As a supervisor, what would you do? l . Report the drug users and the incident to the company's
human resources department. 2. Mind your own business. The employees are not on your team
and don't appear to be impaired at work. 3. Talk to your boss and get her opinion about what
should be done. 4. Invent other optio
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Charlie Brown rents a one-bedroom apartment in from Lucy. The lease is signed on 1-3-18 and
Charlie, his dog Snoopy and his bird Woodstock move into the apartment on 2-1-18. Charlie has
been shown a "display model" and has never actually seen the apartment he eventually rents.
Upon inspection, Charlie notices a large t
Do you think it makes sense for a company such as Sears Holdings Corp., which has numerous
Sears and Kmart stores in serious need of a makeover, to focus resources on building the online
business at the expense of its bricks-and-mortar business? Discuss.
1. How would you describe Netflix's organizational culture? Explain. 2. If you were hiring
people at Netflix, what questions would you ask applicants to determine if they would fit into the
corporate culture? Generate three to five questions. 3. What are the specific human resource
practices that Netflix is using to
Company name, C's Tasty wings a fast food restaurant selling wings, chicken etc, and Vantage
points of C's Tasty wings: 1. Offer baked, fried, and smoked wings. 2. Offer all you can eat wing
buffet on the weekends. 3. Every other month, 3 different flavors for wings are implemented on
the menu based off customer voting
Search the Internet for a large organization that is strategically "sustainable" and aligned with
SMART 2020. Describe the basic concept behind the firm's sustainability initiative(s). Be
specific as to which part of Porter's Value Chain it impacts. Do you think it is successful in terms
of a positive impact on the fir
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1. What are Yogesh Gupta and Kathleen Murphy doing to reduce the "noise" in their
communications? Discuss. 2. Which of the nine personal barriers to communication are being
addressed by Gupta and Murphy? Explain your rationale. 3. How might Gupta and Murphy use
the tools of information technology to enhance their com
Critics argue that RFID can potentially jeopardize consumer privacy by making it possible to
link purchases to individuals or even to track the movement of individuals. Should this concern
prevent companies from adopting RFID? Explain.
Wexly is a large publicly owned corporation which you are the president. When making
decisions, do you make them to maximize stockholders' wealth or for your personal gains? What
actions could stockholders take to make sure the interest of both parties is served? What can
influence management's actions?
Imagine your manager has requested that everyone in the company take the Strengths Finder test.
Now, your manager has asked you to put together a training tool on how to best coach and
develop employees in the decision making process who have varied strengths. Write a document
for your manager in which you: Describ
1. Alex Patterson notes that our educational system is often focused on individual achievement,
but when we go out into the work world as adults, almost all of us are required to work in teams.
In what ways does this early focus on individual work make it difficult for us to work in teams?
What should an individual do
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How would you resolve this dilemma? I. In today's economy it is very important to contain or
reduce the cost of health care. I would revise the Genetic Information Nondiscrimination Act so
that employers are allowed to ask about family health history. 2. If we allow companies to ask
about family medical history, they
What would you do given the current situation? 1. Charge Mr. Hills. He knew that it was against
U.S. policy to have dealings with terrorist organizations. 2. Fine the company $25 million. The
company should have folded its operations in Colombia rather than make payments to a terrorist
organization. 3. Don't charge
1. What type of team does the new CIO have? What do you see as the key problem with the
team? 2. How do you think that the team evolved to this low level of cooperation and
cohesiveness? 3. What suggestions do you have for the CIO to help her turn this collection of
individual regional and department heads into a top
1. What are blind spots and what causes them? 2. Who has better information for judging internal
traits, the self or others? Why? 3. Who has better information for judging external traits, self or
others? Why?
In zero-based budgeting, every account starts at $0, and every dollar added to the budget is
reflected by an actual, documented need. Identify the possible advantages of zero-based
budgeting.
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As a manager, what would you do? 1. Tell the mortgage company your friend is still employed
by the company. Your friend needs a break, and you're confident that he'll find a job in the near
future. 2. Refuse to lie. It is unethical to falsify information regarding employment. 3. Simply
avoid the mortgage company's p
Write an article making recommendations for the optimal business entity form for the
entrepreneurs in the scenarios outlined below using at least two other credible sources in your
paper. Discussing your recommendation for the optimal business entity form for each of the
following scenarios: A. Melanie has a busine
Review an article "Why Incentive Plans Cannot Work" from the Harvard Business Review
course pack to build your understanding on Employee incentive plans which are widely used in
organizations to align employee behavior toward the corporate strategy. Some experts argue that
employee incentive programs are not effective
Describe the advantages of using a balanced scorecard to measure and control organizational
performance. Suppose that you created a balanced scorecard for Walmart. What specific
customer service measures would you include?
Knowing a company might be reluctant to hire you based on your condition, what would you do?
1. Don't immediately mention your disease during the interview. Instead, play up your abilities,
experience, and enthusiasm for the job. If you get hired, you can explain your illness and make
up for missed work owing to medic
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Ethics in business relationships include both the external and internal relationships that develop
around the organization. For this assignment, we will focus on the internal relationships that
develop inside the organization. Studies have indicated the more positive the environment within
the organization, the more pr
After watching the video, Session 27/35 (SDLC Methodologies - Waterfall, Agile, Scrum, etc),
and reading the assigned sections, you will required to start their own thread comparing and
contrasting two SDLC methods, not models. The same two SDLC methods cannot be used more
than twice in the discussion board. Below is t
Consider that several Mitsubishi executives were put on trial for manslaughter charges in Japan
"for failing diligently to investigate defects in delivery trucks that were subsequently implicated
in two deaths." Do you think it is fair to level criminal charges on executives for product defects
that can cause death amo
What does it mean that ethics are "good for business"? List and explain at least ten reasons why
ethics are good for business.
Discuss about Careers in Information assurance engineering. Introduction - what you plan to
accomplish and why, include an overview of the situation or organization and what the
situation/problem is that you intend to improve. Overview The non-portfolio or non-internship
action research project involves actively resear
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I. Which of the forces for change are causing GM to undertake major organizational change?
Explain. 2. Which of the four targeted areas of change is GM focusing on? Provide examples. 3.
How can Whitacre increase innovation within GM? Provide specific recommendations. 4. Why
are some GM employees resisting change? Ex
1. Intermountain Healthcare is a very large organization with thousands of employees. List at
least four methods it uses to communicate with employees. Why do you think this organization
feels the need to use so many different methods to communicate? 2. In the video, Fritz Grohn
says that communicating with patients a
Write an article on "Social Security System". Social Security is a debated topic in every
Presidential Election and is gaining increasing attention as more and more baby boomers retire.
For this article you should research the history and functioning of the current Social Security
System. From this research you are t
Write a short research report explaining a recent innovation in your area of interest or expertise.
Your goal is to develop a recommendation whether your company should become committed to
this innovation, or to explain why not. Information you might present includes: Problems in the
development of the innovation and
Write an essay on motherless women who are face psychological and emotional exile
experienced during the period of bringing up their own child and so on.
