Question 1
Required: What is P&G?s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? What business risks does P&G face that may threaten its ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks? (Hint: Focus on page 28 of the annual report.) What were P&G?s quarterly net sales for the fiscal year ended June 30, 2005? What were Federated Department Stores? quarterly net sales for 2004? (Hint: see page 79 of its 10-K.) How does P&G?s quarterly sales trend compare to Federated Department Stores? quarterly sales trend? Which of the two quarterly sales trends is likely to cause greater cash budgeting concerns? Why? Describe the scope of P&G?s business in three respects?physical facilities, products, and customers. More specifically, how many manufacturing facilities does P&G operate globally? What are P&G?s three Global Business Units (GBUs)? Which of P&G?s 17 ?billion dollar brands? are included in each of these GBU?s? How many brands does P&G offer in total and in how many countries do they sell these brands? How many countries does P&G?s Market Development Organization operate in? Describe five uncertainties that complicate P&G?s efforts to accurately forecast its sales and expenses. P&G?s annual report briefly discuss the acquisition of Gillette (see pages 10-11). It acknowledges that Gillette has some different cultural norms in terms of how it defines accountability and communicates internally. Although not discussed in the annual report, how could differences in two organization?s budgeting practices be responsible for these types of divergent cultural norms?,I need to receive the answers by tomorrow night please,1.What is Blue Nile's strategy for success in the marketplace?
Question 2
Eileen Nolland works for a small company that employs twelve people who all work in the same office. She is responsible for various duties ranging from answering phones and entering orders into the system to tracking inventory and updating client files. She performs many of these duties as a back-up for other colleagues. Over the years she has worked herself into a position as ?the go to person? for her boss, Jack Barns. Eileen has made quite an effort to gain Jack?s confidence. She handles the sales staff commissions and employee benefits, and makes most of the purchasing decisions for the office. She is often found sitting in Jack?s office, doing her daily work and chatting with Jack about both work and personal issues. The rest of the staff resent Eileen?s connection to Jack, the boss. Many of them feel that she gets preferential treatment. Eileen does work hard, but she also has a way of setting her own hours. She is often overheard complaining about how tired she is after having to stay late at night to fix some filing error. Jack is often the one to inform other employees that he has sent Eileen home to get some rest. He often makes comments such as, ?She worked so hard last night, and she won?t be any good today. I told her to go home and sleep. Be back tomorrow and start fresh.? Eileen also makes herself out to be a hero by spending time comparison shopping for things that the office needs. She then presents the information to Jack so he can see how much money she saved the company. Jack often consults with Eileen first when a major decision affecting the entire office needs to be made. Her co-workers are rarely granted this knowledge and only see Jack consulting with Eileen. Several co-workers have talked amongst themselves wondering what Eileen says that keeps Jack asking for her input. They do not think she is more knowledgeable about the clients or company than any of them. From Jack?s perspective, Eileen is invaluable to the team. She always has necessary data to consider, is quick to point out benefits or potential hardships to clients, and almost always presents a solution. He wishes more employees approached their work the same way Eileen does. In fact, he often wonders why there sometimes seems to be hostility directed toward Eileen. 1. How could Jack?s perception of Eileen?s performance affect his leader behaviors when interacting with her? 2. How could her co-worker?s perception of Jack?s leader behaviors toward Eileen affect their own performance?
Question 3
Your uncle has $90,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years. After consulting with his financial adviser, he has been offered four types of fixed income investments, labeled as investments A,B,C and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5). Each dollar invested in B at the beginning of a year returns $1.36 three years later. Investments C and D will each be available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.66 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.12 at the end of year 5. Your uncle is obligated to make a balloon payment on an existing loan, in the amount of $24,000, at the end of year 3. He wants to cover that payment out of these funds a well. a. Devise an investment plan for your uncle that maximizes the amount of money that can be accumulated at the end of five years. How much money will be available for the annuity in five years? b. Describe the pattern in the optimal plan. A Network Diagram is needed to accompany this problem and must be done on Excel.
