, the auditor might conside r including a client-prepared statement of account showing details of the customer's account balance being confirmed. By making it easier for customers to determine which items are included in the balance being confirmed, the auditor also makes it more likely that those customers will respond. Choice â€Å"a† is incorrect. Restricting the selection of accounts to be confirmed to those customers with large balances doesn't improve response rates, as customers with large balances are not necessarily more likely to respond than customers with small balances.Choice â€Å"c† is incorrect. Explaining to customers that discrepancies will be investigated by an independent third party would not necessarily encourage them to respond, as they might be reluctant to set off this investigation. Choice â€Å"d† is incorrect. Responses received by fax should be verified by calling the senders and requesting that the original confirmations be mailed back. Asking customers to res pond by fax might actually reduce the response rate for receiving the original confirmation, since customers may decide that since they already sent the fax, they don't need to send the original back as well. 5 2007 AICPA Newly Released Questions – Auditing 36. CPA-05500 Which of the following procedures would an auditor most likely perform in auditing the statement of cash flows? a. Reconcile the amounts included in the statement of cash flows to the other financial statements' amounts. b. Vouch a sample of cash receipts and disbursements for the last few days of the current year. c. Reconcile the cutoff bank statement to the proof of cash to verify the accuracy of the year-end cash balance. d. Confirm the amounts included in the statement of cash flows with the entity's financial institution.ANSWER: Choice â€Å"a† is correct. To audit the statement of cash flows, the auditor reconciles the amounts on the statement to amounts on other financial statements. Choice â⠂¬Å"b† is incorrect. Vouching a sample of cash receipts and disbursements is a procedure used to audit the cash balance, rather than the statement of cash flows. Choice â€Å"c† is incorrect. Reconciling the cutoff bank statement to the proof of cash to verify the accuracy of the year-end cash balance is a procedure used to audit the cash balance, rather than the statement of cash flows. Choice d† is incorrect. Confirming cash amounts with the entity's financial institution is a procedure used to audit the cash balance, rather than the statement of cash flows. 36 2007 AICPA Newly Released Questions – Auditing 37. CPA-05501 In establishing the existence and ownership of long-term investments in the form of publicly-traded stock, an auditor most likely would inspect the securities or: a. b. c. d. Correspond with the investee company to verify the number of shares owned. Confirm the number of shares owned that are held by an independent custodian.Apply analyti cal procedures to the dividend income and investments accounts. Inspect the cash receipts journal for amounts that could represent the sale of securities. ANSWER: Choice â€Å"b† is correct. Confirmations should be requested from the custodian for securities that are in the possession of third parties. Choice â€Å"a† is incorrect. The investee company may not have timely information regarding the ownership of its stock, nor would an investee typically want to correspond with all of its shareholders in this manner.Choice â€Å"c† is incorrect. Analytical procedures might be used to test the reasonableness of dividend income, but this would not provide evidence about the existence and ownership of the investments. Choice â€Å"d† is incorrect. Inspecting the cash receipts journal for amounts that could represent the sale of securities might provide evidence regarding sales (and gains or losses on sales), but would not provide evidence about the existence a nd ownership of the investments. 37 2007 AICPA Newly Released Questions – Auditing 38.CPA-05502 The standard report issued by an accountant after reviewing the financial statements of a nonpublic entity should state that: a. A review is limited to presenting in the form of financial statements information that is the representation of management. b. A review consists of inquiries of company personnel and analytical procedures applied to financial data. c. The accountant does not express an opinion or any other form of assurance on the financial statements. d. The accountant did not obtain an understanding of the entity's internal control or assess control risk. ANSWER: Choice â€Å"b† is correct.The standard report issued by an accountant after reviewing the financial statements of a nonpublic entity states that a review consists of inquiries of company personnel and analytical procedures applied to financial data. Choice â€Å"a† is incorrect. A compilation rep ort uses language similar to this, stating that a compilation is limited to presenting, in the form of financial statements, information that is the representation of management. Choice â€Å"c† is incorrect. A compilation report uses language similar to this, stating that the accountant does not express an opinion or any other form of assurance on the financial statements.A review provides negative assurance. Choice â€Å"d† is incorrect. While it is true that a review of the financial statements of a nonpublic entity does not require the accountant to obtain an understanding of the entity's internal control or assess control risk, the report does not explicitly state this. 38 2007 AICPA Newly Released Questions – Auditing 39. CPA-05503 When an accountant compiles projected financial statements, the accountant's report should include a separate paragraph that: a. b. c. d. Explains the difference between a compilation and a review.Documents the assessment of the risk of material misstatement due to fraud. Expresses limited assurance that the actual results may be within the projected range. Describes the limitations on the projection's usefulness. ANSWER: Choice â€Å"d† is correct. The accountant's report on compiled projected financial statements should