A firm has total interest charges of $10,000 per year, sales of $1 million, a tax rate of 40 percent, and a net profit margin of 6 percent. The firm's times interest earned ratio is:
A. ?16 times.
B. 10 times.
C. ?7 times.
D. ?11 times.
E. ?20 times.
Answer: D
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An auditor knows that an audit client operating in an industry in which common stock is valued based on the price-earnings ratio will soon make an initial public offering. All of the following are true except:
A. materiality should be reduced. B. audit risk should increase. C. detection risk should decrease. D. risk of material misstatement should increase.
Under international accounting standards, the derecognition of receivables requires that
a. the risks and rewards associated with the cash flows from the financial asset pass from the transferor to the transferee. b. a binding legal agreement must exist between the transferor and the transferee. c. economic ownership of the asset passes from the transferor to the transferee. d. the receivable is determined to be fully collectible.
Email and instant messaging are common ways to communicate informally in an organization. How could cultural differences influence the effectiveness of electronic channels? In what ways could management help employees avoid potential communication problems?
The doctrine of ultra vires is of more significance today than it has been in the past
a. True b. False Indicate whether the statement is true or false