Question: In 2015, Bay City purchased supplies valued

> In what sense can suppliers of raw materials, merchandise, or labor services (employees) also be sources of financing for firms?

> What is the purpose of using contra accounts? What is the alternative to using them?

> What is involved in an audit by an independent external auditor?

> Once upon a time many, many years ago, a feudal landlord lived in a small province of central Europe. The landlord, called the Red-Bearded Baron, lived in a castle high on a hill. This benevolent fellow took responsibility for the well-being of many peas

> The photographic analogy for a balance sheet is a snapshot, and for the income statement and the statement of cash flows it is a motion picture.” Explain.

> The ABC Company starts the year in fine shape. The firm makes widgets—just what the customer wants. It makes them for $0.75 each and sells them for $1.00. The ABC Company keeps an inventory equal to shipments of the past 30 days, pays its bills promptly,

> Dina Richards opens a high-end stationery store, Stationery Plus, on November 1, 2013. She finances the store by investing $80,000 in cash in exchange for all the common stock of the firm. She also obtains a bank loan for $100,000, which she promises to

> Jack Block opens a tax and bookkeeping services business, Block’s Tax and Bookkeeping Services, on July 1, 2013. He invests $40,000 for all the common stock of the business, and the firm borrows $20,000 from the local bank, promising to repay the loan on

> The accounting records of Jet Away Airlines reveal the following. The fiscal year ends on September 30 and amounts are in thousands of US$: a. Prepare a comparative balance sheet for JetAway Airlines as of September 30, 2013, and September 30, 2012, in

> Selected data from the statement of cash flows for Jackson Corporation for the years ended October 31, 2013, 2012, and 2011 appear as follows (amounts in millions of US$): Prepare a statement of cash flows for each of the three years 2013, 2012 and 201

> The following information is based on data reported in the statement of cash flows for AB Brown, a Swedish firm. All amounts are in millions of Swedish kronor (SEK). Prepare a statement of cash flows for AB Brown for the three years presented using the

> Selected income statement information for Yankee Fashion, a U.S. clothing retailer, appears next. All amounts are in millions of U.S. dollars ($). Compute the missing amounts. 2013 2012 2011 Net Revenues.. $4,295.4 $3,746.3 $3,305.4 Cost of Goods So

> Selected income statement information for Easton Home, a U.S. consumer products manufacturer, appears next. All amounts are in millions of U.S. dollars ($). Compute the missing amounts. 2013 2012 2011 Sales.... $13,790 ? $11,397 Cost of Goods Sold ?

> Selected balance sheet amounts for SinoTwelve, a Chinese manufacturer, appear next. All amounts are in thousands of U.S. dollars ($). Compute the missing amounts. 2013 2012 Total Assets. $5,450,838 Current Liabilities . Current Assets Total Liabilit

> Selected balance sheet amounts for ComputerCo, a manufacturer located in Singapore, appear next. All amounts are in millions of Singapore dollars ($). Compute the missing amounts. 2013 2012 Total Assets $199,824 Noncurrent Liabilities 7,010 2013 201

> The chapter describes four activities common to all entities: setting goals and strategies, financing activities, investing activities, and operating activities. How would these four activities likely differ for a charitable organization versus a busines

> The following information is based on the financial statements of Hewston, a large manufacturing firm. Annual revenues are $66,387 million and net expenses (including income taxes) are $62,313 million. During the year, the firm collected $65,995 million

> Information based on and adapted from the statement of cash flows of Seller Redbud, a U.S. retailer, appears in Exhibit 1.11. This firm reports all amounts in thousands of U.S. dollars ($). Answer the following questions that pertain to the information i

> What is the advantage of the accrual basis of accounting, relative to the cash basis of accounting, for measuring performance?

> What is the purpose of the FASB’s and IASB’s conceptual frameworks?

> What distinguishes noncurrent assets from current assets?