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Ethics in business relationships include both the external and internal relationships that develop
around the organization. For this, we will focus on the internal relationships that develop inside
the organization. Studies have indicated the more positive the environment within the
organization, the more productive th
The openness of wikis is both their strength and their weakness. As a business owner, why might
you want to take advantage of this technology? How might you guard against potential problems,
such as vulnerability to mistakes, pranks, self-serving posts, or cybervandalism?
How do you feel about forcing employees to donate part of the pay to charity? 1. Goldman
should not adopt this policy. Charitable donations are a personal decision and an employer
should stay out of an individual's personal decisions. 2. Goldman should adopt this policy.
Employees at Goldman make a lot of money and t
What are the characteristics of an open communication climate? Describe the organizational
benefits of managers cultivating an open communication climate.
Review how censorship and other limitations may be imposed that are restricted your ability to
effectively have true freedom of speech on-line. After you have reviewed the articles and have an
understanding of how the laws affect on-line realities, discuss how these topics are related to the
Canadian context. Examine t
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What type of production layout do you think would work best in a car dealership? What type
might work best for an insurance company that provides customers with auto-, home-, health-,
and life-insurance products? Discuss the reasons for your answers.
1. Vote to exonerate the three group project members who didn't cheat. You're convinced that
they had no reason to suspect Paul Colgan of dishonesty. Exonerating them is the right thing to
do. 2. Vote in support of Hank Zierden's decision to hold each individual member accountable
for the entire project. The professor
What is ISO certification? Why would a global company like GE want ISO certification?
Write an essay on Gettysburg Address. Analyze and explain what this speech means to you
personally.
1. What do you see as the major strengths and flaws in the feedback control system used in the
schools in this scenario? What changes do you recommend to overcome the flaws? 2. Is a 1-5
grading system by principals and master teachers a valuable part of a feedback control system for
teachers? Why? 3. How might the st
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If you were the leader of a newly formed team, what might you do to make sure that the team
developed norms of high performance?
During times of significant organizational change, such as downsizing and layoffs, the grapevine
becomes more active as anxious employees share organizational news and rumors. As a
manager, what communication strategies would you employ during a time of uncertainty in the
workplace? What are the advantages and disadvan
1. Which internal and external stakeholders are positively and negatively affected by Google's
decision to oppose censorship of its search engine? 2. Which of the six general environmental
forces influenced Google's decision about censorship in China? Discuss. 3. Use the four
approaches to deciding ethical dilemmas t
What would you do if you were the principal of Westwood High? I. Allow the Native American
students to wear the eagle feathers now and in the future. This shows an appreciation for
diversity. 2. Do not allow the Native American students to wear the eagle feathers because it
violates an existing rule. Allowing an exce
Most companies have policies that regulate employees' personal use of work computers during
work hours. Some even monitor employee e-mails and track the Web sites that have been visited.
Do you consider this type of surveillance an invasion of privacy? What are the advantages of
restricting employee use of the Internet
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Collect information on "Amazon" from internet and write an article in which they utilized a
"Business Information Systems Initiative". The article must include information regarding the
background, situation, response and results of the action.
1. How would you evaluate Cameron in terms of the Big Five personality dimensions? 2. How
would you evaluate Cameron in terms of the five traits important to organizational behavior?
Explain. 3. W hat were Twentieth Century Fox's attitudes toward producing the film at the start
of the case-use the three components of
Research how quantitative research is used in your discipline. Using this information, write an
essay that describes how quantitative research tools can be used to aid in decision making within
your field. Be sure your essay addresses the following questions: 1. Describe specific
quantitative methods and tools that c
You work for an established production company on the Production Lead Team. Your team
consists of talented team members, each with a certain skill to help in the research and operations
of a new product and/or services. Your team was tasked with identifying the current operational
procedures of the company, which you w
Review the various methods for improving the performance and ethical behavior of those you
manage. Respond to the following: 1. Evaluate the importance of managerial example to creating
a culture of integrity. Does this importance change based on how high or low a manager is in the
organization? Provide a detailed eva
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In order to address the concerns of stakeholders while meeting overall business needs. We need
to establish such type of Designs in order to ensure the smooth running of operations. Outline
business need and Design Requirements of Entire WWTC Project. The requirements include but
are not limited to Design Requirements
Research on team interactions described in the chapter indicates that when people eat lunch at
12-person tables, they are more productive and collaborative than when they eat at 4-person
tables, even if they aren't eating with their own team members. What do you think would explain
this finding?
You are a middle manager helping to implement a new corporate cost-cutting strategy, and
you're meeting skepticism, resistance, and in some cases, outright hostility from your
subordinates. In what ways might you or the company have been able to avoid this situation?
Where do you go from here?
1. Consider your own personal environment as related to organization communication. That most
likely implies your job and work environment, but might also include organizations you are
affiliated with outside of work. Describing the organizations you are involved with, and how
organization communication impacts the eff
How might the organizers of an upcoming Olympics use an extranet to get all the elements of the
event up and running on schedule?
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What are the three types of inventory? Which type is most likely to be affected by the JIT
inventory system? Explain.
Prepare a draft that covers the topic of the global market. Specifically, you will analyze potential
issues in financial statement analysis in your company's country of choice (SWEDEN) and make
a recommendation on how to avoid these issues. You will also weigh the benefits of the
international financial statement analy
Do you believe that it is ethical for organizational managers to try to get access to and scrutinize
the Facebook pages of employees or job applicants? Discuss.
1. Evaluate Theo's new strategy in light of the company's strengths, weaknesses, opportunities,
and threats. 2. Using the BCG matrix, explain Theo's decision to offer a classic line of chocolate
bars after having limited success with Fantasy Flavor chocolates. 3. Which of the three
competitive strategies- differentia
1. What goal or mission for the Central City Museum do you personally prefer? As director,
would you try to implement your preferred direction? Explain. 2. How would you resolve the
underlying conflicts among key stakeholders about museum direction and goals? What actions
would you take? 3. Review the "Manager's Shop
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1. Say nothing about the false numbers. Of course, the company will miss the projections and
have to come up with a good explanation, but after all, isn't that par for the course among
fledgling high-tech companies? Chances are the whole thing will blow over without a problem.
2. Go ahead and close the deal, but come
Does it seem like a good idea to let a big data computer program make hiring decisions, as some
companies like Xerox are doing, as described in this chapter? What types of positions do you
think this might be suitable for? What might be some drawbacks to this approach?
Aaron Alexis, the former Navy reservist who went on a shooting rampage in September 2013
and killed 12 people at the Washington Navy Yard in Washington D.C., had a history of mental
instability, but he was carrying a valid security clearance. How would you suggest managers
make decisions for issuing or revoking securit
1. How would you characterize Rankin's leadership style? What approach do you think is correct
for this situation? Why? 2. What would you do now if you were Rankin? How might you awaken
more enthusiasm in your team for completing this project on time? Suggest specific steps. 3.
How would you suggest that Rankin modif
1. Based on how this business owner describes her business, write a one- or two-sentence
organizational mission statement for Mi Ola Swimwear. 2. Pick four of the following six
categories: strategic goal, strategic plan, tactical goal, tactical plan, operational goal, and
operational plan. Then, in the video, find one
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Analyze the driving and restraining forces of a change that you would like to make in your life.
