A major customer of an entity suffers a fire after year-end, but just prior to completion of audit fieldwork. The entity believes that this event could have a significant direct effect on the financial statements. The auditor should
A. Advise management to disclose the event in the notes to the financial statements.
B. Disclose the event in the auditor's report.
C. Withhold submission of the auditor's report until the extent of the direct effect on the financial statements is known.
D. Advise management to adjust the financial statements.
A. Advise management to disclose the event in the notes to the financial statements.
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Which of the following statements is incorrect?
A. Capital budgeting focuses on short-term planning. B. Capital budgeting involves decisions as whether to buy or lease equipment. C. Cash outflows for capital budgeting will appear on the cash budget. D. Capital budgeting affects the master budget because it considers what assets a company should have and use when achieving its budgets.
Renee and Lisa are discussing ways in which their company's turnover can be reduced. Renee thinks that the employees can be retained by increasing internal promotions. Lisa thinks that the employees can be retained by increasing their salaries. Renee wants to express her disagreement with Lisa in a tactful way. Which of the following spoken statements would best help her do this? A. You are
wrong, Lisa, because our company pays its employees much more than othercompanies. B. Your ideas will not work, Lisa, because our employees are already satisfied with their pay. C. Your point of view certainly has merit, Lisa, but I have doubts because our company's payalready exceeds industrial standards. D. Your idea will fail to reduce employee turnover, Lisa; you should already know that our company pays the most in the industry.
Suppose the real risk-free rate is 3.50% and the future rate of inflation is expected to be constant at 4.10%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Include cross-product terms, i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.)
A. 6.58% B. 7.74% C. 9.37% D. 6.50% E. 7.90%
A typical problem for limited-line retailers is that
A. their marketing strategy usually relies only on low price. B. many of the items they carry are slow moving. C. they usually cannot carry enough items in a line for any customers to find what they want. D. it is almost impossible for them to satisfy any particular target markets better than other types of retailers. E. All of these are problems for limited-line retailers.