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  • Question 1

5 out of 5 points

  
 

Product costs:

Answer

   

Selected Answer:

   

Are expenditures necessary and integral to finished products

Correct Answer:

   

Are expenditures necessary and integral to finished products

   
  • Question 2

5 out of 5 points

  
 

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Cash paid for purchase of plant assets

$15,000

Decrease in interest payable

2,000

Depreciation expense

30,000

Gain on retirement of bonds

32,000

Increase in accounts receivable

40,000

Loss on sale of plant assets

5,000

Net Income

76,000

Answer

   

Selected Answer:

   

$37,000

Correct Answer:

   

$37,000

   
  • Question 3

0 out of 5 points

  
 

 Actual fixed overhead for Kapok Company during March was $92,780. The flexible budget for fixed overhead this period is $89,000 based on a production level of 5,000 units. If the company actually produced 4,200 units what is the fixed overhead volume variance for March?

Answer

   

Selected Answer:

   

$3,780 unfavorable

Correct Answer:

   

$14,240 unfavorable

   
  • Question 4

5 out of 5 points

  
 

A company’s income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on sale of plant assets, $14,000. An examination of the company’s current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

Answer

   

Selected Answer:

   

$141,000

Correct Answer:

   

$141,000

   
  • Question 5

5 out of 5 points

  
 

 Chance, Inc. sold 3,000 units of its product at a price of $72 per unit.  Total variable cost per unit is $51, consisting of $32 in variable production cost and $19 in variable selling and administrative cost.  Compute the manufacturing margin for the company under variable costing.

Answer

   

Selected Answer:

   

$120,000

Correct Answer:

   

$120,000

Answer Feedback:

($72 – $32) x 3,000 units = $120,000  

   
  • Question 6

5 out of 5 points

  
 

A company has fixed costs of $90,000. Its contribution margin ratio is 30% and the product sells for $75 per unit. What is the company’s break-even point in dollar sales?

Answer

   

Selected Answer:

   

$300,000

Correct Answer:

   

$300,000

Answer Feedback:

Break-even point in dollar sales = $90,000/0.30 = $300,000    

   
  • Question 7

5 out of 5 points

  
 

A corporation issued 300 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

Answer

   

Selected Answer:

   

A $300 credit to Contributed Capital in Excess of Par Value, Common Stock

Correct Answer:

   

A $300 credit to Contributed Capital in Excess of Par Value, Common Stock

   
  • Question 8

5 out of 5 points

  
 

The three major cost components of a manufactured product are:

Answer

   

Selected Answer:

   

Direct materials, direct labor, and factory overhead

Correct Answer:

   

Direct materials, direct labor, and factory overhead

   
  • Question 9

0 out of 5 points

  
 

The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

Answer

   

Selected Answer:

   

Underapplied overhead

Correct Answer:

   

Overapplied overhead

   
  • Question 10

0 out of 5 points

  
 

Which of the following journal entries correctly records the current month’s activity where $125,000 of raw material was purchased for cash, and $75,000 of direct material and $30,000 of indirect materials were used in the production process? 

(A)

Raw Materials Inventory

 

125,000

 

 

 

 

 

Raw Materials Inventory

105,000

 

 

Goods in Process Inventory

 

75,000

 

Factory Overhead

 

30,000

 

 

 

 

(B)

Raw Materials Inventory

125,000

 

 

Cash

 

125,000

 

 

 

 

 

Goods in Process Inventory

75,000

 

 

Factory Overhead

30,000

 

 

Raw Materials Inventory

 

105,000

 

 

 

 

(C)

Raw Materials Inventory

125,000

 

 

Cash

 

125,000

 

 

 

 

 

Raw Materials Inventory

105,000

 

 

Goods in Process Inventory

 

75,000

 

Factory Overhead

 

30,000

 

 

 

 

(D)

Cash

125,000

 

 

Raw Materials Inventory

 

125,000

 

 

 

 

 

Goods in Process Inventory

75,000

 

 

Factory Overhead

30,000

 

 

Raw Materials Inventory

 

105,000

 

 

 

 

(E)

Raw Materials Inventory

125,000

 

 

Cash

 

125,000

 

 

 

 

 

Goods in Process Inventory

125,000

 

 

Raw Materials Inventory

 

125,000

Answer

   

Selected Answer:

   

(C) above

Correct Answer:

   

(B) above

   
  • Question 11

5 out of 5 points

  
 

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.

Units produced this year:          25,000 units
Units sold this year:                 15,000 units
Direct Materials:                       $9 per unit
DIrect Labor:                            $11 per hour
Variable overhead:                    $75,000 in total
Fixed overhead:                        $137,500 in total

Given Advanced Company’s data, compute cost per unit of finished goods under variable costing.

Answer

   

Selected Answer:

   

$23.00

Correct Answer:

   

$23.00

Answer Feedback:

$9 DM + $11 DL + ($75,000/25,000) VOH = $23

   
  • Question 12

5 out of 5 points

  
 

When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?

Answer

   

Selected Answer:

   

Decrease in income taxes payable

Correct Answer:

   

Decrease in income taxes payable

   
  • Question 13

5 out of 5 points

  
 

Six months ago, a company purchased an investment in stock for $65,000. This investment is considered available-for-sale. The current market value of the stock is $68,500. The company should record a:

Answer

   

Selected Answer:

   

Credit to Unrealized Gain-Equity for $3,500

Correct Answer:

   

Credit to Unrealized Gain-Equity for $3,500

   
  • Question 14

5 out of 5 points

  
 

A company manufactures and sells a product for $120 per unit. The company’s fixed costs are $68,760, and its variable costs are $90 per unit. The company’s break-even point in units is:

Answer

   

Selected Answer:

   

2,292

Correct Answer:

   

2,292

Answer Feedback:

Break-even point = $68,760/($120 – $90) = 2,292 units

   
  • Question 15

5 out of 5 points

  
 

Bradford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. 

What is the direct materials quantity variance?

Answer

   

Selected Answer:

   

$2,500 unfavorable

Correct Answer:

   

$2,500 unfavorable

   
  • Question 16

5 out of 5 points

  
 

Montaigne Corp. has the following information about its standards and production activity in November:

Actual total factory overhead incurred

$28,175

Standard factory overhead

 

Variable overhead

$3.10 per unit produced

Fixed overhead

 

($12,000/6,000 estimated units to be produced)

$2 per unit

Actual units produced

4,800 units


The volume variance is:

Answer

   

Selected Answer:

   

$2,400U

Correct Answer:

   

$2,400U

   
  • Question 17

5 out of 5 points

  
 

A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is:

Answer

   

Selected Answer:

   

$29,300

Correct Answer:

   

$29,300

Answer Feedback:

Beg FG + COGM – End FG = COGS
$14,600 + $32,500 – $17,800 =- $29,300

   
  • Question 18

5 out of 5 points

  
 

Preferred stock is often issued:

Answer

   

Selected Answer:

   

All of the above

Correct Answer:

   

All of the above

   
  • Question 19

0 out of 5 points

  
 

A company reports the following information for the current year which is its first year of operations.

Units produced this year

? units

Units sold this year

1,500 units

Direct materials

$9 per unit

Direct labor

$5 per unit

Variable overhead

$7 per unit

Fixed overhead

$24,000 in total


If the company’s cost per unit of finished goods using absorption costing is $27, how many units were produced?

