Auditing P 3-26 A careful reading of an unqualified report indicates several important phrases.
Explain why each of the following phrases or clauses is used rather than the alternative provided:
a. "The financial statements referred to above present fairly in all material respects the financial position" rather than "The financial statements mentioned above are correctly stated."
b. "In conformity with accounting principles generally accepted in the United States of America" rather than "are properly stated to represent the true economic conditions."
c. "In our opinion, the financial statements present fairly" rather than "The financial statements present fairly."
d. "Brown & Phillips, CPAs (firm name)," rather than "James E. Brown, CPA (individual partner's name)."
e. "We conducted our audit in accordance with auditing standards generally accepted in the United States of America" rather than "Our audit was performed to detect material misstatements in the financial statements."
Click here for the solution: Explain why each of the following phrases or clauses is used rather than the alternative provided
Showing posts with label Alternative. Show all posts
Showing posts with label Alternative. Show all posts
Friday, September 11, 2015
Wednesday, June 17, 2015
Quentin Giordano owns a small retail ice cream parlor
Problem 16-17 Using the Payback Period and Unadjusted Rate of Return to Evaluate Alternative Investment Opportunities
Quentin Giordano owns a small retail ice cream parlor. He is considering expanding the business and has identifies two attractive alternatives. One involves purchasing a machine that would enable him to serve frozen yogurt to customers. The machine would cost $4,050 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $2,970 and $450, respectively.
Alternatively, he could purchase for $5,040 the equipment necessary to serve cappuccinos. That equipment has an expected useful life of four years and no salvage value. Additional annual cash revenue and cash operating expenses associated with selling cappuccinos are expected to be $4,140 and $1,215, respectively.
Income before taxes earned by the ice cream parlor is taxed at an effective rate of 20 percent.
A. Determine the payback period and unadjusted rate of return (use average investment.) for each alternative.
B. Indicate which investment alternative you would recommend. Explain your choice.
Check:
a. Payback Period of the Yogurt Investment: 1.77 Years
Unadjusted Rate of Return of the Cappuccino Investment: 52.86%
Click here for the solution: Quentin Giordano owns a small retail ice cream parlor
Quentin Giordano owns a small retail ice cream parlor. He is considering expanding the business and has identifies two attractive alternatives. One involves purchasing a machine that would enable him to serve frozen yogurt to customers. The machine would cost $4,050 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $2,970 and $450, respectively.
Alternatively, he could purchase for $5,040 the equipment necessary to serve cappuccinos. That equipment has an expected useful life of four years and no salvage value. Additional annual cash revenue and cash operating expenses associated with selling cappuccinos are expected to be $4,140 and $1,215, respectively.
Income before taxes earned by the ice cream parlor is taxed at an effective rate of 20 percent.
A. Determine the payback period and unadjusted rate of return (use average investment.) for each alternative.
B. Indicate which investment alternative you would recommend. Explain your choice.
Check:
a. Payback Period of the Yogurt Investment: 1.77 Years
Unadjusted Rate of Return of the Cappuccino Investment: 52.86%
Click here for the solution: Quentin Giordano owns a small retail ice cream parlor
Tuesday, June 16, 2015
ADK Delivery is a small company that transports business packages between San Francisco and Los Angeles
Problem 16-16 Using Present Value Techniques to Evaluate Alternative Investment Opportunities
ADK Delivery is a small company that transports business packages between San Francisco and Los Angeles. It operates a fleet of small vans that move packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. ADK delivery recently acquired approximately $3 million of cash capital from its owners, and its president, Frank Hobb, is trying to identify the most profitable way to invest these funds.
AND SO ON
Check:
a. NPV of the vans investment: $75,608.57
b. NPV index of the trucks investment: 1.126
Click here for the solution: ADK Delivery is a small company that transports business packages between San Francisco and Los Angeles
ADK Delivery is a small company that transports business packages between San Francisco and Los Angeles. It operates a fleet of small vans that move packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. ADK delivery recently acquired approximately $3 million of cash capital from its owners, and its president, Frank Hobb, is trying to identify the most profitable way to invest these funds.
AND SO ON
Check:
a. NPV of the vans investment: $75,608.57
b. NPV index of the trucks investment: 1.126
Click here for the solution: ADK Delivery is a small company that transports business packages between San Francisco and Los Angeles
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