What is the fundamental difference between a fixed-price and a cost-plus contract?
A. On fixed-price contracts contractors are used while on cost-plus contracts no external contractors are used
B. On fixed-price contracts the cost is set in advance while for cost-plus contracts it is established after the project is completed
C. On fixed-price contracts macro estimates are used while micro estimates are used for cost-plus contracts
D. No scope changes are made on fixed-price contracts while scope changes are allowed for cost-plus contracts
E. On fixed-price contracts partnering is used while it is not used for cost-plus contracts
Answer: B
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The Devon Tower graces the Oklahoma City skyline and is officially the tallest building in the state. The manufacturing process used to produce this jewel is most probably:
A) a fixed-position layout. B) a batch manufacturing process. C) a hybrid process. D) a job shop.
Rocky Corporation, an S corporation, reports the following results for the current year:Ordinary income$70,000Long-term capital gain20,000Municipal bond interest income10,000Domestic corporate dividends6,000Charitable contributions16,000Rocky's AAA and accumulated E&P balances at the beginning of the year are $80,000 and $50,000, respectively. Rocky makes a $100,000 cash distribution to its sole shareholder on June 1 and a second $100,000 cash distribution on December 1. The shareholder's basis for Rocky stock on January 1 was $120,000. Discuss the tax consequences of these transactions.
What will be an ideal response?
Patriot Corporation purchased manufacturing equipment with an expected useful life of five years. The purchase of the machinery would be shown as
A) an expense on the balance sheet. B) an expense on the income statement. C) an asset on the balance sheet. D) both an expense and an asset.
The effectiveness of controls is not generally tested by:
A. Performance of analytical procedures. B. Observation of the application of accounting policies and procedures. C. Inquiries of appropriate client personnel. D. Inspection of documents and reports.