Answer:
debt financing
Explanation:
The investment made by Lyndon and Tammy Shook in the business of Blake represents financing from personal resources.
Explanation:In the scenario presented, the investment from Lyndon and Tammy Shook symbolizes financing derived from personal resources. This is because they are directly related to Blake and the investment comes in the form of their personal property and funds, thereby not encompassing the principles of venture capital or crowdfunding loans.
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W.C. Cycling had $55,000 in cash at year-end 2007 and $25,000 in cash at year-end 2008. Cash flow from long-term investing activities totaled _$250,000, and cash flow from financing activities totaled $170,000. Required: a) What was the cash flow from operating activities? b) If accruals increased by $25,000, receivables and inventories increased by $100,000, and depreciation and amortization totaled $10,000, what was the firm's net income?
Answer:
a) 50,000
b) 115,000
Explanation:
Cash flow from operating activities and Net Income can be calculated as follows
DATA
Opening cash balance = $55,000
Closing cash balance = $25,000
Long term investing activities = $250,000
Cashflow from financing activities = $170,000
Requirement A: Cash flow from operating activities
$
Investment 250,000
Less:
Cash flow from financing activities (170,000)
Opening Cash balance (55,000)
Add:
Closing cash balance 25,000
Operating cash flows 50,000
Requirement B: Net Income
Operating cash flows 50,000
Add:
Increase in receivables and inventory 100,000
Less:
Increase in accruals 25,000
Depreciation 10,000
Net Income 115,000
bonnie gui, an appliance salesperson, is using the spin approach. she was sure her prospect was ready to buy, but instead the prospect responded negatively to the need-payoff question. what should bonnie do now?
Bonnie was sure her prospect was ready to buy, but instead the prospect responded negatively to the need-payoff question. Bonnie should ask a problem question.
Using questions from the scenario, problem, implication, and need-payoff categories, SPIN selling reps structure sales calls. By focusing on the difficulties of the buyer, this strategy enables salespeople to build the consultative client relationships that complex negotiations demand.
Buyers are guided by need-payoff inquiries to understand the advantages of solving the issue and the rewards of acting right away rather than waiting. Use these inquiries to guide the customer to a certain next action.
Reps can find the buyer's problem by asking them problem-related inquiries. Use these inquiries to identify any areas of potential, whether they are presented explicitly or impliedly. Hence, problem questions hsould be asked.
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the year the volleyball was introduced
Answer:
The Year was 1895
Hope that helps!
Why is account management important in the vegetable farming ? give reason .
Answer:
Money
Explanation:
The expected result of farming would be to make money, account management would help the most in making money. With account management, you can see how well your farm is producing money which in turn can tell you if you are growing quality crops or a crop that your clients want the most.
Answer:
It is important to appreciate the fact that modern business management principles can assist the farmer or farm manager, no matter how small his farm may be and however meager his capital. This is because of the two major tasks facing today’s farm managers.
Explanation:
Importance of agriculture in the Food supply Agriculture is the world’s leading source of food items. All the food substances that are essential viz. Agriculture produces vegetables, proteins, and oils. The carbohydrates provide all living beings with energy.
a firm acquired an assset on 1st Apri, 1990 at a cost of Le 30,000. The useful life of the asset is expected to be 10 years. The estimated scrap value of the asset at the end of the year is Le 2,000. Show the provision for depreciation account for the first 3 years in the life of the asset using the Straight line method
Answer:
First year : Le 2100
Second year : Le 2800
Third year : Le 2800
Explanation:
Given the following :
Cost of equipment = 30,000
Useful years = 10
Salvage or scrap value = 2,000
depreciation account for the first 3 years in the life of the asset using the Straight line method :
Straight line Depreciation :
(Cost - salvage value) / useful years
First year: (April - December 1990)
April - December 1990 = 9 months
(30,000 - 2000) / 10 × 9/12
28000 / 10 × 0.75 = Le 2100
Second year:
(30,000 - 2000) / 10 × 12/12
28000/ 10 = Le 2800
Third year:
(30,000 - 2000) / 10 × 12/12
28000/ 10 = Le 2800
If a unionized company has a(n) ______ shop, the workers do not have to join the union, and they do not pay dues or fees to the union.
managed
open
closed
union
agency
The workers do not have to join the union or pay the dues or fees to the union, only when there is an open shop owned by the unionized company. Hence, Option B is correct.
