Several factors affect a firm's ability to pay a dividend. Three such factors are described in the table: profitability (an increase in net income), investment opportunities, and capital structure (an increase in the debt ratio). Use the table to indicate how a firm's ability to pay a dividend is affected by the factors described. Hint: Consider each factor in isolation, with everything else held the same.) Factors Affecting Dividend Payment Ability to Pay Dividends Net income increases. More profitable investment opportunities are available. The firm increases its debt ratio. The ability to pay dividends The ability to pay dividends The ability to pay dividends Spandelay Industries Inc. is a typical company that is very concerned with meeting investors' expectations and keeping investors happy. Its earnings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Spandelay Industries Inc.'s dividend policy? Spandelay Industries Inc. will be willing to increase its dividend only if it believes that it will be able to maintain the dividend increase in future years. O Spandelay Industries Inc. will increase its dividends in years when it has high earnings so that it can distribute excess free cash flows to investors, even if it means that the firm will have to reduce its dividend in subsequent years

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Answer 1

Based on the information provided, it appears that Spandelay Industries Inc. is likely to have a stable dividend policy, in which the company will only increase its dividends if it believes it will be able to maintain the increase in future years.

This approach is often taken by companies that are concerned with meeting investors' expectations and maintaining investor confidence. In contrast, a company that increases its dividends in years when it has high earnings and then reduces them in subsequent years may be seen as less reliable by investors and may face negative consequences as a result. Therefore, it is generally better for a company to have a stable dividend policy that it can maintain over the long term, rather than a more erratic dividend policy that may be affected by short-term fluctuations in earnings.

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Related Questions

If an externality of pollution exists for all manufacturers in a given industry, then all related
A) are no longer represented in their supply curves.
B) continue to be represented in their supply curves.
C) are no longer represented in their demand curves.
D) continue to be represented in their demand curves.

Answers

The supply curves of all linked manufacturers in a specific industry are no longer reflects if there is an aspect of pollution for all of the manufacturers in that industry.

Who is a manufacturer, exactly?

A manufacturer is a person or business that turns raw materials into completed products using a variety of tools, machinery, and procedures, and then sells those products to customers, merchants, marketers, retailers, or other manufacturers who can use them to make more complicated products.

Who are a few manufacturers as examples?

Manufacturing is the process of creating new goods from components or raw materials. Automotive businesses, bakery, shoemakers, and tailors are all instances of manufacture because they all produce goods rather than provide services.

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outplacement services are group of answer choices designed to help terminated employees find a job elsewhere. rarely provided to executive employees. useful in attracting individuals to a career. offered to employees who are constantly transferred to different locations.

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Outplacement services are designed to help terminated employees find a job elsewhere.

Outplacement benefits are services provided as part of a severance package by a company to assist terminated and laid-off workers in finding new employment.

Outplacement services aid workers in transitioning to new positions, which can lessen stress and boost job satisfaction. Employers can eventually cut the cost of unemployment benefits, prevent potential litigation from angry workers, and keep a good reputation with both existing and new employees.

Outplacement services assist firms in maintaining their brand identity through layoffs or terminations because they are employer-sponsored benefits. Additionally, it may reduce legal risk, raise morale among the remaining employees, and lower unemployment tax rates.

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studies have found that firms with large investments in tangible assets tend to have: question 12 options: zero debt. the highest financial distress costs of any firm per dollar of debt. the same capital structure as firms that specialize in intangible asset investments. higher target debt-equity ratios than firms that primarily invest in intangible assets. higher financial distress costs than firms with comparable investments in intangible assets.

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Studies have found that firms with large investments in tangible assets tend to have higher target debt-equity ratios than firms that primarily invest in intangible assets.

The tangible asset is a term used in accounting for assets and property that may not easily be converted into cash. Tangible assets are usually physical things that include buildings, machines and property etc.

Intangible assets are anything of value that you can't physically touch such as trademarks, domain names and brand ownership in your company's reputation.

Large investments means that the company is unstable and not perform goods or in a debt which results higher target debt-equity ratios than firms that primarily invest in intangible assets.

