Elm Tree Inc

question 64

Multiple Choice

Elm Tree Inc. has a December 31 year end. On October 15, the auditor evaluated and tested Elm Tree's internal control procedures over the sales recording process and finds the controls to be effective. At a minimum, the auditor's year-end procedures for testing internal control procedures must include:

• A)confirmations of year-end accounts that were examined on October 15.
• B)tests the client's internal control procedures from October 15 through the year end.
• C)tests of compliance with internal control for a random sample of transactions throughout the audit period.
• D)a comparison of the responses to the auditor's internal control questionnaire with a detailed flowchart of control procedures at year end.

Analyze the factors influencing the optimal capital structure of a firm.

Recognize the benefits and drawbacks of debt financing, including the impact on the cost of equity and shareholder value.

Understand the definitions and concepts related to bankruptcy, including direct and indirect costs, as well as options for reorganization and liquidation.

Grasp the importance and calculation of the weighted average cost of capital (WACC) in different tax contexts.

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Definitions:

Mineralocorticoids

A class of corticosteroids that are essential for regulating the balance of minerals and water in the body.

PTH

Parathyroid hormone, a regulator of calcium and phosphate metabolism in the body.

Insulin

A biochemical produced in the pancreas that helps regulate the amount of sugar in the blood by enabling tissues to absorb glucose.

ADH

Anti-Diuretic Hormone, a peptide hormone that regulates the body's retention of water by increasing water reabsorption in the kidneys.