A number of factors influence the sample size for a substantive test of details of an account balance. All other factors being equal, which of the following would lead to a larger sample size?
A. Greater reliance on internal controls.
B. Smaller expected frequency of misstatements.
C. Smaller measure of tolerable misstatements.
D. Greater reliance on analytical procedures.
Answer: C
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Which of the following is not a merchandise source?
a. outside, new supplier b. resident buying office c. outside, regularly used supplier d. company-owned
Which of the following statements is CORRECT?
A. The percentage flotation cost associated with issuing new common equity is typically smaller than the flotation cost for new debt. B. The WACC as used in capital budgeting is an estimate of the cost of all the capital a company has raised to acquire its assets. C. There is an "opportunity cost" associated with using reinvested earnings, hence they are not "free." D. The WACC as used in capital budgeting would be simply the after-tax cost of debt if the firm plans to use only debt to finance its capital budget during the coming year. E. The WACC as used in capital budgeting is an estimate of a company's before-tax cost of capital.
The present value of an annuity is equal to the sum of the individual future values for each payment.
Answer the following statement true (T) or false (F)
A _____ is everything, both favorable and unfavorable, that a person receives in an exchange. It can be tangible, intangible, a service, an idea, or a combination of these things.
A. brand equity B. quality C. warranty D. transaction E. product