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Snezhnost [94]
3 years ago
10

Dorothy (an audit manager) has been assigned to the audit of Tandem Electric, Inc. Dorothy is concerned that Joanne, a friend fr

om her college days, is on the internal audit staff of Tandem Electric. Dorothy believes she could provide services to this client in an objective manner. Which statement best describes how Dorothy should apply the AICPA conceptual framework approach in this situation?a. Dorothy should refuse to provide services to Tandem Electric because no safeguards would be effective in mitigating the threat(s) to her independence. b. Dorothy should not participate in the audit of Tandem Electric before obtaining a written waiver from her firm's general counsel. c. Dorothy should consider the threats to her independence and whether safeguards may be applied that reduce the threat(s) to an acceptable level. d. Dorothy should document her assessment of independence, which should include a sworn statement from Joanne.
Business
1 answer:
Helga [31]3 years ago
7 0

Answer:

c. Dorothy should consider the threats to her independence and whether safeguards may be applied that reduce the threat(s) to an acceptable level.

Explanation:

The best application of the AICPA conceptual framework approach in this scenario is that: Dorothy should consider the threats to her independence and whether safeguards may be applied that reduce the threat(s) to an acceptable level.

<u>The threat of independence in the scenario is not high enough to warrant the resignation of Dorothy from the audit team because her friend is not the Finance Director or person in charge of primary preparation of the financial statements but just a member in the internal audit team, hence the risk to her independence is relatively moderate.</u>

Dorothy already believes that she will be objective, hence she should consider the threats to her independence and whether safeguards may be applied that reduce the threat(s) to an acceptable level.

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Andrei [34K]

Answer:

The amount of effective interest expense that chaco will record in the first six months is $14,375

Explanation:

interest payment that will be first made is on June 30, Year 1. Therefore, the outstanding balance used in the calculation is the issue price.

The interest expense is calculated by these formula

Interest expense = Effective semiannual interest rate × Outstanding balance

Interest expense = (8% ÷ 2) × $359,378 = $14,375

So the interest expense is gotten as %14,375

8 0
3 years ago
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On July 1, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending
Neko [114]

Answer:

a.

July 1, Year 1

Prepaid Insurance                  $15000 Dr

     Cash                                       $15000 Cr

Dec 31, Year 1

Insurance expense                    $2500 Dr

    Prepaid Insurance                     $2500 Cr

b.

July 1, Year 1

Cash                                                  $15000 Dr

    Unearned Service revenue             $15000 Cr

Dec 31, Year 1

Unearned service revenue        $2500 Dr

    Service revenue                           $2500 Cr

Explanation:

a.

The company will record the cash going out of the business for prepaid insurance as credit and the asset account prepaid insurance as debit to record the prepayment of insurance for 3 years at the amount of $15000.

The insurance paid out is for 3 years. So, the per year insurance expense is,

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b.

For the receiving company, the cash is being received and as the service will be provided later on, the cash received will be debited and the unearned service revenue will be credited.

As six months worth of cover has passed, on 31 December, the company will record service revenue for 6 months that is $2500 and debit the liability recorded under unearned service revenue.

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Explanation:

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