Explain the primary functions of internal controls procedures in the accounting area. What is meant by separation of duties?
> What is meant by an activity base when dealing with variable costs? Give several examples of activity bases.
> What effect does an increase in volume have on— a. Unit fixed costs? b. Unit variable costs? c. Total fixed costs? d. Total variable costs?
> Assume that a company has two processing departments—Mixing and Firing. Prepare a journal entry to show a transfer of work in process from the Mixing Department to the Firing Department
> How many Work in Process accounts are maintained in a company that uses process costing?
> Only variable costs can be differential costs. Do you agree? Explain.
> Why is cost accumulation simpler in a process costing system than it is in a job-order costing system?
> The variable cost per unit varies with output, whereas the fixed cost per unit is constant. Do you agree? Explain.
> Under what conditions would it be appropriate to use a process costing system?
> Describe how the inventory accounts of a manufacturing company differ from the inventory account of a merchandising company.
> Mary Adams is employed by Acme Company. Last week she worked 34 hours assembling one of the company’s products and was idle 6 hours due to material shortages. Acme’s employees are engaged at their workstations for a normal 40-hour week. Ms. Adams is paid
> Do U.S. GAAP and IFRS differ in the ability of a company to recognize in net income the recovery of impairment losses of accounts and notes receivable?
> What are the key variables that influence a company’s investment in receivables? Describe the two ratios used by financial analysts to monitor a company’s investment in receivables.
> What is a deferred annuity?
> Prepare a time diagram for the present value of a four-year annuity due of $200. Assume an interest rate of 10% per year.
> Explain the relationship between Table 2, Present Value of $1, and Table 4, Present Value of an Ordinary Annuity of $1. TABLE 2 Present Value of $1 PV = nN 1.0% 15% 2.0% 2.5% 10% 4.0% 4.5% 6.0% 7.0% 9.0% 10.0% 11.0% 12.0% 20.0% 1 0.99010 O.98522 0.9
> Shackelford Corporation acquired a patent from its founder, Jim Shackelford, in exchange for 50,000 shares of the company’s nopar common stock. On the date of the exchange, the common stock had a fair value of $22 per share. Determine the cost of the pat
> What is the basic principle for valuing property, plant, and equipment and intangible assets acquired in exchange for other nonmonetary assets?
> What account is credited when a company receives donated assets? What is the rationale for this choice?
> Explain how property, plant, and equipment and intangible assets acquired through donation are valued.
> Explain the difference between an ordinary annuity and an annuity due.
> Explain how assets acquired in exchange for equity securities are valued.
> When an asset is acquired and a note payable is assumed, explain how acquisition cost of the asset is determined when the interest rate for the note is less than the current market rate for similar notes.
> Explain the method generally used to allocate the cost of a lump-sum purchase to the individual assets acquired.
> Identify the costs associated with the initial valuation of a developed natural resource.
> Explain the difference between tangible and intangible long-lived, revenue-producing assets.
> Explain the difference between the successful efforts and the full-cost methods of accounting for oil and gas exploration costs.
> Describe how debits and credits affect temporary owners’ equity accounts.
> Identify the two exceptions to valuing property, plant, and equipment and intangible assets acquired in nonmonetary exchanges at the fair value of the asset(s) given up.
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2015, are available in Connect. This m
> Ross Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; selling price, $30; selling costs, $4. What unit value should Ross use when applying the lower of cost or net realizable value rule to ending inv
> What is an annuity?
> Explain the retail inventory method of estimating ending inventory.
> What are the various levels of aggregation to which the LCNRV and LCM approaches can be applied?
> It is discovered in 2018 that ending inventory in 2016 was understated. What is the effect of the understatement on the following: 2016: Cost of goods sold Net income Ending retained earnings 2017: Net purchases Cost of goods sold Net income Ending retai
> Describe the accounting treatment for a change in inventory method other than to LIFO.
> What is the conventional retail method?
> On December 28, 2018, Tristar Communications sold 10 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will i
> The following items appeared on the year-end trial balance of Consolidated Freight Corporation: cash in a checking account, U.S. Treasury bills that mature in six months, undeposited customer checks, cash in a savings account, and currency and coins. Whi
> For each of the following situations, (1) indicate whether you agree or disagree with the financial reporting practice employed and (2) state the accounting concept that is applied (if you agree), or violated (if you disagree). 1. Winderl Corporation
> Janice Dodds opens the mail for the Ajax Plumbing Company. She lists all customer checks on a spreadsheet that includes the name of the customer and the check amount. The checks, along with the spreadsheet, are then sent to Jim Seymour in the accounting
> Einhorn Industries believes it is not probable that Thaler Inc. will default on an account receivable, but given the possibility of default, Einhorn believes it will collect $30,000 less than the receivable’s current carrying value on Einhorn’s balance s
> Explain the difference between monetary and nonmonetary assets and liabilities.
> Refer to the situation described in BE 7–15. Assuming that the sale criteria are not met, describe how Logitech would account for the transfer. In BE 7–15 Logitech Corporation transferred $100,000 of accounts receivable to a local bank. The transfer was
> On December 1, 2018, Davenport Company sold merchandise to a customer for $20,000. In payment for the merchandise, the customer signed a 6% note requiring the payment of interest and principal on March 1, 2019. How much interest revenue will the company
> Singletary Associates has accounts receivable due from normal credit customers, and also has an account receivable due from a director of the company. Singletary would like to combine both of those receivables on one line in the current assets section of
> Refer to the situation described in BE 7–4. Answer the questions assuming that Tristar uses the net method to account for sales discounts. In BE 7–4 On December 28, 2018, Tristar Communications sold 10 units of its new satellite uplink system to various
> Is any special accounting treatment required for the assigning of accounts receivable in general as collateral for debt?
