Question 1

Trinket Corporation is being sued by its distributor, International, for nonpayment of debts. International will be able to hold Jasper Crumb, a shareholder of Trinket, personally liable for the company's debts if:

Options :

A : Trinket Corporation is overcapitalized.

B : The shareholder-s personal assets are materially commingled with Trinket-s assets.

C : Trinket-s articles of incorporation allow for more than one class of stock.

D : Trinket has four shareholders, including Jasper Crumb.

Answer: B

Question 2

The price elasticity of demand for widgets is 1.1 and the quantity demanded is 5,000 units. The price increases by 8%. What is the new quantity demanded?

Options :

A : 440

B : 4,560

C : 5,440

D : 4,780

Answer: B

Question 3

Sales on credit is recorded in which of the following journal ?

Options :

A : Purchase journal

B : Sales journal

C : Purchase return journal

D : Sales return journal

Answer: B

Question 4

Drillfast is a drilling corporation with operations at oil rigs around the world. For the 2014 annual report, which business segment should be reported as an operating segment?

Options :

A : South American segment, which contributes 8% of total revenues, 5% of profits and accounts for 9% of assets. South American operating manager reports to the chief operating officer.

B : African segment, which contributes 9% of the company’s assets, 16% of total revenues, and 18% of profits. The African operating manager reports to the British operating manager.

C : Australian segment, which contributes 10% of total revenues, 2% of assets, and 4% of profits. The Australian manager reports to the chief operating officer.

D : Texas based corporate headquarters

Answer: C

Question 5

Identify the correct statement regarding analytical procedures used in a review conducted at the conclusion of an audit.

Options :

A : The ultimate purpose of analytical procedures used in a review conducted at the conclusion of the audit is to uncover fraud schemes that may have been missed previously during the audit.

B : Typically, a junior member of the engagement team will perform the analytical procedures applied at the conclusion of the audit because less precision is required.

C : If review analytical procedures suggest the presence of misstated account balances, the auditor may have to perform additional substantive tests of details to satisfactorily complete the audit.

D : Analytical procedures used in the review near the conclusion of the audit are not required.

Answer: C