What is a unionized company?There are two types of organizations, one is unionized and the second is non-unionized. Both the companies have employees. In a unionized company, the employees usually do not receive any kind of special or individual treatment from the employers. Whereas in a non-unionized company, the employees have the right to negotiate on their behalf of themselves and simultaneously an employer also has the right to treat the employees differently.
When a company is having a working culture of unionized pattern, the employees also belongs to the trade unions. There is a particular pattern of raising the pay that after the end of three years of duty, there will be a rise of almost 12%.
Thus, Option B is correct.
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What can a boosted post help an advertiser achieve?
A boosted post helps an adviser to connect with the audience and gain trust.
Boosted post is a kind of post that is used on social media platforms in order to enhance the page of the platform and to attract audience to the page. Boosted post can help better communication with the audience along with the increase in a greater number of messages, calls and texts. Boosted posts help for better advertisements of the product. For example, A Chocolate brand may use Boosted posts to gain audience as well as consumers. Boosted posts helps an adviser to be discovered among people, to establish a benchmark in the market and to gain more and more customers. It's a kind of marketing strategy used for publicity purpose.
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Menu costs help explain a. sticky-wage theory b. sticky-price theory c. natural rate of unemployment d. misperceptions theory
Menu costs play a role in explaining the sticky-price theory and the misperceptions theory. In the sticky-price theory, prices do not adjust immediately to changes in demand or supply due to the costs associated with changing prices, such as printing new menus or updating computer systems.
This results in temporary imbalances in the market, leading to fluctuations in output and employment. In the misperceptions theory, firms may misinterpret changes in prices as changes in relative prices, leading to incorrect production decisions. Menu costs also indirectly impact the natural rate of unemployment by causing firms to adjust employment levels instead of prices in response to changes in demand or supply. The sticky-wage theory, on the other hand, is not directly related to menu costs but rather suggests that nominal wages are slow to adjust due to factors such as labor market institutions or social norms.
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which of the following is the first step in creating a wbs? identify all activities needed for the project refer to the scope to identify the deliverable identify all tasks needed to make the work manageable verify that the work has been properly sequenced
It refer to the scope to identify the deliverable is the first step in creating a wbs.
What is the process of WBS?A project is divided up into smaller, easier-to-manage components as part of the process of creating a Work Breakdown Structure (WBS). The project's entire scope is laid out in a hierarchical framework provided by the WBS, which divides it into smaller, more manageable components. The project scope and the deliverables are referenced in the first step of the procedure. The deliverables can be further divided into more specialised, smaller components after being identified. This procedure is repeated until the project has been divided into controllable work packages. Typically, a tree diagram is used to represent the WBS, with the overall project at the top and the various work packages at the bottom.
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Finance. A person wishes to have $27,500 cash for a new car 7 years from now. How much should be placed in an account now, if the account pays 4.4% annual interest rate, compounded weekly? ... (Round
The amount that should be placed in an account now is $18,218.53 if the account pays 4.4% annual interest rate, compounded weekly to get $27,500 after 7 years.
The formula for calculating the future value of an investment is given by:FV = PV(1 + r/n)^(n*t)where,FV is the future value of the investmentPV is the present value of the investmentr is the annual interest raten is the number of times the interest is compounded per yeart is the number of years
For the given situation, the future value of the investment (new car) is $27,500 and the annual interest rate is 4.4% compounded weekly.Therefore, the weekly interest rate would be:r = 4.4% / 52 = 0.0846% per weekThe number of weeks in 7 years is given by:t = 7 years × 52 weeks/year = 364 weeks
Putting these values in the formula:FV = \(PV(1 + r/n)^(n*t)$27,500 = PV(1 + 0.0846%/52)^(52*7\))Solving for PV, we get:PV = $18,218.53Therefore, the amount that should be placed in an account now is $18,218.53 if the account pays 4.4% annual interest rate, compounded weekly to get $27,500 after 7 years.
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Why would high start-up costs serve as a barrier to competition?
on september 1, your company issued 50,000 shares of $2 par value stock for $20 per share. book value was $18 per share. which journal entry records this transaction?
According to the question of company issued 50,000 shares of $2 par value stock for $20 per share, $900,000 journal entry records this transaction.
To record the issuance of 50,000 shares of $2 par value stock at $20 per share, the journal entry would be:
The total amount of the transaction is $1,000,000, which is the number of shares issued ($50,000) multiplied by the price per share ($20). The par value of the stock is $2 per share, so the Common Stock account is credited for $100,000 (50,000 x $2). The difference between the total amount and the par value ($900,000) is credited to Additional Paid-in Capital.
