Test 2 Chapter 6: Effects on material misstatement increase or decrease part 2
Because municipalities have received increased federal and state funding for environmental purposes, TWD returned to profitability for the first year following three years with losses.
decrease
During 20X1, litigation filed against TWD from an action 10 years ago that alleged that TWD discharged pollutants into state waterways was dropped by the state. Loss contingency disclosures that TWD included in prior years' financial statements are being removed from the 20X1 financial statements.
decrease
TWD's bank has a loan officer who meets regularly with TWD's CEO and controller to monitor TWD's financial performance.
decrease
An initial public offering of TWD's stock is planned for late 20X2.
increase
During 20X1, TWD changed its method of preparing its financial statements from the cash basis to generally accepted accounting principles.
increase
During 20X1, TWD sold one-half of its controlling interest in United Equipment Leasing (UEL) Co. TWD retained significant influence over UEL.
increase
During December 20X1, TWD completed a barter transaction with a municipality. TWD removed waste from the municipally owned site and acquired title to another contaminated site at below market price. TWD intends to service this new site in 20X2.
increase
During December 20X1, TWD signed a contract to lease disposal equipment from an entity owned by Janice Mead's parents. This related party transaction is not disclosed in TWD's notes to the 20X1 financial statements.
increase
Inquiries about the substantial increase in revenue TWD recorded in the fourth quarter of 20X1 disclosed a new operating policy. TWD guaranteed to several municipalities that it would refund the federal and state funding paid to TWD if any municipality fails a federal or state site clean-up inspection in 20X2.
increase
TWD has such a strong financial presence in its industry to allow it often to dictate the terms or conditions of transactions with its suppliers.
increase
TWD's Board of Directors is controlled by Janice Mead, the majority stockholder, who also acts as the chief executive officer.
increase
The accounting department has experienced a high rate of turnover of key personnel.
increase
The internal auditor reports to the controller and the controller reports to Janice Mead.
increase
During December 20X1, TWD increased its casualty insurance coverage on several pieces of sophisticated machinery from historical cost to replacement cost.
no effect
TWD's employees are paid biweekly.
no effect
