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NEW QUESTION: 1
In order to maintain strategic flexibility and the ability to bring a cloud system back internally, which of the
following is the MOST important requirement in the contract?
A. Cloud subscriber maintains ownership of their data
B. Cloud provider has ability to terminate contract
C. Yearly independent audit is performed to measure performance
D. One week timeframe for termination of service
Answer: A
NEW QUESTION: 2
An auditor should request that an audit client send a letter of inquiry to those attorneys who have been
consulted concerning litigation, claims, or assessments. The primary reason for this request is to provide:
A. A description of litigation, claims, and assessments that have a reasonable possibility of unfavorable
outcomes.
B. The opinion of a specialist as to whether loss contingencies are possible, probable, or remote.
C. An objective appraisal of management's controls adopted for identifying and evaluating legal matters.
D. The corroboration of the information furnished by management concerning litigation, claims, and
assessments.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Choice "D" is correct. The primary reason for an auditor to request that the audit client send a letter of
inquiry to its attorneys is to provide corroboration of the information furnished by management concerning
litigation, claims and assessments.
Choice "A" is incorrect. The letter of inquiry is used to corroborate information furnished by management.
The likelihood of loss contingencies occurring is only one item addressed in this correspondence, but it is
not the primary purpose of the request.
Choice "B" is incorrect. The description of litigation, claims and assessments that have a reasonable
possibility of unfavorable outcomes should be provided by management, not the attorneys.
Choice "C" is incorrect. The attorneys do not give an appraisal of management's controls adopted for
identifying and evaluating legal matters.
NEW QUESTION: 3
Conner purchased 300 shares of Zinco stock for $30,000 in 1980. On May 23, 1994, Conner sold all the
stock to his daughter Alice for $20,000, its then fair market value. Conner realized no other gain or loss
during 1994. On July 26, 1994, Alice sold the 300 shares of Zinco for $25,000.
What was Alice's recognized gain or loss on her sale?
A. $0
B. $5,000 short-term loss.
C. $5,000 long-term gain.
D. $5,000 long-term loss.
Answer: A
Explanation:
Explanation
Choice "a" is correct. Alice has a realized gain of $5,000 on the transaction: $25,000 sales price less
$ 20,000 purchase price. However, she can reduce the gain, but not below zero, by the amount of loss her
father could not deduct on the sale to her. Thus, Alice can reduce her gain by up to $10,000, but not below
zero. Here, the gain is $5,000, so it is reduced to zero. Conner should have sold the stock in the open
market so that he could deduct the entire loss. Alice could then have purchased the stock in the open
market.
Choice "b" is incorrect. $5,000 is Alice's realized long-term gain on the sale. However, she can reduce the
gain, but not below zero, by the amount of loss her father could not deduct on the sale to her.
Choice "c" is incorrect. Alice has a realized gain of $5,000 on the sale. However, since she is related to
Conner, her holding period includes his holding period. Therefore, her realized gain is long-term. In
addition, she can reduce the gain, but not below zero, by the amount of loss her father could not deduct
on the sale to her.
Choice "d" is incorrect. Alice can reduce the gain by the amount of loss her father could not deduct on the
sale to her. However, she cannot reduce the gain below zero.