What does the term unlimited liability mean when it is applied to partnership members?
> Enter the letter for each term in the blank space beside the definition that it most closely matches. A. Sales discount B. Credit period C. Discount period D. FOB destination E. FOB shipping point F. Gross profit I. Cash discount G. Merchandise inven
> On June 3, a company borrows $200,000 cash by giving its bank a 90-day, interest-bearing note. On the statement of cash flows, where should this be reported?
> If a partnership contract does not state the period of time the partnership is to exist, when does the partnership end?
> Refer to Samsung’s 2013 statement of cash flows in Appendix A. List its cash flows from operating activities, investing activities, and financing activities. Samsung’s Statement of Cash Flow from Appendix A: Sams
> Under what circumstances are long-term investments in debt securities reported at cost and adjusted for amortization of any difference between cost and maturity value?
> On a balance sheet, what valuation must be reported for debt securities classified as available-for-sale?
> If a company purchases its only long-term investments in available-for-sale debt securities this period and their fair value is below cost at the balance sheet date, what entry is required to recognize this unrealized loss?
> If a short-term investment in available-for-sale securities costs $10,000 and is sold for $12,000, how should the difference between these two amounts be recorded?
> On a balance sheet, what valuation must be reported for short-term investments in trading securities?
> Refer to the income statement of Samsung in Appendix A. How can you tell that it uses the consolidated method of accounting? Income Statement of Samsung from Appendix A: Samsung Electronics Co, Ltd. and its subsidiaries CONSOLIDATED STATEMENTS OF
> Refer to Google’s statement of comprehensive income. What was the amount of its 2013 change in net unrealized gains for its AFS investments? Google’s Statement of Comprehensive Income: Google Inc. CONSOLIDATED ST
> Refer to Apple’s statement of comprehensive income in Appendix A. What is the amount of foreign currency translation adjustment for the year ended September 28, 2013? Is this adjustment an unrealized gain or an unrealized loss? Apple&a
> If a U.S. company makes a credit sale to a foreign customer required to make payment in U.S. dollars, can the U.S. company have an exchange gain or loss on this sale?
> What is an employer’s unemployment merit rating? How are these ratings assigned to employers?
> What are two major challenges in accounting for international operations?
> Under what circumstances does a company prepare consolidated financial statements?
> In accounting for investments in equity securities, when should the equity method be used?
> Under what two conditions should investments be classified as current assets?
> What factors affect the market rates for bonds?
> What are the duties of a trustee for bondholders?
> What is the main difference between a bond and a share of stock?
> When can a lease create both an asset and a liability for the lessee?
> Refer to the statements for Google in Appendix A. For the year ended December 31, 2013, what is its debt-to-equity ratio? What does this ratio tell us? Google’s Financial Statements from Appendix A: Google Inc. CONSOLIDATE
> Refer to the statement of cash flows for Samsung in Appendix A. For the year ended December 31, 2013, what was the amount for repayment of long-term borrowings and debentures? Samsung’s Statement of Cash Flow from Appendix A: Sams
> Refer to Samsung’s recent balance sheet in Appendix A. What current liabilities related to income taxes are on its balance sheet? Explain the meaning of each income tax account identified. Samsung’s Balance Sheet from Appendix A: / /
> By what amount did Samsung’s long-term borrowings increase or decrease in 2013? Samsung’s Financial Statements from Appendix A: Samsung Electronics Co., Ltd. and its subsidiaries CONSOLIDATED STATEMENTS OF FI
> Refer to Apple’s annual report in Appendix A. Is there any indication that Apple has issued long-term debt? Apple’s Balance Sheet from Appendix A: Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except numbe
> What is the issue price of a $2,000 bond sold at 98 1⁄4? What is the issue price of a $6,000 bond sold at 101 1⁄2?
> If you know the par value of bonds, the contract rate, and the market rate, how do you compute the bonds’ price?
> What is the main difference between notes payable and bonds payable?
> Why would an investor find convertible preferred stock attractive?
> What is the difference between the par value and the call price of a share of preferred stock?
> What is the preemptive right of common stockholders?
> What is the difference between authorized shares and outstanding shares?
> Who is responsible for directing a corporation’s affairs?
> Suppose that a company has a facility located where disastrous weather conditions often occur. Should it report a probable loss from a future disaster as a liability on its balance sheet? Explain.
> Refer to the financial statements for Samsung in Appendix A. How much were its cash payments for treasury stock purchases for the year ended December 31, 2013? Samsung’s Financial Statements from Appendix A: Samsung Electronic
> Refer to the 2013 balance sheet for Google in Appendix A. What is the par value per share of its preferred stock? Suggest a rationale for the amount of par value it assigned. Google’s Balance Sheet from Appendix A: Google Inc. CON
> Refer to Apple’s fiscal 2013 balance sheet in Appendix A. How many shares of common stock are authorized? How many shares of voting common stock are issued? Apple’s Balance Sheet from Appendix A:
> How are organization expenses reported?
> What is a stock option?
> How are EPS results computed for a corporation with a simple capital structure?
> Why do laws place limits on treasury stock purchases?
> How does the purchase of treasury stock affect the purchaser’s assets and total equity?
> Courts have ruled that a stock dividend is not taxable income to stockholders. What justifies this decision?
> Why is the term liquidating dividend used to describe cash dividends debited against paid-in capital accounts?
> Why are warranty liabilities usually recognized on the balance sheet as liabilities even when they are uncertain?
> What are organization expenses? Provide examples.