Answer

   

Selected Answer:

   

2,000 units

Correct Answer:

   

4,000 units

   
  • Question 20

5 out of 5 points

  
 

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $60,000. The entry to record this exchange is: 

(A)

Land

60,000

 

 

Common Stock

 

50,000

 

Contributed Capital in Excess of Par Value, Common Stock

 

10,000

 

 

 

 

(B)

Land

60,000

 

 

Common Stock

 

60,000

 

 

 

 

(C)

Land

50,000

 

 

Common Stock

 

50,000

 

 

 

 

(D)

Common Stock

50,000

 

 

Contributed Capital in Excess of Par Value, Common Stock

10,000

 

 

Land

 

60,000

 

 

 

 

(E)

Common Stock

60,000

 

 

Land

 

60,000

Answer

   

Selected Answer:

   

(A) above

Correct Answer:

   

(A) above

   
  • Question 21

5 out of 5 points

  
 

The following data are available for a company’s manufacturing activities:

Beginning goods in process inventory

5,000 units, 1/4 of the labor added this period

Units started and completed

15,000

Ending goods in process inventory

6,000 units, 1/2 the labor added this period


If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively?

Answer

   

Selected Answer:

   

21,000; 19,250

Correct Answer:

   

21,000; 19,250

   
  • Question 22

5 out of 5 points

  
 

Employee morale, timeliness of delivery, and the reactions of customers are examples of nonfinancial factors which should be considered when making a managerial decision.

Answer

   

Selected Answer:

 True

Correct Answer:

 True

   
  • Question 23

5 out of 5 points

  
 

Accounting standards:

Answer

   

Selected Answer:

   

Require that companies include a statement of cash flows in a complete set of financial statements

Correct Answer:

   

Require that companies include a statement of cash flows in a complete set of financial statements

   
  • Question 24

5 out of 5 points

  
 

A company declared a $0.50 per share cash dividend. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. 

(A)

Retained Earnings

4,000

 

 

Common Dividends Payable

 

4,000

 

 

 

 

(B)

Common Dividends Payable

4,000

 

 

Cash

 

4,000

 

 

 

 

(C)

Retained Earnings

4,500

 

 

Common Dividends Payable

 

4,500

 

 

 

 

(D)

Common Dividends Payable

4,500

 

 

Cash

 

4,500

 

 

 

 

(E)

Retained Earnings

5,000

 

 

Common Dividends Payable

 

5,000

Answer

   

Selected Answer:

   

(A) above

Correct Answer:

   

(A) above

   
  • Question 25

5 out of 5 points

  
 

A decrease in the fair market value of a security that has not yet been realized through an actual sale of the security is called a(n):

Answer

   

Selected Answer:

   

Unrealized loss

Correct Answer:

   

Unrealized loss

   
  • Question 26

5 out of 5 points

  
 

Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

Answer

   

Selected Answer:

   

A credit to Cost of Goods Sold for $600

Correct Answer:

   

A credit to Cost of Goods Sold for $600

   
  • Question 27

5 out of 5 points

  
 

At acquisition, debt securities are:

Answer

   

Selected Answer:

   

Recorded at cost

Correct Answer:

   

Recorded at cost

   
  • Question 28

0 out of 5 points

  
 

Vision Tester, Inc., a manufacturer of optical glass, began operations on February 1 of the current year. During this time, the company produced 900,000 units and sold 800,000 units at a sales price of  $12 per unit. Cost information for this year is shown below.

Production costs

 

Direct materials

$.80 per unit

Direct labor

$.70 per unit

Variable overhead

$500,000 in total

Fixed overhead

$450,000 in total

Non-production costs

 

Variable selling and administrative

$30,000 in total

Fixed selling and administrative

$490,000 in total


Given this information, which of the following is true?

Answer

   

Selected Answer:

   

Net income under variable costing will exceed net income under absorption costing by $60,000.  

Correct Answer:

   

Net income under absorption costing will exceed net income under variable costing by $50,000.

   
  • Question 29

5 out of 5 points

  
 

Long-term investments can include:

Answer

   

Selected Answer:

   

All of the above

Correct Answer:

   

All of the above

   
  • Question 30

5 out of 5 points

  
 

The following company information is available:

Direct materials used for production

36,000 gallons

Standard quality for units produced

34,400 gallons

Standard cost per gallon of direct material

$6.00

Actual cost per gallon of direct material

$6.10


The direct materials quantity variance is:

Answer

   

Selected Answer:

   

$  9,600 unfavorable

Correct Answer:

   

$  9,600 unfavorable

   

 

 

 

 

 

 

Week 1: Overview of Financial Statements – Discussion


Accounting is a way of tracking transactions and organizing them into concise reports to be used by investors, principals of companies, or government agencies to be able to control the financial health of a company, family, or an individual. The book uses the example of a checkbook, which is apropos, as I don’t know of anyone who has never “bounced” a check due to careless recording of a transaction.  Accounting involves a level of trust, that the reporting is accurate and true.  Unfortunately, trust is not enough, and it must be standardized and regulated. Accounting is a way to maximize a finite resource (capital) and allocate it in the most efficient way.  

Accounting is the bookkeeping methods involved in making a financial record of business transactions. It is also the preparation of statements concerning the assets, liabilities, and operating results of a business.  Accounting is part of every day life for those who pay bills as well.  Honestly in the business community there has to be accounting in place to see where the business stands.

 

What is GAAP?  What is the purpose of GAAP?

 
 

GAAP are the rules that stop accountants from manipulating numbers and formulas to represent whatever it is they want the numbers to say rather than it being an actual reflection of the company’s performance. these principles are put in place to prevent the over valuation of company’s and overstating of profits that lead to CEO’s and other top executives receiving bonuses for goals that were not accomplished. These kind of activities done on a large enough scale can collapse a company. And if enough company’s that are large enough to form the impact start to go against the GAAPs it can have a tremendous impact on a countries economy as a whole. Or cripple a industry is the company has enough market share.


unfortunately there have been too many cases of companies not adhering to GAAP guidelines.  This hurts the investors, many of whom are employees of the companies, and the economy as a whole.  Public trust in the financial markets is also a casualty. This Time magazine article talks about how this not only affected Enron, but also the accounting firm Arthur Anderson, whose job it was to audit Enron’s books.

www.time.com/time/specials/packages/0,28757,2021097,00.html

RE: What is GAAP?

My Name

10/28/2011 3:40:30 PM

 

Definition: What is GAAP (generally accepted accounting principles)?

GAAP (pronounced “gap”) stands for “generally accepted accounting principles,” a collection of commonly followed accounting rules and standards for financial reporting.

GAAP specifications include definitions of concepts and principles, as well as industry-specific rules. The purpose of GAAP is to ensure that financial reporting is transparent and consistent from one organization to another.

There is no universal GAAP standard and the specifics vary from one geographic location or industry to another. In the United States, the Securities and Exchange Commission (SEC) mandates that financial reports adhere to GAAP requirements. The Financial Accounting Standards Board (FASB) stipulates GAAP overall and the Governmental Accounting Standards Board (GASB) stipulates GAAP for state and local government. Publicly traded companies must comply with both SEC and GAAP requirements.

Many countries around the world have adopted the International Financial Reporting Standards (IFRS). The SEC has released a proposed roadmap for conversion from GAAP to IFRS by 2014.


This information comes from www.techtarget.com.

