Question: Many companies have established business codes of

> What is the International Accounting Standards Board? Why has the board been unable to obtain uniform global application of its standards?

> Why is the use of a single activity base inappropriate for some companies?

> Six events relating to liabilities follow. a. Paid the liability for interest payable accrued at the end of the last accounting period. b. Made the current monthly payment on a 12-month installment note payable, including interest and a partial repayme

> When Torretti Company began business on August 1, it purchased a one-year fire insurance policy and debited the entire cost of $7,200 to Unexpired Insurance. Torretti adjusts its accounts at the end of each month and closes its books at the end of the ye

> Why might the unit cost of those items started and completed during the period differ from the unit cost of all items completed and transferred during the period?

> What is meant by the year-end cutoff of transactions? If merchandise in transit at year-end is material in dollar amount, what determines whether these goods should be included in the inventory of the buyer or the seller? Explain

> Haywood, Inc., purchased a truck to use for deliveries and is attempting to determine how much depreciation expense would be recognized under three different methods. The truck cost $24,000and is expected to have a value of $6,000 at the end of its 6-yea

> Giant Chef Equipment Company is organized into two divisions—commercial sales and home products. During June, sales for the commercial sales division totaled $1,500,000, and its contribution margin ratio averaged 34 percent. Sales generated by the home p

> Kelp Company produces three joint products from seaweed. At the split-off point, three basic products emerge: Sea Tea, Sea Paste, and Sea Powder. Each of these products can either be sold at the split-off point or be processed further. If they are proces

> Moffett Company earned a 8 percent return on its total assets. Current liabilities are 5 percent of total assets. Longterm bonds carrying a 5.5 percent coupon rate are equal to 30 percent of total assets. There is no preferred stock. Is this application

> Bottom-Shelf Provisions uses standard costs in its process costing system. At the end of the current month, the following information is prepared by the company’s cost accountant The total standard cost per unit of finished product is

> A U.S.-based company, Global Products Inc., has wholly owned subsidiaries across the world. Global Products Inc. sells products linked to major holidays in each country. The president and board members of Global Products Inc. believe that the managers of

> This case is based on the statement of cash flows for Allison Corporation, illustrated in Exhibit 13–1. Use this statement to evaluate the company’s ability to continue paying the current level of dividends—$40,000 per year. The following information als

> Tucker Technology is considering two alternative proposals for modernizing its production facilities. To provide a basis for selection, the cost accounting department has developed the following data regarding the expected annual operating results for th

> Nashville Do-It-Yourself owns a chain of nine retail stores that sell building materials, hardware, and garden supplies. In early October, the company’s current ratio is 1.7 to 1. This is about normal for the company, but it is lower than the current rat

> A manufacturing firm has three inventory control accounts. Name each of the accounts, and describe briefly what the balance in each at the end of any accounting period represents.

> Compute the following ratios and comment on the trend you can observe from the limited two years of data you have available. a. Gross profit rate. b. Net income as a percentage of sales. c. Current ratio. Hal Holcomb reports the business and economic ne

> The following items were taken from the accounting records of Nevada Utility Company for the year ended December 31, 2021 (dollar amounts are in thousands). Information 1. The 10 percent bonds due in April 2022 will be refinanced in March 2023 through

> King Enterprises is a book wholesaler. King hired a new accounting clerk on January 1 of the current year. The new clerk does not understand accrual accounting and recorded the following transactions based on when cash receipts and disbursements changed

> In a recent annual report, Procter & Gamble reports that product-related inventories are primarily maintained on the FIFO method. Minor amounts of product inventories, including certain cosmetics, are maintained on the LIFO method. The spare parts invent

> At December 31, year 1, Westport Manufacturing Co. owned the following investments in the capital stock of publicly owned companies. Instructions: a. Illustrate the presentation of marketable securities and the unrealized holding gain or loss in Westp

> Bring Company’s inventory is subject to shrinkage via evaporation. At the end of the current financial reporting period, the company’s inventory had a cost of $100,000. Management estimates that evaporation has resulte

> Locate the table titled “Selected Financial Data” in the Home Depot Financial Information in Appendix A. Assume Home Depot identifies each store as a profit center. Identify the categories of information in the “Store Data” section of the table that woul

> Assume that you will have a 10-year, $10,000 loan to repay when you graduate from college next month. The loan, plus 8 percent annual interest on the unpaid balance, is to be repaid in 10 annual installments of $1,490 each, beginning one year after you g