Do you believe that understanding force-field analysis can help you more effectively implement
a significant change in your own behavior?
If talkative men are viewed as powerful and competent, why do you think talkative women are
seen as less capable and pushy? Do you think this perception would be different in an
organization with a large percentage of female managers at top levels?
Until Sheryl Sandberg was promoted to chief operating officer of Facebook in 2012, its board
was composed of only men. Yet a majority of Facebook's 845 million users are women. Given
this demographic, explain how Facebook might benefit from increasing the presence of women
on its corporate board.
In September 2013, Tokyo Electric Power Company (Tepco) reported highly contaminated water
leaking from a storage tank at the Fukushima nuclear power plant crippled in a March 2011
earthquake and tsunami. From what you know of the ongoing Fukushima disaster, discuss the
various stakeholder groups that Tepco should resp
How does starting an online business differ from starting a small business such as a local auto
repair shop or delicatessen? Is it really possible for businesses that operate totally in cyberspace
to build close customer relationships? Discuss.
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What does it mean to say that HRM plays a strategic role in driving organizational performance?
Consider recruiting, training, performance appraisal and compensation strategies as part of your
answer.
How does relational coordination differ from teams and task forces? Do you think that relational
coordination seems more valuable for a service technology or a manufacturing technology?
Explain your answer.
Managers at some banks and mortgage companies have argued that providing subprime
mortgages was based on their desire to give poor people a chance to participate in the American
dream of home ownership. What is your opinion of this explanation in terms of ethics and social
responsibility?
As a manager, how might you deal with an employee who is always displaying negative
emotions that affect the rest of the team? How might you use an understanding of attributions
and emotional contagion to help you decide what to do?
What personal skills do you need to keep your financial backers feeling confident in your new
business? Which skills are most useful when you're dealing with more informal sources, such as
family and friends, versus receiving funds from stockholders, a bank, or a venture capital firm?
Would these considerations affect
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By the time that an online or mobile business starts noticeably losing customers, it is often too
late to turn things around. If you were the creator of a successful game app, such as Angry Birds
or iShoot, how might you know when it was time to pivot in order to keep thriving?
Using Hackman and Oldham's core job dimensions, compare and contrast the jobs of these two
state employees: (1) Jared, who spends much of his time researching and debating energy policy
to make recommendations that will eventually be presented to the state legislature (2) Anise,
who spends her days planting and carin
This chapter described studies that show that people work harder and better for managers who
put the interests of others above their own. Why might this happen? Do you believe being more
of a "giver" than a "taker" will translate into greater career success for these managers? Discuss.
1. What do you see as the advantages and disadvantages of the incentive system that DeMarco's
is using for sales associates? What impact do you think it's having on the DeMarco's culture?
Explain. 2. Do you think the complaints of lower-paid sales associates are legitimate? Why?
How do you suggest that Lauren respond
Have you ever experienced or witnessed the queen bee syndrome? What specific strategies might
top executives use to avoid the queen bee syndrome among female managers? Do you think that
men might employ some of the same tactics as "queen bees" and are simply not scrutinized as
women are?
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1. How has Ken Bodine shaped the sales culture at Pace Technologies? Do you consider this
culture to be at a preconventional, conventional, or post conventional level of ethical
development? Why? 2. What should Ali Sloan do? What would you actually do if you were in
her place? Explain. 3. How might Cody Rudisell's de
1. What are some of Seth Goldman's responsibilities as "TeaEO" of Honest Tea? Provide at least
three detailed examples. 2. How does Goldman's experience as the founder of the company
influence his ability to delegate? 3. Referring to Woodward's research on manufacturing
technology and structure, how would you categor
If you wanted to add a group of big data scientists to a large organization such as PepsiCo, would
you centralize the scientists in a central pool at headquarters or decentralize them to separate
divisions? Discuss your reasons.
Why do you think empowerment increases motivation? Do you see any ways in which a
manager's empowerment efforts might contribute to demotivation among employees? Discuss.
1. List the three main activities of HRM and identify which activity is examined at length in the
video. 2. Of the various steps in Barcelona's employee selection process, the job interview is the
briefest. Do you agree with the company's approach to interviewing? Why or why not? 3.
Identify Barcelona's three-stage p
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Studies of women leaders suggest that many of them view power differently than men do and
prefer a collaborative, relationship-oriented use of power. If this is the case, what does it suggest
about women leaders' abilities to accomplish goals? What does it suggest about women's ability
to rise to higher organizational
Assume that it is the year 2027. In your company, central planning has given way to frontline
decision making, and bureaucracy has given way to teamwork. Shop floor workers use handheld
devices and robots. A labor shortage currently affects many job openings, and the few applicants
that you do attract lack skills to wo
One HR manager recently got a thank-you note on her iPhone that said "Thx 4 the Iview! Wud
♥ to wrk 4 u!!!" The manager had liked the candidate in the interview, but after getting this
note, she put him in the reject pile. Do you think it was fair for the manager to reject the
candidate so automatically? Should "text
Some people say an organization could never be "prepared" for a disaster such as the shooting at
Sandy Hook Elementary School, the Japan nuclear disaster, or the huge BP oil spill in the Gulf
of Mexico. Discuss the potential value of crisis planning in situations like these, even if the
situations are difficult to plan
Suggest some personal traits that you believe would be useful to a business leader today. Are
these traits more valuable in some situations than in others? How do you think traits differ from
strengths?
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As HR manager for a small company that makes computer games and software, what are some
steps that you might take to create an employer brand?
Why do you think research has shown that idea champions are so essential to the initiation of
change? Could they be equally important for implementation?
1. What role does an advisory board play in this business owner's approach to decision making?
If you were a business owner, would you want to develop an advisory board? 2. After listening
to this entrepreneur's perspective on decision making, how would you categorize her decisionmaking style? Include at least two ex
1. What does nice mean to you? Is being considered nice a good trait for managers to have or the
kiss of death? 2. Is nice related to any concepts in the chapter, such as agreeableness,
conscientiousness, or emotional intelligence? Discuss. 3. If Harry is passed over for promotion,
what feedback and advice should he
Managers at Gap Inc., a once-popular retail chain, are reported to have made a series of decisions
that hurt the company: They expanded so rapidly that the chain lost touch with customers; they
tried to copy the successful approach of rivals rather than charting their own course; they cut
quality to reduce costs; they
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A survey found that 69 percent of MBA students view maximizing shareholder value as the
primary responsibility of a company. Do you agree? What do you think this finding suggests
about the ethical and socially responsible stance of corporate managers over the next couple of
decades?
1. Does Camp Bow Wow CEO Heidi Ganahl possess qualities associated with contemporary
leadership? 2. In what way is Ganahl's leadership charismatic and visionary? Give examples. 3.
Where does Ganahl's leadership fall on the Leadership Grid discussed in this chapter and
illustrated in Exhibit 15.6? Explain.
