Joined: 31 Dec 2009 Location: United States
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Posted: 13 Jan 2011 at 19:59 | IP Logged
Today’s question: AUD
A company issues audited financial statements under circumstances which require a presentation of a statement of cash flows. If the company refuses to present a statement of cash flows, the independent auditor should:
A) Disclaim an opinion.
B) Prepare a statement of cash flows and note in a middle paragraph of the report that this statement is auditor-prepared.
C) Prepare a statement of cash flows and disclose in a footnote that this statement is auditor-prepared.
D) Qualify his opinion with an "except for" qualification and a description of the omission in a middle paragraph of the report.
Joined: 31 Dec 2009 Location: United States
Online Status: Offline Posts: 763
Posted: 14 Jan 2011 at 13:55 | IP Logged
Correct Answer: D
Explanation: The statement of cash flows is required by GAAP and its omission results in a qualified except for opinion. The statement of cash flows, for reporting purposes, is considered the omission of a disclosure.
Joined: 31 Dec 2009 Location: United States
Online Status: Offline Posts: 763
Posted: 14 Jan 2011 at 18:09 | IP Logged
Today’s question: REG
This taxable year, Trapp, Inc., had $400,000 of gross profit from operations and $160,000 of dividends from Von Corporation in which Trapp had a 25% ownership interest. Trapp's operating expenses totaled $410,000. What is Trapp's dividends received deduction?
Joined: 31 Dec 2009 Location: United States
Online Status: Offline Posts: 763
Posted: 17 Jan 2011 at 15:04 | IP Logged
Correct Answer: D
Explanation: The lesser of 80% of the (1) dividends received or (2) taxable income is used. As taxable income ($150,000) before the dividends received deduction is less than dividends received, the $120,000 is the DRD for this year. (Note: Using the $128,000 will not cause a net operating loss.)
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Topic: QUESTION OF THE DAY - MCQ’S ALL SECTIONS
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