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Decision Point: Choosing the Type of Advertising ObjectiveYour first task is to set an advertising objective. Remember, your key goals are to build brand preference for your product and to differentiate your product as the safe and natural choice. Decide on the best type of objective for your national campaign.Persuasive advertising: Reinforce why consumers should choose Enliven as their first choice.

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Persuasive advertising is a shape of virtual marketing that leverages the pursuits, desires, and motivations of your audiences to persuade them to make a buy decision.

Persuasive advertising leverages the goals and hobbies of purchasers to persuade them to purchase a services or products. This form of advertising often makes a speciality of the benefits the product or service can offer the give up-user.

Innovative advertising is when a team of creatives come collectively to make a campaign or industrial that creatively and efficiently tells the tale of a emblem or nonprofit. creative agencies can carry out any variety of functions for clients; from approach and design, to era or media – all creatively or professional lead.

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FILL IN THE BLANK. ________ are the deeply held beliefs that guide behavior and tell members of an organization how to perceive and think about things.

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A member of an organization conduct is dictated by assumptions, which are ingrained beliefs that shape how they view and think about the world.

What kinds of organizational behavior are there?

The three basic theoretical frameworks for organizational behavior are cognitive, behaviorist, and social learning frameworks. These frameworks were used as the foundation for the organizational behavior model.

What three kinds of organizational control are there?

Executives can monitor how well the organization is operating, spot problem areas, and then take appropriate action to resolve the issues using organizational control systems. Executives have access to three different sorts of control systems: output control, behavioral control, and clan control.

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green corporation hires six individuals on january 4, 2022, all of whom qualify for the work opportunity credit. three of these individuals receive wages of $8,500 during 2022, and each individual works more than 400 hours during the year. the other three individuals work 300 hours and receive wages of $5,000 during the year.
a. The amount of Green's work opportunity tax credit for 2014 is $ 10950
b. If Green pays total wages of $140,000 to its employees during the year, how much of this amount can Green deduct, assuming that the work opportunity credit is taken? $
Now how do i answer part B?

Answers

Employers can take advantage of the work opportunity tax credit if they hire people who have had trouble finding work in the past. The number of hours worked by the employee determines the amount of the tax credit.

3 representatives at $8,500 wages= $25,500 X 40% = $10,000 (40% for workers who worked more than 400 hours)

3 workers at $5,000 wages= $15,000 X 25% = 3750.

What does WOTC stand for?

Work Opportunity Tax Credit Employers can get a federal tax credit called the Work Opportunity Tax Credit (WOTC) for investing in American job seekers who have always faced obstacles to employment. If an employee falls into a WOTC-targeted group, the employer may be eligible for a tax credit and meet their business needs.

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the total time to recover an original investment is the: multiple choice net present value. internal rate of return. accounting rate of return. payback period.

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The total time to recover an original investment is the payback period.

Payback period is a term in investments which describe the amount of time needed to recover the cost of an investment. An investor needs this payback period to obtain a breakeven point. It means that if an investment has a shorter payback period it will be more attractive for investors. Why is the payback period important? Because investors have to make sure that they invest their money in lucrative investments. It is also needed for analysis in comparing other alternative investments which gives a shorter payback period.

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T/F company acquisition for the sole purpose of diversification is normally not a wise financial strategy.

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It is untrue that buying a firm just for the purpose of diversity is typically not a smart financial move.

What should a financial strategy contain?

Financial resources, cost structure analysis, calculating profit potential, accounting operations, and other topics are all covered under financial strategy. Financial strategy, in essence, concerns with availability of resources, their uses, and their administration.

What objectives does financial strategy have?

You can determine your financial needs, the resources needed to support and accomplish your goals, your organization's overarching goal, and prepare for future growth to ensure the success and sustainability of your business by developing a financial strategy.

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TRUE/FALSE. the decision to make long-term capital investments is best evaluated without recognizing the time value of money.

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Making long-term capital investments decision is best evaluated without recognizing the time value of money. The correct answer is false.