GAAP includes hundreds of different components, but here are a few of the most important:

  • Inventory costs
  • Debt
  • Stockholders’ equity
  • Short-term investments
  • Long-term investments
  • Revenues and Sales
  • Taxation
  • Profits
  • Goodwill and other intangibles

This information comes from :www.stanford.edu/~mikefan/metrics/gaap.html

Basically GAAP is to assure that there is consistency in accounting practices.

 

1) Balance Sheet [We will begin with this statement]
2) Income Statement [We will begin this discussion on Wednesday morning]
3) Statement of Retained Earnings [We will begin this discussion on Thursday night]
4) Statement of Cash Flows. [We will begin this discussion on Friday night]
5) Return on Assets and Return on Equity. [We will begin this discussion on Saturday night]

Let’s begin by asking the question: What is the purpose of a Balance Sheet? What information does it provide?

Purpose of Balance Sheet

My Name

10/25/2011 8:59:49 PM

 

According to our text on page 14, the balance sheet reports assets and claims to assets at a specific point in time.  The lecture says that a balance sheet (statement of Financial position)  presents a company’s financial position (measured by its assets, liabilities, and owner’s equity).  The information that the balance sheet provides is a statement of financial conditions of a business. The balance sheet focuses on the financial position of a business.

 

 

 

According to the text on page 12, an income statement reports the success or failure of the company’s operations for a period of time.  This statement includes revenues and expenses.  Revenues are listed first minus the expenses which will equal the net income.

The information that is provided can predict future net income or net loss for a specific timeframe.

The statement of retained earnings shows the difference in the balance of retained earnings from the beginning of the year to the end.  The retained earnings will change based upon the net income, and the dividends declared by the company.  The retained earnings may be merged with the statement of stockholders equity, since the retained earnings belong to the stockholders.

 

The statement of cash flows reports on an organization’s operating activities during a defined period that highlights the operating, investing, and financing activities for the organization. It reports on the cash increases or decreases during the period for all three categories including both revenue and expenses.

The statement of cash flows is one of the three key financial statements organizations generate to share financial information for both internal and external audiences. The statement of cash flows provides information on how an organization increased its cash or capital and how much dividends were paid; if any.

The statement of cash flow provides insight into how a company obtained the money required operating the business (e.g. revenue from sales, issued stocks, borrowed money), how the company spent its cash, and what was the change in cash from one period to another.

Below is a URL link to a sample statement of cash flows that highlights items that may appear under each of the three activity categories (operating, investing, financing) in a statement of cash flows. To access the sample, please click on the URL below.

http://accountinginfo.com/study/fs/fs-cf-101.htm

 

According to:http://www.investopedia.com/terms/r/returnonassets.asp#axzz1c7Ee1JSH; Return on Assets is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company’s annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as “return on investment”.

The formula for return on assets is:

 

Investopedia explains Return On Assets – ROA
ROA tells you what earnings were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent on the industry. This is why when using ROA as a comparative measure, it is best to compare it against a company’s previous ROA numbers or the ROA of a similar company. 

The assets of the company are comprised of both debt and equity. Both of these types of financing are used to fund the operations of the company. The ROA figure gives investors an idea of how effectively the company is converting the money it has to invest into net income. The higher the ROA number, the better, because the company is earning more money on less investment. For example, if one company has a net income of $1 million and total assets of $5 million, its ROA is 20%; however, if another company earns the same amount but has total assets of $10 million, it has an ROA of 10%. Based on this example, the first company is better at converting its investment into profit. When you really think about it, management’s most important job is to make wise choices in allocating its resources. Anybody can make a profit by throwing a ton of money at a problem, but very few managers excel at making large profits with little investment.

Read more: http://www.investopedia.com/terms/r/returnonassets.asp#ixzz1cCzRrYCH


Return on assets is an indicator of how profitable a company is, and is a comparison with companies in the same industry.   ROA measurements include all of a business’s assets.



 

 

 

 

 

(TCO A, B, C) Which of the following statements concerning users of accounting information is incorrect?

 

Student Answer:

 

Management is considered an internal user.

   

Present and prospective creditors are considered external users.

   

Regulatory authorities such as the SEC are considered internal users.

   

Taxing authorities are considered external users.

 

Instructor Explanation:

Chapter 1 page 7

 
 

Points Received:

3 of 3

 

Comments:

 

ACCT 504 Wk_4 Midterm 30 Multiple Chioce and 2 Explainatory

2.

Question :

(TCO C) Issuing shares of stock in exchange for cash is an example of a(n):

 

Student Answer:

 

delivering activity.

   

investing activity.

   

financing activity.

   

operating activity.

 

Instructor Explanation:

Chapter 1 page 9

 
 

Points Received:

3 of 3

 

Comments:

 

3.

Question :

(TCO C) Which activities involve putting the resources of the business into action to generate a profit?

 

Student Answer:

 

Delivering

   

Financing

   

Investing

   

Operating

 

Instructor Explanation:

Chapter 1 page 10

 
 

Points Received:

0 of 3

 

Comments:

 

4.

Question :

(TCO A) The cost of assets consumed or services used is also known as:

 

Student Answer:

 

a revenue.

   

an expense.

   

a liability.

   

an asset.

 

Instructor Explanation:

Chapter 1 page 10

 
 

Points Received:

0 of 3

 

Comments:

 

5.

Question :

(TCO C) Edwards Company recorded the following cash transactions for the year:

Paid $45,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $5,000 for utilities.
Paid $2,000 in dividends.
Collected $75,000 from customers.

What was Edwards’ net cash provided by operating activities?

 

Student Answer:

 

$25,000

   

$5,000

   

$30,000

   

$23,000

 

Instructor Explanation:

$75,000 – 45,000 – 5,000 = $25,000
Chapter 1 page 10

 
 

Points Received:

0 of 3

 

Comments:

 

6.

Question :

(TCO A) On a classified balance sheet, prepaid insurance is classified as:

 

Student Answer:

 

an intangible asset.

   

property, plant, and equipment.

   

a current asset.

   

a long-term investment.

 

Instructor Explanation:

Chapter 2 page 49

 
 

Points Received:

3 of 3

 

Comments:

 

7.

Question :

(TCO A) An intangible asset:

 

Student Answer:

 

may have the capacity to earn revenue for its owner.

   

is worthless because it has no physical substance.

   

is converted into a tangible asset during the operating cycle.

   

cannot be reported on the balance sheet because it lacks physical substance.

 

Instructor Explanation:

Chapter 2 page 51

 
 

Points Received:

3 of 3

 

Comments:

 

8.

Question :

(TCO A) These are selected account balances on December 31, 2007.

-Land (location of the corporation’s office building) $200,000
-Land (held for future use) 300,000
-Corporate Office Building 1,200,000
-Inventory 400,000
-Equipment 900,000
-Office Furniture 200,000
-Accumulated Depreciation 600,000

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet?

 

Student Answer:

 

$1,900,000

   

$2,600,000

   

$2,200,000

   

$3,200,000

 

Instructor Explanation:

Gross cost of plant assets utilized – accumulated depreciation Chapter 2 page 51

 
 

Points Received:

3 of 3

 

Comments:

 

9.

Question :

(TCO B) For 2010, Landford Corporation reported net income of $30,000; net sales $400,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?

 

Student Answer:

 

$4.66

   

$0.20

   

$66.67

   

$5.00

 

Instructor Explanation:

$30,000/6,000 = $5.00
Chapter 2 page 56

 
 

Points Received:

3 of 3

 

Comments:

 

10.

