ACCT 304 ( Intermediate Accounting I )
Complete Class
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ACCT 304 ( Intermediate
Accounting I ) Complete Class
week 1
Development
of Accounting Standards (graded)
|
Hello
Class, Welcome to week 1 Discussion Topic 1.
Generally
Accepted Accounting Principles (GAAP) are guidelines for companies to follow as
they prepare and issue financial statements.
Let’s
start by getting an understanding of why the guidelines were developed in the
first place?
1. a)
Who relies on the financial statements (external users) and why, what are they
using the statements for?
b) What happens if an External User relies on financial statements that are inaccurate? (what could happen to the corporaton)
c) What negative consequences can arise from relying on inaccurate financial statements? (what could happen to the external user)
Remember, these discussion threads are supposed to be stimulating conversation, a back and forth discussion among students and teacher.
b) What happens if an External User relies on financial statements that are inaccurate? (what could happen to the corporaton)
c) What negative consequences can arise from relying on inaccurate financial statements? (what could happen to the external user)
Remember, these discussion threads are supposed to be stimulating conversation, a back and forth discussion among students and teacher.
After
the first person responds, he or she can respond to the first item, the next
person can add a point that maybe the previous discussions failed to point out
or answer the second item..
I don’t
want to see everybody repeating the same answer. You wouldn’t do that if you
were in class and I asked a question.
You
need to respond to each of the two separate discussion topics by Wednesday the
latest. And, including Wednesday, you need to respond to each of the 2
discussion threads on 3 different days. For example, you could come in as late
as Wednesday and respond to topic one and two. Then do the same for both topics
on Thursday and Sunday.
They
need to be of quality responses. Not “I agree with what you said John.” or Not
“Yes, John, you are correct in saying that…..”
Prof.
Marnell
Accounting
Conceptual Framework (graded)
|
Hello
Class, Welcome to week 1 Discussion Topic 2.
A sound
foundation is necessary for success in any task from building a house to
putting on make-up.
In terms of U.S. Accounting
Standards, it is also necessary to have a sound foundation, referred to as the
conceptual framework.
a)What is the conceptual framework, and why is it important?
a)What is the conceptual framework, and why is it important?
Once
students have answered the above thoroughly, lets move on and…
1. b)
discuss it step by step starting with the objective. What is the objective of
accounting standards?
Remember,
these discussion threads are supposed to be stimulating conversation, a back
and forth discussion among students and teacher.
After
the first person responds, he or she can respond to the first item, the next
person can add a point that maybe the previous discussions failed to point out
or answer the second item..
I don’t
want to see everybody repeating the same answer. You wouldn’t do that if you
were in class and I asked a question.
You
need to respond to each of the two separate discussion topics by Wednesday the
latest. And, including Wednesday, you need to respond to each of the 2
discussion threads on 3 different days. For example, you could come in as late
as Wednesday and respond to topic one and two. Then do the same for both topics
on Thursday and Sunday.
They
need to be of quality responses. Not “I agree with what you said John.” or Not
“Yes, John, you are correct in saying that…..”
Prof.
Marnellweek 2
Balance
Sheet: Purpose and Uses (graded)
|
Hello
class;
The
balance sheet is one of the first financial statements I turn to when reviewing
a company. You can learn a lot about a company by looking at its balance sheet.
The balance sheet is also
called the statement of financial position. Why is this? What is the purpose of
the balance sheet?
Hello
Class;
Disclosures
are required to elaborate on certain items that are presented in summarized
form in the financial statements. There are specific disclosure notes that are
required to be present in all financial statements, while others may be unique
to the disclosure needs of a particular company.
Let’s start by discussing the
three required disclosures. Please
pick one and explain what information is to be included in the note:
1.
a) Summary of Significant Accounting Policies
2.
b) Subsequent Events
3.
c) Third Party Transactions
ACCT 304 week 4
Revenue
Recognition (graded)
|
Hello
Class;
When a
company sells a product for cash, it generally recognizes the revenue. However,
there are situations when it is not always clear when a company should
recognize the revenue.
1) How
do you handle a car dealership that sells a warranty contract to its customers
for $650 that will cover the next 5 years?
Time Value
of Money Concepts (graded)
|
Hello
Class;
You
might think of the “time value of money” to be a topic for Finance class, but
accountants need an understanding of this topic as well.
Let’s
discuss where/why an accountant may need to use these skills/calculations.