Debit: Cash ($20/share × 50,000 shares) = $1,000,000
Credit: Common Stock ($2 par value × 50,000 shares) = $100,000
Credit: Additional Paid-In Capital ($18/share × 50,000 shares) = $900,000
This journal entry reflects the cash received from the transaction, the par value of the issued shares, and the additional paid-in capital.
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beginning in 1983 to the present, medicare reimburses hospitals based on a question blank 1 of 1 answer payment system.
Beginning in 1983 to the present, Medicare reimburses hospitals based on a prospective payment system (PPS).
The prospective payment system is a method of reimbursement where hospitals are paid a predetermined, fixed amount for each patient based on their diagnosis, regardless of the actual costs incurred by the hospital. This system was implemented to control healthcare costs and provide incentives for hospitals to be more efficient in delivering care.
Under the prospective payment system, hospitals are classified into diagnosis-related groups (DRGs), which group together similar diagnoses and treatments. Each DRG is assigned a specific payment rate, and hospitals are reimbursed based on the DRG classification of the patients they treat.
This payment system shifts the focus from fee-for-service reimbursement to a predetermined payment based on the patient's condition. It encourages hospitals to provide cost-effective care and manage resources efficiently to meet the needs of patients within the fixed payment amount.
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What are expenditures on a fixed asset that only benefit the current period called?
The expenditures on a fixed asset that only benefit the current period are called revenue expenditures.
Revenue expenditures are expenses incurred in order to maintain or operate a fixed asset and are usually short-term in nature. They are expenses that are incurred to keep the fixed asset in good working condition or to restore it to its original state.
These expenditures do not result in an increase in the productive capacity or the useful life of the asset.
Examples of revenue expenditures include repairs, maintenance, and routine servicing costs. Unlike capital expenditures, which are incurred to acquire or improve a fixed asset and provide long-term benefits, revenue expenditures are expensed in the period they are incurred.
They are reported as operating expenses on the income statement and reduce the net income for the period.
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the ability to influence employees to voluntarily pursue organizational goals is referred to as ______.
Answer:
leadership
Explanation:
The ability to influence employees to voluntarily pursue organizational goals is referred to as leadership.
What is an example of a mixed market economy?
It United States is used as an illustration of a mix market economy in the statement.
What defines an economy?Any economy is a collection of interdependent processes of creation and consumption that actually determine whether resources are split within a community. The interests that persons who live there and conduct business there are met by creation & consumption of items and services in general.
What are examples of economy?The well example about an economy is the that has, which leverages a nation's customs as history to influence the creation & sale of merchandise. A traditional economy's major cornerstones are agriculture, fishing, and hunting.
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What is STP Marketing?
STP Marketing is a strategic approach to marketing that involves segmenting the market, targeting specific segments, and positioning products or services to meet the unique needs of those segments. STP stands for Segmentation, Targeting, and Positioning, which are the key elements of this approach.
In STP Marketing, the first step is segmentation, which involves dividing the market into groups of consumers who share similar characteristics, such as demographics, behaviors, or preferences. This allows businesses to better understand their customers and create targeted marketing campaigns that address the unique needs and wants of each segment.
Once the market is segmented, the next step is targeting. This involves selecting one or more segments that the business wants to focus on and tailoring its marketing efforts to those segments. By targeting specific segments, businesses can develop more effective marketing strategies that are more likely to resonate with their customers.
Finally, positioning involves creating a unique image or identity for the product or service in the minds of the target audience. This can involve developing a specific brand personality, highlighting key product features or benefits, or positioning the product in a certain way relative to competitors. By positioning their products or services in a way that appeals to their target audience, businesses can differentiate themselves from the competition and create a stronger market position.
Overall, STP Marketing is a powerful tool for businesses to create more effective marketing strategies and achieve greater success in the marketplace. By segmenting the market, targeting specific segments, and positioning their products or services in a way that meets the unique needs of those segments, businesses can create a strong competitive advantage and better connect with their customers.
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"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that a. the activities of the Federal Reserve’s bond traders are irrelevant if the Federal Reserve decides to target an interest rate. b. our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate. c. changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate. d. rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate.
Answer:
b
Explanation:
The monetary policy is not fundamently altered
If the company estimates 4% of receivables to be uncollectible, the bad debt expense for 2022 would be: group of answer choices $4,720 $720 $4,000 $160 $4,800
If the Company estimates 4% of receivables to be uncollectible, the bad debt expense for 2022 would be $ 720 option B.
