Answer:
1. Under the Securities Act of 1933, initial purchasers of securities may sue the auditors for misleading audited financial statements and need not prove that they relied on the financial statements. The burden of proof is on the auditors to prove that they were <u>relied</u> in the performance of their work.
2. When CPAs are associated with <u>unaudited financial statements
</u>
, a possibility exists that the client may misinterpret the extent of the CPAs' services and believe that the accountants are acting as auditors.
3. A document including audited financial statements that must be filed with the SEC by any company intending to sell its securities to the public through the mails or interstate commerce is called a <u>Form S-1.</u>
4. When damage to another is directly attributable to a wrongdoer's act, <u>proximate cause</u> is said to exist.
5. An <u>engagement letter</u> is the written contract summarizing the relationship between the auditors and the client.
Answer:
The Journal entries are as follows:
(i) On March 1,
Cash A/c Dr. $297,500
To common stock (42,500 × $4) $170,000
To paid in capital in excess of par value $127,500
(To record the issuance of common stock)
(ii) On April 1,
Cash A/c Dr. $70,000
To common stock $70,000
(To issue no-par value common stock)
(iii) On April 6,
Inventory A/c Dr. $45,000
Machinery A/c Dr. $145,000
To common stock (2,000 × $25) $50,000
To paid in capital in excess of par value $46,000
To Note payable $94,000
(To record the issuance of common stock)
Answer:
<u>Part 1</u> There will be a disadvantage for 30,000 as there are allocated cost into product X
<u>Part 2 </u>TRUE
As performing the order will not renounce to selling in the local market. When the order comiptes with the normal capacity(there is no idlbe capacity to use) it will have as opportunity cost the contribution if sold in the local market.
Explanation:
![\left[\begin{array}{cccc} &$Current&$Discontinued&$Differential\\$Revenues&400,000&&-400,000\\$variables&-320,000&&320,000\\$Contribution&80,000&&-80,000\\$avoidable fixed cost&-50,000&&50,000\\$allocate fixed&-70,000&-70,000&\\$Result&-40,000&-70,000&-30,000\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7D%20%26%24Current%26%24Discontinued%26%24Differential%5C%5C%24Revenues%26400%2C000%26%26-400%2C000%5C%5C%24variables%26-320%2C000%26%26320%2C000%5C%5C%24Contribution%2680%2C000%26%26-80%2C000%5C%5C%24avoidable%20fixed%20cost%26-50%2C000%26%2650%2C000%5C%5C%24allocate%20fixed%26-70%2C000%26-70%2C000%26%5C%5C%24Result%26-40%2C000%26-70%2C000%26-30%2C000%5C%5C%5Cend%7Barray%7D%5Cright%5D)
Revenue 10,000 x 40 = 400,000
Variable Cost: 100,000 x 32 = 320,000
Avoidable: 120,000 - 70,000 = 50,000
<span>Crystal corporation makes $2,000 payments every month for leasing office equipment. Crystal recorded a lease payment as an operating lease.
An operating lease is a lease that is commonly used for a short term basis and asset. The operating lease payment is found on the financial statement.
</span>
The definition in my own words are:
- Cash Basis of Accounting: is type of accounting that that makes use of revenues and expenses at the time cash is received.
- Accrual Basis of Accounting: The accrual basis of accounting focus on recording revenues .
- Matching Principle: can be regarded as accounting concept that focus on companies report expenses .
- Time-Period Principle: is one that a business should report the states that financial results of its activities .
- Accounting Period: serves as the period of time that is used for accounting functions, this can be a fiscal year.
<h3>What is accounting?</h3>
Accounting serves as the process which involves the recording as well as summarizing business and financial transactions.
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