Capital investment is defined as an investment that is used in order to acquire a long-term capital or fixed asset such as building, land, vehicle or machinery or equipment in an attempt to expand or grow the business. When considering purchasing a fixed asset for capital investment, a company must consider the time value of money, which means that the same amount of money is worth more now than it will be later on in the future, meaning that a delayed investment now will translate into a more expensive and more opportunity cost in the future.

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an increase in asymmetric information problems from a disruption in the financial system when a financial crisis occurs

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A monetary emergency happens when an expansion in hilter kilter data from a disturbance in the monetary framework: A) causes serious unfavorable determination and moral peril issues that make monetary business sectors unequipped for directing assets effectively.

Lenders offering credit to borrowers face uncertainty about their creditworthiness to the extent that they cannot observe some of the borrowers' characteristics and actions. These informational asymmetries cause adverse selection and moral hazard problems and may invalidate standard competitive market results.

Here, again, an asymmetric information problem is at the source of the financial crisis because depositors rush to make withdrawals from the solvent as well as insolvent banks since they cannot distinguish between them.

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suppose the multiplier is 3 and the government increases its purchases by $25 billion. also, suppose the ad curve would shift from ad1 to ad2 if there were no crowding out; the ad curve actually shifts from ad1 to ad3 with crowding out. finally, assume the horizontal distance between the curves ad1 and ad3 is $30 billion. the extent of crowding out, for any particular level of the price level, is

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the extent of crowding out, for any particular level of the price level, is $20 billion.

What is demand curve?

A demand curve in economics is a graph that shows the relationship between the price of a certain good (on the y-axis) and the amount of that good that is desired at that price (the x-axis). Demand curves can be used to both the price-quantity connection for a single consumer (a single demand curve) and for all consumers in a given market (a market demand curve). Demand curves are typically thought to slope downward, as the following graphic demonstrates. This is due to the law of demand, which states that when prices increase for most things, demand decreases. Certain peculiar circumstances do not adhere to this rule. Veblen goods, Giffen goods, and speculative bubbles are a few examples of this type of phenomenon. Buyers are drawn to an item if its price increases.

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sales management consists of three interrelated functions: , sales plan implementation, and salesforce evaluation. multiple choice sales plan formulation salesforce size determination salesforce identification salesforce communication salesforce training

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Sales management consists of three interrelated functions, sales plan formulation, sales plan implementation, and salesforce evaluation.

Sales management is the process by which sales managers coordinate, inspire, and guide their sales representatives while monitoring and enhancing group performance. This entails identifying top talent, developing sales people, coordinating activities across the sales department, and putting in place a cogent sales strategy that boosts revenue generation for the company.

Imagine it like a sports team. A top-tier baseball club without a coach? Have you heard of such a thing? Obviously not. The coach gives the players the direction, motivation, plan, and training necessary to gain significant victories. The finest sales managers run their businesses in a similar manner, motivating, instructing, and directing their people to increase sales. Consistent revenue growth, a content staff, and significant commissions are all benefits.

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each of the following statements concerning compilation of financial statements on certain prescribed forms is correct, except

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a prescribed form cannot depart from generally accepted accounting principles or fail to include all required disclosures.

Accounting standards are executed to work on the quality of financial information detailed by companies.

In the United States, the Financial Accounting Standards Board (FASB) issues generally accepted accounting principles (GAAP).

GAAP is required for all publicly traded companies in the U.S.; it is also routinely executed by non-publicly traded companies as well.

Internationally, the International Accounting Standards Board (IASB) issues International Financial Announcing Standards (IFRS).

The FASB and the IASB sometimes cooperate to issue joint standards on hotly debated issue issues, but there is no expectation for the U.S. to switch to IFRS in the foreseeable future.

The ultimate goal of standardized accounting principles is to allow financial statement users to see a company's financials with certainty that the information disclosed in the report is finished, consistent, and comparable.

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Cushman Company had $820,000 in sales, sales discounts of $12,300, sales returns and allowances of $18,450, cost of goods sold of $389,500, and $282,080 in operating expenses. Net income equals:
Multiple Choice
$399,750.
$148,420.
$117,670.
$179,170.
$789,250.

Answers

Gross profit equals From sales, subtract sales discounts, sales returns, cost of goods sold $399,750.