ACCT 304 week 3
Income Statement
(graded)
|
Hello
Class;
Students
often refer to an income statement as the statement that shows how much money a
company has made. Money, by definition, is something that is generally accepted
as a medium of exchange or means or payment. Keeping that definition in mind,
an income statement is not a measure of money, but rather it is a measure of
net income (or loss) also known as profit (or loss).
Select a publicly held company like Apple, Microsoft, IBM, Hewlett
Packard, Home Depot (Note:
do not select a company already chosen by your classmate). Go to
their website and select Investor Relations and there you will find the
company’s annual report.
Provide the link to that annual
report and based on what you have read
about income statements in this chapter and in the Becker materials,tell us
what you have learned about the company from reviewing its income statement.
Prof.
Marnell
Cash-Flow
Statement (graded)
|
Hello
Class;
The
Statement of Cash Flows has historically given students a lot of heartburn, but
it really isn’t that scary. A cash-flow statement, simply stated, reports the
uses (where the cash was spent) and the sources (where the cash came from) of
cash during a period. Let’s start with a very simplistic set of facts. I run a
CPA firm, and I billed my clients $50K during the month of February. To earn
that $50K, I incurred $20K of wage expense and another $10K of overhead (rent,
utilities, insurance, etc.). So I made $20K profit, right? So I am sitting
pretty? Not necessarily. What if I now tell you that $40K of my billings have
yet to be collected? And my E&O insurance carrier increased my premium and
I had to pre-pay $10K of premiums this month.
1. a)
How does my cash flow differ from my profit?
2. b)
Will these transactions appear on my income statement?
3. c)
My cash-flow statement?
Prof. Marnell
ACCT 304
week 5
Cash
(graded)
|
Hello
Class;
Cash is
listed first on the balance sheet because it is the asset most readily
available to pay off debt or use in operations. Cash is also one of the assets
that most often “grows legs” and walks away. Therefore, it is important that
any business protect its cash; it does so through Internal Control Procedures.
1. a)
Please start by defining Internal Control,
2. b)
then discuss specific procedures related to cash.
Receivables
(graded)
|
Hello
Class;
When a
business extends credit to its customers, we call this Accounts Receivable.
Often a business will grant its customers a discount.
a)What are the two types of
discounts, and
1. b)
how does the journal entry to record the sale change when there is a discount
granted?
ACCT 304 week 7
Inventories—LCM
(graded)
|
Hello
Class;
The
lower-of-cost-or-market (LCM) approach was developed to avoid reporting
inventory at an amount greater than the benefits it can provide. The LCM
approach records losses in the period the value of the inventory drops below
its cost instead of later in the period that the goods are ultimately sold.
Is this a conservative or an
aggressive approach? What does GAAP say about LCM?
Inventory
Errors (graded)
|
Hello
Class;
It is discovered in 2013 that
ending inventory from 2011 is understated.
What accounts will be affected by this understatement, and how will they be affected?
What accounts will be affected by this understatement, and how will they be affected?
This is
a situation that really happens. Start with the 2011 inventory being
understated, and track the changes through the inventory account to 2013.
ACCT 304 week 6
Inventory
Classification and Systems (graded)
|
Hello
Class;
Merchandise Inventory is assets held for sale in the ordinary course of business of wholesale and retail companies. Manufacturing inventories are raw materials or WIP (Work In Process) that will be used or consumed in the production of finished goods to be sold.
Merchandise Inventory is assets held for sale in the ordinary course of business of wholesale and retail companies. Manufacturing inventories are raw materials or WIP (Work In Process) that will be used or consumed in the production of finished goods to be sold.
·
iscussion topic #1
1. explain
how inventory is presented on the balance sheet, and
2. what
further information you found in the footnote disclosures about the inventory
method and “Impairment of Inventory”, if any.
Inventoriable
Costs/Cost-Flow Assumptions (graded)
|
Hello
Class;
We read about the Perpetual and
the Periodic Inventory System. Regardless of which system is used, under both,
we need to assign dollar amounts to the Ending Inventory and Cost of Goods Sold
so that we can trace how costs flow through the system.
1) Start by identifying what is included in inventory and then
2) discuss how each item might be treated differently in the Perpetual vs. the Periodic Inventory System.
1) Start by identifying what is included in inventory and then
2) discuss how each item might be treated differently in the Perpetual vs. the Periodic Inventory System.
quizesQuestion 1. Question : (TCO 1) Which of the following has the authority to
set accounting standards in the United States?