> What is the role of the following participants in the financial reporting process: the U.S. Securities and Exchange Commission (SEC); the Financial Accounting Standards Board (FASB); the International Accounting Standards Board (IASB)?

> How does an income statement connect two successive balance sheets? How does a statement of cash flows connect two successive balance sheets?

> The measurement basis for reporting items on a firm’s balance sheet can be either historical amounts or current amounts. What is the difference between these two measurement bases?

> Assets and liabilities appear on balance sheets as either current or noncurrent. What is the difference between a current item and a noncurrent item? Why would users of financial statements likely be interested in this distinction?

> What is the relation between a T-account and a journal entry?

> Review the meaning of the terms and concepts listed in Key Terms and Concepts.

> Select the best answer for each of the following items: 1. In accordance with the marshaling of assets provision of the Uniform Partnership Act, rank the following liabilities of a partnership in order of payment. (1) $20,000 loan from B. Barry who is a

> The unsuccessful partnership of the Jones Brothers is about to undergo liquidation. They have asked you to estimate the amount of cash that each brother will receive. They share profits and losses equally. Both Doug and Dave are personally solvent, but

> The guidance for segmental reporting is located in which general topic area (i.e., 100–general principles, 200–presentation, 300–assets, etc.)? List the specific topic number (i.e., ASC XXX).

> The following information is available for Bailey Company for 2014: 1. On January 2, 2014, Bailey paid property taxes amounting to $60,000 on its plant and equipment for the calendar year 2014. In late March 2014 Bailey made major repairs to its machiner

> Use the information provided in Exercise 13-4. Exercise 13-4: On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a p

> Select the best answer for each of the following. 1. A forward contract is a hedge of an identifiable foreign currency commitment if (a) The forward contract is designated as, and is effective as, a hedge of a foreign currency commitment. (b) The foreign

> On December 1, 2014, Tuscano Corp. entered into a transaction to import raw materials from a foreign company. The account is to be settled on February 1 with the payment of 60,000 foreign currency units (FCU). On December 1, Tuscano also entered into a f

> A U.S. firm carried a receivable for 100,000 yen. Assuming that the direct exchange rate declined from $.009 at the date of the transaction to $.006 at the balance sheet date, compute the transaction gain or loss. What balance would be reported for the r

> LAX Inc. has the following income before income tax and estimated effective annual income tax rates for the first three quarters of 2014. Required: What should be LAX’s income tax provision in the third-quarter income statement? (AICP

> Select the best answer for each of the following. 1. A sale of goods by a U.S. company was denominated in a foreign currency. The sale resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. Exchange rat

> Select the best answer for each of the following items: 1. Which of the following should be included in the current funds revenue of a not-for-profit private university? 2. The current funds group of a not-for-profit private university includes which o

> During 2015 volunteer pinstripers donated their services to General Hospital at no cost. The staff at General Hospital was in control of the pinstripers’ duties. If regular employees had provided the services rendered by the volunteers, their salaries wo

> Select the best answer for each of the following items: 1. An unrestricted pledge from an annual contributor to a not-for-profit hospital made in December 2014 and paid in cash in March 2015 would generally be credited to (a) Nonoperating revenue in 2014

> Select the best answer for each of the following items: 1. Which NNOs must record depreciation on exhaustible assets? (a) Hospitals. (b) VHWOs. (c) ONNOs. (d) All of the above. 2. Which statement relating to VHWOs is most nearly correct? (a) Use modified

> Mane Company operates in five identifiable segments, V, W, X, Y, and Z. During the past year, sales to unaffiliated customers and intersegment sales for each segment were as follows: Required: Applying the revenue test, determine which of the segments

> Select the best answer for each of the following items: 1. Cura Foundation, a voluntary health and welfare organization, supported by contributions from the general public, included the following costs in its statement of functional expenses for the year

> Select the best answer choice for each of the following items: 1. Which of the following receipts is properly recorded as unrestricted current funds on the books of a university? (a) Tuition. (b) Student laboratory fees. (c) Housing fees. (d) Research gr

