Which of the following represents the legal approach to capital leases?
a. Limit capital leases to leases that are virtually conditional sales agreements with installment payments.
b. Capitalize leases where a purchase equivalent has occurred.
c. The lease treatment is the same for lessor and lessee.
d. Capitalize leases that are not true leases.
ANSWER: D
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Stacey, the partner in charge of the audit of GHER Corporation, calculates that detection risk to be 5.7% for the audit of accounts payable. GHER Corporation and RIF Enterprises are in the same industry, close to the same size, and have similar balances in accounts payable. What do the different detection risks tell you about the planned audit evidence that will be gathered for the GHER Corporation audit?
What will be an ideal response?
The difference between gross profit and total costs equals the _____
a. cost of goods sold b. net profit after taxes c. cost of goods available for sales d. net profit before taxes
A major difference between a process cost system and a job order cost system is that the process cost system provides management with a unit cost of completing each stage of production while the job order cost system provides management with the cost of completing each individual product or batch of products
Indicate whether the statement is true or false
Sylvia Corporation sold 12,500 units of its single product during the year, reporting a cost of goods sold that totaled $250,000. A review of the company's accounting records disclosed the following information:Cost of goods sold as a percentage of sales revenue40%Finished goods, Jan. 1$87,000Work-in-process, Dec. 3155,000Cost of Goods Manufactured241,000Raw materials used40,000Direct labor74,000Manufacturing overhead122,000Selling and administrative expenses 310,000Sylvia is subject to a 30% income tax rate.Required:A. Determine the selling price per unit.B. Management established a goal at the beginning of the year to reduce the company's investment in finished-goods inventory and work-in-process inventory.1. Analyze cost of goods sold and determine if management's goal was achieved
with respect to finished-goods inventory. Show computations.2. Analyze the firm's manufacturing costs and determine if management's goal was achieved with respect to work-in-process inventory. Show computations.C. Is the company profitable? Show calculations. What will be an ideal response?