FASB
IRS
SEC
AICPA
: 1
Question 2. Question : (TCO 2) SFAC No.5 focuses on:
objectives
of financial reporting.
qualitative
characteristics of accounting information.
Recognition
and measurement concepts in accounting, including assumptions and principles.
elements
of financial statements.
: 1
5 of 5
Question 3. Question : (TCO 3) Mary Parker Co. invested $15,000 in ABC
Corporation and received capital stock in exchange. Mary Parker Co.’s journal
entry to record this transaction would include a:
debit
to investments.
credit
to retained earnings.
credit
to capital stock.
debit
to expense.
: 2
5 of 5
Question 4. Question : (TCO 3) The adjusting entry required to record
accrued expenses includes:
a
credit to cash.
a debit
to an asset.
a
credit to an asset.
a
credit to liability.
: 2
5 of 5
Question
5. Question : (TCO 3) Temporary accounts would not include:
salaries
payable.
depreciation
expense.
supplies
expense.
cost of
goods sold.
: 2
5 of 5
Question 6. Question : (TCO 4) Notes payable:
is a
current liability account.
usually
has a debit balance.
is a
non-current liability account.
cannot
determine its classification without additional information.
: 2
5 of 5
Question 7. Question : (TCO 4) The current ratio is given by:
current
assets divided by non-current assets.
current
assets divided by total assets.
current
assets divided by current liabilities.
current
assets divided by total liabilities.
: 3
5 of 5
Question 8. Question : (TCO 5) The distinction between operating and
non-operating income relates to:
continuity
of income.
principal
activities of the reporting entity.
consistency
of income stream.
reliability
of measurements.
: 4
5 of 5
Question 9. Question : (TCO 5) A voluntary change in accounting principle
is accounted for by:
a
cumulative effect on income in the year of the change.
a
retrospective reporting of all comparative financial statements shown.
a prior
period adjustment.
a
separate line component of income.
: 4
5 of 5
Question 10. Question : (TCO 5) Cash flows from investing activities do not
include:
proceeds
from issuing bonds.
payment
for the purchase of equipment.
proceeds
from the sale of marketable securities.
cash
outflows from acquiring land.
: 4
5 of 5
Question 11. Question : (TCO 5) The Maytag Corporation’s income statement
includes income from continuing operations, a loss from discontinued
operations, and extraordinary items. Earnings per share information would be
provided for:
net
income only.
income
from continuing operations and net income only.
income
from continuing operations, loss from discontinued operations, and net income
only.
income
from continuing operations, loss from discontinued operations, extraordinary
items, and net income.
: 4
5 of 5
Question 12. Question : (TCO 5) In a statement of cash flows prepared under
International Financial Reporting Standards, each of the following items is
typically classified as a financing cash flow except:
interest
paid.
dividends
paid.
proceeds
from the issuance of long-term debt.
dividends
received.
: 4
5 of 5
Question 13. Question : (TCO 4) Which is a shareholders’ equity account in
the balance sheet?
Accumulated
depreciation
Paid-in
capital
Dividends
payable
Marketable
securities
: 3
5 of 5
Question 14. Question : (TCO 4) Which of the following groups is not among
the external users for whom financial statements are prepared?
Customers
Suppliers
Employees
All of
the above are external users of financial statements.
(TCO 5) Misty Company reported the following
before-tax items during the current year:
Misty’s
effective tax rate is 40% and there were 1,000 shares of common stock
outstanding.
What
would be Misty’s income before extraordinary item(s)?
Question
2. Question : (TCO 4) Listed below are account balances (in $millions) taken
from the records of Symphony Stores. All of these are permanent accounts,
except the last two that have yet to be closed. The installment receivables are
current. Symphony uses a perpetual inventory system.
What
would Symphony report as total assets? Hint: Don’t forget to deduct the contra
assets.
(TCO 4) Explain how management’s discussion and
analysis of its operations and liquidity may be helpful to investors.
Question 2. Question : (TCO 2) What are the key provisions of the Public
Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?
Question 3. Question : (TCO 5) Give an example of a non-cash financing and
investing activity and explain when and how it would be reported in the financial
statements.
Question 4. Question : (TCO 3) What is the purpose of the closing process?
(TCO 1) The SEC issues accounting standards in the
form of
accounting
research bulletins.
financial
reporting releases.
financial
accounting standards.
financial
technical bulletins.