Over the past 20 years, entrepreneurship has been the fastest-growing course of study on
campuses throughout the United States. Do you think it is possible to teach someone to be an
entrepreneur? Why or why not?
What are some specific tips that you would give a new manager for building trust with
subordinates? With other managers?
Consider the six characteristics of entrepreneurs described in this chapter. Which two traits do
you think are most like those of managers in large companies? Which two are least like those of
managers in large companies?
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How do you think a system for self-management such as the five-step system described in this
chapter could benefit you as a student? What parts of the system seem particularly useful to you?
Explain.
If you were a manager responsible for floor-cleaning products at a consumer products company,
how might you apply crowd sourcing to identify a new product that would meet customer needs?
Use Herzberg's two-factor theory to explain why motivation seems to be high and turnover low
at Mars, based on the information provided in the chapter opening example.
1. What mistakes do you think John Mitchell made with the way he solved the problem of
limited office space? Explain. 2. What approach would you have used if you were Mitchell?
Why? 3. What are Krista Acklen's options for responding to Mitchell's decision? What should
she do now? Why? Krista Acklen was the "golden g
1. Which of the five approaches to structural design is used at Modern Shed, and how are the
company's departments organized and coordinated? 2. What are the advantages and
disadvantages of Modern Shed's organizational structure? 3. How did Ryan Smith determine
whether his company needed a mechanistic structure with
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LivingSocial started with one "daily deal," a $25 voucher for $50 worth of food at a Washington,
D.C., area restaurant. Since then, the company has grown at breakneck speed, has 46 million
members in 25 countries, and has acquired a dozen companies that offer related deals and
services. Why and how might a company such
Surveys by the Conference Board show that job satisfaction has declined from 61 percent of
people surveyed in 1987 to 45 percent in 2009, and one workplace analyst has said a high level
of dissatisfaction is "the new normal." What are some factors that might explain this decline in
satisfaction levels? Do you think it
Evaluate your own personal experiences with people from other cultural backgrounds. How well
do you think those experiences have prepared you to understand the unique needs and dilemmas
of a diverse workforce?
1. In the video, Mike Boyle talks about establishing a work environment that motivates
employees to do great work. List two or three specific ways Boyle has created this type of
environment in his gyms, and explain how these actions empower the employees. 2. Co-founder
Bob Hanson says that education is an important pa
Based on your knowledge of the following companies, how effective would you say any one of
the following acquisitions were in terms of creating synergy? a) Microsoft's purchase of Nokia's
mobile handset and services business b) Google's purchase of YouTube c) PepsiCo's purchase of
Frito-Lay d) Kroger's purchase of
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Many people who are successful at the start-up stage of a business are not the right people to
carry the venture forward. How do you decide whether you're better suited to be a serial
entrepreneur (start a business and then move on to start another), or whether you can guide your
venture as it grows and matures?
Netflix has successfully adapted to a number of challenges in its industry. What do you see as
some emerging opportunities and threats for the company?
One of the benefits of a strategy map is that goals and how they are linked can be communicated
clearly to everyone in the organization. Does a minimum-wage maintenance worker in a hospital
really need to understand any goals beyond keeping the place clean? Discuss.
How might organizations strike a balance between respecting and meeting the needs of a diverse
workforce and shaping a high-performance corporate culture where shared values contribute to
the accomplishment of strategic goals?
1. Give Carpenter a month's notice and terminate him. He's known as a good consultant, so he
probably won't have any trouble finding a new job, and you'll avoid any further problems
associated with his emotional difficulties and his possible alcohol problem. 2. Let it slide.
Missing the New York appointment is Carpent
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The chapter suggested that structure should be designed to fit strategy. Some theorists argue that
strategy should be designed to fit the organization's structure. With which theory do you agree?
Explain.
Is it wise for managers to evaluate a promising candidate's tweets or postings on social
networking sites as grounds for rejection before even interviewing him or her? What might be
some ethical and legal issues that managers should consider? Discuss.
Goals that are overly ambitious can discourage employees and decrease motivation, yet the idea
of stretch goals is proposed as a way to get people fired up and motivated. As a manager, how
might you decide where to draw the line between a "good" stretch goal and a "bad" one that is
unrealistic?
Would you expect the structure of a company such as Facebook, which operates almost entirely
online, to differ from the structure of a bricks-and-mortar company, such as AT&T, which uses
the Internet only for some things, such as customer service and business-to business
transactions? Why or why not?
Why do you think that so little attention is given to followership compared to leadership in
organizations? Discuss how the role of an effective follower is similar to the role of a leader.
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Harley-Davidson, which once boasted that it made "big toys for big boys," is trying to lure more
women to the brand to make up for declining sales in a slow economy. How do you think this
move will complement or confound the company's differentiation strategy, which has long been
based on a macho image?
1. Part of Honest Tea's mission is to convince consumers to make healthier choices by offering
innovative products. Based on what you saw in the video, describe at least two "disruptive
innovations" this company has made to support this goal. 2. When Honest Tea decided to
become a division of Coca-Cola, many employees
As an administrator for a medium-sized hospital, you and the board of directors have decided to
change to a drug dependency hospital from a short-term, acute care facility. How would you go
about executing this strategy?
A new business venture must develop a comprehensive business plan to borrow money to get
started. Companies such as FedEx and Nike say they did not follow the original plan closely.
Does that mean that developing the plan was a waste of time for these eventually successful
companies?
Microsoft and Intel are giants of the computer industry. Why do you think that these large
companies have had such a hard time competing against disruptive innovations such as mobile
computing?
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Social entrepreneurship is a growing phenomenon. Do you believe that for-profit businesses can
have a social mission? Should they do so, if it means hurting profits?
How might a corporate management team go about determining whether the company should
diversify? What factors should they consider? What kinds of information should they collect?
Why is self-awareness important for being a good manager? Can you think of some specific
negative consequences that might result from a manager with low self-awareness?
If a male manager changes his behaviors to incorporate elements of interactive leadership more
common to female managers, can he still be an "authentic" leader? Discuss.
1. Honor the agreement, trusting that Winston's rehabilitation is complete on all levels and that
he is now ready for a responsible position. Give him a good recommendation. 2. Contact the vice
president of sales and ask him to release you from the agreement or to give the reference himself.
After all, he's the one wh
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From the information provided in the chapter example, identify how Western Digital Thailand
used both the prevention and the preparation stages of crisis planning.
1. Does Mike Boyle appear to be self-aware? How does his level of self-awareness affect the
way he runs his business? 2. As you watch the video, focus on Marco's comments about himself
and Mike's comments on Marco. Then use the four components of emotional intelligence to
evaluate Marco as an employee and explain whet
Why do you think that making progress ranks as the most important factor contributing to
motivation, according to recent studies? How can managers provide a sense of progress for
employees working on long-range projects that might not show results for months or even years?
Is it reasonable to expect that managers can measure their social and environmental performance
on the same level as they measure financial performance with a triple bottom line? Discuss.
Assume that you are a front-line manager at a call center. Try to come up with a specific
motivational idea that fits into each of the four quadrants in Exhibit 16.2: Positive Extrinsic;
Positive Intrinsic; Negative Extrinsic; Negative Intrinsic.