When a receivable is no longer recoverable as a result of a customer's inability to pay an existing debt owing to bankruptcy or other financial issues, a bad debt charge is recorded. Businesses that offer credit to their clients record bad debts as an allowance for doubtful accounts, sometimes referred to as a provision for credit losses, on their balance sheet.
A corporation records a credit to revenue and a debit to an account receivable when it completes a credit sale. There is no assurance that the business will get the money, which is the issue with this accounts receivable balance. A corporation can be entitled to money from a credit sale but never actually get it for any number of reasons.
Particulars Amount
Beginning balance of allowance for doubtful accounts $ 5,000
Less: Accounts written off $ -2,000
Add: Accounts reinstated $ 1,000
Unadjusted balance of allowance for doubtful accounts $ 4,000
Ending balance of allowance for doubtful accounts $ 4720
Less: Unadjusted balance of allowance for doubtful accounts $ -4000
Bad debts expense $720
Hence, the correct option is B $720.
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Complete question:
Use the following information to answer the next 3 questions: On January 1, 2022, a company's Accounts Receivable balance was $100,000, and the balance in the Allowance for Doubtful Accounts was a credit balance of $5,000. During 2022, the company recorded the following transactions: Credit Sales $130,000
Collections from customers $110,000
Accounts written-off $2.000
Collections on accounts previously written off $1,000
If the Company estimates 4% of receivables to be uncollectible, the bad debt expense for 2022 would be
A. $4,720 B. $720 C. $4,000 D. $160 E. $4,800
discuss THREE contributing factors that led to xenophobia
Answer: Unemployment, poverty, lack of conflict resolution
Explanation:
Xenophobia is a dislike that citizens of a country show to immigrants who settled in the same country. The following are three causes of xenophobia
1) Unemployment; this happens when the citizens of the country don't have the best of jobs compared to the immigrants, this may be due to how well qualified the immigrants are over them. In some cases, this immigrants study further, get more papers to get better jobs, while the some citizens may not want that.
2) Poverty; poverty is a general problem through the world. This could lead to xenophobia, especially when the citizens realize the immigrants have a better life than them.
3) lack of conflict resolution; the government should be able to resolve the slightest form of conflicts among this two parties(citizens and immigrants) because when they are not resolved from the minor issue they are, they escalate to xenophobia.
The Sarbanes-Oxley Act of 2002 The macro environment, also known as the _____ includes six forces. requirements for ____. Non Compliance can result in penalties of
It should be noted that Sarbanes-Oxley Act of 2002 The macro environment includes six forces. requirements for Proper financial record keeping for public companies Non Compliance can result in penalties of as much as 25 years in prison.
What is Sarbanes–Oxley Act of 2002 all about?The Sarbanes–Oxley Act of 2002 can be regarded as an act that give order about some practices in financial record keeping.
Therefore, non Compliance Sarbanes–Oxley Act can result in penalties of as much as 25 years in prison.
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The Two types of wills are:
- formal and holographic
- legal and fake
- formal and casual
- none of the above
1-The most recent annual (2021) dividend payment of Spot Industries was $2.50 per share. The firm’s financial manager expects that these dividends will increase at a 6% annual rate, g1, over the next three years. At the end of three years the firm’s mature product line is expected to result in a slowing of the dividend constant growth rate of 4% per year/ The firm’s required return, rs, is 12%. What is the share value for Spot Industries?
2- If the stock is selling for $34 should you purchase?
Calculation of Share Value for Spot Industries: Here, the most recent annual dividend payment for Spot Industries, D0 = $2.50.The dividend growth rate for the next three years is expected to be g1 = 6%.The growth rate will slow to 4% after three years when the mature product line will be reached.
The required rate of return, rs = 12%.Therefore, the current expected dividend for the first three years can be calculated using the formula: D1 = D0 (1+g1) = $2.50 (1 + 0.06) = $2.65D2 = D1 (1+g1) = $2.65 (1 + 0.06) = $2.81D3 = D2 (1+g1) = $2.81 (1 + 0.06) = $2.98The dividend after the third year (D4) is expected to be $2.98 (1 + 0.04) = $3.09.
The dividend discount model formula can be used to calculate the share value for Spot Industries.P0 = D1/(1+rs) + D2/(1+rs)^2 + D3/(1+rs)^3 + D4/(rs-g) (1/(1+rs)^3)P0 = $2.65/(1+0.12) + $2.81/(1+0.12)^2 + $2.98/(1+0.12)^3 + $3.09/(0.12-0.04) (1/(1+0.12)^3)P0 = $2.365 + $2.271 + $2.096 + $73.309P0 = $80.041Therefore, the share value for Spot Industries is $80.0412.