:
Question 2. Question :
(TCO 2) Enhancing qualitative characteristics of
accounting information include each of the following, except
timeliness.
materiality.
comparability.
verifiability.
Comments:
Question 3. Question :
(TCO 3) Hughes Aircraft sold a four-passenger
airplane for $380,000, receiving a $50,000 down payment and a 12% note for the
balance. The journal entry to record this sale would include a
credit
to cash.
debit
to cash discount.
debit
to note receivable.
credit to
note receivable.
Comments:
Question 4. Question :
(TCO 3) When a tenant makes an end-of-period
adjusting entry credit to the prepaid rent account
he or
she usually debits cash.
he or
she usually debits an expense account.
he or
she debits a liability account.
he or
she does none of the above.
Comments:
Question 5. Question :
(TCO 3) Permanent accounts would not include
interest
expense.
wages
payable.
prepaid
rent.
unearned
revenues.
Question 1. Question :
(TCO 4) Cash equivalents would not include
cash
not available for current operations.
money
market funds.
United
States Treasury bills.
bank
drafts.
Question 2. Question :
(TCO 4) Which is a shareholders’ equity account in
the balance sheet?
Accumulated
depreciation
Paid-in
capital
Dividends
payable
Marketable
securities
Instructor
Explanation: See Chapter 3.
Points
Received: 4 of 4
Comments:
Question 3. Question :
(TCO 4) Janson Corporation Co.’s trial balance
included the following account balances at December 31, 2011:
Investments
consist of treasury bills that were purchased in November and mature in
January. Prepaid insurance is for the next 2 years. What amount should be
included in the current asset section of Janson’s December 31, 2011 balance
sheet?
$88.000
$85,000
$55,000
$135,000
Question 4. Question :
(TCO 4) Which of the following would be disclosed
in the summary of significant accounting policies disclosure note?
Option
A
Option
B
Option
C
Option
D
Question 5. Question :
(TCO 4) Below is the partial balance sheet ($ in
thousands) for Paisano Seafood Inc.
The
current ratio (rounded) is
1.98.
1.58.
1.17.
0.66.
quiz 3
<pstyle=”font-size:
11.8181819915771px;”=””>TCO 5) The distinction between operating and
non-operating income relates to
continuity
of income.
principal
activities of the reporting entity.
consistency
of income stream.
reliability
of measurements.
Instructor
Explanation: See Chapter 4.
Points
Received: 4 of 4
Comments:
Question 2. Question :
(TCO 5) Major Co. reported a 2011 income of
$300,000 from continuing operations before income taxes and a before-tax
extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the
2011 income statement, Major Co. would show the following line-item amounts for
income tax expense and net income.
$66,000
and $210,000
$90,000
and $154,000
$90,000
and $276,000
$66,000
and $220,000
Instructor
Explanation:
Points
Received: 4 of 4
Comments:
Question 3. Question :
(TCO 5) The financial statement presentation of a
change in depreciation method is most similar to that of reporting
changes
in accounting estimates.
prior
period adjustments.
ion of
errors.
extraordinary
items.
Instructor
Explanation: See Chapter 4.
Points
Received: 4 of 4
Comments:
Question 4. Question :
(TCO 5) Cash flows from investing activities do not
include
proceeds
from issuing bonds.
payment
for the purchase of equipment.
proceeds
from the sale of marketable securities.
cash
outflows from acquiring land.
Instructor
Explanation: See Chapter 4.
Points
Received: 4 of 4
Comments:
Question 5. Question :
(TCO 5) Review Rowdy’s Restaurants cash flow (in
millions):
Rowdy’s
would report net cash inflows (outflows) from financing activities in the
amount of
$1,100.
$(1,100).
$820.
$900.
Instructor
Explanation:
Points
Received: 4 of 4
Comments:
4
<pstyle=”font-size:
11.8181819915771px;”=””>(TCO 5) For a typical manufacturing company, the
most common critical point for recognizing revenue is the date
an
order is received.
production
is completed.
the
product is delivered.
payment
is received.
Question 2. Question :
(TCO 5) On December 15, 2011, Rigsby Sales Co. sold
a tract of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses
the installment sale method of accounting for this transaction. Terms called
for a down payment of $500,000 with the balance in two equal, annual
installments, payable on December 15, 2012 and December 15, 2013. Ignore
interest charges. Rigsby has a December 31 year-end. In 2011, Rigsby would
recognize the realized gross profit of
$500,000.