For households and individuals, gross income is the sum of all wages, salaries, profits, interest payments, rent, and other income before deductions or taxes. This is in contrast to net income, which is defined as gross income less taxes and other deductions.

Gross profit is the profit of a company after deducting all costs associated with producing and selling a product or service. You can calculate your gross margin by subtracting your cost of goods sold (COGS) from your total sales.

In other words, gross profit is sales without deducting manufacturing or production costs. Net profit, on the other hand, is gross profit minus the costs of doing business and not doing business. Net income is a more realistic representation of a company's earnings.

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Which of the following is not a factor in determining rates charged by the California State Compensation Insurance Fund for insurance issued by it?

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In order to cover workmen' compensation claims, states typically compel employers to buy workers' liability insurance either private insurance firms or public funds.

What does the term "private" mean?

adjective. When you call someone "private," you're referring to the fact that they are typically quite reserved and don't share their innermost feelings with others. Gould was a very secretive person. Synonyms include withdrawn, retiring, and solitary. Additional Synonyms for private

What in a relationship is private?

When you're in a relationship, you don't have to be concerned about what others believe of your connection. You're also not trying to impress or make other people envious of your love life. The idea behind a private relationship is to keep your partnership's most personal information private.

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in defining a distribution strategy, a company must consider the importance of channel intermediaries including: group of answer choices

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In defining a distribution strategy, a company must consider the importance of channel intermediaries including retailers and distributors.

A distribution strategy is a way to get products or services out to consumers. Implementing the most effective distribution strategy for your company is essential for generating income and retaining clientele. Some businesses choose to adhere to various consumer bases by using several distribution channels.

Your strategy approach should be centered on elements like the buying habits of your target market and the preferred methods of purchase. When deciding on your distribution strategy, keep the following types of questions in mind:

Who is the perfect client for you?What about the person's lifestyle? does the product or service fit?What kind of purchasing decision is necessary?What are your clients' top priorities? Do your clients, for instance, care more about price or convenience?Can you make the shopping process better and more user-friendly for your customers?

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ayayai company makes swimsuits and sells these suits directly to retailers. although ayayai has a variety of suits, it does not make the performance suit used by highly skilled swimmers. the market research department believes that a strong market exists for this type of suit. the department indicates that the performance suit would sell for approximately $100. given its experience, ayayai believes the performance suit would have the following manufacturing costs.

Answers

Cost of materials: $20 per suit

$30 for labour per suit

overhead: $10 for each suit

According to this data, each performance suit would cost $60 to manufacture, which is $20 + $30 + $10. If Ayayai decides to sell the performance suit for $100, the gross profit per suit would be $100 – $60, or $40.It's crucial to remember that this profit calculation does not account for additional costs like marketing, R&D, and other overhead costs that might be incurred in the creation and sale of the performance suit.Additionally, it's critical to think about any potential market competition and how it might impact the cost and demand of the performance suit.In order to determine a company's profits, the cost of all goods sold must be deducted from the total revenue. It represents the money that a business has left over after covering its direct costs of producing its products or providing its services.

Therefore, based on this information, each performance suit would cost $60 to produce ($20 + $30 + $10).

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In the 2-factor, 2-good Heckscher-Ohlin model, the country with a relative abundance of ________ will have a production possibility frontier that is biased toward production of the ________ good.A) labor; labor intensive

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In the 2-factor, 2-good Heckscher-Ohlin model, the country with a relative abundance of labor will have a production possibility frontier that is biased toward production of the labor intensive good.

Labor intensive refers to a method or enterprise that calls for a big amount of hard work to produce its items or services. hard work expenses embody all the expenses essential to secure the human capital vital to complete work.

A labor intensive organization has a decrease breakeven factor than greater capital extensive agencies, so the owners can earn a profit at a lower income stage. also, a exertions in depth business can lay off body of workers during an economic downturn to be able to power down its prices and stay in business.

Labor-intensive refers to a task that calls for good sized amount of labor as compared to different expenses. Operation that rely on exertions rather than mechanical or automatic processes might also bring about charges that decrease profitability.