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A recent Gallup survey shows that highly educated workers are significantly less likely to be
engaged than are those with a high school diploma or less. What might be some reasons for this
lower level of engagement among more-educated employees?
How would you go about deciding whether to use a job-based, skills-based, or pay-forperformance compensation plan for employees in a textile manufacturing plant? For wait staff in
a restaurant? For sales people in an insurance company?
Why would small business ownership have great appeal to immigrants, women, and minorities?
Is it ethical and socially responsible for large corporations to lobby against an SEC rule requiring
that they report the ratio of their CEOs' pay compared to that of their average employee, as
described in the chapter? Discuss.
In a study asking what people wanted from leaders versus followers, people ranked maturity
number 8 for followers, but number 15 for leaders. What might account for people wanting a
higher maturity level from followers?
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Fortune magazine and the Hay Group found that a clear, stable strategy is one of the defining
characteristics of companies on the list of "The World's Most Admired Companies." Why might
this be the case?
1. If you were Ethney, how would you try to conduct yourself at the oil company? Would you act
differently from your normal personality? Do you think your approach would be successful?
Why? 2. What other strategies might Ethney adopt to work with the oil company men as an
active member of the team? What are the pros a
Experts advise that most catastrophes in organizations result from a series of small problems or
mistakes. As a new, entry-level manager, how might you apply this understanding to help your
organization avoid making major mistakes?
What might be some disadvantages of acqui-hiring? As a manager, how would you draw up a
contract with a new employee who was an acqui-hire? Include considerations such as
compensation and benefits, performance measures, training, and a noncompete agreement.
1. How does JetBlue's commitment to diversity influence the way it treats its employees? How
does it influence the way it treats its customers? 2. JetPride and VetConnect are two of JetBlue's
diversity initiatives. What are some of the benefits JetBlue and its employees have gained from
these initiatives? 3. These em
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Can intuition and evidence-based decision making coexist as valid approaches within an
organization? How might managers combine their intuition with a rational, data-driven,
evidence-based approach?
Describe the primary differences between manufacturing and service technology. How do these
differences influence the type of structure that will be most effective?
Many successful entrepreneurs say that they did little planning, perhaps scratching notes on a
legal pad. How was it possible for them to do well, even so?
To tap into the experience of battle-tested soldiers, the U.S. Army recently has begun
encouraging personnel from all ranks to go online and collaboratively rewrite some of the
Army's field manuals in a Wikipedia-like fashion. When the rank and file showed little interest,
one retired colonel suggested that top leaders
Studies have suggested that extroverts contribute less to teams and are poor listeners, yet other
studies suggest that they are more likely to earn six-figure incomes, even in today's collaborative,
team-oriented workplaces. Discuss why you think this might be the case.
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1. With respect to competitive strategy, identify and evaluate Costco's target customers, its core
competence, and how it builds synergy and delivers value. 2. Would you rate Costco's
competitive strategy as pursuing differentiation, cost leadership, focus, or some combination?
Why? In 2010, Costco's reputation for r
1. Don't require Spitzer "connectors" to reveal their affiliation with the corporate word-of-mouth
marketing campaign. They don't have to recommend a product they don't believe in. 2. Require
that Spitzer participants reveal their ties to the corporate marketing program right up front before
they make a recommendation
What are the similarities and differences in the objectives of the following two procedures? (1)
Select a random sample of receiving reports and trace them to related vendors’ invoices and
acquisitions journal entries, comparing the vendor’s name, type of material and quantity
acquired, and total amount of the acq
The technique of stakeholder mapping lets managers classify which stakeholders they will
consider more important and will invest more time to satisfy. Is it appropriate for management to
define some stakeholders as more important than others? Should all stakeholders be considered
equal?
Describe the benefits of using social media to help a start-up gain traction during the early stages
of its life cycle. What are some possible disadvantages of using social media?
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1. What kind of employee social contract is assumed by Kirby and by Drew? Explain. 2. If you
were an HR manager at the company, which view would you support? Why? 3. HR departments
hire and develop human capital to serve the organization's strategy and drive performance.
Which approach-Kirby's or Drew's-is more likel
The MBO technique has been criticized for putting too much emphasis on achieving goals (ends)
and not enough on the methods that people use to achieve them (means). Do you think this is a
flaw in the technique, or in the way managers apply it? How would you place a balanced
emphasis on ends and means?
Multiple Choice Questions The following questions concern internal controls in the acquisition
and payment cycle. Choose the best response. a. A client erroneously recorded a large purchase
twice. Which of the following internal controls would be most likely to detect this error in a
timely and efficient manner? (1) Fo
The Broughton Cap Company requires that prenumbered receiving reports be completed when
purchased inventory items arrive in the receiving department. At the time of receipt, the
receiving clerk writes the date of receipt on the receiving document. The last receipt in the fiscal
year ended June 30, 2011 was recorded on
Explain the relationship between substantive tests of transactions for the acquisition and payment
cycle and tests of details of balances for the verification of prepaid insurance.
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Distinguish between the evaluation of the adequacy of insurance coverage and the verification of
prepaid insurance. Explain which is more important in a typical audit.
Donnen Designs, Inc. is a small manufacturer of women’s casual-wear jewelry, including
bracelets, necklaces, earrings, and other moderately priced accessory items. Most of their
products are made from silver, various low-cost stones, beads, and other decorative jewelry
pieces. Donnen Designs is not involved in the ma
You intend to use MUS as a part of the audit of several accounts for Roynpower Manufacturing
Company. You have done the audit for the past several years, and there has rarely been an
adjusting entry of any kind. Your audit tests of all tests of controls and substantive tests of
transactions cycles were completed at an
In recent years, several high-profile incidents of improper revenue recognition attracted the
attention of the business media. The SEC has also expressed concerns about the number of
instances of improper revenue recognition identified by SEC staff. One revenue issue involves
"bill and hold" sales. In a bill and hold t
Evaluate the following statement by an auditor concerning tests of acquisitions and cash
disbursements: “In selecting the acquisitions and cash disbursements sample for testing, the
best approach is to select a random month and test every transaction for the period. Using this
approach enables me to thoroughly unders
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Marjorie Jorgenson, CPA, is verifying the accuracy of outstanding accounts payable for
Marygold Hardware, a large, single-location retail hardware store. There are 650 vendors listed
on the outstanding accounts payable list. She has eliminated from the population 40 vendors that
have large ending balances and will audi
An audit partner is developing an office training program to familiarize her professional staff
with audit sampling decision models applicable to the audit of dollar-value balances. She wishes
to demonstrate the relationship of sample sizes to population size and estimated population
exception rate and the auditor’s
An auditor is determining the appropriate sample size for testing inventory valuation using MUS.
The population has 2,620 inventory items valued at $12,625,000. The tolerable misstatement for
both understatements and overstatements is $500,000 at a 10% ARIA. No misstatements are
expected in the population. Calculate th
If an audit client does not have prenumbered checks, what type of misstatement has a greater
chance of occurring? Under the circumstances, what audit procedure can the auditor use to
compensate for the deficiency?