$0.
$900,000.
$100,000.
Question 3. Question :
(TCO 6) Present and future value tables of $1 at 3%
are presented below:
Carol
wants to invest money in a 6% CD account that compounds semiannually. Carol
would like the account to have a balance of $50,000 5 years from now. How much
must Carol deposit to accomplish her goal?
$35,069
$43,131
$37,205
$35,000
Comments:
Question 4. Question :
(TCO 6) Sondra deposits $2,000 in an IRA account on
April 15, 2011. Assume the account will earn 3% annually. If she repeats this for
the next 9 years, how much will she have on deposit on April 14, 2020?
$20,600
$20,928
$23,616
$24,715
Question 5. Question :
(TCO 6) Jose wants to cash in his winning lottery
ticket. He can either receive five, $5,000 annual payments starting today, or
he can receive a lump-sum payment now based on a 3% annual interest rate. What
is the present value of the installments if he opts for the lump sum payment?
$22,899
$21,565
$23,000
5
<pstyle=”font-size:
11.8181819915771px;”=””>(TCO 7) Cash may not include
foreign
currency.
money
orders.
restricted
cash.
undeposited
customer checks.
Question 2. Question :
(TCO 7) On November 10 of the current year, Flores
Mills sold carpet to a customer for $8,000 with credit term 2/10, n/30. Flores
uses the gross method of accounting for cash discounts. What is the correct
entry for Flores on November 17, assuming the correct payment was received on
that date?
Option
a
Option
b
Option
c
Option
d
Question 3. Question :
(TCO 7) Which of the following does not change the
balance in accounts receivable?
Returns
on credit sales
Collections
from customers
Bad
debts expense adjusting entry
Write-offs
Question 4. Question :
(TCO 7) Brockton Carpet Cleaning prepares a bank
reconciliation at the end of every month. At the end of July, the balance in
the general ledger checking account was $2,750, and the bank balance on the
bank statement was $2,980. Outstanding checks totaled $680, and deposits in
transit were $400. The bank statement revealed that a check written for $120 was
incorrectly recorded by Brockton as a $220 disbursement. The bank statement
listed service charges and NSF check charges totaling $150. The corrected cash
balance is
$2,270.
$2,550.
$2,470.
$2,700.
Question 5. Question :
(TCO 7) Calistoga Produce estimates bad debt
expense at ½% of credit sales. The company reported accounts receivable and
allowance for uncollectible accounts of $471,000 and $1,650, respectively, at
December 31, 2010. During 2011, Calistoga’s credit sales and collections were
$315,000 and $319,000, respectively, and $1,720 in accounts receivable were
written off. Calistoga’s adjusted allowance for uncollectible accounts at
December 31, 2011 is
$1,575.
$1,505.
$1,650.
$1,720.
quiz 7
<pstyle=”font-size:
11.8181819915771px;”=””>(TCO 8) In applying LCM, market cannot be
less
than net realizable value minus a normal profit margin.
net
realizable value less reasonable completion and disposal costs.
greater
than net realizable value reduced by an allowance for normal profit margin.
less
than cost.
Question 2. Question :
(TCO 8) Montana Co. has determined its year-end
inventory on a FIFO basis to be $600,000. Information pertaining to that
inventory is as follows:
What
should be the carrying value of Montana’s inventory?
$600,000
$520,000
$590,000
$510,000
Question 3. Question :
(TCO 8) Howard’s Supply Co. suffered a fire loss on
April 20, 2011. The company’s last physical inventory was taken on January 30,
2011, at which time the inventory totaled $220,000. Sales from January 30 to
April 20 were $600,000, and purchases during that time were $450,000. Howard’s
consistently reports a 30% gross profit. The estimated inventory loss is
$490,000.
$238,000.
$250,000.
None of
the above
Question 4. Question :
(TCO 8) When computing the cost-to-retail
percentage for the conventional retail method, included in the denominator are
net
markups and net markdowns.
neither
net markups nor net markdowns.
net
markups, but not net markdowns.
net
markdowns, but not net markups.
Question 5. Question :
(TCO 8) Retrospective treatment of prior years’
financial statements is required when there is a change from
average
cost to FIFO.
FIFO to
average cost.
LIFO to
average cost.
All of
the above
ACCT 304 Week 6
Annual Report
Analysis
Your
annual report analysis is due at the end of Week 6. Obtain an annual report
from a corporation that is interesting to you. Using techniques that you have
learned of in the previous weeks, respond to the following questions.
