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- Mary Ribukh was hired as a staff auditor of LGY and Company in 2005. In December 2012, he transferred to Quilava and Associates. In 2014, he returned back to LGY and Company until his retirement in 2020 at the age of 55. Question 1: Are the retirement benefits taxable to Anton? Question 2: Suppose he was terminated from employment due to dishonesty. Is the separation pay taxable to Anton? Question 3: Suppose he was terminated from employment due to the merger of the two audit firms Will the separation pay be taxable to Anton? Yes, Yes, Yes No, Yes No No Yes, Yes Yes, No, NoDuring the year to 31 December 2019, a customer started legal proceedings against TCI Food company, claiming that one of the food products that it manufactures had caused several members of his family to become seriously ill. The company’s lawyers have advised that this action will probably not succeed. Should the company disclose this in its financial statements according to IAS 37?In order to improve the cash flow of the company, Neal Emerald decided to postpone depositing all employment taxes a few months ago. He told his sales manager, “I’ll pay up before the IRS catches up with me.” What risks does Emerald face by not upholding his responsibility for the collection and payment of employment taxes?
- George's long-time client, Henrietta, brought in business records this year showing $40,000 of business income and $30,000 of related expenses. In prior years, her expenses have been closer to $10,000. Which of the following should George do to ensure that he complies with his Circular 230 duty of due diligence as to accuracy? Refuse to prepare the return unless Henrietta can provide receipts for each individual expense. Review the records Henrietta provided to see if they adequately explain the sharp increase in expenses. If he has any remaining questions, he should ask Henrietta to explain. Independently investigate by calling a random sample of the vendors listed to verify that Henrietta really paid the amounts claimed. Prepare Henrietta's return using the expenses listed on the prior-year return.Jon Yanta, owner of Yanta’s Yard Care, is disappointed that his business incurred a net loss for June of the current year. Mr. Yanta would have preferred not to have to reduce his capital by $880.00. He knows that you are studying accounting, so Mr. Yanta asks you to analyze his work sheet for June. Review the statements provided in the worksheet, and based on your analysis of the work sheet, indicate the likely causes of the net loss for Yanta’s Yard Care as well as the steps Mr. Yanta can take to avoid a net loss in future months. Select True or False for each of the given statements. Jon Yanta’s sales exceeded the amount of his expenses. Reducing expenses could improve the company’s results. An increase in total revenue could result in net income. Rent expense of $5,500 would have resulted in net income. Supplies expense were not a significant portion of total expenses. Selling more services would have no effect on revenues. An increase in prices could result in higher…Mohammed is in serious financial difficulty and is unable to meet current unsecured obligations of $20,000 to some 14 creditors who are demanding immediate payment. Mohammed owes Aminu $5,000, and Aminu has decided to file an involuntary petition against Mohammed. Which of the following is necessary for Aminu? Aminu must be joined by at least two other creditors. Mohammed must have commited a fraudulent act within one year of the filing. Aminu must allege and subsequently establish that Mohammed's liabilities exceed its assets upon fair valuation. Aminu must be a secured creditor.
- How are claims against a decedent’s estate discovered by an executor? Choose the correct.a. Public notice must be printed in an appropriate newspaper to alert all possible claimants.b. The executor waits for nine months until all possible bills have been received.c. The executor directly contacts all companies that the decedent did business with.d. Claims the estate is to pay are limited to all of the bills received but not paid prior to the date of death.Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Coleen has told her accountant to provide the bank with just the balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year. The accountant, Jim Long, only sent over the balance sheet to First Federal Bank Did Jim act ethically or unethically? Why?Joe Rezzo, a college student majoring in accounting, helped finance his education with a part-time job maintaining all accounting records for a small business, White Company, located near the campus. Upon graduation, Rezzo passed the CPA examination and joined the audit staff of a national CPA firm. However, he continued to perform all accounting work for White Company during his “leisure time.” Two years later, Rezzo received his CPA license and decided to give up his part-time work with White Company. He notified White that he would no longer be available after preparing the year-end financial statements. On January 7, Rezzo delivered the annual financial statements as his final act for White Company. The owner then made the following request: “Joe, I am applying for a substantial bank loan, and the bank loan officer insists upon getting audited financial statements to support my loan application. You are now a CPA, and you know everything that’s happened in this company and…
- Lara Croft has been hired as a new auditor for Jolie Inc. Ms. Croft has suggested thefollowing accounting changes in regards to the company’s financial statements.1. At December 31, 2019, Jolie Inc. had a receivable of $500,000 from Relic Inc. on itsstatement of financial position. Relic had gone bankrupt, and no recovery is expected.Jolie proposes to write off the receivable as a prior period item.2. The client proposes the following changes in depreciation policies. (a) For officefurniture and fixtures, it proposes to change from a 10-year useful life to an 8-yearlife. If this change had been made in prior years, retained earnings at December 31, 2019,would have been $250,000 less. The effect of the change on 2020 income alone is areduction of $60,000.(b) For its equipment in the leasing division, the client proposes to adopt the sum-of-theyears’-digits depreciation method. The client had never used SYD before. The first yearthe client operated a leasing division was 2020. If…George lost his $155,000 sales job. It took him a year to find a new job and, during that time, his utilities were shut off, he foreclosedon his home, and he declared bankruptcy. Ten years from now, what information from this time will remain on his credit report?Helen Hernandez, president of Double H Enterprises, applied for a $175,000 loan from Great Nations Bank. The bank requested financial statements as a basis for granting the loan. Helen instructed her accountant to provide the bank with a balance sheet, but to omit the other financial statements because her business incurred a net loss last year. Helen contends that as the owner of the business, it is her right to withhold certain financial statements from the bank. Do you agree with Helen? Why or why not? What type of information would banks require from a loan applicant and why would the loan officer request this information?