> George, Burton, and Dillman have been partners for three years. The partnership is being dissolved. George is leaving the firm, but Burton and Dillman plan to carry on the business. In the final settlement, George places a $75,000 salary claim against th
> Allocation of partnership income among the partners appears on what financial statement?
> Assume that the Barnes and Ardmore partnership agreement provides for a two-third/one-third sharing of income but says nothing about losses. The first year of partnership operation resulted in a loss, and Barnes argues that the loss should be shared equa
> Assume that Amey and Lacey are partners. Lacey dies, and her son claims the right to take his mother’s place in the partnership. Does he have this right? Why or why not?
> Can partners limit the right of a partner to commit their partnership to contracts? Would such an agreement be binding (a) on the partners and (b) on outsiders?
> How does a general partnership differ from a limited partnership?
> Apple began as a partnership. What does the term mutual agency mean when applied to a partnership?
> Assume a partner withdraws from a partnership and receives assets of greater value than the book value of his equity. Should the remaining partners share the resulting reduction in their equities in the ratio of their relative capital balances or accordi
> Identify the main difference between (a) plant assets and current assets, (b) plant assets and inventory, and (c) plant assets and long-term investments.
> Kay, Kat, and Kim are partners. In a liquidation, Kay’s share of partnership losses exceeds her capital account balance. Moreover, she is unable to meet the deficit from her personal assets, and her partners shared the excess losses. Does this relieve Ka
> What determines the amount deducted from an employee’s wages for federal income taxes?
> Which payroll taxes are the employee’s responsibility and which are the employer’s responsibility?
> What is the current Medicare tax rate? This rate is applied to what maximum level of salary and wages?
> What is the combined amount (in percent) of the employee and employer Social Security tax rate? (Assume wages do not exceed $200,000 per year.)
> If $988 is the total of a sale that includes its sales tax of 4%, what is the selling price of the item only?
> What are the three important questions concerning the uncertainty of liabilities?
> What is an estimated liability?
> Refer to Samsung’s balance sheet in Appendix A. List Samsung’s current liabilities as of December 31, 2013. Samsung’s Balance Sheet from Appendix A: / /
> Refer to Google’s balance sheet in Appendix A. What accrued expenses (liabilities) does Google report at December 31, 2013? Google’s Balance Sheet from Appendix A: Google Inc. CONSOLIDATED BALANCE SHEETS (In mill
> What is the difference between ordinary repairs and extraordinary repairs? How should each be recorded?
> Why does the direct write-off method of accounting for bad debts usually fail to match revenues and expenses?
> Refer to Apple’s balance sheet in Appendix A. What is the amount of Apple’s accounts payable as of September 28, 2013? Apple’s Balance Sheet from Appendix A: Apple Inc. CONSOLIDATED BALANCE SHEE
> What amount of income tax is withheld from the salary of an employee who is single with two withholding allowances and earning $725 per week? What if the employee earned $625 and has no withholding allowances? (Use Exhibit 11A.6.) Exhibit 11A.6: SI
> What is a wage bracket withholding table?
> What is the difference between a current and a long-term liability?
> What accounting concept justifies charging low-cost plant asset purchases immediately to an expense account?
> Why is the Modified Accelerated Cost Recovery System not generally accepted for financial accounting purposes?
> Why is the cost of a lump-sum purchase allocated to the individual assets acquired?
> What is different between land and land improvements?
> Refer to the December 31, 2013, balance sheet of Samsung in Appendix A. What long-term assets discussed in this chapter are reported by the company? Samsung’s Balance Sheet from Appendix A: / Samsung Electronics Co., Ltd. and i
> What is the general rule for cost inclusion for plant assets?
> Assume that a company buys another business and pays for its goodwill. If the company plans to incur costs each year to maintain the value of the goodwill, must it also amortize this goodwill?
> Refer to Samsung’s balance sheet in Appendix A. What does it title its plant assets? What is the book value of its plant assets at December 31, 2013? Samsung’s Balance Sheet from Appendix A: / /
> Refer to Google’s recent balance sheet in Appendix A. What property, plant and equipment assets does Google list on its balance sheet? What is the book value of its total net property, plant and equipment assets at December 31, 2013? G
> On its recent balance sheet in Appendix A, Apple lists its plant assets as “Property, plant and equipment, net.” What does “net” mean in this title? Apple Balance Sheet from Appendi
> How is total asset turnover computed? Why would a financial statement user be interested in total asset turnover?
> What are the characteristics of an intangible asset?
> Is the declining-balance method an acceptable way to compute depletion of natural resources? Explain.
> What is the process of allocating the cost of natural resources to expense as they are used?
> What characteristics of a plant asset make it different from other assets?
> Explain the accounting constraint of materiality.
> Why should cash receipts be deposited on the day of receipt?
> When do we know that a company has goodwill? When can goodwill appear in a company’s balance sheet?
> What is a petty cash receipt? Who should sign it?
> Which of the following assets—inventory, building, accounts receivable, or cash—is most liquid? Which is least liquid?
> What are the limitations of internal controls?
> When a store purchases merchandise, why are individual departments not allowed to directly deal with suppliers?
> Why should the person who keeps the records of an asset not be the person responsible for its custody?
> Why should responsibility for related transactions be divided among different departments or individuals?
> Internal control procedures are important in every business, but at what stage in the development of a business do they become especially critical?
> Apple’s statement of cash flows in Appendix A describes changes in cash and cash equivalents for the year ended September 28, 2013. What total amount is provided (used) by investing activities? What amount is provided (used) by financin
> List the seven broad principles of internal control.