> Budgets are essential for the successful operation of an organization. Finding the resources to implement budget goals requires extensive use of human resources. How managers perceive their roles in the budgeting process is important to the successful an

> A recent balance sheet of Sweet Tooth, Inc., included the following items, among others. (Dollar amounts are stated in thousands.) The company also reported total assets of $353,816 thousand, total liabilities of $81,630 thousand, and a return on total

> Indicate whether each of the companies or individuals in the following independent cases would benefit more from a strong U.S. dollar (relatively low foreign exchange rates) or a weak U.S. dollar (relatively high foreign exchange rates). Provide a brief

> Monster Toys is considering a new toy monster called Garga. Annual sales of Garga are estimated at 100,000 units at a price of $8 per unit. Variable manufacturing costs are estimated at $3 per unit, incremental fixed manufacturing costs (excluding deprec

> Harvey Corporation produces several joint products from common materials and shared production processes. Why are costs incurred up to the split-off point not relevant in deciding which products Harvey sells at the split-off point and which products it p

> These selected statistics are from recent annual reports of two well-known retailers. a. Explain the significance of each of these three measures. b. Evaluate briefly the performance of each company on the basis of these three measures

> Identify the variances from standard cost that are generally computed for direct materials, direct labor, and manufacturing overhead.

> Heritage Furniture Co. uses a standard cost system. One of the company’s most popular products is an oak entertainment center that looks like an old icebox but houses a television, stereo, or other electronic components. The per-unit st

> Blind River, Inc., recently hired Neil Young as its bookkeeper. Mr. Young is somewhat inexperienced and has made numerous errors recording daily business transactions. Indicate the effects of the errors described as follows on each of the financial state

> Briefly state the purposes of a statement of cash flows.

> Sci-Fi Labs is a publicly owned company with several issues of capital stock outstanding. Over the past decade, the company has consistently earned modest profits and has increased its common stock dividend annually by 5 or 10 cents per share. Recently t

> Define the term free cash flow. Explain the significance of this measurement to (1) short-term creditors, (2) long-term editors, (3) stockholders, and (4) management.

> Tech Process, Inc., manufactures a variety of computer peripherals, such as tape drives and printers. Listed are five events that occurred during the current year.1. Declared a $1.00 per share cash dividend.2. Paid the cash dividend.3. Purchased 1,000 sh

> A recent annual report of Lowe’s indicates that property is capitalized at cost if it is expected to yield future benefits and has an original useful life that exceeds one year. Cost includes all applicable expenditures to deliver and install the propert

> Georgia Woods, Inc., manufactures furniture to customers’ specifications and uses job order cosign. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Department One, overhead is applied on t

> Selected items from successive annual reports of Middlebrook, Inc., appear as follows. Dividends of $16,000 were declared and paid in year 2. Compute the following: a. Current ratio for year 2 and year 1. b. Debt ratio for year 2 and year 1. c. Earnings

> Alexander, Inc., declared and distributed a 10 percent stock dividend on its 700,000 shares of outstanding $5 par value common stock when the stock was selling for $12 per share. The outstanding shares had originally been sold at $8 per share. The balanc

> Timberlake Corporation is a publicly owned company. The following information is taken from a recent balance sheet. Dollar amounts (except for per-share amounts) are stated in thousands Instructions: From this information, compute answers to the follow

> Dyelot Industries manufactures dyes and uses cost standards. The dye is produced in 1,000 pound batches; the normal level of production is 500 batches of dye per month. The standard costs per batch are as follows. Instructions: You have been engaged to

> Anton Company manufactures wooden magazine stands. An accountant for Anton just completed the variance report for the current month. After printing the report, his computer’s hard drive crashed, effectively destroying most of the actual

> Briefly distinguish between management and financial accounting information in terms of (a) the intended users of the information, and (b) the purpose of the information.

> In the Home Depot 2018 annual report, the following statement is included in explaining the primary risks facing the company. (This statement is an excerpt from a section of the annual report that is not included in Appendix A at the end of this textbook

> The following income statement was prepared by a new and inexperienced employee in theaccounting department of Dexter, Inc., a business organized as a corporation Instructions:a. Prepare a corrected income statement for the year ended December 31, 2021,

> On August 1, year 1, Hampton Construction received a 4.5 percent, 6-month note receivable from Dusty Roads, one of Hampton Construction’s problem credit customers. Roads had owed $43,200 on an outstanding account receivable. The note re

> A recent balance sheet of Sweet as Sugar included the following items, among others. (Dollar amounts are stated in thousands.) The company also reported total assets of $600,000, total liabilities of $90,000, and a return on total assets of 20 percent.