> A $36,000 cash gift was received by a college during the year. Required: A. In which fund should the gift be recorded if there were no restrictions on the use of the cash? B. In which fund should the gift be recorded if the donor specified that the cash

> Select the best answer for each of the following: 1. Premiums received on general obligation bonds are generally transferred to what fund or group of accounts? (a) Debt Service. (b) General. (c) Special Revenue. 2. Of the items listed below, those most l

> Select the best answer for each of the following: 1. The activities of a municipal golf course that receives three-fourths of its total revenue from a special tax levy should be accounted for in (a) An Enterprise Fund. (b) The General Fund. (c) A Trust F

> Select the best answer for each of the following: 1. The City of Apache should use a Capital Projects Fund to account for (a) Structures and improvements constructed with the proceeds of a special assessment. (b) Special Revenue funds set aside to acquir

> The following transactions take place: 1. A commitment was made to transfer general revenues to the entity in charge of providing transportation for all government agencies. 2. Construction bonds were issued at a premium. The premium is to be included in

> The preclosing trial balance for the General Fund of the City of Springfield is presented below. Note 1: Includes $35,000 of encumbrances from 2014. Required: Prepare the closing entries for the General Fund. City of Springfield The General Fund G

> Select the best answer for each of the following items: 1. When used in fund accounting, the term “fund” usually refers to (a) A sum of money designated for a special purpose. (b) A liability to other governmental units. (c) The equity of a municipality

> The following transactions take place: 1. A cement mixer was purchased with resources of the general fund. 2. A contract was signed for the construction of a new civic center. 3. Bonds were issued to finance the construction of the new civic center. 4. C

> The administrators of the City of Lyons have obtained approval from the City Council to centralize the computer facility as of January 1, 2015. An internal service fund is created to account for the activities of the computer facility. The City Council h

> The City of Dayville has undertaken a sidewalk construction project. The project is being financed by the proceeds from the issue on July 1, 2015, of $500,000 of 7% special assessment debt. One quarter of the principal plus interest is payable on June 30

> The Town of Green River authorized a municipal building to be constructed at a cost of $175,000. The construction will be financed from the proceeds from the issue of $175,000 of 6% bonds. Any difference between the par value of the bonds and the proceed

> On January 1, 2007, the city of Nashvegas issued an 8% annual, 10-year, $10,000 bond for $11,472 (an effective yield of 6%). The bonds become due on December 31, 2016. On June 30, 2015, the city of Nashvegas issued an 8% annual, 10-year, $10,000 bond to

> Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system. The city received $1,754,217 cash from the bond issuance on January 1, 2015. The bond yield is 10%. Interest is paid annually on December 31 of each year. Disclosu

> The following information is available about Gotham’s City government funds. Required: Using the information about the government’s funds, determine which funds qualify as “major”

> The City of Minden entered into the following transactions during the year 2016. 1. A bond issue was authorized by vote to provide funds for the construction of a new municipal building, which it was estimated would cost $1,000,000. The bonds are to be p

> Describe the conditions under which a firm can change one of its accounting principles. What is the preferred accounting treatment for a change in accounting principle? List the relevant paragraphs in the Codification.

> See the information from AFS11-1. The statement of comprehensive income is stated as: AFS11-1: In its 10-K amended filing on April 30, 2010, Bronco Drilling reported the financial statements of Challenger Limited (an unconsolidated subsidiary) for its

> The following transactions represent practical situations frequently encountered in accounting for municipal governments. Each transaction is independent of the others. 1. The City Council of Bernardville adopted a budget for the general operations of th

> Select the best answer for each of the following items. Questions 1 and 2 are based on the following condensed balance sheet for the partnership of Caine, Davis, and Jones. The partners share income and loss in the ratio of 5:3:2, respectively. 1. Assu

> On January 1, 2015, the City of Cape May authorized and issued $200,000 of 5%, three-year term bonds. Interest is payable annually on December 31. A debt service fund is established to accumulate the necessary resources to pay the annual interest on the