Question :

(TCO B) Liondale Corporation had beginning retained earnings of $2,292,000 and ending retained earnings of $2,499,000. During the year, they issued common stock totaling $141,000. There were no dividends issued. What was their net income for the year?

 

Student Answer:

 

$207,000

   

$ 66,000

   

$348,000

   

$273,000

 

Instructor Explanation:

$2,499,000 – $2,292,000 = $207,000
Chapter 2 page 57

 
 

Points Received:

3 of 3

 

Comments:

 

11.

Question :

(TCO D) On March 1, 2010, Dillon Company hires a new employee who will start the work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?

 

Student Answer:

 

Yes, the company is now obligated to pay the employee, thus that event must be recorded on March 6.

   

No, hiring an employee is an important event; however, it is not an economic event that should be recorded on March 6.

   

Yes, failure to record the event on March 6 would cause the financial statements to be misleading.

   

No, the journal entry should be made on March 1 which is the date of hiring.

 

Instructor Explanation:

Chapter 3 page 108

 
 

Points Received:

3 of 3

 

Comments:

 

12.

Question :

(TCO D) Which one of the following is not a part of an account?

 

Student Answer:

 

Credit side

   

Trial balance

   

Debit side

   

Title

 

Instructor Explanation:

Chapter 3 page 111

 
 

Points Received:

3 of 3

 

Comments:

 

13.

Question :

(TCO D) Which of the following describes the classification and normal balance of the retained earnings account?

 

Student Answer:

 

Asset, debit

   

Stockholders’ equity, credit

   

Revenues, credit

   

Expense, debit

 

Instructor Explanation:

Chapter 3 page 116

 
 

Points Received:

3 of 3

 

Comments:

 

14.

Question :

(TCO D) A debit is the normal balance for which account listed below?

 

Student Answer:

 

Furniture

   

Accounts payable

   

Rent revenue

   

Capital stock issued

 

Instructor Explanation:

Chapter 3 page 116

 
 

Points Received:

3 of 3

 

Comments:

 

15.

Question :

(TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

 

Student Answer:

 

Prepaid insurance and dividends

   

Dividends and medical fees earned

   

Interest payable and common stock

   

Advertising expense and land

 

Instructor Explanation:

Chapter 3 page 116

 
 

Points Received:

0 of 3

 

Comments:

 

Page:

123

 

* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)

 

(TCO E) An accounting time period that is one year in length is called:

 

Student Answer:

 

a fiscal year.

   

an interim period.

   

the time period assumption.

   

a reporting period.

 

Instructor Explanation:

Chapter 4 page 164

 
 

Points Received:

3 of 3

 

Comments:

 

2.

Question :

(TCO E) In a merchandising business, revenue may be considered earned when:

 

Student Answer:

 

cash is received from the customers

   

a product is delivered to a customer.

   

an order is received from a customer

   

a customer shows interest in a product

 

Instructor Explanation:

Chapter 4 page 164

 
 

Points Received:

0 of 3

 

Comments:

 

3.

Question :

(TCO E) On April 1, 2010, M Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years and will have no residual value. M records depreciation expense of $9,000 for the calendar year ending December 31, 2010. Which accounting principle has been violated?

 

Student Answer:

 

Revenue recognition principle

   

No principle has been violated because M has correctly matched the expense for using the equipment to the period during which it generated revenue.

   

Matching principle because the cash was paid in 2007 and should be expensed in 2007.

   

Cost principle

 

Instructor Explanation:

Chapter 4 page 171

 
 

Points Received:

3 of 3

 

Comments:

 

4.

Question :

(TCO E) The following is selected information from M Corporation for the fiscal year ending October 31, 2010:

Cash received from customers $300,000
Revenue earned 350,000
Cash paid for expenses 170,000
Expenses incurred 200,000

Based on the accrual basis of accounting, what is M Corporation’s net income for the year ending October 31, 2010?

 

Student Answer:

 

$140,000

   

$114,000

   

$82,000

   

$150,000

 

Instructor Explanation:

$350,000 – 200,000 = $150,000
Chapter 4 pages 166-167

 
 

Points Received:

3 of 3

 

Comments:

 

5.

Question :

(TCO E) Adjusting entries are made to ensure that:

 

Student Answer:

 

expense are recognized in the period in which they are incurred.

   

revenues are recorded in the period in which they are earned.

   

balance sheet and income statement accounts have correct balances at the end of an accounting period.

   

All of the above

 

Instructor Explanation:

Chapter 4 pages 167-168

 
 

Points Received:

3 of 3

 

Comments:

 

6.

Question :

(TCO A, B) Which of the following expressions is incorrect?

 

Student Answer:

 

Gross profit – operating expenses = net income

   

Sales – cost of goods sold – operating expenses = net income

   

Net income + operating expenses = gross profit

   

Operating expenses – cost of goods sold = gross profit

 

Instructor Explanation:

Chapter 5 page 228

 
 

Points Received:

0 of 3

 

Comments:

 

7.

Question :

(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $3,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

 

Student Answer:

 

$2,940

   

$2,760

   

$2,700

   

$3,000

 

Instructor Explanation:

$3,000 x 98% = $2,940
Chapter 5 page 234

 
 

Points Received:

0 of 3

 

Comments:

 

8.

Question :

(TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.

As a result of these events, the company’s merchandise inventory:

 

Student Answer:

 

increased by $19,208.

   

increased by $19,700.

   

increased by $19,306.

   

increased by $19,308.

 

Instructor Explanation:

($20,000 – $400) x 98% = $19,208 + $100 for freight = $19,308 Chapter 5 page 235

 
 

Points Received:

0 of 3

 

Comments:

 

9.

Question :

(TCO A) The factor which determines whether or not goods should be included in a physical count of inventory is:

 

Student Answer:

 

physical possession.

   

legal title.

   

management’s judgment.

   

whether or not the purchase price has been paid.

 

Instructor Explanation:

Chapter 6 page 284

 
 

Points Received:

0 of 3

 

Comments:

 

10.

Question :

(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

 

Student Answer:

 

Goods in transit to Barnes, FOB destination

   

Goods that Barnes is holding on consignment for Parker Company

   

Goods in transit that Barnes has sold to Smith Company, FOB shipping point

   

Goods that Barnes is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

 

Instructor Explanation:

Chapter 6 pages 284-285

 
 

Points Received:

3 of 3

 

Comments:

 

11.

Question :

(TCO A) A problem with the specific identification method is that:

 

Student Answer:

 

inventories can be reported at actual costs.

   

management can manipulate income.

   

matching is not achieved.

   

the lower of cost or market basis cannot be applied

 

Instructor Explanation:

Chapter 6 page 286

 
 

Points Received:

(not graded)

 

Comments:

 

12.

Question :

(TCO A) Which of the following statements is true regarding inventory cost flow assumptions?

 

Student Answer:

 

A company may use more than one cost-flow assumption concurrently for different product lines.

   

A company must comply with the method specified by industry standards.

   

A company must use the same method for domestic and foreign operations.

   

A company may never change its inventory costing method once it has chosen a method.

 

Instructor Explanation:

Chapter 6 page 286

 
 

Points Received:

0 of 3

 

Comments:

 

13.

Question :

(TCO A) In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the:

 

Student Answer:

 

FIFO method.

   

LIFO method.

   

average cost method.

   

tax method.

 

Instructor Explanation:

Chapter 6 page 288

 
 

Points Received:

0 of 3

 

Comments:

 

14.

Question :

(TCO B) Which of the following is a true statement about inventory systems?

