The statements are:
Because Dazzle is not a separate tax entity, all the owners declare revenue earned through the company on their personal federal tax returns.
The $5 million dollar villa is protected from business liabilities unless the liability is incurred through wrongful acts.
Answer:
a. in order to calculate this we must assume that the economy entered a recession:
degree of operating leverage = [($20 - $70)/$70] / [($260 - $520)/$520] = -0.7143 / -0.5 = 1.43
b. $14 million
Explanation:
strong economy:
total sales $520 million
<u>variable costs $420 million</u>
gross profit $100 million
<u>fixed costs $30 million</u>
EBIT $70 million
<u>income taxes $21 million</u>
net income $49 million
weak economy:
total sales $260 million
<u>variable costs $210 million</u>
gross profit $50 million
<u>fixed costs $30 million</u>
EBIT $20 million
<u>income taxes $6 million</u>
net income $14 million
Answer:
Identification of the Internal Control Weaknesses:
A. There is no segregation of duties and there is lack of access control. Jerry Miller as a security guard is not expected to have a master key to the cash box. With this he can pilfer the cash. If he prepares the report that shows the number of cars that parked on the lot, he is not supposed to also prepare the day's cash receipts. Otherwise, he can state any number of cars as parked that he likes, and which corresponds to the cash he might leave in the Cash box since he also has a master key.
B. There is no segregation of duties and there is lack of supervision, proper reconciliations, and assets audit. Sharon Fisher handles purchase transactions from the beginning to the close all alone with a third party. This exposes the company to procurement frauds and collusion with suppliers. She can purchase assets for the company at prices that would enrich her personally.
C. Forming an audit opinion on the basis of ratio analysis of last year's comparative financial statements exposes the company to audit risks. While ratio analysis is part of the basis for forming audit opinions, it is surely not the first audit procedure to obtain audit evidence to support his audit opinion on the financial statements. An auditor is expected to obtain sufficient audit evidence and perform audit substantive tests of financial statement assertions. He or she is also expected to review the internal control system to ensure that it is operating effectively after establishing its existence and reviewing changes in internal controls.
Explanation:
Internal Controls are controls established by management in order to help it achieve business goals. There are many internal controls, including Separation of Duties, Access Controls
, Authorization and Approvals, Asset Audits, Reconciliations, and Data Backups. The purposes of internal controls are to establish the reliability of financial reporting, ensure timely feedback on the achievement of operational or strategic goals, and achieve compliance with financial management laws, and accounting regulations.
Answer:
Sunk cost will be = $70
Explanation:
Sunk Cost refers to the cost for which the amount has been already spent, and cannot be recovered. These are generally incurred and then not regarded for decision making as irrespective of decision being viable or not this cost cannot be avoided.
In the given instance, Damon Rutton Purchased the ticket of $70
This is the only cost which has already been incurred, else other costs of parking and food will only be incurred if he visits the game of Sarasota Shippers.
When he spend some time with his wife sunk cost will be = $70
