ACC 555 Week 10 Assignment 3 Tax Periods and Method
Imagine that you have always wanted to own a business and
have now created a new start-up company.
Write an eight to ten (8-10) page paper in which you:
1. Analyze the start-up company you created. Include in your
analysis the type of company you have created, its business objectives, and
other factors that you believe are important to the success of the business.
2. Determine the types of accounting periods that you could
choose from for the company. Choose the type of accounting period that would
provide the greatest tax benefit. Provide example(s) to support your proposal.
3. Evaluate the appropriateness of the types of accounting
methods that would be available for your business. Recommend the method that
would minimize the tax liabilities for the company. Provide support for your
rationale.
4. Choose at least two (2) specific transactions, and then
propose one (1) special accounting method which your company would use to
account for these transactions. Indicate any significant tax consequences that
may result from the method you proposed.
ACC 555 Week 7 Assignment 2 Tax Deductible Losses
Write a six to eight (6-8) page paper in which you:
1. Research the manner in which tax-deductible losses originally
became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses
overall are reasonable. Provide support for your conclusions.
2. Suggest what you believe to be a significant
tax-deductible loss. Discuss whether or not the deductibility of this loss
harms other taxpayers in general. Recommend changes to this tax-deductible loss
you would make that would be fairer to all taxpayers.
3. Choose a type of loss that is not deductible, and argue
whether these losses should continue to be disallowed, or why they should be
allowed. Provide support for the rationale.
ACC 555 Week 3 Assignment 1 Tax Research
Imagine that the Internal Revenue Service (IRS) has selected
your client for an audit. Your client and the IRS disagree about the amount of
tax revenue owed. You agree with your client’s position. You must provide a
defense for the client that requires you to research the issues in order to
render an educated opinion on a course of action for your client. Note: You may
create and/or make all necessary assumptions needed for the completion of this
assignment.
Write a three to four (3-4) page paper in which you:
1. Prepare a defensible strategy for the client by using the
six (6) steps in the tax research process. Propose how each of the steps
provides support for the client’s position.
2. Create a fact-based argument that you plan to propose to
the client as a defense of his / her position with the IRS.
ACC 555 Midterm Exam Solution
1. Question: (TCO F) The objective of the ordinary audit of
financial statements is the expression of an opinion on
2. Question: (TCO F) Which of the following statements is
most correct regarding errors and fraud?
3. Question: (TCO F) If the auditor believes that the
financial statements are not fairly stated or is unable to reach an conclusion
because of insufficient evidence, the auditor:
4. Question: (TCO F) Auditors accumulate evidence to:
5. Question: (TCO F) Which of the following forms of
evidence is most reliable?
6. Question: (TCO F) Analytical procedures are required
during which phase(s) of the audit?
Test of Controls; Planning; Completion
7. Question: (TCO F) To be considered reliable evidence,
confirmations must be controlled by:
8. Question: (TCO F) When the auditor has reason to believe
an illegal act has occurred without any corrective action being taken, the
auditor should:
9. Question: (TCO F) Traditionally, confirmations are used
to verify:
10. Question: (TCO G) Which of the following is correct with
respect to the use of analytical procedures?
11. Question: (TCO G) Which is a liquidity activity ratio?
1. Question: (TCO A) Match the following definitions to the
terms.
____ Public Company Accounting Oversight Board Auditing
Standards
____ Generally Accepted Auditing Standards
____ Statements on Auditing Standards
a. Pronouncements providing specific guidance on auditing
matters for all entities except public companies
b. The standards used for public company audits
c. Standards used by non-public companies and for interim
audits for public companies as initially adopted by the PCAOB
2. Question: (TCO B) The following is a portion of a
qualified audit report issued for a private company:
Independent Auditor’s Report
To the shareholders of Tamarak Corporation,
We have audited the accompanying balance sheet of Tamarak
Corporation as of October 31, 2009, and the related statements of income,
retained earnings, and cash flows for the past year. These financial statements
are the responsibility of the company’s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The company has included in property and debt in the
accompanying balance sheet certain lease obligations that, in our opinion,
should be expensed in order to conform with generally accepted accounting
principles. If these lease obligations were capitalized, property would be
decreased by $4,000,000, long-term debt by $2,000,000, and retained earnings by
$180,000 as of October 31, 2009, and net income and earnings per share would be
decreased by $180,000 and $0.62, respectively, for the past year.