> Explain the meaning of an impairment of an asset. Provide several examples. What accounting event should occur when an asset has become substantially impaired?

> You’ve just read in The Wall Street Journal that the U.S. dollar has strengthened relative to the euro. All else equal, what would you expect to happen to the quantity of Italian leather jackets sold in the United States? Why?

> The following journal entry summarizes for the current year the income tax expense of Sophie’s Software Warehouse. a. Briefly explain the term deferred income tax. b. What is the amount of income tax that the company has paid or expec

> Starting with the most general and moving to the more specific, what are the three primary objectives of financial reporting?

> At the beginning of the year, Gannon, Inc., had 100,000 shares of common stock outstanding.During the current year, the company distributed a 10 percent stock dividend and subsequentlypaid a $0.50 per share cash dividend. Calculate the number of shares

> The following information has been excerpted from the statement of stockholders’ equity includedin a recent annual report of Thompson Supply Company. (Dollar figures are in millions.) Instructions:Use the information about Thompson Sup

> Arietta Inc. produces a popular brand of air conditioner that is backed by a five-year warranty. In year 1, Arietta began implementing a total quality management program that has resulted in significant changes in its cost of quality. Listed as follows i

> The following is a series of related transactions between Isogon Shoes, a shoe wholesaler, and Sole Mates, a chain of retail shoe stores. Instructions: a. Record this series of transactions in the general journal of Isogon Shoes. (The company records s

> What factors should be considered in drawing up an agreement as to the way in which income shall be shared by two or more partners

> Distinguish between trend percentages and component percentages. Which would be better suited for analyzing the change in sales over several years?

> The following are responsibility income statements for Sotheby, Inc., for the month of June. Instructions: a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $8,000 per month and i

> What factors should be considered when comparing the net income figure of a partnership to that of a corporation of similar size?

> Under what circumstances might a company have a high p/e ratio even when investors are not optimistic about the company’s future prospects?

> Meager Mining, Inc., has just discovered two new mining sites for iron ore. Geologists and engineers have come up with the estimates on the following page regarding costs and ore yields if the mines are opened. Meier’s owners currently

> Stevens Manufacturing Company obtained authorization to issue 10-year bonds with a face value of $5 million. The bonds are dated June 1, 2021, and have a contract rate of interest of 6 percent. They pay interest on December 1 and June 1. The bonds are is

> In financial statement analysis, what information is produced by computing a ratio that is not available in a simple observation of the underlying data?

> Kolhapur Company manufactures two products: KAP1, which sells for $120; and QUIN, which sells for $220. Estimated cost and production data for the current year are as follows. In addition, fixed manufacturing overhead is estimated to be $2,000,000 and va

> An investor states, “I bought this stock for $50 several years ago and it now sells for $100. It paid $5 per share in dividends last year so I’m earning 10 percent on my investment.” Evaluate this statement.

> The following information is taken from the current year financial statements of Espier Corporation. (Dollar figures and shares of stock are in thousands.) The first three items are net of applicable income tax. The loss from continuing operations does n

> James Lighting manufactures switches that it uses in several of its products. Management is considering whether to continue manufacturing the switches or to buy them from an outside source. The following information is available. 1. The company needs 100

> Why are unfavorable variances recorded by using debit entries and favorable variances recorded by using credit entries?

> Assume that you are preparing a seminar on cost-volume-profit analysis for no accountants. Several potential attendees have approached you and have asked why they should be interested in learning about your topic. The individuals include the following. 1

> Refer to the adjusted trial balance of Wilderness Guide Services, Inc., illustrated in Exercise 5.3 to respond to the following items. a. Prepare all necessary closing entries at December 31, current year. b. Prepare an after-closing trial balance date

> Pfizer, Inc., develops and manufactures various pharmaceutical products. Visit its home page at the following address: www.pfizer.com From the home page, access the company’s most recent financial report by clicking on the Investors tab. Instructions: a

> Potter Corporation mass-produces pencils through several processing departments 10 hours per day, 300 days per year. The company currently uses a process costing system and traces manufacturing costs from one process department to the next. The company p

> On January 22, 2021, Dobbins Supply, Inc., sold 700 toner cartridges to Foster Office Fitters. Immediately prior to this sale, Dobbins Supply’s perpetual inventory records for these units included the following cost layers. Instruction

> Explain the significance of par value. Does par value indicate the reasonable market price for a share of stock? Explain

