How is the $25,000 treated for purposes of federal tax income? The $25,000 will be recognized as income similar to the $300,000 from 1A. Assuming that that the company operates on a cash basis, the expenses are recognized in the year they occurred, IRC Code Sec. 162. There is no current year deduction for these expenses since they were already deducted for taxes in the previous year.
Assume an error was discovered: land costing $87,010 (net of tax) was charged to maintenance and repairs expense in 2011. Exercise 4-3 Your answer is correct. Presented below are certain account balances of Paczki Products Co. Rent revenue $7,030 Sales discounts $8,130 Interest expense 12,960 Selling expenses 99,480 Beginning retained earnings 114,960 Sales revenue 409,360 Ending retained earnings 134,780 Income tax expense 27,420 Dividend revenue 71,640 Cost of goods sold 184,410 Sales returns and allowances 12,940 Administrative expenses 83,880 Allocation to noncontrolling interest
Accounting – Fraud case Satyam Systems, a global IT company based in India, has just been added to a notorious list of companies involved in fraudulent financial activities, one that includes such names as Enron, WorldCom etc. The Satyam Computer Services scandal was publicly announced on 7 January 2009, when Chairman Ramalinga Raju confessed that Satyam's accounts had been falsified. The preliminary investigations by Registrar of Companies and confession by Mr. Raju revealed the balance sheet of Satyam for the year 2008 contained `cash and bank balances’ of Rs 5040 crore (US $ 1.12 billion) as against the Rs 5361 crore (US$ 1.12 billion) reflected in the books, an accrued interest of Rs 376 crore (US$ 83.85 million) which was described by Raju as `non existent’ , an understated liability of Rs. 1,230 crore (US$ 274.29 million) on account of funds was arranged by himself and an overstated debtors' position of Rs. 490 crore (US$ 109.27 million) as against Rs.
$2,040,500 B. $2,212,500 C. $2,260,500 D. $2,171,500 E. $2,071,500 Difficulty: Medium 4. A company should always use the equity method to account for an investment if A. It has the ability to exercise significant influence over the operating policies of the investee B. It owns 30% of another company's stock C. It has a controlling interest (more than 50%) of another company's stock D. The investment was made primarily to earn a return on excess cash E. It does not have the ability to
Accounts receivable are $500,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,500. a. Prepare the adjusting journal entry to record bad debts expense for the year. Debit: Allowance for doubtful accounts $8,500 Credit: Bad Debts Expense $8,500 b. If the allowance for doubtful accounts had a debit balance of $600 instead of a credit balance of $1,500, prepare the adjusting journal
ACCT 557 Quiz 2 Purchase here http://chosecourses.com/ACCT%20557/acct-557-quiz-2 Product Description 1. (TCO B) As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Co.'s sole depreciable asset, acquired in Year 1, exceeded its tax basis by $250,000 at December 31, Year 1. This difference will reverse in future years. The enacted tax rate is 30% for Year 1, and 40% for future years. Noor has no other temporary differences.
It also had accounts payables of $51,369, short-term notes payables of $11,417, and accrued taxes of $6,145. The net working capital of the firm is None of these $68,931 $63,510 $69,655 Multiple Choice Question 81 Which of the following best represents cash flows to investors? Net income, minus dividends paid to preferred stockholders. Earnings before interest and taxes times 1 minus the firm’s tax rate. Cash flow from operating activity, plus cash flow generated from net working
In 2001, the United States faced its biggest financial market fraud scandal by the worldwide known corporation Enron. The top management was found guilty for using accounting loopholes to overstate revenues and stock price. The discovery of the Enron scandal lead to the exposure of several more corporate fraud cases from more well-known companies including WorldCom. This decreased the confidence in our markets and question the adequacy of the United States disclosure practices and the reliability in the required independent audits. Consequently, the biggest accounting legislation was passed known as The Sarbanes-Oxley Act of 2002.
Accounting Fraud Examination October 12, 2011 Introduction As we look back on the first decade of the 21st Century, we see that Corporate America and the Financial Markets were riddled with corruption and fraud. At the beginning of the decade we saw the likes of Enron and WorldCom become insolvent due to accounting frauds of epic proportions. The one case that stands out amongst all of them is the Bernard Madoff case, which is considered to be the largest fraud case of all time. “Madoff managed to lure billions of dollars away from huge charities, as well as wealthy individuals in both the United States and Europe by getting them to invest in his hedge fund. He did so by claiming extraordinary returns (generally in the low double digits).
After reading Chapter 10 of our text concerning “Payroll Fraud Schemes”, I began to think about a recent scandal that took place in our local town’s city council. Alonzo “Lonnie” Bates, 68, a former Detroit city councilman and Detroit Public Schools board member is currently serving a 33-month sentence after being convicted of theft and bank fraud charges related to placing “ghost employees” who did little or no work for the city, on his City Hall payroll. He was convicted August 2008, I found a recent article titled “Past Legal Troubles”, published by The Detroit News, on March 25, 2008. The article describes the indictment and many charges that were filed against the former city councilman concerning the “ghost employee’s payroll fraud”.