Homework Lance
Question 1.
Question :
(TCO 1) Which of the following has the authority to set accounting standards in the United States?
Student Answer:
FASB
IRS
SEC
AICPA
Instructor Explanation:
Chapter 1
Points Received:
0 of 5
Comments:
Question 2.
Question :
(TCO 2) SFAC No.5 focuses on:
Student Answer:
objectives of financial reporting.
qualitative characteristics of accounting information.
Recognition and measurement concepts in accounting, including assumptions and principles.
elements of financial statements.
Instructor Explanation:
Chapter 1
Points Received:
5 of 5
Comments:
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:
Student Answer:
debit to investments.
credit to retained earnings.
credit to capital stock.
debit to expense.
Instructor Explanation:
Chapter 2
Points Received:
5 of 5
Comments:
Question 4.
Question :
(TCO 3) The adjusting entry required to record accrued expenses includes:
Student Answer:
a credit to cash.
a debit to an asset.
a credit to an asset.
a credit to liability.
Instructor Explanation:
Chapter 2
Points Received:
5 of 5
Comments:
Question 5.
Question :
(TCO 3) Temporary accounts would not include:
Student Answer:
salaries payable.
depreciation expense.
supplies expense.
cost of goods sold.
Instructor Explanation:
Chapter 2
Points Received:
5 of 5
Comments:
Question 6.
Question :
(TCO 4) Notes payable:
Student Answer:
is a current liability account.
usually has a debit balance.
is a non-current liability account.
cannot determine its classification without additional information.
Instructor Explanation:
Chapter 2
Points Received:
5 of 5
Comments:
Question 7.
Question :
(TCO 4) The current ratio is given by:
Student Answer:
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.
Instructor Explanation:
Chapter 3
Points Received:
5 of 5
Comments:
Question 8.
Question :
(TCO 5) The distinction between operating and non-operating income relates to:
Student Answer:
continuity of income.
principal activities of the reporting entity.
consistency of income stream.
reliability of measurements.
Instructor Explanation:
Chapter 4
Points Received:
5 of 5
Comments:
Question 9.
Question :
(TCO 5) A voluntary change in accounting principle is accounted for by:
Student Answer:
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.
Instructor Explanation:
Chapter 4
Points Received:
5 of 5
Comments:
Question 10.
Question :
(TCO 5) Cash flows from investing activities do not include:
Student Answer:
proceeds from issuing bonds.
payment for the purchase of equipment.
proceeds from the sale of marketable securities.
cash outflows from acquiring land.
Instructor Explanation:
Chapter 4
Points Received:
5 of 5
Comments:
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:
Student Answer:
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.
Instructor Explanation:
Chapter 4
Points Received:
5 of 5
Comments:
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:
Student Answer:
interest paid.
dividends paid.
proceeds from the issuance of long-term debt.
dividends received.
Instructor Explanation:
Chapter 4
Points Received:
5 of 5
Comments:
Question 13.
Question :
(TCO 4) Which is a shareholders’ equity account in the balance sheet?
Student Answer:
Accumulated depreciation
Paid-in capital
Dividends payable
Marketable securities
Instructor Explanation:
Chapter 3
Points Received:
5 of 5
Comments:
Question 14.
Question :
(TCO 4) Which of the following groups is not among the external users for whom financial statements are prepared?
Student Answer:
Customers
Suppliers
Employees
All of the above are external users of financial statements.
Instructor Explanation:
Chapter 1
Points Received:
0 of 5
Comments:
Page:
1 2 3
* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)
(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)?
Student Answer:
Income before extraordinary item = (600-250-20)*(1-.4) = $198
Instructor Explanation:
($600 – 250 – 20) x (1 – .4) = $198
Points Received:
15 of 15
Comments:
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.
Student Answer:
Total assets = (680+920+34+50+30+16+150+450+5+20+8+40-80-20) = $2303 millions
Instructor Explanation:
Total assets: ($680 – 20) + ($920 – 80) + 34 + 50 + 30 + 16 + 150 + 450 + 5 + 20 + 8 + 40 = $2,303
Points Received:
15 of 15
Comments:
* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)
(TCO 4) Explain how management’s discussion and analysis of its operations and liquidity may be helpful to investors.
Student Answer:
Management’s discussion and analysis is very significant part of company’s financial evaluation process. It plays key role in determining where company stands financially in current year and also estimates its financial condition for future. Information via management’s discussion and analysis is very helpful for investors in a way that it provides investors with reasonable and comprehensive information about company’s past, present and future performance. This helps them to take key decisions like whether to make investments in company or keep investing in if already have shares of company. All important matters of company are expressed via management’s discussion and analysis. These matters include liquidity position of company, outcomes of its operations, key changes made in financial statements, capital resources, causes of inflation, etc. All these factors are really important for investors to make important investment decisions.
Instructor Explanation:
Although the financial statement numbers give a partial picture of how well the company has been performing its operations and how liquid it is, management is in a better position to describe key factors that influence these measures and what risks and opportunities exist that may affect future operations and liquidity.
Points Received:
20 of 20
Comments:
Question 2.
Question :
(TCO 2) What are the key provisions of the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?
Student Answer:
There are number of key provisions of the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002. One of them is independence of auditor which stresses on independence of external auditor and gives specific requisites for audit approval and its reporting. Other provision is about corporate responsibility, according to which corporate executives along with external auditors work on financial reports of corporations. However, it should be the responsibility of corporate audit member or committee to ensure correct and valid financial reports of company or corporation. Another very important provision of Sarbanes-Oxley Act of 2002 is enhanced financial disclosures. In this provision, all financial transactions are carefully reported in financial statements by ensuring internal controls on reporting procedures. Stock transactions of company officials are also monitored.
Instructor Explanation:
The act provides for the regulation of auditors and the types of services that they furnish to clients, increases accountability of corporate executives, addresses conflicts of interest for auditors and securities analysts, and requires that companies document and assess their internal controls, that auditors express an opinion on management’s assessment of internal controls, and requires auditors to express their own opinion on company internal controls.
Points Received:
25 of 25
Comments:
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.
Student Answer:
Purchase of land by issuing notes payable is an example of non-cash financing and investing activity. It will be reported in balance sheet as increase of land and increase of liabilities. In cash flow statement, it will be reported in seperate schedule of non-cash financial and investing activity. It will not change the cash position of a company.
Instructor Explanation:
The purchase of land and building in exchange for a mortgage note would be one example of a non-cash financing and investing activity. Such activities can either be reported in a separate schedule in the statement of cash flows or reported in a disclosure note.
Points Received:
25 of 25
Comments:
Question 4.
Question :
(TCO 3) What is the purpose of the closing process?
Student Answer:
Closing process is very important step to complete accounting cycle. In this process, revenues, expenses, income summary and dividends are closed. Closing process serves two main purpose First purposes is that it reduces all accounts of revenues, expenses and gain and loss to zero in current accounting period. It is done to make all these accounts prepared for evaluation of financial activity in next accounting period. Second purpose of closing process is that the balance of temporary accounts of revenues, expenses, gain and loss are basically transferred to retained earnings. This closure of temporary account balance to retained earnings is made to determine variations which have taken place in the account throughout the period.
Instructor Explanation:
The closing process serves a dual purpose: (1) The temporary accounts are reduced to a zero balance, ready to measure activity in the next accounting period, and (2) the balances of these temporary accounts are transferred to retained earnings to reflect the changes that have occurred in that account during the period. Revenue and expense accounts are first transferred to income summary. The net balance in income summary is then transferred to retained earnings.
Points Received:
25 of 25
Comments:
* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)
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