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consider a pure exchange economy with two consumers and two goods. assume the preferences of both consumers are cobb-douglas. at the pareto optimal allocation, it is known that both consumers are consuming both goods. it is also known that the goods are exchanged at a ratio of three units of good 2 for one unit of good 1. consumer a's marginal rate of substitution between these two goods is . (use a negative sign in your answer if necessary.)

Answers

The marginal rate of substitution for consumer A between good 1 and good 2 at the Pareto optimal allocation is -3.

This means that consumer A is willing to give up 3 units of good 2 to obtain 1 unit of good 1.

The quantity of a good that a customer is prepared to consume in comparison to another good, provided that the new item is equally fulfilling, is known as the marginal rate of substitution (MRS) in economics. The indifference theory use MRS to examine customer behaviour.

For example, if a consumer is willing to give up 6 bananas in exchange for 3 apples, the MRS = -6 / 3 = -3.

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when tool craft international uses the long-term generalist strategy, it seek to hire employees with specific skills and abilities who will stay employed with the organization for a long time.

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The statement, when tool craft international tend to use the long-term generalist strategy, it then seeks to hire employees who are with specific skills and abilities and will stay employed for a long time, is false.

The research conducted tend to suggests that when hiring generalists, job-based fit is a more important consideration than organization-based fit. Thus, the job based fit is a concept which refers to how well an employee is tend to be suited for his or her position.

However, the tool craft international cannot use the long-term generalist strategy to hire employees with specific skills and abilities by keeping them employed. Thus, by hiring employees its best to decrease turnover.

Hence, the given statement is false.

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what would you expect to happen to wrigley's eps if it issued $3 billion in debt and:used the proceeds to pay a dividend? used the proceeds to repurchase shares? calculate thepotential eps's given the following incomes. assume the numbers are in millionwhat would you expect to happen to wrigley's eps if it issued $3 billion in debt and:used the proceeds to pay a dividend? used the proceeds to repurchase shares? calculate thepotential eps's given the following incomes. assume the numbers are in million

Answers

If $3 billion of new debt is issued to purchase shares, the number of shares outstanding will fall; but, if dividends are paid with this borrowed money, the number of shares outstanding will not change.

The worth of a company's net assets is equal to the total assets less intangible assets (patents, goodwill, etc.) and liabilities. When the corporation issues new debt, the book value is unaffected because there is a $3 billion increase on both sides of the balance sheet. The book value of the shares is unaffected by the dividend payment.

The share price will be reduced by the dividend paid per share. The act of buying back shares of company stock will not have an immediate effect on the share price.

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selected financial statement data for schmitzer inc. is shown below: 2021 2020 balance sheet: inventories 61,000 49,000 ratios: gross profit ratio for 2021 45 % inventory turnover ratio for 2021 4 what was the amount of net sales for 2021?

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$1,035,000 will be the net sales amount for 2021. Net sales are the total of a company's gross sales less any discounts, returns, and allowances.

$1,035,000 will be the net sales amount for 2021.

Average inventory is calculated as follows: Average inventory = ($61,000 + $49,000) / 2 Average inventory = $69,000

Cost of goods sold/Average Inventory is the calculation for the inventory turnover ratio.

Six = Cost of goods sold divided by $69,000 Net sales

$414,000 is the cost of goods sold.

If the gross profit ratio is 40%, then 40% of sales equals gross profit.

Let the revenue be $K.

Sales minus Cost of Goods Sold is gross profit.

0.4K = K - $414,000

0.4K = $414,000\sK = $414,000 / 0.4\sK = $1,035,000

Net sales will therefore total $1,035,000 in 2021.

When examining a company's sales, revenue growth, and operational expenses, the income statement is the financial report that is most frequently used.

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The Truth in Debt Collection Practices Act of 1977 established legal protection from abusive debt collection practices and promotes the informed use of consumer credit by forcing creditors to notify consumers of the actual cost of that credit.
True
False

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The statement is True. The Truth in Debt Collection Practices Act of 1977 established legal protection from abusive debt collection practices and promotes the informed use of consumer credit by forcing creditors to notify consumers of the actual cost of that credit.

