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3 years ago

What are some common motivations of financial statement fraud examination?

Business

1 answer:

WINSTONCH [101]3 years ago

5 0

Answer:

To support a high stock price, to support a bond or stock offering, or to increase the company's stock price.

Explanation:

The motivation to publish fraudulent financial statements varies depending on the situation. A common theme in many cases of fraud is the attempt to improve the reported financial information to maintain high stock prices, support bonds or stock quotes, or raise a company's stock price. In many companies that published fraudulent financial statements, senior executives held significant stocks or stock options, and lowering the price of the stock would significantly reduce personal net worth or make worthless options. As a result, senior management had to maintain the high share price and therefore needed high returns to maintain the high share price. Investors value reports that increase profits each year. Indeed, the decline in earnings can significantly lower a company's stock price. Sometimes fraudulent financial reports cause line managers to exaggerate the results to meet the company or other expectations. Sometimes the cost of failure in corporate governance is high, and when it comes to choosing between failure and fraud, some managers quickly turn to fraud.

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Soundgarden Company sold 200 color laser copiers on July 10, 2020, for $4,000 apiece, together with a 1-year warranty. Maintenan

ziro4ka [17]

Answer:

Soundgarden Company

Journal Entries:

July 10, 2020:

Debit Cash Account (or Accounts Receivable) $800,000

Credit Sales Revenue $800,000

To record the sale of 200 copiers at $4,000 apiece.

July 10, 2020:

Debit Warranty Expense $66,000

Credit Warranty Liability $66,000

To record the estimated warranty maintenance on copiers sold.

December 31:

Debit Warranty Liability $17,000

Credit Inventory $17,000

To record actual warranty costs incurred.

Explanation:

Soundgarden should record these transactions according to the matching principle, whereby warranty expense is recognized in the period that matches the sale so that all expenses related to sales are recognized when the sales are recognized. This is achieved by creating a warranty liability account after the sales and recording a warranty expense as the debit entry. When actual warranty costs are incurred, the Soundgarden Company will debit the warranty liability and credit the inventory actual for the actual costs.

7 0

3 years ago

Kulka Corporation manufactures two products: Product F82D and Product T05P. The company uses a plantwide overhead rate based on

ipn [44]

Answer:

b. $303,000

Explanation:

The activity rate

1. Machining = $\frac{\text{total cost}}{\text{total activity}}$

$=\frac{180000}{9000}$

= $ 20 per machine hour

2. Machine set up = $\frac{\text{total cost}}{\text{total activity}}$

$=\frac{125000}{250}$

= $ 500 per set up

3. Product design = $\frac{\text{total cost}}{\text{total activity}}$

$=\frac{44000}{2}$

= $ 22000 per product

4. Order size = $\frac{\text{total cost}}{\text{total activity}}$

$=\frac{260000}{10000}$

= $ 26 per direct labor hour

Now the ABC cost (Product T05P)

1. Machining = $\text{machine hours} \times \text{activity rate}$

= 4000 x 20

= $ 80,000

2. Machine set ups = $\text{no. of set ups} \times \text{activity rate}$

= 90 x 500

= $ 45,000

3. Product design = $\text{no. of products} \times \text{activity rate}$

= 1 x 22000

= $ 22,000

4. Order size = $\text{direct labor hours} \times \text{activity rate}$

= 6000 x 26

= $ 156,000

Therefore, the total manufacturing overhead cost assigned to product T05P = 80000 + 45000 + 22000 + 156000

= $ 303,000

6 0

3 years ago

Pretax accounting income for the year ended December 31, 2021, was $53 million for Truffles Company. Truffles' taxable income wa

Anuta_ua [19.1K]

Answer:

$17,820,000

Explanation:

The amount of tax due to government authorities for the current period is referred to as current portion of income tax expense. It is calculated by product of current or enacted tax rate and taxable income for the period

Taxable income for 2021 = $66million

Enacted or current tax rate for 2021 = 27%

Current portion of income tax expense for 2021 = Taxable income x current tax rate = $66 million x 27% = $17,820,000million

Hence Current portion of income tax expense = $18 million

4 0

2 years ago

Ben and Mildred's Stables used two different independent variables (trainer hours and number of? horses) in two different equati

liubo4ka [24]

Answer:

the estimated total cost for the coming year is $12,227.60

Explanation:

The computation of the estimated total cost is shown below:

= Constant coefficient + independent variable coefficient × number of horses

= $5,240.20 + $22.54 × 310 horses

= $5,240.20 + $6,987.40

= $12,227.60

This is the answer but not the same is to be given in the options

hence, the estimated total cost for the coming year is $12,227.60

7 0

3 years ago

Which of the following is not allowed by scrum refactoring velocity tracking relaease planning hardening sprints

Igoryamba

Answer:

(B) Hardening sprints

Explanation:

Hardening Sprints are not allowed because the subject of hardening should be continuously address throughout normal Sprints.

Or if the question has the following options:

Which of the following is not allowed in Scrum?

a. Using Story Points

b. Hardening Sprints

c. Release Planning

d. Using Planning Poker

Answer:

(B) Hardening sprints

Explanation:

Using Story Points, Release Planning, Using Planning Poker are not mandatory but allowed. Only hardening sprints are not allowed.

3 0

3 years ago