1. Who are
the firm’s auditors? Do they provide a clean opinion on the financial
statements?
2. Have
there been any subsequent events, errors and irregularities, illegal acts, or
related-party transactions that have a material effect on the financial
statements?
3. Describe
the trend in total assets and total liabilities for the years presented.
4. What
are the company’s three largest assets for the most recent year presented?
5. What
are the company’s three largest liabilities for the most recent year presented?
6. What
types of stock does the company have? How many outstanding shares are there for
each type of stock for the most recent year presented?
7. Does
the company use the single-step income statement, multiple-step income
statement, or a variation of both?
8. Does
the income statement contain any separately reported items, including
discontinued operations or extraordinary items, in any year presented? If it
does, describe the event that caused the item. (Hint: There should be a related
footnote.)
9. Describe
the trend in net income over the years presented.
10. Does
the company have other comprehensive income? If yes, what is the nature of the
transaction(s)?
11. Does
the company use the indirect or direct method of the cash-flow statement?
12. What is
the trend in cash from operations for the years presented?
13. What
are the two largest items included in cash from investing activities?
Please
see grading rubric for guidelines. Please submit the completed project by
Sunday at the end of Week 6.
Submit
your Course Project to the Dropbox located on the silver tab at the top of this
page. For instructions on how to use the Dropbox, read these
midterm
<pstyle=”font-size:
11.8181819915771px;”=””>Question 1. Question : (TCO 1) Which of the
following has the authority to set accounting standards in the United States?
FASB
IRS
SEC
AICPA
: 1
Question
2. Question : (TCO 2) SFAC No.5 focuses on:
objectives
of financial reporting.
qualitative
characteristics of accounting information.
Recognition
and measurement concepts in accounting, including assumptions and principles.
elements
of financial statements.
: 1
5 of 5
Question
3. Question : (TCO 3) Mary Parker Co. invested $15,000 in ABC Corporation and
received capital stock in exchange. Mary Parker Co.’s journal entry to record
this transaction would include a:
debit
to investments.
credit
to retained earnings.
credit
to capital stock.
debit
to expense.
: 2
5 of 5
Question
4. Question : (TCO 3) The adjusting entry required to record accrued expenses
includes:
a
credit to cash.
a debit
to an asset.
a
credit to an asset.
a
credit to liability.
: 2
5 of 5
Question
5. Question : (TCO 3) Temporary accounts would not include:
salaries
payable.
depreciation
expense.
supplies
expense.
cost of
goods sold.
: 2
5 of 5
Question
6. Question : (TCO 4) Notes payable:
is a
current liability account.
usually
has a debit balance.
is a
non-current liability account.
cannot
determine its classification without additional information.
: 2
5 of 5
Question
7. Question : (TCO 4) The current ratio is given by:
current
assets divided by non-current assets.
current
assets divided by total assets.
current
assets divided by current liabilities.
current
assets divided by total liabilities.
: 3
5 of 5
Question
8. Question : (TCO 5) The distinction between operating and non-operating
income relates to:
continuity
of income.
principal
activities of the reporting entity.
consistency
of income stream.
reliability
of measurements.
: 4
5 of 5
Question
9. Question : (TCO 5) A voluntary change in accounting principle is accounted
for by:
a
cumulative effect on income in the year of the change.
a
retrospective reporting of all comparative financial statements shown.
a prior
period adjustment.
a
separate line component of income.
: 4
5 of 5
Question
10. Question : (TCO 5) Cash flows from investing activities do not include:
proceeds
from issuing bonds.
payment
for the purchase of equipment.
proceeds
from the sale of marketable securities.
cash
outflows from acquiring land.
: 4
5 of 5
Question
11. Question : (TCO 5) The Maytag Corporation’s income statement includes
income from continuing operations, a loss from discontinued operations, and
extraordinary items. Earnings per share information would be provided for:
net
income only.
income
from continuing operations and net income only.
income
from continuing operations, loss from discontinued operations, and net income
only.
income
from continuing operations, loss from discontinued operations, extraordinary
items, and net income.
: 4
5 of 5
Question
12. Question : (TCO 5) In a statement of cash flows prepared under
International Financial Reporting Standards, each of the following items is
typically classified as a financing cash flow except:
interest
paid.
dividends
paid.
proceeds
from the issuance of long-term debt.
dividends
received.
