BUSINESS ENVIRONMENT AND CONCEPTS
Park and Graham entered into a written partnership agreement to operate a retail store.
Their agreement was silent as to the duration of the partnership. Park wishes to dissolve the partnership. Which of the following statements is correct?
- Park may dissolve the partnership at any time.
- Unless Graham consents to a dissolution, Park must apply to a court and obtain a decree ordering the dissolution.
- Park may not dissolve the partnership unless Graham consents.
- Park may dissolve the partnership only after notice of the proposed dissolution is given to all partnership creditors.
AUDITING
In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and
- Observe the segregation of duties concerning personnel responsibilities and payroll disbursement.
- Inspect evidence of accounting for prenumbered payroll checks.
- Recompute the payroll deductions for employee fringe benefits.
- Verify the preparation of the monthly payroll account bank reconciliation.
REGULATION
In 2002, Cable Corp., a calendar-year C corporation, contributed $80,000 to a qualified charitable organization. Cable's 2002 taxable income before the deduction for charitable contributions was $820,000 after a $40,000 dividends-received deduction. Cable also had carryover contributions of $10,000 from the prior year. In 2002, what amount can Cable deduct as charitable contributions?
- $90,000
- $86,000
- $82,000
- $80,000
FINANCIAL
Lang Co. uses the installment method of revenue recognition. The following data pertain to Lang's installment sales for the years ended December 31, 2001 and 2002.
| |
2001 |
2002 |
| |
|
|
| Installment receivables at year-end on 2001 sales |
$60,000 |
$30,000 |
| |
|
|
| Installment receivables at year-end on 2002 sales |
-- |
69,000 |
| |
|
|
| Installment sales |
80,000 |
90,000 |
| |
|
|
| Cost of sales |
40,000 |
60,000 |
What amount should Lang report as deferred gross profit in its December 31, 2002 balance sheet?
- $23,000
- $33,000
- $38,000
- $43,000
SOURCE: GLEIM'S CPA REVIEW (A SYSTEM FOR SUCCESS) Nov 2002-May 2003 edition.
