What part of the accounting equation is lisa failing

Assignment Help Cost Accounting
Reference no: EM13929829

The statement of financial position (balance sheet) of Trident Company reports assets of $5,500,000. Lisa Kimpton advises you that a major accounting firm has audited the statements and attested that they were prepared in accordance with generally accepted accounting principles. She tells you that she can buy the total owner's interest in the business for only $3,800,000 and is seriously considering the opportunity. She says that the auditor's unqualified opinion validates the $5,500,000 value of the assets. Lisa believes she would be foolish to pass up the opportunity to purchase the assets at a price of only $3,800,000.

Required: 

a. What part of the accounting equation is Lisa failing to consider? 

b. Comment on Lisa's misconceptions regarding the auditor's role in providing information that is useful in making investment decisions. 

Reference no: EM13929829

Questions Cloud

Problem regarding the employee commitment : We conduct research about The Association of Employee Commitment, Organizational Support, Job Satisfaction on Intention to Leave of nurses in Najran, Saudi Arabia I want from you only introduction and literature review for my research the instrume..
What is the pretax cost of debt : Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 12 percent 3 years ago. The bond currently sells for 94 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt? Wh..
Compare and contrast technique use for job analysis : Compare and contrast the major technique that organizations use for job analysis? Specify the circumstances under which, from a firms perspective, a firm''s HR might be seen as a organizational strength and specify organizational weakness aswell?
Using the arithmetic average growth rate in dividends : Suppose Stark Ltd. just issued a dividend of $2.24 per share on its common stock. The company paid dividends of $1.80, $1.98, $2.05, and $2.16 per share in the last four years. If the stock currently sells for $45, what is your best estimate of the c..
What part of the accounting equation is lisa failing : Comment on Lisa's misconceptions regarding the auditor's role in providing information that is useful in making investment decisions.
What is the companys cost of equity capital : The Graber Corporation’s common stock has a beta of 1.2. If the risk-free rate is 4.3 percent and the expected return on the market is 13 percent, what is the company’s cost of equity capital?
What is the market value of debt : Gingle Co. issued 2 different zero-coupon bonds. Bond A is a junior bond with face value $87 million while Bond B is a senior bond with face value $200 million. The maturity of the debt is 1 year from now. What is the market value of debt?
Evaluate various capital investment alternatives : Explain CVP analysis in detail with suitable example. Evaluate various capital investment alternatives. Describe the planning-and-control cycle and the five key dimensions of budgeting. Calculate costs using activity-based costing method with suitabl..
Discuss the key facts and critical issues presented in case : What were the elements that led to him so successfully wooing some of the wealthiest and most intelligent clients? Why do you think the SEC was unable to uncover his fraud?

Reviews

Write a Review

Cost Accounting Questions & Answers

  Cost accounting assignment

Evaluate Method of measuring costs associated with production, budgeting process, normal job-order costing system , master budget, cycle time.

  Prepare the journal entries

Prepare the journal entries to record the bond issue and interest expense.

  Advise as to the liability of all the parties

Write a report on given case study and Advise as to the liability of ALL the parties both under common law and the Corporations Law.

  Prepare revenues budget

Prepare Revenues budget and Production budget in units

  Effect of exchange rate changes on cash and cash

Effect of exchange rate changes on cash and cash

  Corporate governance

You are to reflect on how this case of China Sky relates to what the arguments for and against allowing audit firm partners and/or employees to join audit committees.

  Cost-benefit analysis

A cost-benefit analysis of electronic medical records in primary care

  Non-annual interest rates and annuities

Theory of Interest- Non-annual interest rates and annuities

  Job costing in service organizations

How is job costing in service organizations different from job costing in manufacturing environments?

  Accounting for bad debt expense

Accounting for bad debt expense

  Accounting and partnership problems

Accounting and Partnership problems

  Development of relevant cash flows

Development of relevant cash flows - Cost estimating and financial analysis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd