How does earning revenue affect the accounting equation?
> How is the cost of goods available for sale determined?
> Why does the periodic inventory system impose a major disadvantage for management in accounting for lost, stolen, or damaged goods?
> What is the purpose of preparing a schedule of cost of goods sold?
> What is the difference between a product cost and a selling and administrative cost?
> Indicate the effect of each of the following transactions on (1) the current ratio, (2) working capital, (3) stockholders’ equity, (4) book value per share of common stock, and (5) retained earnings. Assume that the current ratio is greater than 1:1. a.
> Ball Co. purchased inventory with a list price of $4,000 with the terms 2/10, n/30. What amount will be added to the Merchandise Inventory account?
> Define transportation-out. Is it a product cost or a period cost for the seller?
> What is the purpose of giving a cash discount to charge customers?
> Eastern Discount Stores incurred a $5,000 cash cost. How does the accounting for this cost differ if the cash were paid for inventory versus commissions to sales personnel?
> Dyer Department Store purchased goods with the terms 2/10, n/30. What do these terms mean?
> Why would a seller grant an allowance to a buyer of his merchandise?
> Quality Cellular Co. paid $80 for freight on merchandise that it had purchased for resale to customers (transportation-in) and paid $135 for freight on merchandise delivered to customers (transportation out). The $80 payment is added to what account? Th
> Define transportation-in. Is it a product or a period cost?
> If goods are shipped FOB shipping point, which party (buyer or seller) is responsible for the shipping costs?
> Define merchandise inventory. What types of costs are included in the Merchandise Inventory account?
> Match each of the following ratios with the formula used to compute it: 1. Working capital a. Net income - Average total stockholders' equity b. Cost of goods sold - Average inventory c. Current assets – Current liabilities d. 365 - Inventory turnov
> When is revenue recognized under accrual accounting?
> Give an example of an asset source transaction. What is the effect of this transaction on the accounting equation?
> How does the recognition of revenue on account (accounts receivable) affect the income statement compared to its effect on the statement of cash flows?
> What effect does the issue of common stock have on the accounting equation?
> What does the term asset source transaction mean?
> If cash is collected in advance of performing services, when is the associated revenue recognized?
> Give several examples of period costs.
> What types of accounts are closed at the end of the accounting period? Why is it necessary to close these accounts?
> What does the term deferral mean?
> What does the statement of cash flows explain?
> Compute the specified ratios using Duluth Company’s balance sheet for 2018: Assets Cash…………………………………………..………………..$ 36,000 Marketable securities………………...……………………..24,000 Accounts receivable………………………………………….50,000 Inve
> In what order are assets listed on the balance sheet?
> What does the term revenue mean?
> What does the term expense mean?
> What is the difference between a cost and an expense?
> Define recognition. How is it independent of collecting or paying cash?
> How does net income affect the stockholders’ claims on the business’s assets?
> What type of information does a business typically include in its annual report?
> What is the relationship between the income statement and changes in assets and liabilities?
> When are expenses recognized under accrual accounting?
> Give an example of a cost that can be directly matched with the revenue produced by an accounting firm from preparing a tax return.
> During 2018, Blue Ridge Corporation reported after-tax net income of $4,150,000. During the year, the number of shares of stock outstanding remained constant at 15,000 of $100 par, 9 percent preferred stock and 400,000 shares of common stock. The company
> Discuss the term articulation as it relates to financial statements.
> How are asset accounts usually arranged in the balance sheet?
> What type of transaction is a cash payment to creditors? How does this type of transaction affect the accounting equation?
> What causes a net loss?
> Which of the general- purpose financial statements provides information about the enterprise at a specific designated date?
> What does the term claims exchange transaction mean?
> What effect does expense recognition have on the accounting equation?
> How does distributing assets (paying dividends) to owners affect the accounting equation?
> What is the source of retained earnings?
> What are the three primary sources of assets?
