Question & Answer

Explain how pro-cyclical lending criteria applied by financial institutions could amplify fluctuations in real GDP.

Explain the rationale for the ceiling and floor in the lowerof- cost-or-market method of valuing inventories.

(a)       Pick two public companies, go to their websites and identify their      major strategies.           (b) Pick one of the companies from part (a) and go to the website of a      competitor in the same industry. (For example, if you chose Coles, you            might go to the website of Woolworths.) Now compare the strategies of      both companies and list any similarities and differences.

Although process costing appears to use precise measurements, it requires several estimates. Discuss where judgement is needed in collecting information for process costing.

Assume that Wal-Mart Stores, Inc. has decided to surface and maintain for 10 years a vacant lot next to one of its stores to serve as a parking lot for customers. Management is considering the following bids involving two different qualities of surfacing for a parking area of 12,000 square yards. Bid A: A surface that costs $5.75 per square yard to install. This surface will have to be replaced at the end of 5 years. The annual maintenance cost on this surface is estimated at 25 cents per square yard for each year except the last year of its service. The replacement surface will be similar to the initial surface. Bid B: A surface that costs $10.50 per square yard to install. This surface has a probable useful life of 10 years and will require annual maintenance in each year except the last year, at an estimated cost of 9 cents per square yard. Instructions Prepare computations showing which bid should be accepted by Wal-Mart. You may assume that the cost of capital is 9%, that the annual maintenance expenditures are incurred at the end of each year, and that prices are not expected to change during the next 10 years.

Static and flexible budgets, variances, information quality The photocopying department in the local polytechnic college has budgeted monthly costs at $40 000 per month plus $7 per student. Normally 800 students are enrolled. During March there were 730 students (which is within the relevant range). At the end of the month, actual fixed costs were $42 000 and variable costs were $3650.   Required (a) Develop a static budget for photocopying costs based on 800 students. (b) Calculate the March static budget variance for fixed and variable photocopying costs. (c) Develop a flexible budget for the actual volume of students in March. (d) Calculate the March flexible budget variance for fixed and variable photocopying costs. (e) Which variance information — part (b) or (c) — is of higher quality? Explain.

Assume that in an annual audit of Harlowe Inc. at December 31, 2014, you find the following transactions near the closing date. 1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2014. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2015. 2. Merchandise costing $2,800 was received on January 3, 2015, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2014, f.o.b. destination. 3. A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer’s order was dated December 18, 2014, but that the case was shipped and the customer billed on January 10, 2015. The product was a stock item of your client. 4. Merchandise received on January 6, 2015, costing $680 was entered in the purchase journal on January 7, 2015. The invoice showed shipment was made f.o.b. supplier’s warehouse on December 31, 2014. Because it was not on hand at December 31, it was not included in inventory. 5. Merchandise costing $720 was received on December 28, 2014, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked “on consignment.” Instructions Assuming that each of the amounts is material, state whether the merchandise should be included in theclient’s inventory, and give your reason for your decision on each item.

1.      : Ignore the test. Cheryl has proved herself via work experience and deserves the job.

Define the difference between elastic and plastic deformation in terms of the effect on the crystal lattice structure

Ace Company had 200,000 shares of common stock outstanding on December 31, 2015. During the year 2016, the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2016, Ace Company reported net income of $249,690 after a casualty loss of $40,600 (net of tax). Instructions What earnings per share data should be reported at the bottom of its income statement, assuming that the casualty loss is extraordinary?

Why is the ‘withdrawals multiplier’ strictly speaking a negative figure?

A wire EDM operation is to be performed on a slab of ¾-in-thick aluminum using a brass wire electrode whose diameter = 0.005 in. It is anticipated that the overcut will be 0.001 in, so that the kerf width will be 0.007 in. Using a discharge current = 7 amps, what is the expected allowable feed rate that can be used in the operation? The melting temperature of aluminum is 1220°F.

If a person meets the qualifying relative tests for a taxpayer, is that person automatically considered to be a dependent of the taxpayer? Explain.

What kinds of questions about future cash flows do investors and creditors attempt to answer with information in the income statement?

What challenges do LLCs face when deciding whether to treat their members’ shares of ordinary business income as self-employment income?

Given the Keynesian explanation for the persistence of high levels of unemployment after the early 1980s and early 1990s recessions, what policies would you advocate to reduce unemployment in the years following a recession?

How might fluctuations in aggregate demand lead to changes in output even under the assumption of continuous market clearing?

Explain the relative risk of the various types of securities in which a money market fund may invest. (LO3)

reported the following information regarding 2013–2014 inventory.     Instructions (a) Why might Robots, Inc., use two different methods for valuing inventory? (b) Comment on why Robots, Inc., might disclose how its LIFO inventories would be valued under FIFO. (c) Why does the LIFO liquidation reduce operating costs? (d) Comment on whether Robots, Inc. would report more or less income if it had been on a FIFO basis for all its inventory.

Explain how the Sarbanes-Oxley Act improved the transparency of banks. Why might the act have a negative impact on some banks? (LO2)

1.       : How might employee resource groups contribute to the advancement of women and people of color to higher-level positions in an organization?

1.      What additional investigation might Whitley and Vinson undertake before settling on a plan of action toward Cam?

What is the rule of mixtures?

Clyde is a cash method taxpayer who reports on a calendar-year basis.  This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000.  Determine the amount Clyde should include in his gross income this year under the following circumstances: a.       Paylate Corporation wrote the check and put it in his office mail slot on December 30 of this year, but Clyde did not bother to stop by the office to pick it up until after year-end. b.       Paylate Corporation mistakenly wrote the check for $100.  Clyde received the remaining $900 after year-end. c.       Paylate Corporation mailed the check to Clyde before the end of the year, (and it was delivered before year-end). Although Clyde expected the bonus payment, he decided not to collect his mail until after year-end. d.       Clyde picked up the check in December, but the check could not be cashed immediately because it was postdated January 10.

Amber is a tax expert, whereas Rob is a tax novice.  Explain how their process in identifying tax issues may differ.