Required: Complete the above qualified audit report by
preparing the opinion paragraph. Do not date or sign the report.
3. Question: (TCO C) The following situation involves a
possible violation of the AICPA’s Code of Professional Conduct. For each
situation, (1) determine the applicable rule number from the Code, (2) decide
whether or not the Code has been violated, and (3) briefly explain how the
situation violates (or does not violate) the Code.
Your answer should be set up something like this:
Rule # __________ Violation? Yes or No
1 or 2 line explanation:
Brad Heist, CPA, was traveling from Dallas to Houston,
Texas, when he was pulled over by a police officer on suspicion of driving
under the influence. The breath-a-lyzer and a subsequent blood test revealed
that Brad was definitely impaired. He was convicted in court of driving while
under the influence of alcohol (DUI). This was Brad’s fourth conviction of DUI
in less than a year, a felony under current Texas law. Accordingly, Brad was
sentenced to 18 months in prison.
4. Question: (TCO C) The following situation involves a
possible violation of the AICPA’s Code of Professional Conduct. For each
situation, (1) determine the applicable rule number from the Code, (2) decide
whether or not the Code has been violated, and (3) briefly explain how the
situation violates (or does not violate) the Code.
Your answer should be set up something like this:
Rule # __________ Violation? Yes or No
1 or 2 line explanation:
Jim is the audit partner for the small CPA firm of Jim, CPA,
PA. Jim’s neighbor Duffy has a financial advisement practice whereby she sells
mutual funds to individuals for their retirement. Jim’s firm is performing the
audit for a privately held company Jim’s best friend Cressy owns. Jim refers
Cressy to Duffy for retirement advice. Cressy buys 10 units of ABC Mutual Fund
which generates Duffy a fat little commission fee. Duffy buys Jim a $25 gift
certificate to the local movie theater.
5. Question: (TCO C) Brandt, CPAs has obtained Big-Bucks, a
new publicly-held client. Big-Bucks has various accounting-related needs that
Brandt, CPAs would like to fulfill. Partner-in-charge D. Brandt has discussed
with Big-Bucks the possibility of performing the annual audit of Big-Bucks as
well as preparing the tax returns, business plan, quarterly write-up services,
and providing consultation on the viability and valuation of mining gas
reserves in Tennessee. An outside expert would be hired by Brandt CPAs to
provide expert advice to the CPA firm on mining gas reserves. Additionally,
Brandt, CPA’s audit manager who will be assigned to this audit has previously
been approached by Big-Bucks to come work for the company as Chief Financial
Officer. The audit manager has refused the offer, since his cousin’s
sister-in-law is a 10 percent shareholder in Big-Bucks and does not want her to
have any say in his employment.
Under the Sarbanes-Oxley Act of 2002, what issues do you see
and how would you advise Brandt, CPAs? Is there ever a time when Brandt, CPAs
could perform any of these services for Big-Bucks?
6. Question: (TCO D) There are four major sources of an
auditor’s legal liability. One source is liability to the audit client under
common law. Briefly summarize the other three sources.
7. Question: (TCO F) Below are 10 documents typically
examined during an audit. Classify each document as either internal or
external.
Type of Document Documents
________________ 1. Canceled checks for payments of accounts
payable
________________ 2. Payroll time cards
________________ 3. Duplicate sales invoices
________________ 4. Vendors’ invoices
________________ 5. Bank statements
________________ 6. Minutes of the board of directors’
meetings
________________ 7. Signed lease agreements
________________ 8. Notes receivable
________________ 9. Subsidiary accounts receivable records
________________ 10. Remittance advices
8. Question: (TCO G) Discuss the essential activities
involved in the initial planning of an audit.
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