Respondents may be deceived during the research process
Indicate whether the statement is true or false
TRUE
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Joe is deciding whether or not to invest $10,000 in a business that has pending lawsuits against it. If
Joe invests and the business loses the lawsuits, the most Joe can lose is A) $10,000 if Joe is a sole proprietor. B) $10,000 if Joe is a general partner. C) $10,000 if Joe is a limited partner. D) $10,000 plus his share of the lawsuits if Joe is a limited partner.
Consider two firms that are identical in every way except that one has $15,000 of debt and 500 shares of stock outstanding, while the other is all-equity and has 650 shares of stock outstanding
Assume that the debt is a perpetuity with annual coupons at the rate of 6%. What is each firms' earnings per share if EBIT is $7,500? Assume a tax rate of 40%. Leveraged Firm All-Equity Firm EBIT $7,500 $7,500 EPS ? ? A) EPSL = 7.92; EPSE = 7.92 B) EPSL = 6.92; EPSE = 7.92 C) EPSL = 6.92; EPSE = 6.92 D) EPSL = 7.92; EPSE = 6.92 E) EPSL = 8.92; EPSE = 6.92
Because DSL signals interfere with telephone signals, DSL data transmission and telephone conversations cannot occur simultaneously
Indicate whether the statement is true or false
Explain how CPAs should evaluate risks to integrity and objectivity when considering providing gifts to audit clients and/or client management or accepting risks from them.Gifts made or received, in particular, may cloud audit judgment and impair independence. They can compromise objectivity and integrity because of the size and/or importance of the gift and the purpose of giving it or receiving it from the client. To avoid a conflict of interest that may impair integrity, objectivity and independence, the following guidelines should be followed.If the audit is completed, the first question is whether the acceptance of the gift might make it appear to a reasonable observer that the gift is intended to influence the audit opinion. If so, that would create an undue influence threat and
compromise integrity and objectivity. Also, it could be perceived as an advance payoff for future audit opinions. The influence does not have to be immediate. Beyond that, an important issue to consider is: Would acceptance violate any laws, regulations, or firm policies. If so, acceptance would create a threat that cannot be reduced or eliminated through any safeguards. If not, consider the following: What is the nature, value, and intent of the gift? Is it more than clearly inconsequential? Is it reasonable in the circumstances? Is it standard practice to accept or reject such gifts? Does the client expect a "quid pro quo?" What will be an ideal response?