Sun CorpApproved a Merger Plan with Cord Corp

question 47

Multiple Choice

Sun Corp.approved a merger plan with Cord Corp.One of the factors that led to the approval of the merger was the fact that the Cord's financial statements were audited by Frank & Co.CAs.Sun had engaged Frank to audit Cord's financial statements.While performing the audit,Frank failed to discover certain irregularities that later caused Sun to suffer substantial losses.For the lawsuit to be successful,Sun must prove that Frank & Co. ,CAs ________.

• A)knew of the irregularities
• B)failed to exercise due care
• C)was grossly negligent
• D)acted with scienter

Prepare the statement of cash flows using the indirect method.

Identify and classify operating, investing, and financing activities.

Adjust net income for changes in operating assets and liabilities to arrive at cash flows from operating activities.

Recognize the impact of transactions involving property, plant, and equipment on the statement of cash flows.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a product or service.

Marginal Revenue

Marginal revenue is the additional income received from selling one more unit of a good or service, important for businesses in determining optimal production levels.

Long Run

A period in economics during which all inputs, including capital, are variable, allowing firms to adjust all aspects of production.

Economic Profits

Profits exceeding the opportunity costs of all inputs, indicating a firm is not only covering its costs but earning more than the next best alternative use of its resources.