> If a company has accounts receivable from ordinary customers and from related parties, can they combine those receivables in their financial statements under U.S. GAAP? Under IFRS?
> Do U.S. GAAP and IFRS differ in how bank overdrafts are treated? Explain.
> Describe how debits and credits affect assets, liabilities, and permanent owners’ equity accounts.
> Define cash equivalents.
> Define the present value of a single amount.
> Identify the three items of information necessary to calculate the future value of a single amount.
> What would cause the annual interest rate to be different from the annual effective rate or yield?
> Explain compound interest.
> Define interest.
> Franklin Construction entered into a fixed-price contract to build a freeway-connecting ramp for $30 million. Construction costs incurred in the first year were $16 million and estimated remaining costs to complete at the end of the year were $17 million
> Kerianne paints landscapes, and in late 2018 placed four paintings with a retail price of $250 each in the Holmstrom Gallery. Kerianne’s arrangement with Holmstrom is that Holmstrom will earn a 20% commission on paintings sold to gallery patrons. As of D
> Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2018, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2019 (having assured Bassadrome that it would deliver sooner if
> Assume the same facts as in BE 5-5 but that Tulane Tires reports under IFRS. How much revenue should Tulane recognize under IFRS? In BE 5-5 Tulane Tires wrote a contract for a $100,000 sale to the new Garden District Tour Company. Tulane onlyanticipates
> What are the two general criteria that must be satisfied before a company can recognize revenue?
> How does a company report deferred gross profit resulting from the use of the installment sales method in its balance sheet?
> Listed below are several statements that relate to financial accounting and reporting. Identify the accounting concept that applies to each statement. 1. SiriusXM Radio Inc. files its annual and quarterly financial statements with the SEC. 2. The preside
> Distinguish between the installment sales method and the cost recovery method of accounting for installment sales.
> Revenue recognition for most installment sales occurs at the point of delivery of the product or service. Under what circumstances would a seller delay revenue recognition for installment sales beyond the delivery date?
> Security-Rand Corporation determines executive incentive compensation at the end of its fiscal year. At the end of the first quarter, management estimated that the amount will be $300 million. Depreciation expense for the year is expected to be $60 milli
> What is the standard-setting body responsible for determining IFRS? How does it obtain its funding?
> What are the functions of the conceptual framework under IFRS?
> Must bad debt expense be reported on its own line on the income statement? If not, how should it be disclosed?
> What measurement attributes are commonly used in financial reporting?
> When is an estimated loss on a long-term contract recognized, both for contracts that recognize revenue over time and those that recognize revenue at the point in time the contract is completed?
> In addition to the financial statement elements arrayed in the basic financial statements, what are some other ways to disclose financial information to external users?
> The Esposito Import Company had 1 million shares of common stock outstanding during 2018. Its income statement reported the following items: income from continuing operations, $5 million; loss from discontinued operations, $1.6 million. All of these amou
> What is the purpose of a journal? What is the purpose of a general ledger?
> What are restructuring costs and where are they reported in the income statement?
> Where can we find authoritative guidance for balance sheet presentation under IFRS?
> What are four key accounting practices that often are referred to as principles in current GAAP?
> Explain the periodicity assumption.
> What is the going concern assumption?
> What are the four basic assumptions underlying GAAP?
> Distinguish between operating and nonoperating income in relation to the income statement.
> [Based on Appendix A] What is the purpose of a worksheet? In a columnar worksheet similar to Illustration 2A–1, what would be the result of incorrectly transferring the balance in a liability account to column K, the credit column under income statement?
> Define the terms working capital, current ratio, and acid-test ratio (or quick ratio).
> The income statement is a change statement. Explain what is meant by this.
> For each of the following items, identify the appropriate financial statement element or elements: (1) probable future sacrifices of economic benefits; (2) probable future economic benefits owned by the company; (3) inflows of assets from ongoing, ma
> Define accrued liabilities. What adjusting journal entry is required to record accrued liabilities?
> What are the components of relevant information? What are the components of faithful representation?
> At the end of 2018, Barker Corporation’s preliminary trial balance indicated a current ratio of 1.2. Management is contemplating paying some of its accounts payable balance before the end of the fiscal year. Explain the effect this transaction would have
> Discuss the terms relevance and faithful representation as they relate to financial accounting information.
> Define prepaid expenses and provide at least two examples.
> What is the purpose of the FASB’s conceptual framework?
> For each of the following note disclosures, indicate whether the disclosure would likely appear in (A) the summary of significant accounts policies or (B) a separate note: (1) depreciation method; (2) contingency information; (3) significant issuance o
> Why does the FASB undertake a series of elaborate information-gathering steps before issuing a substantive accounting standard?
> Describe what is meant by transaction analysis.
> Describe what is meant by an operating cycle for a typical manufacturing company.
> What is the function and primary focus of financial accounting?
> What is an unadjusted trial balance? An adjusted trial balance?
> Define the terms paid-in-capital and retained earnings.
> Describe the events that correspond to the following two journal entries: 1. Inventory.. Accounts payable. 20,000 20,000 2. Accounts receivable 30,000 Sales revenue. Cost of goods sold. Inventory. 30,000 18,000 .... 18,000 ...*******.................
> Sherriane Baby Products’ salaries expense was $17 million. What is the amount of cash Sherriane paid to employees during the reporting period if its salaries payable increased by $3 million? Prepare a summary entry that represents the net effect of salar
