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Geyser Company began operations in 2004. It had credit sales of $4 million and cash sales of 1 million. The chief accountant decided to estimate doubtful accounts expense at 5% of total credit sales. During the year, 3.5 million of the credit sales were collected from customers and by the end of the year, 150,000 had been written off as uncollectible. At the end of the second year of operations, credit sales were $6 million and cash sales were 1.5 million. The accountant decided that it would be more accurate to base doubtful accounts expense on ending Accounts Receivable. Accordingly, it was estimated that the ending balance of Allowance for Doubtful Accounts should have a balance equal to 8% of Accounts Receivable. During the year, 5.4 million was collected from customers and 180,000 was written off as uncollectible. For each of the two years, determine the following amounts:

(a). The ending balance of Accounts Receivable

(b). The estimated Doubtful Accounts Expense

(c). The ending balance in the Allowance for Doubtful Accounts

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CMA 1289 3-Y6

Causes of Fraud

The studies conducted by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) revealed that fraudulent financial reporting usually occurs as the result of certain environmental, institutional, or individual influences and opportune situations. These influences and opportunities, present to some degree in all companies, add pressures and motivate individuals and companies to engage in fraudulent financial reporting. The effective prevention and detection of fraudulent financial reporting requires an understanding of these influences and opportunities while evaluating the risk of fraudulent financial reporting that these factors can create in a company. The risk factors to be assessed include not only internal ethical and control factors but also external environmental conditions.

Required:

a. Identify two situational pressures in a public company that would increase the likelihood of fraud.

b. Identify three corporate circumstances (opportune situations) where fraud is easier to commit and detection is less likely.

c. For the purpose of assessing the risk of fraudulent financial reporting, identify the external environmental factors that should be considered in the company’s

i. industry.

ii. business environment.

iii. legal and regulatory environment.

d. List several recommendations that top management should incorporate to reduce the possibility of fraudulent financial reporting.

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Austrian company Red Bull is such an effective marketer that many Americans assume it’s a local brand. Its most successful tactic is to host extreme sports events globally and take the brand everywhere. Also, Red Bull looks like a global product, not like a traditional American soft drink in a 12-ounce can, with script lettering like Pepsi or Coke. It looks European. This example shows all of the following EXCEPT that

O global marketers design their products to meet regulations in major markets
Red Bull develops products that can be sold in most markets
sponsoring global events helps a brand gain local appeal
Red Bull should localize its packaging to appeal to global customers

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Mr. Mohammed and Ahamed are working in a Shawarma shop; As per Mohammed agreement, every day he has produce 500 piece of shawarma and he collects his daily wage 30 rials from his shop owner and as per Ahamed contract he want to produce 700 unit of shawarma as Per his contract he will get 100 paise (OMR) rials per unit of production. Calculated we will get more pay and calculate the differences.

a. Mohammed is getting more rials – 42 OMR

b. Ahamed is getting less rials – 41 OMR
c. None of these option
d. Mohammed is getting more rials – 45 OMR
e. Ahamed is getting more rials – 40 OMR
f. Ahamed is getting more rials – 45 OMR
g. Mohammed is getting more rials – 40 OMR

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