Question 4
1. A common rule of thumb is that a company's acid-test ratio should be at least 2 or a company may face near-term problems. (Points: 6) True False 2. In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period. (Points: 6) True False 3. The cost of an inventory item includes its invoice cost minus any discount, and plus any added or incidental costs necessary to put it in a place and condition for sale. (Points: 6) True False 4. The matching principle requires that the inventory valuation method follow the physical flow of inventory. (Points: 6) True False 5. A company uses the perpetual inventory system and recorded the following entry: 3-7 This entry reflects a: (Points: 6) Purchase. Return. Sale. Payment of the account payable and recognition of a cash discount taken. Purchase and recognition of a cash discount taken. 6. Inventory shrinkage: (Points: 6) Refers to the loss of inventory. Is determined by comparing a physical count of inventory with recorded inventory amounts. Is recognized by debiting Cost of Goods Sold. Can be caused by theft or deterioration. All of the above. 7. A company had the following purchases during the current year: 3-25 On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory? (Points: 6) $3,500. $3,800. $3,960. $3,280. $3,640. 8. Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June 1 Beginning inventory: 15 units at $20 each. June 15 Sale of 12 units for $50 each. June 29 Purchase of 8 at $25 each. The cost of the ending inventory is (Points: 6) $200. $220. $260. $275. $300. 9. Generally accepted accounting principles require that the inventory of a company be reported at: (Points: 6) Market value. Historical cost. Lower of cost or market. Replacement cost. Retail value. 10. A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged: Inventory, beginning: $28,000 Purchases for the period: $17,000 Sales for the period: $55,000 Sales returns for the period: $700 The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory? (Points: 6) $9,705. $25,995. $29,250. $44,000. $45,000.
Question 5
This assignment is expected to take you the following time: Internet research ? 3 hours Industry analysis ? 2 hours Completing the checklist ? 1hour Preliminary analysis ? 2 hours You are being asked to complete part of the checklist for the knowledge of a client?s business, as you would do for any new client of your audit firm. It is expected that you will study at least two competitors for the fictional company described below. The case is as follows. Java Stop Limited (JSL) is a private company with corporate offices at 10 Bay Street, Suite 409 in Toronto. It was founded July 2, 2002 by Michael Beber. Mr. Beber was working as a banker at the time. While visiting a client in the import business, his client pointed to the coffee Mr. Beber had bought at the corner coffee shop for $1.75 and told him that the beans to make one cup cost about 20 cents. Knowing that the other main ingredient was water, which was almost costless, Mr. Beber did the math on the other fixed and variable costs, looked at the competition and the market and decided there was room for one more coffee chain. The first store, run by his now ex-wife Lori, opened October 1, 2002. Java Stop distinguished itself from its competitors in three areas. First, they use distilled water instead of tap water. Technically speaking, anything added to tap water is mostly boiled away during the brewing process. Displaying the water jugs to the customers reinforces the image of purity. Surveys have shown this to be a positive feature of their locations. The second advantage was that right from the beginning, free internet was made available to customers. While this is common in the competitors today, it was not as common in 2002. Lastly, Jave Stop prices its products at 90% of the price at the leading chain. When incorporated, 1,000,000 shares were issued. He owned 75% and his wife owned 25%. Mr. Beber and his wife were divorced in 2006, at which time there were 7 locations in Toronto, and one in Kingston. After their divorce settlement, Lori owned 200,000 shares, Mr. Beber 400,000 and a family trust had 400,000. The family trust was set up to benefit the couple?s two children. Mr. Beber quit the bank in 2006 to run the company full time and it now has 23 locations. Lori ceased to be involved in operating the company in 2005. The current management team is composed of Kathy Kus, CFO, Hy Haberman, V.P. Operations and Michael Beber, CEO. All three sit on the Board of Directors along with four others who are mostly friends of Mr. Beber. There are several challenges faced by the company. The first is that within the next five years, it is planned to change their incorporation from the Ontario Corporations Act to the Federal Canada Corporations Act. While not necessary in order to expand into