Why is the general journal referred to as the “book of original entry”? How are transactions presented in the journal?
> For each item in the following, identify whether it is an advantage or disadvantage of the income statement.
> Explain why it is important to understand cognitive biases in decision making. Identify at least three techniques used to mitigate cognitive biases in practice.
> Match Each Cognitive Bias Below with Its Description.
> Identify areas where managers make estimates and assumptions in accounting for plant and equipment.
> Put the six steps of the research process in correct order (use 1–6).
> Identify areas where managers make estimates and assumptions in accounting for accounts receivable.
> Identify whether the following items are fundamental characteristics (FC) or enhancing characteristics (EC): Comparable. Relevant. Timely. Understandable. Faithful representation. Verifiable
> Discuss how well the historical cost concept satisfies the fundamental characteristics of relevance and faithful representation.
> Explain the costs standard setters consider when comparing the cost of requiring information to the benefits to the users of having the information when setting a new standard.
> Describe when financial information is a faithful representation.
> Describe the fundamental characteristics of financial information. Explain the enhancing characteristics of financial reporting information.
> What is the recognition principle and when is an item considered recognized?
> Identify whether the following items are characteristics of information that are relevant (REL) or a faithful representation (FR): Information that is neutral. Information that has decision-making implications because of its predictive value. Informatio
> Explain the objective of financial reporting.
> Describe the primary users of the financial statements according to the conceptual framework. List the components of the current conceptual framework.
> Explain the difference between revenues and gains.
> Match the enhancing characteristic with its definition:
> Match the component of a faithful representation to its definition:
> List the components of the current conceptual framework.
> Indicate the assumption (going concern, business/economic entity, monetary unit, or periodicity) that best fits the following scenarios.
> The following events occurred at VG Consulting during the most recent month. a. VG provided consulting services and billed clients $2,000. b. VG collected $1,500 for consulting services performed in the prior month. c. VG paid its monthly electric bill o
> Match the measurement basis with its definition.
> What is the definition of an asset?
> Identify whether the following items are part of the general recognition principle under U.S. GAAP, IFRS, or both.
> Identify whether the following elements are elements under U.S. GAAP, IFRS, or both, and point-in-time or period-in-time elements.
> Match each element with its definition.
> Identify whether the following definitions relate to assets, liabilities, or equity.
> Discuss the three main approaches to recognizing expenses.
> Describe capital maintenance adjustments.
> Identify whether the items below are characteristics of a principles-based (P) or rules-based (R) accounting system: Provides a clear discussion of the accounting objective related to the standard. Contains detailed application guidance. Contains numerou
> What is the SEC’s role in standard setting, both historically and currently?
> What is the composition of the IASB’s membership?
> Order the steps in the Financial Accounting Standards Board’s standard setting process from 1 to 7. The Board issues an Exposure Draft (ED), which is intended to solicit input. After consultation with FASB members and others as appropriate, t
> What are the elements of financial reporting and where are they reported?
> What is the standard-setting process followed by FASB?
> Briefly explain how the financial statement preparers, users, and other interested parties are involved in the standard-setting process for U.S. GAAP.
> What is an economic entity?
> Identify at least three types of parties in the financial reporting process and discuss why each would be interested in the financial statements.
> Identify at least four different types of financial statement users and discuss why each would use the financial statements.
> Match the financial statement users and other parties involved in the use of and preparation of financial information with their role.
> What is the definition of financial accounting?
> Describe what is meant by the term “general-purpose financial statements.” Discuss what group(s) benefit(s) from general-purpose financial statements.
> What is the function of the accounting standard setters?
> What are the roles and responsibilities of an external auditor?
> What is the difference between a point-in-time element and a period-of-time element?
> How is the allocation of capital linked to the demand for financial reporting?
> What is the purpose of generating financial statements and who are the primary users of this information?
> Which items are included in the definition of financial information? Is this concept synonymous with the term financial statements? Explain.
> Are account balances found in the general ledger? Explain.
> What is meant by the term normal balance? Provide the normal balance for assets, liabilities, and stockholders’ equity.
> What do the terms debit and credit mean?
> Will all transactions have a dual effect on the accounting equation? Explain
> When will retained earnings contain a positive balance? Negative balance?
> What is equity? What are the three components of shareholders’ equity? Explain each component.
> In recent years, what has been the FASB’s approach to standard setting?
> What is the accounting equation and what does it demonstrate?
