In a short essay, explain the concept of the Tragedy of the Commons.
What will be an ideal response?
The underlying belief of the tragedy of the commons is that free access with unrestricted
use of any resource that is finite will ultimately ruin the resource through overexploitation. From a natural environment context, the tragedy of the commons would predict the eventual use of all the natural resources on Earth due to the lack of control over their use.
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During 2012–2013, currency speculator George Soros made a lucrative currency trade. Having expectations of a future depreciation of the yen, Soros made big bets against it. He sold large amounts of yen, pushed its value down, and profited by re-buying the yen when its price bottomed out. What Soros was engaging in was a
a. long position. b. short position. c. premium position. d. discount position.
An outstanding check is a check that:
a. Has been presented to the bank for payment but has not been reported on the bank statement b. Has been written by the account holder but has not been presented to the bank for payment c. Is guaranteed for payment by the bank d. Has been written for an amount that is greater than the balance in the account holder's bank account
If the auditor's assessment of audit risk is low (e.g., 1% rather than 5%), what is the effect on the amount of direct testing performed by the auditor?
a. Increase in direct testing. b. Decrease in direct testing c. No change in direct testing. d. Direct testing is not needed.
According to the most current FASB standards, intangible assets acquired in a basket purchase that does not represent the acquisition of an entire business should be
a. valued by allocating the total purchase price according to the relative fair values of all assets acquired, regardless of whether the assets are separately tradable or contract based. b. valued by allocating the total purchase price according to the relative fair values only of intangible assets that are separately tradable or contract based. c. valued by recording separately traded and contract based intangible assets at their individual fair values with any unallocated purchase price being recognized as goodwill. d. valued by recording separately traded and contract based intangible assets at their individual fair values with any unallocated purchase price being expensed in the year of acquisition.