> Selected data from Emporia Company follow: Required: Compute the following and round computations to two decimal points: a. The accounts receivable turnover for 2018. b. The inventory turnover for 2018. c. The net margin for 2017. Balance Sheets
> What is the difference between assets that are acquired by issuing common stock and those that are acquired using retained earnings?
> How does acquiring capital from owners affect the accounting equation?
> What does a double entry book keeping system mean?
> Who ultimately bears the risk and collects the rewards associated with operating a business?
> Give an example of an asset exchange transaction. What is the effect of this transaction on the accounting equation?
> Name the accounting term used to describe a business’s obligations to creditors.
> Describe the differences between creditors and investors.
> To whom do the assets of a business belong?
> What role do assets play in business profitability?
> Sarah Bale is an auditor. Her work at two companies disclosed inappropriate recognition of revenue. Both cases involved dollar amounts in the $100,000 range. In one case, Bale considered the item material and required her client to restate earnings. In t
> What does the term unearned revenue mean?
> What is the effect on the right side of the accounting equation when cash is collected in advance of performing services?
> What are the U.S. rules of accounting information measurement called?
> Describe a not-for-profit or nonprofit enterprise. What is the motivation for this type of entity?
> How do financial and managerial accounting differ?
> What type of income or profit does an investor expect to receive in exchange for providing financial resources to a business? What type of income does a creditor expect from providing financial resources to an organization or business?
> Give an example of a financial resource, a physical resource, and a labor resource.
> What market trilogy components are involved in the process of transforming resources into finished products?
> In a business context, what does the term market mean?
> What is the primary mechanism used to allocate resources in the United States?
> John Simmons is a CPA with a secret. His secret is that he gambles on sports. John knows that his profession disapproves of gambling, but considers the professional standards to be misguided in his case. John really doesn’t consider his bets to be gambli
> Use the Target Corporation’s Form 10-K to answer the following questions related to Target’s 2015 fiscal year (year ended January 30, 2016). Target’s Form 10-K is available on the company’s website or through the SEC’s EDGAR database. Appendix A provides
> Why is accounting called the language of business?
> What does accrual accounting attempt to accomplish?
> What is an indirect cost? Provide examples of product costs that would be classified as indirect.
> Why are the salaries of production workers accumulated in an inventory account instead of being directly expensed on the income statement?
> What is a value chain?
> What does the term reengineering mean? Name some reengineering practices. (Appendix)
> Which ratios are used to measure long-term debt paying ability? How is each calculated?
> What is the difference between return on investment and return on equity?
> Why are absolute amounts of limited use when comparing companies?
> What is the difference between the current ratio and the quick ratio? What does each measure?
> Raula Kato discovered a material reporting error in the accounting records of Sampoon, Inc. (SI) during the annual audit. The error was so significant that it will certainly have an adverse effect on the price of the client’s stock which is actively trad
> What is the significance of inventory turnover, and how is it calculated?
> What is apparent from a horizontal presentation of financial statement information? A vertical presentation?
> What do the terms liquidity and solvency mean?
> What environmental factors must be considered in analyzing companies?
> What is information overload?
> What is the function of the stock certificate?
> What is meant by the phrase separate legal entity? To which type of business organization does it apply?
> What is a widely held corporation? What is a closely held corporation?
> What is meant by equity financing? What is meant by debt financing?
> What is the largest source of financing for most U.S. businesses?
> Name and provide a brief explanation of the six Principles of Professional Conduct of the AICPA Code of Professional Conduct.
> When a company appropriates retained earnings, does the company set aside cash for a specific use? Explain.
> What is the primary reason that a company would declare a stock split?
> What is the price-earnings ratio? Explain the difference between it and the dividend yield.
> What is the formula for calculating return on investment (ROI)?
> Why are ratios and trends used in financial analysis?
> What is a limited liability company? Discuss its advantages and disadvantages.
> What are the advantages and disadvantages of the corporate form of business organization?