> What are closing entries? Describe the four closing entries and their effects.
> Which statements can be prepared from the adjusted trial balance? What must be done before preparing the financial statements?
> What is the purpose of the adjusted trial balance? What items are included in the adjusted trial balance?
> What is a deferred revenue? When will the full amount of the deferred revenue be recorded?
> Why are adjusting journal entries made? When do companies make these entries?
> Under the accrual basis of accounting, when do companies record deferrals and accruals?
> Explain the difference between the accrual basis of accounting and the cash basis of accounting? Which basis is acceptable under U.S. GAAP? Explain.
> What is the purpose of an unadjusted trial balance?
> Describe the accounting cycle.
> How does a principles-based standard differ from a rules-based standard?
> What types of biases are individual decision makers subject to when exercising judgment in addressing accounting issues?
> What types of biases are individual decision makers subject to when exercising judgment in addressing accounting issues?
> What is the difference between the availability and confirmatory biases?
> Does IFRS require that companies disclose their accounting policies? Explain.
> Does U.S. GAAP require that companies disclose their accounting policies? Explain.
> Does IFRS require that companies disclose information about the assumptions and estimates they make in their financial statements? Explain.
> Does U.S. GAAP require that companies disclose information about the assumptions and estimates they make in their financial statements? Explain.
> How can management create an impediment to the exercise of good judgment?
> What is research and when is financial accounting research required?
> Explain how accountants and auditors use judgment as they prepare and audit financial statements.
> Is the promulgation of financial accounting standards a political process? Explain.
> What is the Basis for Conclusions and where can they be found for IFRS?
> What is the Basis for Conclusions and where can they be found for U.S. GAAP?
> What is the purpose of a literature hierarchy?
> What is judgment and when is it used by accountants?
> What is the difference between predictive value and confirmatory value?
> What is predictive value?
> Explain the concept of materiality.
> What are the attributes of relevance?
> Explain the concept of relevance.
> Herman and Sons’ Law Offices opened on January 1, 2018. During the first year of business, the company had the following transactions: • January 2: The owners invested $250,000 (the par value of the stock) into the bu
> Branton Stores began operations on January 1, 2018. Branton had the following transactions in its first year of business: • January 4: Owners invested $400,000 (the par value of the stock) in exchange for 40,000 shares of common stock. • January 31: Bran
> Jester Entertainment Company began operations on January 1, 2018. The company had the following transactions in its first year of business: • January 4: Owners invested $120,000 (the par value of the stock) in exchange for 20,000 shares of common stock.
> The Jiayin Li Corporation, which is a technology company, was formed on January 1 of the current year. Transactions completed during the first year of operation follow. January 1: Issued 1,000,000 shares of common stock for $15,000,000, which is the par
> The Umbro Company, which is a fitness center, was formed on January 2 of the current year. Transactions completed during the first year of operation are presented below. January 2: Issued 900,000 shares of common stock for $15,000,000, which is the par v
> Who are the primary financial statement user groups identified in the objective of financial reporting?
> Who does the FASB consult in the standard-setting process?
> Sherlock Locksmiths, Inc. has the following adjusted trial balance for the year ended December 31, 2018. Required a. Journalize and post the necessary closing entries. Omit explanations. b. Prepare a post-closing trial balance as of December 31.
> Using the information in P4-6 and P4-7, perform the following steps for Tides Tea Company: Required a. Journalize and post the necessary closing entries. Omit explanations. b. Prepare a post-closing trial balance as of December 31. Data from P4-6 and P
> The post-closing trial balance for Heron Consulting Services, Inc. at December 31 of the prior year is presented here. The company reported the following transactions during the current year: • January 2: Heron took out a 5%, 2-year n
> Using the information provided in P4-6, perform the following steps for Tides Tea Company: Required a. Journalize and post adjusting journal entries based on the following additional information (omit explanations): • At December 31, i
> Tides Tea Company began operations on January 1, 2018. During the first year of business, the company had the following transactions: • January 18: The owners invested $200,000 (the par value of the stock) into the business and acquire
> Using the information in P4-3 and P4-4, perform the following steps for Herman and Sons’: Required a. Journalize and post the necessary closing entries at year-end. Omit explanations. b. Prepare a post-closing trial balance as of Dec
> Using the information provided in P4-3, perform the following steps: Data From P4-3: Required a. Journalize and post adjusting journal entries for Herman and Sons’ based on the following additional information: • Of