 

Student Answer:

 

Periodic inventory systems require more detailed inventory records.

   

Perpetual inventory systems require more detailed inventory records.

   

A periodic system requires cost of goods sold be determined after each sale.

   

A perpetual system determines cost of goods sold only at the end of the accounting period.

 

Instructor Explanation:

Chapter 5 page 230

 
 

Points Received:

3 of 3

 

Comments:

 

15.

Question :

(TCO B) A merchandiser that sells directly to consumers is:

 

Student Answer:

 

a retailer.

   

a wholesaler.

   

a broker.

   

a service enterprise.

 

Instructor Explanation:

Chapter 5 page 228

 
 

Points Received:

3 of 3

 

Comments:

 

Page:

123

   

 

* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)

TCO D) A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders’ equity) and the income statement (revenues and expenses).

 

Student Answer:

 

The rules of debits and credits are: Assets Debits increase Credits increase Liabilities and Stockholders’ Equity Credits increase Debits decrease The major sections of the balance sheet are: Assets Total assets Liabiliities and Stockholders’ Equity Total liabilities and stockholders’ equty An example would be: Ladys’ Store Balance Sheet January 31, 2012 Assets Cash 15200 Accunts receivable 200 Office, equipment 4950 Advertising supplies 1000 Prepaid insurance 550 Total assets 21910 Liabilites and Stockholders’ Equity Liabilites Notes Payable 5000 Accounts Payable 2500 Salaries payable 1200 Unearned Revenue 800 Interest payable 50 Total liabilties 9550 Stockholders’ equity Common stock 10000 Retained earnings 2360 Total stockholders equity 12360 Total liabilities and stockholders’ equity 21910 Ladys’ Store Income Statement For the Month Ended January 31, 2012 Revenues Service Revenue 10600 Expenses Salaries expense 5200 Supplies expense 1500 Rent expense 900 Insurance expense 50 Interest Expense 50 Depreciation expense 40 Total expenses 7740 Net income 2860

 

Instructor Explanation:

Accounting is based on the double-entry system. This system records the dual effect of each transaction in the appropriate accounts, thus keeping the accounting equation in balance. Each transaction is analyzed and recorded using this dual effect system. If you do not have this basic understanding, the remaining chapters will become increasingly more difficult. You will not have the ability to make journal entries for the many new topics in these upcoming chapters.
Pages 111 through 116

 
 

Points Received:

22 of 25

 

Comments:

-3 you did not discuss the normal balance for revenue or expenses

2.

Question :

(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:

Cost of goods sold $ 710,000
Net sales 1,279,000
Administrative expenses 239,000
Interest expense 68,000
Dividends paid 38,000
Selling expenses 45,000

Instructions:

  1. Prepare an income statement for the year ended December 31, 2010.
  2. Compute the profit margin ratio and gross profit rate. Caltor Company s assets at the beginning of the year were $770,000 and were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations and explain your findings.
 

Student Answer:

 

Caltor Company Income Statement For the month Ended December 31, 2010 Revenues Sales 1279000 Cost of Goods Sold 710000 Gross Profit 1989000 Operating Expenses Administrative expense 239000 Selling expense 45000 Interest expense 5000

 

Instructor Explanation:

1. CALTOR COMPANY
Income Statement
For the Year Ended December 31, 2010

Revenues

  
   

Net sales

 

$1,279,000

Cost of Goods Sold

 

710,000

Gross Profit

 

$569,000

   

Expenses:

  

Selling expenses

45,000

 

Administrative expenses

239,000

 

Interest expense

68,000

 

Total expenses

 

$352,000

Net income

$217,000

 



2. Profit margin ratio: $217,000 ÷ $1,279,000 = 16.9%
Gross profit rate: $569,000 / $1,279,000 = 44.49%
Page 235 and pages 241 through 244

 
 

Points Received:

18 of 35

 

Comments:

-7 you need to subtract cost of goods sold and you did not finish the Net Income calculation -10 you did not calculate either ratio

Page:

123

   

 

* Times are displayed in (GMT-07:00) Mountain Time (US & Canada)

 

Grading Summary

These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the “Details” section below.

Date Taken:

 

Time Spent:

1 h , 41 min , 28 secs

Points Received:

149 / 150

Question Type:

# Of Questions:

# Correct:

Multiple Choice

30

30

Essay

2

N/A

 

Grade Details – All Questions

 

Page:  

1  2  3 

 

 1.

Question :

(TCO A, B, C) External users want answers to all of the following questions except:

 

Student Answer:

 

 Is the company earning satisfactory income?

 

  

 Will the company be able to pay its debts as they come due?

 

  

 Did the company use a budget to plan its expenses?

 

  

 How does the company compare in profitability with competitors?

 

Instructor Explanation:

Chapter 1 page 6

 

 

Points Received:

3 of 3

 

Comments:

 

 

 2.

Question :

(TCO C) Borrowing money is an example of a(n):

 

Student Answer:

 

 delivering activity.

 

  

 financing activity.

 

  

 investing activity.

 

  

 operating activity.

 

Instructor Explanation:

Chapter 1 page 9

 

 

Points Received:

3 of 3

 

Comments:

 

 

 3.

Question :

(TCO C) Buying and selling products are examples of:

 

Student Answer:

 

 operating activities.

 

  

 investing activities.

 

  

 financing activities.

 

  

 delivering activities.

 

Instructor Explanation:

Chapter 1 page 10

 

 

Points Received:

3 of 3

 

Comments:

 

 

 4.

Question :

(TCO A) Resources owned by a business are referred to as:

 

Student Answer:

 

 stockholders’ equity.

 

  

 liabilities.

 

  

 assets.

 

  

 revenues.

 

Instructor Explanation:

Chapter 1 page 9

 

 

Points Received:

3 of 3

 

Comments:

 

 

 5.

Question :

(TCO C) Jamie Company recorded the following cash transactions for the year: 

Paid $70,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $6,000 for utilities.
Paid $7,000 in dividends.
Collected $130,000 from customers.

What was Jamie’s net cash provided by operating activities?

 

Student Answer:

 

 $47,000

 

  

 $54,000

 

  

 $27,000

 

  

 $33,000

 

Instructor Explanation:

$130,000 – 70,000 – 6,000 = $54,000 
Chapter 1 page 10

 

 

Points Received:

3 of 3

 

Comments:

 

 

 6.

Question :

(TCO A) In a classified balance sheet, assets are usually classified as:

 

Student Answer:

 

 current assets; long-term assets; property, plant, and equipment; and tangible assets.

 

  

 current assets; long-term investments; property, plant, and equipment; and common stocks.

 

  

 current assets; long-term investments; and tangible assets.

 

  

 current assets; long-term investments; property, plant, and equipment; and intangible assets.

 

Instructor Explanation:

Chapter 2 page 49

 

 

Points Received:

3 of 3

 

Comments:

 

 

 7.

Question :

(TCO A) An intangible asset:

 

Student Answer:

 

 may have the capacity to earn revenue for its owner.

 

  

 is worthless because it has no physical substance.

 

  

 is converted into a tangible asset during the operating cycle.

 

  

 cannot be reported on the balance sheet because it lacks physical substance.

 

Instructor Explanation:

Chapter 2 page 51

 

 

Points Received:

3 of 3

 

Comments:

 

 

 8.

Question :

(TCO A) These are selected account balances on December 31, 2010.

