Sumo Pty Ltd Makes Submarines for Coastal Holiday Resorts

question 11

Multiple Choice

Sumo Pty Ltd makes submarines for coastal holiday resorts.The small submarines hold around ten passengers and one driver and are used for diving up to ten metres to examine reefs and sea life.Sumo Pty Ltd exports the submarines around the world and last years total revenue was $45 million.This year, revenue is expected to be $80 million with about 70% export revenue.Sumo Pty Ltd is owned jointly by two brothers Harry and Barry Jones.They employ 85 full time staff from their single factory outside Noosa on the Sunshine Coast of Queensland.Sumo Pty Ltd is likely to be a:

• A)non-reporting entity because there is little separation of ownership from management
• B)reporting entity because of its financial and economic importance
• C)non-reporting entity because of its lack of political importance
• D)reporting entity because of its large percentage of export revenue to total revenue

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Definitions:

Current Liability

Financial obligations that a company is expected to settle within one year or within its operating cycle, whichever is longer.

Public Corporation

A company whose shares are traded freely on a stock exchange, owned by public investors, and subject to specific disclosure and regulatory requirements.

Transfer Agents

Organizations or individuals responsible for maintaining records of securities owners and managing the transfer of stock or bonds between parties.

Retained Earnings

Definition: The portion of a business's profits not distributed as dividends to shareholders but instead retained for reinvestment or to pay off debt.