My mind starting asking the following question:
"Increase in reference to what? A sale?"
I then went on to say for a sale Jones would make $6000, and for a lease, Jones would make $9070 for the year (6000+3070). Therefore the Net Income would CHANGE (comparing the sales vs the lease) $3070. Because the answer didn't exist, I chose $9070, but I believe this question should be re-worded.
i'm not really sure why tolerable exception rate is inversely related to sample size..
Lets say for example:
Population of 100 invoices
A) Our tolerable exception rate is 5%. The max amount of misstatements we can accept wile providing an unmodified opinon is 5
B) Our tolerable exception rate is 2%. The max misstatements we'll accept is 2.
Since our tolerable exception rate decreased, shouldn't our sample size? It would make more sense to test less things when accepting less misstatements.. Or it would have no effect
Anyone want to help me out on what I am missing here... Thanks!
The question asks: Which of the statements is true in preparing financial statements for the fund-based statements.
The correct answer is slightly confusing.
The 100,000 expenditure for supplies under "Purchase method" is accounted for on the date of purchase. When preparing fund-statements for the end of a period there is NO entry for Expenditures. The correct answer says 100,000. That is not clearly distinguished in the question. You still can get the answer because no other answer makes any sense.
FYI: for anyone that stumbles on this one.