-Land (location of the corporation’s office building) $50,000
-Land (held for future use) 75,000
-Corporate Office Building 300,000
-Inventory 100,000
-Equipment 225,000
-Office Furniture 50,000
-Accumulated Depreciation 150,000

What is the total NET amount of property, plant, and equipment that will appear on the balance sheet?

 

Student Answer:

 

 $650,000

 

  

 $550,000

 

  

 $475,000

 

  

 $800,000

 

Instructor Explanation:

Gross cost of plant assets utilized – accumulated depreciation 
Chapter 2 page 51

 

 

Points Received:

3 of 3

 

Comments:

 

 

 9.

Question :

(TCO B) For 2010, Ford Corporation reported net income of $15,000; net sales $200,000; and average share outstanding 6,000. There were no preferred stock dividends. What was the 2010 earnings per share?

 

Student Answer:

 

 $2.33

 

  

 $0.10

 

  

 $2.50

 

  

 $33.34

 

Instructor Explanation:

$15,000/6,000 = $2.50 
Chapter 2 page 56

 

 

Points Received:

3 of 3

 

Comments:

 

 

 10.

Question :

(TCO B) Morten Corporation had beginning retained earnings of $764,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. There were no dividends issued. What was their net income for the year?

 

Student Answer:

 

 $69,000

 

  

 $22,000

 

  

 $116,000

 

  

 $91,000

 

Instructor Explanation:

$833,000 – $764,000 = $69,000
Chapter 2 page 57

 

 

Points Received:

3 of 3

 

Comments:

 

 

 11.

Question :

(TCO D) Is the purchase of equipment treated as an expense at the time of purchase? Why or why not?

 

Student Answer:

 

 No, GAAP requires that 10% of the cost be expensed each year. This minimizes attempts to mislead financial statement users.

 

  

 Yes, the matching principle requires that the cost be expensed in the period of purchase.

 

  

 No, the cost needs to be allocated to the years of expected use.

 

  

 Yes, the actual life of the asset is not known, thus there is no acceptable way to allocate the cost.

 

Instructor Explanation:

Chapter 3 page 105

 

 

Points Received:

3 of 3

 

Comments:

 

 

 12.

Question :

(TCO D) The left side of an account is:

 

Student Answer:

 

 blank.

 

  

 a description of the account.

 

  

 the debit side.

 

  

 the balance of the account.

 

Instructor Explanation:

Chapter 3 page 111

 

 

Points Received:

3 of 3

 

Comments:

 

 

 13.

Question :

(TCO D) A credit is not the normal balance for which account listed below?

 

Student Answer:

 

 Common Stock account

 

  

 Revenue account

 

  

 Liability account

 

  

 Dividends account

 

Instructor Explanation:

Chapter 3 page 116

 

 

Points Received:

3 of 3

 

Comments:

 

 

 14.

Question :

(TCO D) A debit is not the normal balance for which account listed below?

 

Student Answer:

 

 Dividends

 

  

 Cash

 

  

 Accounts Receivable

 

  

 Service Revenue

 

Instructor Explanation:

Chapter 3 page 116

 

 

Points Received:

3 of 3

 

Comments:

 

 

 15.

Question :

(TCO D) Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?

 

Student Answer:

 

 Dividends payable and rent expense

 

  

 Repair expense and notes payable

 

  

 Prepaid insurance and advertising expense

 

  

 Service revenues and equipment

 

Instructor Explanation:

Chapter 3 page 116

 

 

Points Received:

3 of 3

 

Comments:

 

 

Page:  

1  2  3 

 

 * Times are displayed in (GMT-07:00) Mountain Time (US & Canada)

 

 

 

Grading Summary

These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the “Details” section below.

Date Taken:

 

Time Spent:

1 h , 41 min , 28 secs

Points Received:

149 / 150

Question Type:

# Of Questions:

# Correct:

Multiple Choice

30

30

Essay

2

N/A

 

Grade Details – All Questions

 

Page:  

1  2  3 

 

 1.

Question :

(TCO E) The time period assumption states that:

 

Student Answer:

 

 a transaction can only affect one period of time.

 

  

 estimates should not be made if a transaction affects more than one time period.

 

  

 adjustments to the enterprise’s accounts can only be made in the time period when the business terminates its operations.

 

  

 the economic life of a business can be divided into artificial time periods.

 

Instructor Explanation:

Chapter 4 page 164

 

 

Points Received:

3 of 3

 

Comments:

 

 

 2.

Question :

(TCO E) The matching principle matches:

 

Student Answer:

 

 customers with businesses.

 

  

 expenses with revenues.

 

  

 assets with liabilities.

 

  

 creditors with businesses.

 

Instructor Explanation:

Chapter 4 page 165

 

 

Points Received:

3 of 3

 

Comments:

 

 

 3.

Question :

(TCO E) Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?

 

Student Answer:

 

 Due from Employees

 

  

 Due to Student

 

  

 Wages Payable

 

  

 Wages Expense

 

Instructor Explanation:

Chapter 4 page 164

 

 

Points Received:

3 of 3

 

Comments:

 

 

 4.

Question :

(TCO E) The following is selected information from J Corporation for the fiscal year ending October 31, 2010. 

Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Expenses incurred 50,000

Based on the accrual basis of accounting, what is J Corporation’s net income for the year ending October 31, 2007?

 

Student Answer:

 

 $28,500

 

  

 $33,500

 

  

 $20,500

 

  

 $37,500

 

Instructor Explanation:

$87,500 – 50,000 = $37,500 
Chapter 4 pages 166-167

 

 

Points Received:

3 of 3

 

Comments:

 

 

 5.

Question :

(TCO E) The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:

 

Student Answer:

 

 contra asset.

 

  

 prepayment.

 

  

 asset.

 

  

 accrual.

 

Instructor Explanation:

Chapter 4 pages 166-167

 

 

Points Received:

3 of 3

 

Comments:

 

 

 6.

Question :

(TCO A, B) Which of the following expressions is incorrect?

 

Student Answer:

 

 Gross profit – operating expenses = net income

 

  

 Sales – cost of goods sold – operating expenses = net income

 

  

 Net income + operating expenses = gross profit

 

  

 Operating expenses – cost of goods sold = gross profit

 

Instructor Explanation:

Chapter 5 page 228

 

 

Points Received:

3 of 3

 

Comments:

 

 

 7.

Question :

(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $6,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?

 

Student Answer:

 

 $6,000

 

  

 $5,880

 

  

 $5,400

 

  

 $5,520

 

Instructor Explanation:

$6,000 x 98% = $5,880
Chapter 5 page 234

 

 

Points Received:

3 of 3

 

Comments:

 

 

 8.

Question :

(TCO A, B) Jake’s Market recorded the following events involving a recent purchase of merchandise: 

Received goods for $20,000, terms 2/10, n/30. 
Returned $400 of the shipment for credit. 
Paid $100 freight on the shipment. 
Paid the invoice within the discount period.

As a result of these events, the company’s merchandise inventory:

 

Student Answer:

 

 increased by $19,208.

 

  

 increased by $19,700.

 

  

 increased by $19,306.

 

  

 increased by $19,308.

 

Instructor Explanation:

($20,000 – $400) x 98% = $19,208 + $100 for freight = $19,308 Chapter 5 page 235

 

 

Points Received:

3 of 3

 

Comments:

 

 

 9.

Question :

(TCO A) The Freight-in account:

 

Student Answer:

 

 increases the cost of merchandise purchased.

 

  

 is contra to the Purchases account.