other provinces, it will make it easier to expand into the United States. At the same time, the company is expected to go public and use the funds to expand rapidly. It is for this reason that they have chosen to have the financial statements audited. Because of Mr. Beber?s contacts at the Bank of Nova Scotia, 100 Yonge St., 9th floor Toronto ON, M5H 1H1, operating lines of credit were secured by a general charge on assets and internally prepared financial statements were deemed to be acceptable. No review or audit has been done in the past. Ms. Kus is a CA with 20 years experience and there six employees in the accounting department, including the Accounting Manger, Joan Zhou, who recently completed her CGA. They are currently using ACCPAC v 5.4 operating on a Dell Data Server. JSL outsources its IT services to FC DataNet, Limited which is headquartered in Calgary and has offices across Canada. Ms. Kus believes this system will be scalable up to 100 locations, at which time it is likely the company will bring its systems in house and upgrade to a larger software platform such as SAP. Ms. Kus is familiar with SAP through her work as Controller for Nabisco Canada prior to joining JSL. There is only a small chance that JSL will have that many locations by the time it goes public. The last challenge to the business is what to do with its coffee import operations. JSL uses its buying power to buy beans and roast them on behalf of smaller coffee shops. This helps use up capacity at its own roasting plant but also helps strengthen its competitors and has a low gross margin of less 15% even though there is no extra operating costs.. Roughly 20% of sales come from the roasting side of the business. It also accounts for all of the accounts receivable. The year end is December 31. Required a) (10 marks) Fill out the client acceptance checklist. This will require you to do research on the coffee shop industry. You may wish to contact the library if you need help with research. Feel free to expand the Knowledge of Industry section to have enough room to give the results of your research. b) (8 marks) Perform a preliminary analysis of the financial information. c) (4 marks) Calculate materiality based on the information you?ve been given and justify your calculation. d) (8 marks) Identify four areas of inherent risk that might affect your audit planning. Would you say these are high risks or low? KNOWLEDGE OF THE CLIENT'S BUSINESS CHECKLIST This appendix provides a checklist that may help the auditor obtain and document knowledge of some of the characteristics of the client's business. This checklist is not meant to be an exhaustive list of the characteristics of the client's business that may be important for the audit. In addition, this checklist is not designed to group all of the information necessary for understanding internal control for planning purposes and assessing control risk. I. KNOWLEDGE OF THE ENTITY A. CHARACTERISTICS OF OWNERSHIP AND MANAGEMENT 1. Type of entity: 0Corporation 0 Sole proprietorship 0Private 0Public 0 Joint venture 0 Crown corporation 0 General partnership 0 Not-for-profit organization 0 Limited partnership 0 Other (describe) 2. Jurisdiction of incorporation: Statute: Date: 3. Listed on stock exchange: (name of stock exchanges, listed securities) 4. Principal owners, directors and officers: Name Title % interest I. KNOWLEDGE OF THE ENTITY B. OPERATIONS 1. Nature of activities (manufacturing, distributing, service, etc.; industrial, commercial, residential, individual, etc.): Description of products and services % of activities 2. Territory covered Location % of activities 3. Production or sales cycles 4. Patents, trademarks, rights, permits: I. KNOWLEDGE OF THE ENTITY C. FINANCIAL POSITION 2. Sources of financing: Financial institutions (name, address, bank accounts) Other sources of financing: 3. Is there a doubt as to the entity's ability to continue as a going concern? D. INFORMATION SYSTEMS 1. Accounting records and documents: Accounting cycle or subsystem System or software Frequency 2. Description of computerized system: II. KNOWLEDGE OF THE INDUSTRY 1. Economic conditions of the industry: (market conditions, decline or expansion of business, price changes, economic cycle of products, etc.): 2. Description of technological changes, internationalization of business transactions and their effects on the market: 3. Major competitors: Name Products or services offered 4. Financial statement users and reporting requirements: 5. Specific knowledge required of the audit team: Type of knowledge Description Canadian accounting standards US accounting standards Other accounting standards Specific industry guidance Materiality: Materiality should be calculated as: This amount is appropriate for the following reasons:,Hi, I just too much things to do nd need help.