The difference between a debtor and a creditor is that the creditor is the only one who lends cash in a credit score courting, and the debtor is the only one who borrows it.

Lenders are individuals/companies that have lent price range to some other business enterprise and are therefore owed cash. through evaluation, debtors are people/agencies that have borrowed a budget from a business and therefore owe cash.

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skimming is selling goods overseas for less than in the exporter's home market or at a price below the cost of production, or both. true or false?

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Skimming is selling goods overseas for less than in the exporter's home market or at a price below the cost of production, or both , the above statement is false.

Which production do you refer to?

Making something out of parts or raw materials is the act of producing something. To put it another way, production employs inputs to generate an output that is suitable for consumption—a thing or product that has value for a final consumer or client.

What three sorts of production are there?

The batch system, the continual system, and the large undertaking are the three most prevalent forms of fundamental production systems. In the batch system, tiny amounts of output (goods or services) are produced using all-purpose tools and techniques, with batch-to-batch variations in requirements.

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how can an insurance company make a profit by taking in premiums and making payouts?

Answers

The majority of insurance businesses make money in two ways: first, by charging premiums in return for insurance coverage, and second, by reinvesting those premiums in additional assets that yield interest.

What do you mean by the insurance company?

The services of insurance businesses, which act as financial middlemen and offer direct insurance or reinsurance, protect customers' finances from potential risks in the future.

It is therefore clear that the insurers can generate profits primarily through good underwriting, which entails carefully choosing, costing, and pricing the risks they take on, as well as investment income, which implies investing premium income and earning a return greater than what is required to cover policyholder claims.

The consumer's income is taken away when an insurance company wants to make a payout.

Therefore, the  majority of insurance businesses make money in two ways: first, by charging premiums in return for insurance coverage, and second, by reinvesting those premiums in additional assets that yield interest.

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moss company selected balance sheet information at december 31 2020 2019 current assets cash $ 94,650 $ 36,800 accounts receivable 35,000 52,000 inventory 70,000 56,100 current liabilities accounts payable 50,400 35,700 income taxes payable 3,050 4,200 moss company income statement for year ended december 31, 2020 sales $ 584,000 cost of goods sold 371,600 gross profit 212,400 operating expenses (excluding depreciation) 132,000 depreciation expense 56,000 income before taxes 24,400 income taxes expense 13,300 net income $ 11,100 Use the information above to calculate this company's cash flows from operating activities using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

Answers

The indirect method results in a $38,850 cash flow from operating activities for this company.

The amount of additional money coming into or out of an organization's operations is indicated by its net cash flow from operational activities. This includes any changes to net income as well as modifications to non-cash components.

Cash flows from operational activities.

Adjustments to balance operating cash flow and net income = 11,100

From operating activities          

Depreciation expense = 11,100  

Decrease in accounts receivable (52000 - 35000) = 17000  

Increase in inventory (56100 - 70000) = -13900  

Increase in accounts payable (50400 - 35,700) = 14700  

Decrease in income taxes payable (3,050 - 4200) = -1150       27,750

Net cash flow from operating activities = 38,850

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you are trying to decide between two vacation options for the summer. the first option is a cruise through the caribbean sea that you have determined would provide you with 98,000 utils of satisfaction and will cost $2,800. the second option is a beach vacation in the florida keys that you have determined would provide you with 74,000 utils of satisfaction and will cost $1,850. assuming both options are affordable, you would choose to take vacation.

Answers

You would choose to cruise through the Caribbean Sea as it provides higher satisfaction.

Based on the information provided, you would choose the cruise through the Caribbean Sea as it provides higher satisfaction (98,000 utils) compared to the beach vacation in the Florida Keys (74,000 utils).

Additionally, both options are affordable, with the cruise costing $2,800 and the beach vacation costing $1,850. Therefore, considering the higher level of satisfaction and affordability, the cruise through the Caribbean Sea would be the preferred vacation option in this scenario.