Whether the stock should be purchased or not: The current market price for the stock is $34. Since the calculated share value is higher than the current market price, it can be concluded that the stock is undervalued and should be purchased.
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Judging is:
Select the best answer choice.
A.
One's openness and flexibility to new information
B.
Perceiving people
C.
Responding to what the world throws at an individual
D.
Imposing order on the outside world
A company can buy a machine that is expected to have a three-year life and a $21,000 salvage value. The machine will cost $1,764,000 and is expected
to produce a $191,000 after-tax net income to be received at the end of each year. If a table of present values of $1 at 12% shows values of 0.8929 for
one year, 0.7972 for two years, and 0.7118 for three years, what is the net present value of the cash flows from the investment, discounted at 12%?
Multiple Choice
$105,214
$564 457
$615,438
$689,319
O $1,869,214
< Prev
9 of 25
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The net present value of the cash flows from the investment, discounted at 12% is $564,457.
Explanation:
First, we need to calculate the annual cash flows:
Annual net income = $191,000
Add back depreciation (cost - salvage value / useful life) = ($1,764,000 - $21,000) / 3 = $581,000
Annual cash flow = $191,000 + $581,000 = $772,000
Using the present value table given:
PV factor for year 1 = 0.8929
PV factor for year 2 = 0.7972
PV factor for year 3 = 0.7118
NPV = (PV factor for year 1 x Year 1 cash flow) + (PV factor for year 2 x Year 2 cash flow) + (PV factor for year 3 x Year 3 cash flow) - Initial investment
NPV = (0.8929 x $772,000) + (0.7972 x $772,000) + (0.7118 x $772,000) - $1,764,000
NPV = $687,888 - $1,764,000
NPV = -$1,076,112
However, since the salvage value of $21,000 is not accounted for in the NPV calculation, we need to add it back to get the final answer:
NPV + Salvage value = -$1,076,112 + $21,000 = -$1,055,112
Finally, we need to consider that the question asks for the net present value (NPV) of the cash flows, not the total value. So we need to subtract the initial investment from the NPV:
Net present value of cash flows = NPV - Initial investment
Net present value of cash flows = -$1,055,112 - (-$1,764,000) = $708,888
Therefore, the correct answer is not listed in the multiple choice options.
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Which tool would you use after performing a stakeholders analysis to change stakeholder opinions? O none of these O Priority matrix O Scope definition documentation O Influencing diagram O RACI matrix
After performing a stakeholders analysis, the tool that would be most useful for changing stakeholder opinions is the Influencing diagram or the RACI matrix.
These tools can help identify key stakeholders, understand their needs and concerns, and develop strategies to influence their opinions and gain their support.
The RACI matrix can also be used to assign roles and responsibilities to stakeholders in order to ensure effective communication and collaboration throughout the project. However, it's important to note that changing stakeholder opinions requires ongoing communication and engagement, and may require a combination of different tools and techniques depending on the specific situation.
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at one point in the evolution of marketing, the united states entered a buyer's market and the customer became king. which era is being described?
This era is being described as market-oriented. Thus, option D is correct.
What is marketing?Marketing can be defined as the way through which the market transaction is being done, in this case, the customer is being made aware of the product or service that is being given to them.
As in recent times, the competition has increased between the business, and the customer has also been more oriented toward what he was he want. This name that the market is being oriented to be a market-oriented where the more the protection the most profit of form of company can get. Therefore, option D is the correct option.
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The question is incomplete, the complete question will be:
Which era is being described?
Select one:
a. economics-oriented
b. value-based marketing
c. production-oriented
d. market-oriented
e. sales-oriented
what is stakeholders
Answer:
A stakeholder is a party that has an interest in a company and can either affect or be affected by the business.
Hope this helped you!
Explanation:
STEP 1 Explain the four basic costs curves that BRICK 'n TILE will experience.
BRICK 'n TILE, a company involved in manufacturing and selling bricks and tiles, will experience four basic cost curves in their operations. These cost curves are fundamental to understanding the relationship between production output and costs.
1. Total Fixed Cost (TFC): Total fixed costs are expenses that do not vary with changes in production volume. These costs include items such as rent, salaries of permanent staff, and equipment maintenance. TFC remains constant regardless of the level of production output. On a graph, the TFC curve appears as a horizontal line parallel to the x-axis.