What are the major differences between the audit of prepaid expenses and other asset accounts
such as accounts receivable or property, plant, and equipment?
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Following are some of the tests of controls and substantive tests of transactions procedures
commonly performed in the acquisition and payment cycle. Each is to be done on a sample basis.
1. Trace transactions recorded in the acquisitions journal to supporting documentation,
comparing the vendor’s name, total dollar
List one possible internal control for each of the six transaction related audit objectives for cash
disbursements. For each control, list a test of control to test its effectiveness.
List one possible control for each of the six transaction-related audit objectives for acquisitions.
For each control, list a test of control to test its effectiveness.
What is meant by the "percent of misstatement assumption" for MUS in those population items
that are misstated? Why is it common to use a 100% misstatement assumption when it is almost
certain to be highly conservative?
List three expense accounts that are tested as part of the acquisition and payment cycle or the
payroll and personnel cycle. List three expense accounts that are not directly verified as part of
the cycle.
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What is the relationship between the audit of property, plant, and equipment accounts and the
audit of repair and maintenance accounts? Explain how the auditor organizes the audit to take
this relationship into consideration.
In auditing depreciation expense, what major considerations should the auditor keep in mind?
Explain how each can be verified.
Distinguish between the point estimate of the total misstatements and the true value of the
misstatements in the population. How can each be determined?
In the confirmation of accounts receivable for the Reliable Service Company, 85 positive and no
negative confirmations were mailed to customers. This represents 35% of the dollar balance of
the total accounts receivable. Second requests were sent for all nonresponses, but there were still
10 customers who did not respo
Explain the relationship between substantive tests of transactions for the acquisition and payment
cycle and tests of details of balances for the verification of property, plant, and equipment.
Which aspects of property, plant, and equipment are directly affected by the tests of controls and
substantive tests of transa
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You have been assigned to the first audit of the Chicago Company for the year ending March 31,
2011. Accounts receivable were confirmed on December 31, 2010, and at that date the
receivables consisted of approximately 200 accounts with balances totaling $956,750. Fifty of
these accounts with balances totaling $650,725
It is less common to confirm accounts payable at an interim date than accounts receivable.
Explain why.
You are evaluating the results of a nonstatistical sample of 85 accounts receivable confirmations
for the Bohrer Company. Information on the sample and population are included below. An
overstatement or understatement of more than $100,000 is considered material. The
confirmation responses were received without exce
The CPA examines all unrecorded invoices on hand as of February 28, 2012, the last day of the
audit. Which of the following misstatements is most likely to be uncovered by this procedure?
Explain. a. Accounts payable are overstated at December 31, 2011. b. Accounts payable are
understated at December 31, 2011. c. Opera
Multiple Choice Questions The following questions concern accumulating evidence in the
acquisition and payment cycle. Choose the best response. a. In auditing accounts payable, an
auditor’s procedures most likely will focus primarily on management’s assertion of (1)
Existence. (2) Realizable value. (3) Completene
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Give an example of the use of attributes sampling, MUS, and variables sampling in the form of
an audit conclusion.
What is meant by a decision rule using difference estimation? State the decision rule.
The following auditing procedures were performed in the audit of accounts payable: 1. Obtain a
list of accounts payable. Re-add and compare with the general ledger. 2. Trace from the general
ledger trial balance and supporting documentation to determine whether accounts payable,
related parties, and other related asset
You were in the final stages of your audit of the financial statements of Ozine Corporation for
the year ended December 31, 2011, when you were consulted by the corporation’s president,
who believes there is no point to your examining the year 2012 acquisitions journal and testing
data in support of year 2012 entries
Multiple Choice Questions The following questions concern the audit of accounts payable. a. For
effective internal control, the accounts payable department generally should (1) Stamp, perforate,
or otherwise cancel supporting documentation after payment is mailed. (2) Ascertain that each
requisition is approved as to p
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Multiple Choice Questions The following questions concern the audit of asset accounts in the
acquisition and payment cycle. Choose the best response. a. In testing for unrecorded disposals
of equipment, an auditor most likely will (1) Select items of equipment from the accounting
records and then locate them during the
Explain why the audit of prepaid insurance should ordinarily take a relatively small amount of
audit time if the client’s assessed control risk for acquisitions is low.
In verifying accounts payable, it is common to restrict the audit sample to a small portion of the
population items, whereas in auditing accrued property taxes, it is common to verify all
transactions for the year. Explain the reason for the difference.
Explain why most auditors consider the receipt of goods and services the most important point in
the acquisition and payment cycle.
Define what is meant by the population standard deviation and explain its importance in
variables sampling. What is the relationship between the population standard deviation and the
required sample size?
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Explain the relationship between tests of the acquisition and payment cycle and tests of
inventory. Give specific examples of how these two types of tests affect each other.
Define monetary unit sampling and explain its importance in auditing. How does it combine the
features of attributes and variables sampling?
List and briefly state the purpose of all audit procedures that might reasonably be applied by an
auditor to determine that all property, plant, and equipment retirements have been recorded in the
accounting system.
The embezzlement of funds from organizations is often orchestrated through fictitious accounts
payable and related cash disbursement transactions. The AuditNet online resource center for
auditors includes information about typical accounts payable fraud techniques. Visit
www.auditnet.org and select the link for “Virt
Explain how the auditor determines tolerable misstatement for MUS.
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The 2,620 inventory items described in Question are listed on 44 inventory pages with 60 lines
per page. There is a total for each page. The client's data are not in machine-readable form.
Describe how a monetary unit sample can be selected in this situation.
What is meant by the analysis of expense accounts? Explain how expense account analysis
relates to the tests of controls and substantive tests of transactions that the auditor has already
completed for the acquisition and payment cycle.
Distinguish between FOB destination and FOB origin. What procedures should the auditor
follow concerning acquisitions of inventory on an FOB origin basis near year-end?
The physical inventory for Ajak Manufacturing was taken on December 30, 2011, rather than
December 31, because the client had to operate the plant for a special order the last day of the
year. At the time of the client’s physical count, you observed that acquisitions represented by
receiving report number 2631 and al
Multiple Choice Questions The following relate to the use of statistical sampling for tests of
details of balances. For each one, select the best response. a. When the auditor uses monetary
unit statistical sampling to examine the total dollar value of invoices, each invoice (1) Has an
equal probability of being selec
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Evaluate the following statement made by an auditor: "I took a random sample and derived a 90
percent confidence interval of $800,000 to $900,000. That means that the true population value
will be between $800,000 and $900,000, 90 percent of the time."
Distinguish among difference estimation, ratio estimation, mean-per-unit estimation, and
stratified mean-per-unit estimation. Give one example in which each can be used. When is MUS
preferable to any of these?
As part of the June 30, 2011, audit of accounts payable of Milner Products Company, the auditor
sent 22 confirmations of accounts payable to vendors in the form of requests for statements. Four
of the statements were not returned by the vendors, and five vendors reported balances different
from the amounts recorded in
Why is it difficult to determine the appropriate sample size for MUS? How should the auditor
determine the proper sample size?