: 4
5 of 5
Question
13. Question : (TCO 4) Which is a shareholders’ equity account in the balance
sheet?
Accumulated
depreciation
Paid-in
capital
Dividends
payable
Marketable
securities
: 3
5 of 5
Question
14. Question : (TCO 4) Which of the following groups is not among the external
users for whom financial statements are prepared?
Customers
Suppliers
Employees
All of
the above are external users of financial statements.
(TCO 5)
Misty Company reported the following before-tax items during the current year:
Misty’s
effective tax rate is 40% and there were 1,000 shares of common stock
outstanding.
What
would be Misty’s income before extraordinary item(s)?
Question
2. Question : (TCO 4) Listed below are account balances (in $millions) taken
from the records of Symphony Stores. All of these are permanent accounts,
except the last two that have yet to be closed. The installment receivables are
current. Symphony uses a perpetual inventory system.
What
would Symphony report as total assets? Hint: Don’t forget to deduct the contra
assets.
(TCO 4)
Explain how management’s discussion and analysis of its operations and
liquidity may be helpful to investors.
Question
2. Question : (TCO 2) What are the key provisions of the Public Company
Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?
Question
3. Question : (TCO 5) Give an example of a non-cash financing and investing
activity and explain when and how it would be reported in the financial
statements.
Question
4. Question : (TCO 3) What is the purpose of the closing process?
final
acct304
final exam
Question
1.1. (TCO 1) The SEC issues accounting standards in the form of (Points : 6)
accounting
research bulletins.
financial
reporting releases.
financial
accounting standards.
financial
technical bulletins.
Question
2.2. (TCO 1) When a registrant company submits its annual filing to the SEC, it
uses (Points : 6)
Form
10-A.
Form
10-K.
Form
10-Q.
Form
S-1.
Question
3.3. (TCO 2) The conceptual framework’s qualitative characteristic of relevance
includes (Points : 6)
predictive
value.
verifiability.
completeness.
neutrality.
Question
4.4. (TCO 2) Enhancing qualitative characteristics of accounting information
include each of the following, except (Points : 6)
timeliness.
materiality.
comparability.
verifiability.
Question
5.5. (TCO 3) A sale on account would be recorded by (Points : 6)
debiting
revenue.
crediting
assets.
crediting
liabilities.
debiting
assets.
Question
6.6. (TCO 3) Prepayments occur when (Points : 6)
cash
flow precedes expense recognition.
sales
are delayed pending credit approval.
customers
are unable to pay the full amount due when goods are delivered.
manufactured
goods await quality control inspections.
Question
7.7. (TCO 4) An asset that is not expected to be converted to cash or consumed
within 1 year or the operating cycle is (Points : 6)
goodwill.
accounts
receivable.
inventory.
supplies.
Question
8.8. (TCO 4) Which of the following is never a current liability account?
(Points : 6)
Accrued
payroll
Dividends
payable
Prepaid
rent
Subscriptions
collected in advance
Question
9.9. (TCO 5) The distinction between operating and nonoperating income relates
to (Points : 6)
continuity
of income.
principal
activities of the reporting entity.
consistency
of income stream.
reliability
of measurements.
Question
10.10. (TCO 5) On May 1, Foxtrot Co. agreed to sell the assets of its Footwear
Division to Albanese Inc. for $80 million. The sale was completed on December
31, 2012. The following additional facts pertain to the transaction:
The
Footwear Division qualifies as a component of the entity, according to GAAP,
regarding discontinued operations.
The
book value of Footwear’s assets totaled $48 million on the date of the sale.
Footwear’s
operating income was a pre-tax loss of $10 million in 2012.
Foxtrot’s
income tax rate is 40%.
In the
2012 income statement for Foxtrot Co., it would report
(Points
: 6)
income
(loss) on its total operations for the year without separation.
income
(loss) on its continuing operation only.
income
(loss) from its continuing and discontinued operations separately.
income
and gains separately from losses.
Question
11.11. (TCO 5) Operating cash outflows would include (Points : 6)
purchase
of investments.
purchase
of equipment.
payment
of cash dividends.
purchases
of inventory.
Question
12.12. (TCO 5) The FASB’s stated preference for reporting operating cash flows
is the (Points : 6)
indirect
method.
direct
method.
working
capital method.
all
financial resources method.
