1. All of the following are examples of types of audit opinions, except:

a. Adverse Report

b. Standard Unqualified Report

c. Disclaimer of a Report

d. Report of No Opinion

2. The difference between the publics perception of the attest function and the auditors view is known as the _________________ Gap.

3. When a company tries to engage auditors that will issue unqualified audit opinions, regardless of the evidence generated by the audit procedures this is called:

a. Unethical Shopping

b. Expectation Shopping

c. Opinion Shopping

d. Window Shopping

4. The unadjusted Return on Assets (ROA) Ratio is calculated as follows: _________________ / _________________.

5. A firms effective income tax rate is calculated by dividing income tax payable by financial (GAAP) pretax income.

TRUE or FALSE

6. The following is the December 31, 2010 balance sheet for the Epics Corporation: Sales for 2010 were $3,000,000, with the cost of goods sold being 60% of sales. Depreciation expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling and administrative expenses were $200,000 and the firm's tax rate is 40%.

A. Prepare an income statement.

Assets Cash Accounts Receivable Inventorv Total Current Assets $70,000 150,000 280.000 Liabilities Accounts Payable Notes Payable Bonds Payable Total Liabilities $100,000 120,000 300,000 $520,000 $ 500.000 Plant and Equipment Less: Accum. Deprec. 250,000 Net Plant and Equipment $ 1,000,000 $ 1,250,000 Equity Common Stock Paid In Capital Retained Earnings Total Equity Total Liab. & Equitv 300,000 200,000 480,000 $ 980,000 $ 1,500,000 Total Assets $1,500.000