2. Total Variable Cost (TVC): Total variable costs are expenses that change proportionally with the level of production output. These costs include raw materials, direct labor, and other inputs directly related to production. As production increases, TVC also increases. The TVC curve slopes upward, indicating the direct relationship between output and variable costs.
3. Total Cost (TC): Total cost represents the sum of fixed costs and variable costs. It reflects the overall expenditure incurred by the company to produce a given quantity of output. The TC curve is derived by adding the TFC and TVC curves together. It starts at the same level as TFC and then slopes upward at an increasing rate as TVC rises.
4. Average Cost (AC): Average cost represents the cost per unit of output. It is calculated by dividing the total cost by the quantity of output produced. The AC curve is derived by dividing the TC curve by the corresponding levels of output. It is U-shaped, initially decreasing due to economies of scale and then increasing due to diseconomies of scale.
Understanding these cost curves helps BRICK 'n TILE make informed decisions about production levels, pricing strategies, and cost management. By analyzing the relationships between these curves, the company can optimize production and pricing to achieve maximum profitability and efficiency.
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Question 6 [25 MARKS]
Nangula & Partners, an audit firm, was appointed the new auditors of Solar (Pty) Ltd on 01 March
2019. One of the audit managers, Marinda van der Merwe of Nangula & Partners referred this
work to the audit firm by reference of the relationship that she has to the Managing partner of
Solar (Pty) Ltd as her father.
Solar (Pty) Ltd (‘Solar’) is a large manufacturing company listed on the Namibian Stock Exchange
that manufactures solar geysers and solar panels for industrial and residential use. Solar has a
large manufacturing plant in Okahandja with showrooms throughout the country. Distribution of
goods takes place from Okahandja and its various depots in Windhoek, Walvis Bay and
Ondangwa.
Solar imports its raw materials from China and has recently also started to export its goods to
northern Africa and the SADC region.
Due to the current economic conditions, there has been a significant increase in the demand of
solar geyser especially among businesses. This has led to the company generating large volumes
of sales over the past 12 to 16 months.
Solar has been known in the industry to be disagreeing with the auditors when it comes to
misstatements found on the financial statements and the correcting thereof. Furthermore, the CFO
has had a reputation for being intimidating to the auditors by being aggressive and evasive in
answering audit queries.
Nangula & Partners is a small audit firm of which their clientele is mainly small privately owned
companies, for this reason the partner in charge of the audit was planning to use Marinda as the
audit manager of the audit as she is the only senior manager in the audit firm.
You are required to:
a) Discuss the factors that Nangula & Partners had to consider before accepting the
appointment as external auditors to Solar (Pty) Ltd. (15)
(Include in your answer types of threats identified and safeguards needed to reduce the risk)
b) Identify the risks of material misstatement from the above scenario. (10)
Nangula & Partners considered independence, expertise, and management behavior, while the risks include revenue recognition, inventory valuation, sales completeness, management integrity, and compliance with international standards.
What factors did Nangula & Partners consider before accepting the appointment as external auditors to Solar (Pty) Ltd?a) Nangula & Partners had to consider several factors before accepting the appointment as external auditors to Solar (Pty) Ltd.
First, they should assess the independence and objectivity of their audit team, considering the potential conflict of interest arising from the relationship between Marinda van der Merwe and the Managing partner of Solar (Pty) Ltd.
They need to ensure that there are proper safeguards in place to mitigate the threat to independence, such as assigning an independent partner to oversee the audit.
Additionally, Nangula & Partners should evaluate their expertise and experience in auditing large manufacturing companies and their ability to handle the complexities involved in the industry. They should also assess the integrity and cooperative nature of Solar's management, considering the history of disagreement and evasiveness towards auditors.
b) The risks of material misstatement in the scenario include:
1. Revenue Recognition: With the significant increase in sales, there is a risk of improper recognition or manipulation of revenue, especially given the potential pressure to meet financial targets.
2. Valuation of Inventory: Manufacturing companies like Solar may face challenges in accurately valuing their inventory, including raw materials and finished goods. There is a risk of overvaluation or undervaluation.
3. Completeness of Sales and Distribution: The distribution process involving multiple locations increases the risk of incomplete recording of sales or discrepancies between recorded and actual inventory.
4. Management Integrity: The aggressive and evasive behavior of the CFO towards auditors raises concerns about management's integrity, increasing the risk of intentional misstatements or fraud.
5. Compliance with International Standards: Solar's export activities and the need to adhere to international accounting standards may introduce additional complexities and risks if not properly addressed.
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