Consider the Following Case as You Respond to the Questions

question 53

Multiple Choice

Consider the following case as you respond to the questions: HSO Corp.designs, manufactures and sells golf carts, scooters and similar vehicles.When a prospective client contacts one of their seven corporate offices, the office manager fills out an "intake questionnaire" to determine if HSO can meet the prospective client's needs.The office manager assembles a team of employees with expertise in design, production, marketing and accounting; the team reviews the intake questionnaire and determines if HSO can take on the order.If so, the office manager prepares a three-page written proposal for the prospective client; the proposal explains the responsibilities of both HSO and the client, along with a timeline and a budget.The proposal is forwarded to the prospective client electronically, and the client has ten calendar days to accept it.If HSO cannot take on the order, the prospective client receives an automatically generated form letter; if the prospective client does not accept the proposal within ten calendar days, they receive a different form letter.The new client remits half of the fee at the time the proposal is accepted, and HSO prepares weekly progress reports as the project moves forward.The reports are filed in HSO's database; a hard copy is sent to the client.On a monthly basis, HSO's office manager prepares a comprehensive status report for all current engagements.One week before each project is concluded, HSO bills the client for half of the remaining amount due; after the client has paid all outstanding invoices, HSO completes the work and bills the client for all remaining amounts.HSO delivers the finished product; the client must pay the full amount due within 30 days of the final invoice date.If the client pays within 15 days, HSO gives a 3% discount off the amount due.On April 1 of the current year, EPL Corporation accepted a three-page written proposal from HSO to design and build 10 customized golf carts for EPL's internal use.The total price for the order was $3400.A REA model of EPL's process will include which of the following in the first column: (i) cash, (ii) equipment, (iii) inventory?

• A)I and II only
• B)II and III only
• C)I and III only
• D)I, II and III

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Definitions:

Shale Gas

Natural gas that is found trapped within shale formations, which are fine-grained sedimentary rocks.

Directional Drilling

Drilling within a targeted shale body to permit hydraulic fracturing.

Maturation Of Coal

The process through which plant material is converted into coal over millions of years, increasing in carbon content and energy.

Methane

A greenhouse gas consisting of one carbon atom and four hydrogen atoms, commonly produced through anaerobic decomposition of organic material.