 

  

 is a permanent account.

 

  

 has a normal credit balance.

 

Instructor Explanation:

Chapter 5 page 235

 

 

Points Received:

3 of 3

 

Comments:

 

 

 10.

Question :

(TCO A) Barnes Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

 

Student Answer:

 

 Goods in transit to Barnes, FOB destination

 

  

 Goods that Barnes is holding on consignment for Parker Company

 

  

 Goods in transit that Barnes has sold to Smith Company, FOB shipping point

 

  

 Goods that Barnes is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

 

Instructor Explanation:

Chapter 6 pages 284-285

 

 

Points Received:

3 of 3

 

Comments:

 

 

 11.

Question :

(TCO A) Of the following companies, which one would not likely employ the specific identification method for inventory costing?

 

Student Answer:

 

 Music store specializing in piano sales

 

  

 Custom Jewelry store

 

  

 Antique shop

 

  

 Hardware store

 

Instructor Explanation:

Chapter 6 page 286

 

 

Points Received:

3 of 3

 

Comments:

 

 

 12.

Question :

(TCO A) Which of the following statements is correct with respect to inventories?

 

Student Answer:

 

 The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

 

  

 It is generally good business management to sell the most recently acquired goods first.

 

  

 Under FIFO, the ending inventory is based on the latest units purchased.

 

  

 FIFO seldom coincides with the actual physical flow of inventory.

 

Instructor Explanation:

chapter 6 page 288

 

 

Points Received:

3 of 3

 

Comments:

 

 

 13.

Question :

(TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

 

Student Answer:

 

 Average cost method

 

  

 LIFO method

 

  

 FIFO method

 

  

 Need more information to answer

 

Instructor Explanation:

Chapter 6 page 288

 

 

Points Received:

3 of 3

 

Comments:

 

 

 14.

Question :

(TCO B) Which of the following is a true statement about inventory systems?

 

Student Answer:

 

 Periodic inventory systems require more detailed inventory records.

 

  

 Perpetual inventory systems require more detailed inventory records.

 

  

 A periodic system requires cost of goods sold be determined after each sale.

 

  

 A perpetual system determines cost of goods sold only at the end of the accounting period.

 

Instructor Explanation:

Chapter 5 page 230

 

 

Points Received:

3 of 3

 

Comments:

 

 

 15.

Question :

(TCO B) Two categories of expenses in merchandising companies are:

 

Student Answer:

 

 cost of goods sold and financing expenses.

 

  

 operating expenses and financing expenses.

 

  

 cost of goods sold and operating expenses.

 

  

 sales and cost of goods sold.

 

Instructor Explanation:

Chapter 5 page 228

 

 

Points Received:

3 of 3

 

Comments:

 

 

Page:  

1  2  3 

 

 

Grading Summary

These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the “Details” section below.

Date Taken:

 

Time Spent:

1 h , 41 min , 28 secs

Points Received:

149 / 150

Question Type:

# Of Questions:

# Correct:

Multiple Choice

30

30

Essay

2

N/A

 

Grade Details – All Questions

 

Page:  

1  2  3 

 

 1.

Question :

(TCO D) A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits.
Explain the rules of debits and credits in a way that will help him understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders’ equity) and the income statement (revenues and expenses).

 

Student Answer:

 

Accounting is based on two entry system. Its a system of records for the two entry system. All transactions are recorded in the two envy system to create balance. the account have a normal debits, assets, and liabilities.

 

Instructor Explanation:

Accounting is based on the double-entry system. This system records the dual effect of each transaction in the appropriate accounts, thus keeping the accounting equation in balance. Each transaction is analyzed and recorded using this dual effect system. If you do not have this basic understanding, the remaining chapters will become increasingly more difficult. You will not have the ability to make journal entries for the many new topics in these upcoming chapters.
Pages 111 through 116

 

 

Points Received:

24 of 25

 

Comments:

Ok

 

 2.

Question :

(TCOs B & E) The Caltor Company gathered the following condensed data for the year ended December 31, 2010:

Cost of goods sold                            $ 710,000
Net sales                                         1,279,000
Administrative expenses                      239,000
Interest expense                                   68,000
Dividends paid                                      38,000
Selling expenses                                  45,000

Instructions:

  1. Prepare a multiple-step income statement for the year ended December 31, 2010.
  2. Compute the profit margin ratio and gross profit rate. Caltor Company s assets at the beginning of the year were $770,000 and were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations and explain your findings.

 

Student Answer:

 

1) CALTOR COMPANY Income Statement For the Year Ended December 31, 2007 Revenues Net sales…………………………………………….$1,279,000 Cost of Goods Sold………………………………………………….710,000 Gross Profit…………………………………………………………..$569,000 Expenses: Selling expenses…………………..45,000 Administrative expenses…………………….239,000 Interest expense…………………………………68,000 ———– Total Expenses……………………………………………………..$352,000 ———— Net Income………………………………………………………….$217,000 ========== 2) Profit margin ratio: $217,000 / $1,279,000 = 16.9% Gross profit rate: $569,000 / $1,279,000 = 44.49%

 

Instructor Explanation:

1. CALTOR COMPANY
Income Statement
For the Year Ended December 31, 2010 

 Revenues

 

 

 

 

 

 Net sales

 

$1,279,000

 Cost of Goods Sold

 

 710,000

 Gross Profit 

 

 $569,000

 

 

 

 Expenses:

 

 

 Selling expenses 

 45,000

 

 Administrative expenses 

 239,000

 

 Interest expense 

 68,000

 

 Total expenses

 

 $352,000

 Net income

 $217,000

 



2.  Profit margin ratio: $217,000 ÷ $1,279,000 = 16.9%
Gross profit rate: $569,000 / $1,279,000 = 44.49%
Page 235 and pages 241 through 244

 

 

Points Received:

35 of 35

 

Comments:

Ok

 

Page:  

1  2  3 

 

How does general systems theory influence human services delivery?

 

 

Should a pregnant woman who consumes illegal drugs that damage her child be punished as a criminal? Explain your reasoning with references to support your thoughts and ideas.

A pregnant woman who consumes illegal drugs that harm the child in her womb should be considered a criminal. In particular, women who do these, dependent on an assessment regarding the level of their addiction, should be made to serve time in jail with their other children taken away from them as well as attend a mentoring program which will include drug rehabilitation and parenting classes.

Although the unborn child should be the first concern of a mother, the drugs ruin the mind thus the welfare of the child becomes second place to the urges of the body for the illegal substances. It may seem that the mother is helpless in controlling herself but this does not excuse her from her role of nurturing and caring for her child. However, I do believe that the mothers who commit this should not be placed at the same category as sex offenders and other people with permanent criminal background.

There is still a need though for the women to serve time in jail. Pregnant women take extra care in consuming medications as they may bring negative effects to their children. What more illegal drugs? These women, knowingly or not, bring problems like birth defects, learning and behavioral problems, seizures and malnutrition to the helpless children. Going to jail will surely open the eyes of these women of their grave responsibility for the life of their children.