> The following summary of transactions was taken from the accounts of the Madras School District General Fund before the books were closed for the fiscal year ended June 30, 2016: Additional Information: 1. Property taxes in the amount of $2,870,000 wer

> The January 1, 2015, trial balance, the calendar-year 2015 budget, and the 2015 transactions of the City of Roseburg are presented here: City of Roseburg Budget for General Fund Calendar Year 2015 Estimated Revenue City vehicle and retail license fees

> Hunnington Township’s adjusted trial balance for the General Fund at the close of its fiscal year ended June 30, 2016, is presented here: Note 1: The current tax roll and accounts receivable, recorded on the accrual basis as sources o

> The trial balance for the General Fund of the City of Fairfield as of December 31, 2015, is presented here: Transactions for the year ended December 31, 2016, are summarized as follows: 1. The City Council adopted a budget for the year with estimated r

> The trial balance for the General Fund of the City of Monte Vista as of December 31, 2015, is presented here: Transactions of the General Fund for the year ended December 31, 2016, are summarized as follows: 1. The City Council adopted the following bu

> The following account balances, among others, were included in the preclosing trial balance of the General Fund of the City of Madison on December 31, 2016. Appropriations …………………………………………………………………….. $3,488,000 Cash ………………………………………………………………………………………….

> The following account balances, among others, were included in the preclosing trial balance of the General Fund of the City of Lynchburg on December 31, 2016. Estimated Revenue ………………………………………………………………… $630,000 Expenditures …………………………………………………………………………

> The general ledger trial balance of the General Fund of the City of Bedford on January 1, 2015, shows the following: A summary of activities and transactions for the General Fund during 2015 is presented here: 1. The City Council adopted a budget for t

> In the appendix to the chapter, partial financial statements are presented. Required: 1. What is the institution’s largest source of unrestricted revenue? What is the largest source of total revenue? 2. What is the largest asset on the statement of fina

> Pete, Tom, and Zack have operated a laundromat for 10 years. The partners, who share profits 4:3:3, respectively, decide to liquidate the partnership. The firm’s balance sheet just before the partners sell the other assets for $30,000 i

> Alan Norwood is currently a senior associate with the law firm of Butler, Starns, and Madden (BSM). His compensation currently includes a salary of $155,000, and benefits valued at $5,000. BSM is considered among the strongest of local firms, with assets

> Jan and Sue have engaged successfully as partners in their law firm for a number of years. Soon after their state’s incorporation laws are changed to allow professionals to incorporate, the partners decide to organize a corporation to t

> Mark Malone, Pete Patton, and Sally Spencer formed a partnership on January 1, 2014. Their original capital investments (all cash) were $140,000, $160,000, and $100,000, respectively. During the first year of operations, Mark withdrew $30,000, and the pa

> Part A Baker, Strong, and Weak have called on you to assist them in winding up the affairs of their partnership. You are able to gather the following information. 1. The trial balance of the partnership at June 30, 2014, is as follows. 2. The partners

> Mary, Paula, and Ray have operated a retail store for 20 years. The partners share profits and losses in the ratio of 4:3:3, respectively. The partnership is unable to meet its obligations and the partners decide to liquidate the partnership. The firm&ac

> Hann, Murphey, and Ryan have operated a retail furniture store for the past 30 years. Their business has been unprofitable for several years, since several large discount furniture stores opened in their sales territory. The partners recognize that they

> Nelson, Parker, and Rice are partners who share profits 4:3:3, respectively. Parker decides that it would be more profitable for him to operate as a sole proprietor. Nelson and Rice are in agreement that life would be more rewarding if Parker were to ent

> The Discount Partnership is being liquidated. The current balance sheet is shown here. Discount Partnership Balance Sheet January 14, 2014 Assets Cash …………………………………………………………………………………………….. $ 25,000 Other assets …………………………………………………………………………………… 120,000 T

