Pascal is a buyer for Kelly Benjamin department store in Kentucky. While Pascal was buying visiting California, he found a solar car on sale for $3,000. Pascal contracts to buy the car for Kelly Benjamin, who wants to buy a solar car. Kelly instructs the seller to ship the car. Under these circumstances:
A. Kelly is not liable since Pascal made the purchase.
B. Pascal is considered to have ratified the contract.
C. Pascal and Kelly are both liable on the contract.
D. Kelly is considered to have ratified the contract.
Answer: D
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The amount of cash received on issuance of a 9 percent, $10,000 bond dated February 1 and issued June 1 at 102 1/2 is
a. $10,300. b. $11,100. c. $10,200. d. $10,550.
Recent accounting scandals suggest the need for care on the part of an independent auditor in accepting new clients. The independent auditor needs to know both the business of and the personnel employed by a prospective client. All other control
procedures are fruitless if a CPA chooses to serve an undesirable client. The damage suffered as a result of associating with an undesirable client can be irreparable. Discuss some key issues an independent auditor should consider in the client acceptance decision.
Bailey Corporation. incurred 2,300 direct labor hours to produce 600 units of product. Each unit should take 4 direct labor hours. Bailey Corporation applies variable overhead to production on a direct labor hour basis. The variable overhead efficiency variance
a. will be unfavorable. b. will be favorable. c. will depend upon the capacity measure selected to assign overhead to production. d. is impossible to determine without additional information.
Entry barriers in embryonic industries tend to be based on:
A. brand loyalty. B. economies of scale. C. absolute cost advantages. D. regulatory advantage. E. technological knowhow.