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Correct Answer: A

Explanation: Choice "a" is correct. If substantial doubt about the entity's ability to continue as a going concern has been removed in the current period, the explanatory paragraph included in the prior period auditor's report should not be repeated, and no description of the reasons or plans for recovery need be included. Choice "b" is incorrect. If doubt about the going concern assumption has been removed in the current period, it is not appropriate to include the explanatory paragraph from the prior year in the auditor's report for the current year. Choice "c" is incorrect. If doubt about the going concern assumption has been removed in the current period, no explanatory paragraph is required since the situation no longer exists. The auditor does not have to explain the reason for the change. Choice "d" is incorrect. If doubt about the going concern assumption has been removed in the current period, no explanatory paragraph is required since the situation no longer exists. The entity does not have to describe its plans for the future.

Correct Answer: A

Explanation:

Choice "a" is correct. An accountant's compilation report on a financial forecast should include a statement

that the compilation does not include evaluation of the support of the assumptions underlying the forecast.

(An examination of the financial forecast would include evaluation of the support).

Choice "b" is incorrect. An accountant does not give any form of assurance related to hypothetical

assumptions, which are not used in financial forecasts anyway. (Hypothetical assumptions are used in

financial projections).

Choice "c" is incorrect. No mention of the range of assumptions selected is made in the compilation report.

Choice "d" is incorrect. A compilation is limited to presenting, in the form of a forecast, information that is

management's representation.

Correct Answer: C

Explanation: Choice "c" is correct. If the employee who distributes payroll checks returns unclaimed checks to the payroll department, an unscrupulous payroll department employee might be able to set up a fictitious employee and convert the checks once they are returned to the payroll department. Unclaimed checks should be turned over to the cashier in the treasurer's department. Choices "a", "b", and "d" are incorrect. All of the following procedures are good controls over the payroll system:

A. A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department's payroll summary.

B. Payroll checks are prepared by the payroll department and signed by the treasurer.

D. The personnel department sends employees' hire and termination notices to the payroll department.

Correct Answer: A

Explanation:

Choice "a" is correct. A partnership agreement does not have to be in writing to be valid. If the partners

want to enforce an agreement to be partners for more than one year, that agreement must be in writing,

but merely having the partnership last for more than one year does not make an oral partnership

agreement invalid.

Correct Answer: D

Explanation: Choice "d" is correct. A qualifying widow(er) is a taxpayer who may use the joint tax return standard deduction and rates (but not the exemption for the deceased spouse) for each of two taxable years following the year of death of his or her spouse, unless he or she remarries. The surviving spouse must maintain a household that, for the whole entire taxable year, was the principal place of abode of a son, stepson, daughter, or stepdaughter (whether by blood or adoption). The surviving spouse must also be entitled to a dependency exemption for such individual. Parker may file as a qualifying widow(er) since her spouse died in the previous tax year, she did not remarry and she maintained a home for a dependent child. Since, qualifying widow(er) is the most advantageous status and Parker qualifies, Parker would file as a qualifying widow(er). Choice "a" is incorrect. Even though Parker would qualify as single, filing single would give Parker a high tax liability than the qualifying widow(er) status and therefore is not most advantageous. Choice "b" is incorrect. Parker would not qualify as head of household for the first two years after the death of Parker's spouse because one of the requirements for Head of Household status is that the taxpayer is NOT a surviving spouse. (Also, note that the likely reason for this requirement is that filing as Head of Household status would give the qualifying surviving spouse taxpayer a higher tax liability than the Qualifying Widow(er) status, which would be less advantageous.). Choice "c" is incorrect. Parker would not qualify to file married filing separately.