Assume that a sample of 100 units was obtained in sampling the inventory in Question. Assume
further that the following three misstatements were found: Calculate adjusted misstatement
bounds for the population. Draw audit conclusions based on theresults.
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You have been assigned to the confirmation of aged accounts receivable for the Blank Paper
Company audit. You have tested the aged trial balance and selected the accounts for confirming.
Before the confirmation requests are mailed, the controller asks to look at the accounts you
intend to confirm to determine whether h
The following tests of controls and substantive tests of transactions audit procedures for
acquisitions and cash disbursements are to be used in the audit of Ward Publishing Company.
You concluded that internal control appears effective and a reduced assessed control risk is likely
to be cost beneficial. Ward’s activ
In using difference estimation, an auditor took a random sample of 100 inventory items from a
large population to test for proper pricing. Several of the inventory items were misstated, but the
combined net amount of the sample misstatement was not material. In addition, a review of the
individual misstatements indicat
The following are various changes in audit circumstances. Audit Circumstance 1. Analytical
procedures indicated a significant slowing in accounts receivable turnover. 2. The client entered
into sales contracts with new customers that differ from the client's standard sales contracts. 3.
The client had a significant inc
Explain what is meant by acceptable risk of incorrect acceptance. What are the major audit
factors affecting ARIA?
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Define stratified sampling and explain its importance in auditing. How can an auditor obtain a
stratified sample of 30 items from each of three strata in the confirmation of accounts receivable?
What alternative courses of action are appropriate when a population is rejected using
nonstatistical sampling for tests of details of balances? When should each option be followed?
An essential step in difference estimation is the comparison of each computed confidence limit
with tolerable misstatement. Why is this step so important, and what should the auditor do if one
of the confidence limits is larger than the tolerable misstatement?
In testing cash disbursements for the Jay Klein Company, you obtained an understanding of
internal control. The controls are reasonably good, and no unusual audit problems arose in
previous years. Although there are not many individuals in the accounting department, there is a
reasonable separation of duties in the org
List the factors that should affect the auditor’s decision whether to analyze an account
balance. Considering these factors, list four expense accounts that are commonly analyzed in
audits.
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List five asset accounts, three liability accounts, and five expense accounts included in the
acquisition and payment cycle for a typical manufacturing company.
Explain why it is common for auditors to send confirmation requests to vendors with “zero
balances” on the client’s accounts payable listing but uncommon to follow the same
approach in verifying accounts receivable.
What is the relationship between ARIA and ARACR?
Assume a sample size of 50 for all procedures, regardless of your answers in Part I. For other
procedures, assume that an adequate sample size for the circumstance was selected. The only
exceptions in your audit tests for all tests of controls and substantive tests of transactions audit
procedures are as follows: 1. Pr
Multiple Choice Questions The following apply to evaluating results of audit sampling for tests
of details of balances. For each one, select the best response. a. While performing a substantive
test of details during an audit, the auditor determined that the sample results supported the
conclusion that the recorded acc
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Explain why the emphasis in auditing property, plant, and equipment is on the current period
acquisitions and disposals rather than on the balances in the account carried forward from the
preceding year. Under what circumstances will the emphasis be on the balances carried forward?
In the audit of Price Seed Company for the year ended September 30, the auditor set a tolerable
misstatement of $50,000 at an ARIA of 10%. A PPS sample of 100 was selected from an
accounts receivable population that had a recorded balance of $1,975,000. The following table
shows the differences uncovered in the confirm
Even though Bergeron Wholesale Company is privately held, management has decided that it is
worthwhile to have effective internal controls to the extent it is practical in a small company, as a
way to reduce the likelihood of error and fraud. They have implemented the following system for
acquisitions and payments. Pre
In auditing the valuation of inventory, the auditor, Claire Butler, decided to use difference
estimation. She decided to select an unrestricted random sample of 80 inventory items from a
population of 1,840 that had a book value of $175,820. Butler decided in advance that she was
willing to accept a maximum misstatemen
What is meant by a voucher? Explain how its use can improve an organization’s internal
controls.
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Which documents will be used to verify accrued property taxes and the related expense
accounts?
Explain the relationship between accrued rent and substantive tests of transactions for the
acquisition and payment cycle. Which aspects of accrued rent are not verified as part of the
substantive tests of transactions?
Multiple Choice Questions The following questions concern internal controls in the acquisition
and payment cycle. Choose the best response. a. Which of the following controls will most likely
justify a reduced assessed level of control risk for the existence assertion for equipment? (1)
Internal auditors periodically s
How will the approach for verifying repair expense differ from that used to audit depreciation
expense? Why will the approach be different?
What major difference between (a) Tests of controls and substantive tests of transactions (b)
Tests of details of balances makes attributes sampling inappropriate for tests of details of
balances?
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Define what is meant by sampling risk. Does sampling risk apply to nonstatistical sampling,
MUS, attributes sampling, and variables sampling? Explain.
What are the major differences in the 14 steps used in nonstatistical sampling for tests of details
of balances versus for tests of controls and substantive tests of transactions?
Multiple Choice Questions The following questions concern the audit of liabilities or income and
expense accounts. Choose the best response. a. The auditor may note that annual depreciation
expense is too low for a class of assets by noting (1) Insured values greatly in excess of carrying
amounts. (2) Large numbers of
You are auditing the sales and collection cycle for the Smalltown Regional Hospital, a small notfor-profit hospital. The hospital has a reputation for excellent medical services and deficient
record keeping. The medical people have a tradition of doing all aspects of their job correctly,
but because of a shortage of a
Multiple Choice Questions The following questions relate to determining sample size in tests of
details of balances. For each one, select the best response. a. Mr. Murray decides to use stratified
sampling. The reason for using stratified sampling rather than unrestricted random sampling is to
(1) Reduce as much as po
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Explain why difference estimation is commonly used by auditors.
Multiple Choice Questions The following questions concern analytical procedures in the
acquisition and payment cycle. Choose the best response. a. Which of the following comparisons
will be most useful to an auditor in auditing an entity’s income and expense accounts? (1)
Prior year accounts payable to current year a
You are planning to use nonstatistical sampling to evaluate the results of accounts receivable
confirmation for the Meridian Company. You have already performed tests of controls for sales,
sales returns and allowances, and cash receipts, and they are considered excellent. Because of the
quality of the controls, you de
The following misstatements are included in the accounting records of Westgate Manufacturing
Company. 1. The accounts payable clerk prepares a monthly check to Story Supply Company for
the amount of an invoice owed and submits the unsigned check to the treasurer for payment
along with related supporting documents that
Questions 1 through 8 are typically found in questionnaires used by auditors to obtain an
understanding of internal control in the acquisition and payment cycle. In using the questionnaire
for a client, a “yes” response to a question indicates a possible internal control, whereas a
“no” indicates a potential de
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This problem requires the use of ACL software, which is included in the CD attached to the text.