Question
13.13. (TCO 5) Merchandise sold FOB shipping point indicates that (Points : 6)
the
seller pays the freight.
the
buyer holds title after the merchandise leaves the seller’s location.
the
common carrier holds title until the merchandise is delivered.
the
sale is not consummated until the merchandise reaches the point to which it is
being shipped.
Question
14.14. (TCO 5) Todd Sweeney is an artist who sells his work under consignment.
(He displays his work in local barbershops, and customers buy the work there.)
Sweeney recently transferred a painting to a local barbershop. After Sweeney
has transferred a painting to a barbershop, the painting (Points : 6)
should
be counted in Sweeney’s inventory until the barbershop sells it.
should
be counted in the barbershop’s inventory, as they now possess it.
should
be counted in either Sweeney’s or the barbershop’s inventory, depending on
which incurred the cost of preparing the painting for display.
None of
the above
Question
15.15. (TCO 6) Reba wishes to know how much money would be in her savings
account if she deposits a given sum in an account and leaves it there at 6%
interest for 5 years. She should use a table for the (Points : 6)
future
value of an ordinary annuity of 1.
future
value of 1.
future
value of an annuity of 1.
present
value of an annuity due of 1.
Question
16.16. (TCO 6) Loan A has the same original principal, interest rate, and
payment amount as Loan B. However, Loan A is structured as an annuity due,
while Loan B is structured as an ordinary annuity. The maturity date of Loan A
will be (Points : 6)
earlier
than Loan B.
later
than Loan B.
the
same as Loan B.
indeterminate
with respect to Loan B.
Question
17.17. (TCO 7) Compensating balances represent (Points : 6)
funds
in a bank account that cannot be spent.
balances
in a payroll checking account.
accounts
that are subject to bank service charges.
accounts
on which banks pay interest, such as NOW accounts.
Question
18.18. (TCO 7) Oswego Clay Pipe Company sold $46,000 of pipe to Southeast Water
District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses
the gross method of accounting for cash discounts. What entry would Oswego make
on April 23, assuming the customer made the correct payment on that date?
(Points
: 6)
Option
a
Option
b
Option
c
Option
d
Question
19.19. (TCO 8) In a periodic inventory system, the cost of purchases is debited
to (Points : 6)
purchases.
cost of
goods sold.
inventory.
accounts
payable.
Question
20.20. (TCO 8) During periods when costs are rising and inventory quantities
are stable, cost of goods sold will be (Points : 6)
higher
under FIFO than LIFO.
higher under
FIFO than average cost.
lower
under average cost than LIFO.
lower
under LIFO than FIFO.
Question
21.21. (TCO 8) In applying LCM, market cannot be (Points : 6)
less
than net realizable value.
greater
than the normal profit.
less
than the normal profit margin.
greater
than net realizable value.
Question
22.22. (TCO 8) In calculating the cost-to-retail percentage for the retail
method, the retail column will not include (Points : 6)
purchases.
purchase
returns.
abnormal
shortages.
freight-in.
Question
1. 1. (TCO 8) Fulbright Corp. uses the periodic inventory system. During its
first year of operation, Fulbright made the following purchases (listed in
chronological order of acquisition):
·
40 units at $100
·
70 units at $80
·
170 units at $60
Sales
for the year totaled 270 units, leaving 10 units on hand at the end of the
year. What is the ending inventory using the average cost method (rounded)?
(Points : 15)
Question
2. 2. (TCO 5) Describe what is meant by unearned revenues, and give two
examples. (Points : 28)
Question
3. 3. (TCO 7) Briefly compare and contrast the two allowance estimation
approaches to estimating bad debt expense. In your answer, indicate which
approach, if either, is superior and explain your reasoning. (Points : 25)
1.
(TCO 8) Briefly explain when there would be a tax benefit from
electing LIFO rather than FIFO. (Points : 25)
Question
2. 2. (TCO 4) You are the independent accountant assigned to the audit of
Neophyte Company. The company’s accountant, a graduate of Rival State
University, has prepared financial statements that contained the following
questionable items:
1.
The balance sheet reports land at $100,000. Included in this
amount is a piece of property held for speculation at a cost of $30,000.
2.
Current liabilities include $50,000 for long-term debt that
comes due in 3 months. The company has received a suitable firm commitment to
refinance the debt for 5 years and intends to do so.
3.
Long-term Investments (non-current) in marketable securities
include $20,000 in short-term, high-grade commercial paper.
Please
discuss how the above items should be correctly classified and accounted for.
(Points : 25)
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