The Client May Use a Variety of Methods to Understate

question 30

Multiple Choice

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

• A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
• B)Designing off-balance sheet debt agreements with the sole purpose of keeping the debt off the books of the company.
• C)Failing to disclose loan covenants on long-term agreements.These loan covenants may restrict dividend payments or limit the amount of additional debt taken on by the company.
• D)Failing to disclose special arrangements,such as transactions with special purpose entities.
• E)Failing to disclose non related-party transactions.

Recognize the liabilities and responsibilities in bailment relationships.

Understand the legal implications of joint tenancy and the rights of joint tenants.

Evaluate liability and responsibility for damages in storage and transportation agreements.

Interpret the legal requirements and consequences of transferring hazardous materials.

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Definitions:

Value Chain Management

The optimization of activities involved in bringing a product from conception through production, distribution, marketing, and sales to the end-user.

Statistical Quality Control

Measures work samples for compliance with quality standards. It is the term used to describe the set of statistical tools used by quality professionals.

Statistical Techniques

The mathematical methods used to collect, analyze, interpret, and present data, often for the purpose of making informed decisions or predictions.

Break-Even Analysis

Calculates the point at which revenues cover costs under different ‘what if’ conditions. The break‐even point is where revenues = costs.