> The following information relates to the manufacturing operations of Morrhead Manufacturing during the month of July. The company uses job order costing. a. Purchases of direct materials during the month amount to $80,000. (All purchases were made on ac

> The following information relates to the manufacturing operations of Trevino Golf Company during the month of March. The company uses job order costing. a. Purchases of direct materials during the month amount to $83,580. (All purchases were made on acc

> The following are responsibility income statements for Butterfield, Inc., for the month of March. Instructions: a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $10,000 per month

> Home Team Corporation recently hired Steve Willits as its bookkeeper. Mr. Willits is somewhat inexperienced and has made numerous errors recording daily business transactions. Indicate the effects of the errors described as follows on each of the financi

> Schmaltz Industries organized in January and recorded the following transactions during its first month of operations a. Prepare journal entries for each of these transactions. b. Compute the balance of the Cost of Goods Sold account at January 31. c. D

> The Kroger Company is one of the world’s largest supermarket chains. These selected items were adapted from Kroger’s balance sheet as of February 3, 2018. (Dollar amounts are in millions.) Instructions: a. Using this

> Corner Suites began making high-quality office furniture in January. The company’s executive desks are produced in two departments: Cutting and Finishing. Component kits are produced in the Cutting Department and then transferred to the Finishing Departm

> The 2020 annual report of Software City, Inc., included the following comparative summary of earnings per share over the last three years. In 2021, Software City, Inc., declared and distributed a 2-for-1 stock split. Following this distribution of stock

> Freeze, Inc., sells air conditioners. The company has two sales territories, Northern and Southern. Two products are sold in each territory: Economy and Efficiency. During January, the following data are reported for the Northern territory Common fixed

> Frank’s Fun Company owns 30 pizza parlors and a minor league baseball team. During the current year, the company sold three of its pizza parlors and closed another when the lease on the building expired. Should any of these events be classified as discon

> The following are data regarding last year’s production of Dicer Ricer, one of the major products of Kitchen Gadget Company. During the year, 61,000 units of this product were manufactured and 62,100 units were sold. Selected informati

> Refer to the adjusted trial balance of Green Lawns, Inc., illustrated in Exercise 5.2 to respond to the following items. a. Prepare all necessary closing entries at December 31, current year. b. Prepare an after-closing trial balance dated December 31,

> On July 1, Pine Region Dairy leased equipment from Farm America for a period of three years. The lease calls for monthly payments of $2,500 payable in advance on the first day of each month, beginning July 1. Prepare the journal entry needed to record th

> The following information is taken from the current year financial statements of Cardinal Manufacturing Corporation. (Dollar figures and shares of stock are in thousands.) The first three itemsare net of applicable income tax. The loss from continuing op

> Identify three factors that may cause net income to differ from net cash flows from operating activities.

> On October 1, 2021, Jenco signed a four-year, $100,000 note payable to Vicksburg State Bank in conjunction with the purchase of equipment. The note calls for interest at an annual rate of 12 percent (1 percent per month). The note is fully am

> Easy Writer manufactures an erasable ballpoint pen, which sells for $1.75 per unit. Management recently finished analyzing the results of the company’s operations for the current month. At a break-even point of 40,000 units, the company’s total variable

> Floyd Christianson is the chief executive officer of Morongo Pharmaceuticals. The company has been struggling in recent years to break even and its stock price has been on the decline. The company’s Jacksonville plant manufactures a prescription drug tha

> You can find a large amount of information on the Internet to evaluate the performance of companies. Many firms provide links to this information on their home pages. Access the home page of The Gap, Inc., at www.gapinc.com. Instructions: a. What link

> Explain the accounting principle of revenue recognition.

> Over what period of time the cost of various types of intangible assets should be amortized by regular charges against revenue? (Your answer should be in the form of a principle or guideline rather than a specific number of years.) What method of amortiz

> A large art gallery has in inventory more than 100 paintings. No two are alike. The least expensive is priced at more than $1,000 and the higher-priced items carry prices of $100,000 and more. Which of the four methods of inventory valuation discussed in

> Explain the immediate effects, if any, of each of the following transactions on a company’s earnings per a. Split the common stock 3-for-1.b. Realized a gain from the sale of a discontinued operation.c. Declared and paid a cash dividend on common stock

> During July, jobs no. 103 and 104 were completed, and jobs no. 101, 102, and 104 were delivered to customers. Jobs no. 105 and 106 are still in process at July 31. From this information, compute the following. a. The work in process inventory at June 30