Answer:
1. When searching for unrecorded liabilities, the auditors consider transactions recorded <u>after</u> year end.
<em>Auditors consider transactions recorded after year end to determine if it was supposed to be recorded in the current period. </em>
2. Accounts payable <u>confirmation</u> can be mailed to vendors from whom substantial purchases have been made.
<em>As a way to keep a document trail, creditors from whom substantial goods were bought from can be mailed a confirmation. </em>
3. To gain overall assurance as to the reasonableness of accounts payable, the auditor may consider <u>ratios</u>.
<em>Ratios such as the Payables turnover can be used to evaluate the reasonableness of Accounts payable. </em>
4. When auditors find unrecorded liabilities, before adjusting they must consider <u>materiality</u>.
<em>
They must consider if the adjustment is material or significant enough to record. </em>
5 Auditiors need to consider <u>shipping terms</u> terms for determining ownership and whether a liability should be recorded.
<em>Shipping terms need to be considered because they can tell who owns goods in transit and therefore if a liability is needed for them. Shipping terms such as FOB Shipping point mean that the business incurs the liability as soon as the seller ships the goods. </em>
Answer and Explanation:
There are several reasons why the number of lawsuits against auditors and the size of awards to plaintiffs has increased. Mainly, <em>Certified Public Accountant (CPA) firms are most likely to solve legal issues with companies in front of inaccuracies in audits without a judicial process</em> to avoid the fees, possible penalties they will have to take charge if found at fault. Thus, more lawsuits are created under that situation because those practices are not considered legal even if the plaintiff decides to come up to a resolution that way. This is because firms could still be operating unethically unless the law enforces laws in their operations.
Answer:
The remaining part of the question is given below:
(Note that the subsidy can be granted to the education institutions or to the students directly or indirectly; for example, through low- interest student loans.)
a. P2-P0
b. P2-P1
c. P0-P1
d. P1
<u>Correct Answer:</u>
b. P2-P1
Explanation:
A pigouvian subsidy is a subsidy that is used to encourage behaviour that have positive effects on others who are not involved or society at large. <em>Behaviors or actions that are a benefit to others who are not involved in the transaction are called positive externalities.</em>
Answer:
<u>c. there is the possibility that the funds are used for riskier behavior than the lender agreed to.</u>
Explanation:
True. The term "Moral Hazard" as used in an investment context, often refers to a scenario where one party with a <em>lesser risk burden</em> in a business agreement, <u>deliberately </u>takes investment risk that would be detrimental to others in the agreement who have a higher risk burden.
It is an unethical business practice; a moral hazard, and so acts as a barrier to investors who may want to finance global growth.
The statement is false. When goods are sold, their cost are transferred from finished goods to sold items.
