Answer: The correct answer is "D. It begins when the engagement letter is signed and continues until the report for the third year is issued unless the relationship is terminated sooner.".
Explanation: The statement "It begins when the engagement letter is signed and continues until the report for the third year is issued unless the relationship is terminated sooner." best describes the period of the professional engagement as it applies to a three-year engagement to audit client's financial statements since this type of professional commitment begins with the signing of the document that formalizes the commitment and is in force until the issuance of the last report unless the relationship is resolved beforehand by another circumstance.
Answer: A
Preferred share dividends are distributions of profits and not interest payments. Thus not tax-deductible.
Answer:
The answer is: C) decreases ; increases
Explanation:
The real cost of borrowing is calculated by adjusting the nominal cost of borrowing by the inflation rate. This means that if the inflation rate increases, then the adjusted real cost of borrowing will decrease.
The inflation rate increases when country´s money supply growth rate outpaces its economic growth. So when the inflation rate increases (lowering the real cost of borrowing), borrowers are more likely to issue bonds, increasing the bond supply.
Answer:
a. 300 units
b. $3,750
c. $3,750
d. 100 units
Explanation:
a. The computation of the economic order quantity is shown below:
= 
= 
= 300 units
b. For annual holding cost, first we have to find out the average inventory would equal to
= Economic order quantity ÷ 2
= 300 units ÷ 2
= 150 units
Now the Carrying cost = average inventory × carrying cost per unit
= 150 units × $25
= $3,750
c. For ordering cost, first we have to compute number of orders would be equal to
= Annual demand ÷ economic order quantity
= $15,000 ÷ 300 units
= 50 orders
Now Ordering cost = Number of orders × ordering cost per order
= 50 orders × $75
= $3,750
d. The computation of the reorder point is shown below:
= (Annual demand ÷ total number of days in a year ) × lead time
= (15,000 units ÷ 300 days) × 2 working days
= 100 units