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From a neoclassical perspective, which of the following would most likely be viewed as an element that undermines long-run productivity growth in the economy?
A) tax cuts on business capital investment
B) Government budget surplus
C) government stimulus spending

Answers

The correct answer C) government stimulus spending. The following is likely to be seen as a factor undermining long-term productivity development in the economy from a neoclassical perspective.

Productivity in the workplace is measured as output per employee or per hour worked. Workers' skills, technology advancement, management techniques, and changes in other inputs are some of the variables that might affect labor productivity (such as capital).

The primary findings of this study indicated that the GDP is hampered by the following factors: military spending, public indebtedness, population growth, rising levels of corruption, trade deficits, political instability, and decreased rates of technological adoption.

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Interest earned and notes receivable collected _______ the bank account.
O A. are added to
OB. are both added to and deducted from
OC. are deducted from
OD. are not added to or deducted from

Answers

Notes receivable collected and interest accrued are both added to and subtracted from the bank account.

Define an interest earned.

Interest earned is the sum of interest from investments that make regular, required payments to the holder. For instance, money placed in an interest-bearing bank account or a certificate of deposit can receive interest.

The term "notes receivable" refers to claims for which formal instruments of credit, such promissory notes, are issued as proof of debt. The credit agreement typically has a minimum term of 30 days and requires the debtor to pay interest.

A payee records a note receivable as an asset on its balance sheet and the associated interest income on its income statement for accounting purposes. The interest that the bank charges for borrowing the account holder's money will be shown on the account statement at the end of each month.

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Fact Pattern: The chief audit executive (CAE) of a mid-sized internal audit activity was concerned that management might outsource the internal auditing function. Thus, the CAE adopted a very aggressive program to promote the internal audit activity within the organization. The CAE planned to present the results to senior management and the board and recommend modification of the internal audit activity’s charter after using the new program. The following lists six actions the CAE took to promote a positive image within the organization:
1. Engagement assignments concentrated on efficiency. The engagements focused solely on cost savings, and each engagement communication highlighted potential costs to be saved. Negative observations were omitted. The focus on efficiency was new, but the engagement clients seemed very happy.
2. Drafts of all engagement communications were carefully reviewed with the engagement clients to get their input. Their comments were carefully considered when developing the final engagement communication.
3. The information technology internal auditor participated as part of a development team to review the control procedures to be incorporated into a major computer application under development.
4. Given limited resources, the engagement manager performed a risk assessment to establish engagement work schedule priorities. This was a marked departure from the previous approach of ensuring that all operations are evaluated on at least a 3-year interval.
5. To save time, the CAE no longer required that a standard internal control questionnaire be completed for each engagement.
6. When the internal auditors found that the engagement client had not developed specific criteria or data to evaluate operations, the internal auditors were instructed to perform research, develop specific criteria, review the criteria with the engagement client, and, if acceptable, use them to evaluate the engagement client’s operations. If the engagement client disagreed with the criteria, a negotiation took place until acceptable criteria could be agreed upon. The engagement communication commented on the engagement client’s operations in conjunction with the agreed-upon criteria.
Regarding Action 6, which of the following elements of the action most likely would have rendered it inappropriate if omitted?
answer choices
Seek agreement with the client about the criteria
Developing a set of criteria to present to the engagement client as a basis for evaluating the engagement client’s operations
Commenting on the agreed-upon criteria
All of the answers are correct

Answers

4) All of the answers are correct. is the right option. The following lists six actions the CAE took to promote a positive image within the organization. Regarding Action 6,all of the following elements of the action most likely would have rendered it inappropriate if omitted.

Engagement assignments concentrated on efficiency .Drafts of all engagement communications were carefully reviewed with the engagement clients to get their input. Their comments were carefully considered when developing the final engagement communication. The information technology internal auditor participated as part of a development team to review the control procedures to be incorporated into a major computer application under development. Given limited resources, the engagement manager performed a risk assessment to establish engagement work schedule priorities. To save time, the CAE no longer required that a standard internal control questionnaire be completed for each engagement.

When the internal auditors found that the engagement client had not developed specific criteria or data to evaluate operations, the internal auditors were instructed to perform research, develop specific criteria, review the criteria with the engagement client, and, if acceptable, use them to evaluate the engagement client’s operations.

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