When evaluating accounting estimates, the auditor would not concentrate on which of the following key factors and assumptions?
a. Those that are within budgetary expectations.
b. Those that are subjective and susceptible to misstatement and bias.
c. Those that are inconsistent with current economic trends.
d. Those that are sensitive to variations.
a
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Mystical Duds estimates that unsold women's clothing with a carrying value of $500 million has minimal market value given a change in fashion. To reflect the minimal market value of the merchandise, Mystical Duds
a. would record an impairment loss of $500 million, reducing the carrying value of this inventory to zero. b. would recognize zero cost of goods sold and a gross margin of $100 million on the sale, for a net margin of -$400 (=-$500 + $100) million over the two periods, if the firm sells the clothes for $100 million in a subsequent accounting period. c. would record an impairment loss of $400 million, reducing the carrying value of this inventory to $100 million. d. would recognize $100 million of cost of goods sold and a gross margin of zero on the sale, for a net margin of -$400 (=-$500 + $100) million over the two periods, if the firm sells the clothes for $100 million in a subsequent accounting period, if the firm sells the clothes for $100 million in a subsequent accounting period. e. would record/recognize choices a and b.
Knowledge management (KM) benefits organizations because it ________.
A. enables employees to solve problems and rectify mistakes later B. allows suppliers to work according to the organizational policies C. improves process quality and increases team strength D. improves data integrity, transmission, and value E. allows distributors to work within the company premises
Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000 . After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. In this case, Elmer:
a. has made a firm offer to Fred which cannot be revoked. b. can revoke his offer at any time before Fred accepts it, because there is no consideration to keep it open. c. must keep the offer open, because this is an option contract. d. cannot, because of promissory estoppel, revoke his offer to Fred.
The Kentucky Foam Products Company completed the flexible budget analysis for the second quarter, which is given below
Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget Units 12,820 0 12,820 920 F 11,900 Sales Revenue $62,730 $1,270 U $64,000 $4,000 F $60,000 Variable Costs 27,600 700 U 26,900 $1,680 U 25,220 Contribution Margin $35,130 $1,970 U $37,100 $2,320 F $34,780 Fixed Costs 34,250 170 U 34,080 $0 34,080 Operating Income/(Loss) $880 $2,140 U $3,020 $2,320 F $700 Which of the following would be a correct analysis of the sales volume variance for variable costs? A) decrease in sales price per unit B) increase in variable cost per unit C) increase in sales volume D) increase in fixed costs