> The partnerships of Up & Down and Back & Forth started in business on July 1, 2011; each partnership owns one retail appliance store. It was agreed as of June 30, 2014, to combine the partnerships to form a new partnership to be known as Discount

> Brian Snow and Wendy Waite formed a partnership on July 1, 2013 Brian invested $20,000 cash, inventory valued at $15,000, and equipment valued at $67,000. Wendy invested $50,000 cash and land valued at $120,000. The partnership assumed the $40,000 mortga

> Following is the balance sheet of the BDO Partnership: The partners share income 40:40:20, respectively. Assume that 70% of the receivables are collected and that inventory with a book value of $15,000 is sold for $10,000. All cash available at this ti

> America Service Group Inc. (ASG) contracts to provide and/or administer managed healthcare services to over 140 correctional facilities throughout the United States. The partial statement of operations for the years ending December 31, 2010, 2009, and 20

> Neal, Palmer, and Ruppe are partners in a real estate company. Their respective capital balances and profitsharing ratios are as follows: Neal wishes to withdraw from the partnership on January 1, 2015, Palmer and Ruppe have agreed to pay Neal $300,000

> The December 31, 2014, balance sheet of the Datamation Partnership is shown below. Datamation Partnership Balance Sheet December 31, 2014 Assets Cash ……………………………………………………………………………………………. $ 80,000 Accounts Receivable ………………………………………………………………………… 80,000 I

> The CAB Partnership, although operating profitably, has had a cash flow problem. Unable to meet its current commitments, the firm borrowed $34,000 from a bank giving a long-term note. During a recent meeting, the partners decided to obtain additional cas

> Brown and Coss have been operating a tax accounting service as a partnership for five years. Their current capital balances are $92,000 and $88,000, respectively, and they share profits in a 60:40 ratio. Because of the growth in their tax business, they

> The partnership of Cain, Gallo, and Hamm engaged you to adjust its accounting records and convert them uniformly to the accrual basis in anticipation of admitting Kerns as a new partner. Some accounts are on the accrual basis and some are on the cash bas

> Dave, Brian, and Paul are partners in a retail appliance store. The partnership was formed January 1, 2014, with each partner investing $45,000. They agreed that profits and losses are to be shared as follows: 1. Divided in the ratio of 40:30:30 if net i

> Day and Night formed an accounting partnership in 2014. Capital transactions for Day and Night during 2014 are as follows: Partnership net income for the year ended December 31, 2014; is $68,400 before considering salaries or interest. Required: Determ

> The following statement is an excerpt from ASC 270–10–45–1, 2 [paragraphs 9 and 10 of APB Opinion No. 28, “Interim Financial Reporting”]: “Interim financial information is essential to provide investors and others with timely information as to the progre

> Actual quarterly earnings and quarterly estimates of annual earnings for Sloan Company for the year ended December 31, 2014 are as follows: The combined state and federal tax rate for 2014 is 30%. Sloan Company estimated it would have permanent differe

> The ABC Partnership is in the process of liquidation. The account balances prior to liquidation are given below: The partners share profits in the following ratio: Amos, 1/5; Boone, 2/5; Childs, 2/5. Required: Prepare a schedule showing the calculatio

> Bismac Industries is a diversified company whose operations are conducted in five product lines, L, M, N, O, and P. Segmented financial information is to be included with the December 31, 2014 annual report. Financial information pertaining to each segme

> Examine the Statement of Activities in the appendix to this chapter. 1. For each of the six governmental activities listed (from general government to Parks, Recreation, and Cultural Activities), did the program revenue exceed program expenses? List the

> Branson Industries conducts operations in five major industries, A, B, C, D, and E. Financial data relevant to each industry for the year ending December 31, 2014, are as follows: Included in the sales of segments C and E are intersegment sales of $120

> Perez Industries, a publicly held corporation, consists of several companies, each of which provides an array of products and services to unaffiliated customers. In your opinion, each of these companies qualifies as a separate operating segment. The corp