Information about installing and using ACL and solving this problem can be found in Appendix,
pages 838-842. You should read all of the reference material preceding the instructions for
"Quick Sort" before locating the appr
Distinguish between a vendor’s invoice and a vendor’s statement. Which document
should ideally be used as evidence in auditing acquisition transactions and which for verifying
accounts payable balances? Why?
Monetary unit sampling (MUS) is the most commonly used statistical method of sampling for
tests of details because of its simplicity and its ability to provide statistical results in dollars.
Read an article titled "Monetary-Unit Sampling Using Microsoft Excel" that appeared in the May
2005 issue of The CPA Journal (ww
What is the importance of cash discounts to the client and how can the auditor verify whether
they are being taken in accordance with company policy?
In testing the cutoff of accounts payable at the balance sheet date, explain why it is important
that auditors coordinate their tests with the physical observation of inventory. What can the
auditor do during the physical inventory to enhance the likelihood of an accurate cutoff?
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This problem requires the use of ACL software, which is included in the CD attached to the text.
Information about installing and using ACL and solving this problem can be found in Appendix,
pages 838-842. You should read all of the reference material, especially the material on
sampling, to answer questions a-e. For t
The accounts receivable population for Jake's Bookbinding Company follows. This table is the
same as Table 17-1 on page 560, except that cumulative amounts are included to assist you in
completing the problem. The population is smaller than is ordinarily the case for statistical
sampling, but an entire population is us
You are doing the audit of Peckinpah Tire and Parts, a wholesale auto parts company. You have
decided to use monetary unit sampling (MUS) for the audit of accounts receivable and inventory.
The following are the recorded balances: Accounts receivable .......... $12,000,000
Inventory ............. $23,000,000 You have a
Evaluate the following statement made by an auditor: "On every aspect of the audit where it is
possible, I calculate the point estimate of the misstatements and evaluate whether the amount is
material. If it is, I investigate the cause and continue to test the population until I determine
whether there is a serious pro
You have just completed the accounts receivable confirmation process in the audit of Danforth
Paper Company, a paper supplier to retail shops and commercial users. Following are the data
related to this process: Accounts receivable recorded balance ....... $ 2,760,000 Number of
accounts .............. 7,320 A
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Distinguish between a positive and a negative confirmation and state the circumstances in which
each should be used. Why do CPA firms sometimes use a combination of positive and negative
confirmations on the same audit?
Multiple Choice Questions The following questions deal with internal controls in the sales and
collection cycle. Choose the best response. a. The accounting system will not post a sales
transaction to the sales journal without a valid bill of lading number. This control is most
relevant to which transaction-related obj
Discuss whether email responses and oral responses are confirmations. How can an auditor
verify the addresses for confirmations sent by mail, and confirmations sent electronically?
In Part V of the Pinnacle Manufacturing case, you prepared a performance format audit program.
In Part VI, sample sizes will be determined by using nonstatistical or attributes sampling, and the
results of the tests will be evaluated. You should use nonstatistical sampling unless your
professor tells you to use statist
Explain the relationship between tests of the acquisition and payment cycle and tests of accounts
payable. Give specific examples of how these two types of tests affect each other
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Distinguish between the sales journal and the accounts receivable master file. What type of
information is recorded in each and how do these accounting records relate?
The following misstatements are sometimes found in the sales and collection cycle's account
balances: 1. The accounts receivable trial balance total does not equal the amount in the general
ledger. 2. Several accounts receivable in the accounts receivable master file are not included in
the aged trial balance. 3. One a
List five analytical procedures for the sales and collection cycle. For each test, describe a
misstatement that could be identified.
State three types of differences that might be observed in the confirmation of accounts receivable
that do not constitute misstatements. For each, state an audit procedure that will verify the
difference.
Assume that the auditor has selected 100 sales invoices from a population of 100,000 to test for
an indication of internal verification of pricing and extensions. Determine the CUER at a 10%
ARACR if four exceptions are found in the sample using attributes sampling. Explain the
meaning of the statistical results in aud
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What is meant by an attribute in sampling for tests of controls and substantive tests of
transactions? What is the source of the attributes that the auditor selects?
Evaluate the following statement: "In many audits in which accounts receivable is material, the
requirement of confirming customer balances is a waste of time and would not be performed by
competent auditors if it were not required by auditing standards. When internal controls are
excellent and there are a large number
State the relationship between the following: a. ARACR and sample size b. Population size and
sample size c. TER and sample size d. EPER and sample size
The following are a list of possible errors or fraud (1 through 5) involving cash receipts and
controls (a through g) that may prevent or detect the errors or fraud: Possible Errors or Fraud 1.
Customer checks are properly credited to customer accounts and are properly deposited, but
errors are made in recording receip
Distinguish between the TER and the CUER. How is each determined?
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Identify the factors an auditor uses to decide the appropriate ARACR. Compare the sample size
for an ARACR of 10% with that of 5%, all other factors being equal.
List the transaction-related audit objectives for the audit of sales transactions. For each objective,
state one internal control that the client can use to reduce the likelihood of misstatements.
The Albring Company sells electronics equipment, and has grown rapidly in the last year by
adding new customers. The audit partner has asked you to evaluate the allowance for doubtful
accounts at December 31, 2011. Comparative information on sales and accounts receivable is
included below: Required a. Identify what
Explain why the analysis of differences is important in the confirmation of accounts receivable,
even if the misstatements in the sample are not material.
Under what circumstances is it acceptable to confirm accounts receivable before the balance
sheet date?
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Explain what is meant by lapping and discuss how the auditor can un cover it. Under what
circumstances should the auditor make a special effort to uncover lapping?
The sampling data sheet below is missing selected information for six attributes involving tests
of transactions for the sales and collection cycle. a. Use Table 15-8 (p. 504) and Table 15-9 (p.
505) to complete the missing information for each attribute. b. For which attributes are the
sample results unacceptable?
What is the relationship of each of the following to the sales and collection cycle: flowcharts,
assessing control risk, tests of controls, and tests of details of balances?
Describe systematic sample selection and explain how an auditor will select 40 numbers from a
population of 2,800 items using this approach. What are the advantages and disadvantages of
systematic sample selection?
In Chapter 15, one of the points brought out was the need to obtain a representative sample of the
population. How can this concept be reconciled with the statement in this chapter that the
emphasis should be on confirming larger and older balances because these are most likely to
contain misstatements?
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Explain the major difference between statistical and nonstatistical sampling. What are the three
main parts of statistical and nonstatistical methods?
Multiple Choice Questions The following items apply to determining sample sizes using random
sampling from large populations for attributes sampling. Select the most appropriate response for
each question. a. If all other factors specified in a sampling plan remain constant, changing the
ARACR from 5% to 10% will cause
Multiple Choice Questions The following questions concern sampling for attributes. Choose the
best response. a. An advantage of statistical sampling over nonstatistical sampling is that
statistical sampling helps an auditor (1) Minimize the failure to detect errors and fraud. (2)
Eliminate the risk of nonsampling erro
Multiple Choice Questions The following questions deal with audit evidence for the sales and
collection cycle. Choose the best response. a. An auditor is performing substantive tests of
transactions for sales. One step is to trace a sample of debit entries from the accounts receivable
master file back to the supporting