Cooper, CPA is auditing the financial statements of a small rural municipality. The receivable balances represent residents' delinquent real estate taxes. Internal control at the municipality is weak. To determine the existence of the accounts receivable balances at the balance sheet date, Cooper would most likely
A. Send positive confirmation requests.
B. Send negative confirmation requests.
C. Examine evidence of subsequent cash receipts.
D. Inspect the internal records, such as copies of the tax invoices that were mailed to the residents.
A. Send positive confirmation requests.
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Analysts use the quick ratio (also known as the acid test ratio) and the current ratio. The use of both ratios has become common because
A) the quick ratio is much easier to compute than the current ratio. B) interpretation of the current ratio is more difficult because of its complexity. C) the acid test is a more severe test of a company's liquidity. D) the acid test a better measure of management's effectiveness.
Use the information in Scenario 4.5. What is the pre-tax cash flow (net present value) for alternative #2 compared to the base case of doing nothing for the next five years?
A) negative pre-tax cash flow B) more than $0 but less than $40,000 C) more than $40,000 but less than $80,000 D) more than $80,000
The political economy of the S&L crisis shows that the principal-agent problem occurs in politics. In this instance, the agent-regulators did not act to protect the principal-taxpayers because
A) regulators wanted to escape blame, hoping the situation would improve before others discovered the problem. B) regulators responded to pressure to pursue regulatory forbearance from politicians who had accepted campaign donations from owners of S&Ls. C) Congress was unwilling to allocate the necessary funds regulators needed to close insolvent S&Ls. D) all of the above. E) only A and B of the above.
Cutsinger Corporation has provided the following data from its most recent income statement: Net operating income$55,000 Interest expense$43,000 Net income before taxes$12,000 Income taxes$4,000 Net income$ 8,000 The times interest earned ratio is closest to:
A. 0.19 B. 0.28 C. 1.83 D. 1.28