include a separate paragraph that describes the limitations on the projection's usefulness. For example, the paragraph states that there will usually be differences between projected and actual results, and indicates that the accountant has no responsibility o update the report for events occurring after the date of the report. Choice â€Å"a† is incorrect. The accountant's report on compiled projected financial statements does not include an explanation of the difference between a compilation and a review. Choice â€Å"b† is incorrect. The accountant's report on compiled projected financial statements does not document the assessment of the risk of material misstatem ent due to fraud. Choice â€Å"c† is incorrect. The accountant's report on compiled projected financial statements does not express limited assurance that the actual results may be within the projected range.In fact, it specifically states that no opinion or any other form of assurance is expressed, and that there usually will be differences between projected and actual results. 39 2007 AICPA Newly Released Questions – Auditing 40. CPA-05504 (Adapted) An auditor intends to use the work of an actuary who has a relationship with the client. Under these circumstances, the auditor: a. b. c. d. Is required to disclose the contractual relationship in the auditor's report. Should assess the risk that the actuary's objectivity might be impaired. Is not permitted to rely on the actuary because of a lack of independence.Should communicate this matter to those charged with governance as a significant deficiency in internal control. ANSWER: Choice â€Å"b† is correct. While a specialist who is unrelated to the client will provide the auditor with greater assurance of reliability, a specialist who is related to the client may be acceptable in certain circumstances. In such situations, the auditor would likely perform additional procedures to verify objectivity. Choice â€Å"a† is incorrect. If the auditor is expressing a standard unqualified opinion, no reference would be made to the specialist in the auditor's report.Choice â€Å"c† is incorrect. While a specialist who is unrelated to the client will provide the auditor with greater assurance of reliability, a specialist who is related to the client may be acceptable in certain circumstances. Choice â€Å"d† is incorrect. The fact that the actuary has a relationship with the client is not considered to be a significant deficiency in internal control. 40 2007 AICPA Newly Released Questions – Auditing 41. CPA-05505 Before applying principal substantive tests to an entity's ac counts receivable at an interim date, an auditor should: a. b. c. d.Consider the likelihood of assessing the risk of incorrect rejection too low. Project sampling risk at the maximum for tests covering the remaining period. Ascertain that accounts receivable are immaterial to the financial statements. Assess the difficulty in controlling the incremental audit risk. ANSWER: Choice â€Å"d† is correct. When audit procedures are performed before year-end, the auditor must assess the incremental risk involved and determine whether sufficient alternative procedures exist to extend the interim conclusions to year-end. Choice â€Å"a† is incorrect.The risk of incorrect rejection relates to the efficiency of audit testing, since an item that is initially (and erroneously) rejected will be subject to additional audit testing that should correct the error. The likelihood of assessing this risk lower than it should be does not affect the auditor's decision regarding the appropria te timing of audit work. Choice â€Å"b† is incorrect. When audit procedures are performed before year-end, the auditor must assess the incremental risk involved, but this risk would not necessarily be assessed at the maximum level. Choice â€Å"c† is incorrect.Interim testing may be performed on material accounts, as long as the auditor assesses the incremental risk involved and determines whether sufficient alternative procedures exist to extend the interim conclusions to year-end. Immaterial accounts would not need to be tested. 41 2007 AICPA Newly Released Questions – Auditing 42. CPA-05506 (Adapted) Which of the following procedures would a CPA most likely perform in the planning stage of a financial statement audit? a. b. c. d. Obtain representations from management regarding the availability of all financial records.Communicate with those charged with governance concerning the prior year's audit adjustments. Make inquiries of the client's attorney regardi ng pending and threatened litigation and assessments. Compare recorded financial information with anticipated results from budgets and forecasts. ANSWER: Choice â€Å"d† is correct. The planning process should include application of analytical procedures, such as comparison of the financial statements with budgeted or anticipated results. Choice â€Å"a† is incorrect. Management representations are typically obtained at the end of the audit, not during the planning stage. Choice â€Å"b† is incorrect.Assuming all of those charged with governance are not also involved with managing the entity, the auditor is required to communicate with those charged with governance concerning adjustments arising from the current year's audit, not adjustments from the previous year. Choice â€Å"c† is incorrect. Inquiries are typically made of the client's attorney during the fieldwork stage of the audit, not during the planning stage. 42 2007 AICPA Newly Released Question s – Auditing 43. CPA-05507 A CPA is engaged to examine management's assertion that the entity's schedule of investment returns is presented in accordance with specific criteria.In performing this engagement, the CPA should comply with the provisions of: a. b. c. d. Statements on Standards for Accounting and Review Services (SSARS). Statements on Auditing Standards (SAS). Statements on Standards for Consulting Services (SSCS). Statements on Standards for Attestation Engagements (SSAE). ANSWER: Choice â€Å"d† is correct. Statements on Standards for Attestation Engagements apply to engagements in which a practitioner is engag