You have just graduated from college and been hired as an entry-level accountant in a local CPA firm, Olde, Aged, and Outofit, CPAs. When you arrived on the job, you were shocked to learn that the firm's partners, Elmer Olde, Thaddeus Aged, and Ethel Outofit, know almost nothing about social media, especially as it is now being used in business. They boast that they do business "the old-fashioned way" and regard social media as the trendy hobby of inexperienced young people. At a recent meeting with one of the firm's main clients, however, Mr. Olde heard some disturbing news. This client, Rodney Current, believes that all businesses, if they are to remain competitive and effective, must understand and in some cases incorporate social media into their business practices. Mr. Olde was horrified to hear Mr. Current's views, but he and his partners have begun to suspect that their own views might be just a little behind the times. Mr. Olde called you into the office because he knows you are fully up-to-date on the use of electronic communication and social media. He has asked you to research the use of social media in professional accounting practices. He has not asked you to recommend whether the firm should embrace these media, but he does want to be fully informed about the topic, so that he and the other partners can evaluate whether their firm will need to update their attitudes, and possibly their practices. Research the topic and write a memo to Mr. Olde, as he has requested. Invent any information you feel is necessary to make your memo complete. Exercise 10-4 [Managerial] You are a staff accountant for Mitchell Manufacturing, Inc., a large electronics manufacturing company. Mitchell has four sales divisions, three manufacturing plants, and a home office in Dearborn, Michigan, which houses all the administrative offices. Management is considering using the cloud in accounting and auditing for the first time. Jeff Smart, Chief Operating Officer of Mitchell, has asked you to answer the following questions in a memo: 202 What is the cloud? How might Mitchell Manufacturing use the cloud in accounting and auditing? What advantages might there be to Mitchell Manufacturing's use of the cloud? Write a memo to Mr. Smart responding to these questions. Invent any information you feel is necessary to make your memo complete. Exercise 10-5 [Financial] You are newly hired as an accountant for Hill Business Technologies, Inc., a small service business that has no formal capital budgeting system. The president of your company, Janice Hill, has requested that you write a memo to her explaining what the internal rate of return method of investment evaluation is, how it differs from the net present value and payback period methods, and why Hill Business Technologies should use the internal rate of return method for capital budgeting purposes instead of either of the other methods. Write the memo. Invent any information you feel is necessary to make your memo complete. Exercise 10-11 [Auditing] Assume you are a staff accountant working for Kim & Kirkpatrick, Inc. (K&K), a small publicly traded company that will soon have its financial statements audited by a local CPA firm, Young, Mitchell, and Gregory. Eleanor Lee, a rising manager at K&K, expects to work closely with the auditors. Ms. Lee has a general business background and several years experience working for K&K, but her knowledge of auditing is limited. She sees you in the hall one day and during the conversation, she tells you she is confused about a term she's heard of that will somehow affect the upcoming audit. The term she refers to is materiality. You talk with her briefly about materiality, but as she walks away she still seems to be a little confused. Later she asks you to write her a memo explaining the concept of materiality and possible ways it might affect the audit of K&K. 204 Write the memo, inventing any details you need to make your discussion clear and readable.