FMGT 3263 BSAD 1064
CHAPTER 3 SAMPLE EXAM QUESTIONS - AUDIT REPORTS
For the following independent situations, assume you are the audit partner on the engagement.
For each situation, state the type of auditors report that shou
Auditors Ethical and
LO1 Introduce the concept of auditor responsibilities.
LO2 Explain the importance of the study of ethics in helping
define auditor responsibilities.
LO3 Outline the characteristics
Definition of Auditing
Auditing is a systematic process of objectively
obtaining and evaluating evidence regarding
assertions about economic actions and events to
ascertain the degree of correspondence between
the assertions and established criteria and
Independence, Integrity, and Objectivity Cases. LO3 Knowledge of the rules of conduct and
related interpretations on independence, integrity, and objectivity will help you respond to the
For each case, state whe
Except as indicated elsewhere, take intermediate calculations to 4 decimal places and
dollar amounts for lease vs. buy to the closest dollar.
The firm for which you work requires the use of a particular type of machine. To purchase the
A firm that wants to raise $21 million has 500,000 common shares outstanding, with a current
market value of $16 per share. The firms tax rate is 40 percent.
The alternatives are to issue common shares that would net the company $15 per
USE 4 DECIMAL PLACES (rounded) - i.e., 1.23% or .0123.
The ABCEasyAs123 Corporation has numerous retail clothing stores in the Lower
Mainland. Its tax rate is 40 percent. ABC is going to expand its business by building a
new retail store
ASSIGNMENT #4 (12 marks)
Name (Last, First):_
The ABC Company currently has $50 million of 13 percent coupon bonds that pay interest
semi-annually. These bonds are due in 8 years and can be called at a premium of 5 percent.
Question 1 (3 marks)
You are evaluating two different pollution control devices:
(a) A filtration system which costs $1.1 million to install and $60,000 annually to operate. It
would have to be replaced every five years.
(b) A precipitation
A company has two projects to choose from with the following annual after-tax cash flows:
The firms cost of capital is 15
Homework Problem # 3
Kaitlyn Domijan 100164693
Units started in period
Completed and Transferred Out
Three types of analysis
a) Horizontal analysis
i) Trend % analysis
b) Vertical analysis
ii) Common size statements
c) Ratio analysis
Ex 13- 14
a) Horizontal Analysis
Inc/Dec in $
Cashflow statement shows uses and sources of CASH under
Operating activities (from inc stmt)
cash from customers
from cash sales
collection from AR
Pymt to suppliers
buying and selling of long-term assets+investments (short-term & lon