The women should also take part in a mentoring program which will aim at, not only their mental health, but also physical and emotional health. This opportunity will grant the women a chance to recover and turn their life around. The mentoring program can also open the eyes of these women to the fact that their consumption of drugs such as marijuana, cocaine, ecstasy, PCP, LSD, amphetamines, and heroin can result in miscarriage, premature labor or newborn withdrawal symptoms. By participating in such a program, where they give their consent and knowingly submit themselves to observation, the women can actively work at bettering themselves for the sake of their children.


http://www.adoptionservices.org/pregnancy/pregnancy_alcohol_drugs.htm

Even when already out of the jail, continuous monitoring of the mothers for a certain period of time is needed as a relapse is always a possibility. It is according to our nature as humans that we make mistakes and oftentimes, even after being incarcerated, these women may continue to hurt themselves and their children by taking up the habit again. Usually, without close monitoring, due to their troubled history or warped emotions, they easily become addicted again. In such cases, where even family members and friends cannot stop them, forced rehabilitation is necessary.

Mistakes will be a part of life but they must not be committed again and again. Women found to consume illegal drugs should already receive a ‘slap on the hand’ at the first instance. Repeated illegal actions should merit a harsher punishment – going to jail can already serve as the much needed wake-up call. Unfortunately, many who go in-and-out of jail never learn.

Without any contention, illegal drugs are substances that must not be taken lightly. The very fact that one harms another person’s life – in this case, a helpless and innocent child – warrants not only a mentoring program (which may not be taken seriously) but also an accompanying time in jail.

 

 

 

 

 

 

How does general systems theory influence human services delivery?

 

The general systems theory has influenced human services delivery positively. It has given social workers the opportunity to get substantial information in order to effectively address the needs of their clients.

 

In the past, the clients were just seen as people to fix with nothing to contribute in solving the problem. With the general systems theory, the professional does not merely use his own stored knowledge; instead, he observes the client and the immediate society he moves in. Through observation, the professional is able look deeply into who the client is and understands what he is going through. This makes it easy to correctly diagnose the problem and find a solution.

 

Additionally, the client ceases to be the sole target of many criticisms and blame for the condition he is in. The causes of the problems are now sought in the external environment. The solutions as well can be deduced by looking at the environment. The theory, in this way, actually makes one respect the rights and the dignity of the human person.

Lastly, the theory has contributed to the expansion of social or human delivery services. As more information about the economy and culture, among many others, is learned, new situations can be addressed. By focusing on the condition that the client is in, the professional is able to see the difference in seemingly similar situations. For example, two poor communities have the same problems: lack of food, water, as well as health facilities. However, the factors that contribute to this cannot be more than different. Using the general systems theory precisely gives social workers the tools needed to effectively handle unique situations to address the problems.

The bio-psycho-social aspects of human attitude are composed of social, biological and physiological attributes that describe human attitude. The biological aspects that can be described by attitude are heredity and genetics. Genetics is largely explained by DNA. Intelligence is explained through genes. Another attribute of bio-psycho-social aspects is the social dimension. We must acknowledge the effect in which the family and culture has on human attitude. The bio-psychosocial ideals are actually beneficial in explaining attitude for it analyzes a few of the things in which humans are not capable of controlling and few of the things in which they are capable of. There is a boundary to this method for it does not recognize the moral feature of the human attitude. In the ideals, concerns like freedom, love, etc. may not be analyzed.

The strengths perspective is a mechanism in which is beneficial in raising responsiveness to human differences and supports individuals to comprehend other people on different cultural and ethnic circumstances. Various groups of people translate eye-contact, non-verbal communications and hand motions in various types. This is the reason why professionals are required to master cross-culture communications for it aids in mastering communications on individuals, families, communities of people and groups with ease. This needs accurate cognition, learning regarding an individual’s culture, listening capabilities, traditions and beliefs.

Cultural capability is a set of characteristics, attitudes, capabilities and protocols in which supports institutions and personnel to perform efficiently when handling people with cross culture. Cultural capability also specifically concentrates on population concerns like cultural values, health connected advantages, treatment effectiveness and prevalence of disease. A culturally capable provider can see the diversity between an unsuccessful individual and a successful one. Language diversity can influence the majority and minority groups. Social workers that are experienced in ethnic diversity care can relate to people to a number of social accommodations. For example, social workers that aid and support adoptive parents to comprehend their child’s ethnicity, standards and methods to maintain and cultivate their child’s heritage in their lives. Social workers that are ethnically responsible are also exceptional at recognizing gender concerns, capabilities, senior adults and those people that have other sexual choices.

General systems theorem is comparable to industry and business in the form it is arranged. In businesses, inputs are handled through the organizational client in which appears to be a result of the output. Social services function similarly. Social services acquire resources (inputs) and undergo operations and mechanisms to provide an output (service). Systems theorem can support social workers comprehend how clients comprehend and are analyzed through those who comprises the client. When they are able to comprehend the client, social workers will formulate the best solution in making a positive change in the client to establish a more exceptional quality of life. Mental health professionals utilize the systems theorem to comprehend how people are both results of their individual experiences and how instances influence those people. They function to support their customers comprehend their current bearing and aid to formulate required solutions to adapt to their surroundings and make it more conducive. The general systems theorem is utilized in every factor of social work like protocol formulation, advocacy and families. Social order associates to an approximately constant system of institution, facts regarding society and arrangements of customs and interactions. To obtain a systems theorem, social order is required. In the absence of social order, we are not able to create an environment conducive for utilization of the systems theorem.

 

In human services, human diversity, ethnic competence, general systems theorem and bio-psychosocial dimensions function altogether to make a better surrounding and atmosphere for their customers and to support them better.

 

 

 

 

 

 

 

 

 

 

 

Ashford, LeCray&Latie (2007): Human Behavior in the social environment, Rout ledge

NASW (2001) Standards for Cultural Competence in Social Work Practice.

 Washington, DC: Author.

Firstly, if the U.S embraces a policy to “bail out” firms and heavily subsidize the economy it could very well spin us into a major hyperinflation. Why? If the Fed utilizes its ability to increase the money supply, it would cause an overflow of currency into the economy and push the value of the dollar down and interest rates up at an alarming and uncontrollable pace. Furthermore, by heavily subsidizing the economy, there is no guarantee that the money given will be spent. During times like these most of the individuals and businesses will hoard the money that is given to stimulate the economy. Furthermore, by bailing out firms and heavily subsidizing the economy, it would aid badly managed companies and industries an opportunity to continue to flourish.

Secondly, let us look at the resent mortgage industry bailouts. Are we really any better off? We still have high unemployment, huge foreclosures, looming inflation (over 3%), high oil prices, and evidence of a possible hyperinflation approaching. Currently we are in a stagflation – a combination of inflation, slow economic growth and high unemployment. The above is all because of the Fed’s use of its Monetary policy “Only” to bail out the banking industry, subsidize the economy (which was a little too little and a little too late), and attempts at keeping the interest rate to low for too long. We need more bipartisanship in our political arena to assist the Fed to get us out of this economic mess that we currently find ourselves in.

Lastly, if I have cash available to invest I would keep it as liquid as possible. Why? Because, if I know interest rates will rise, I do not want to commit my money to any long term investment. For example, if I lock up my money in a 3 year CD earning 1.5%, then in 8 months the interest rates increase to 3.5% for another investment, I take out the money from the 3 year CD and must absorb a hefty early withdrawal penalty.  Did I make any money? No! In fact I lost money. In conclusion, I would be better off keeping my money in an interest baring checking account or a saving account until a better investment opportunity comes along.


References:

Hubbard, R.G. (2008). Money, the Financial System, and the Economy (6th ed.). Boston: Pearson Addison Wesley. ISBN: 9780321426703

 

Adm 614 Topic 1 DQ 1

 

The economic way of thinking requires administrators to incorporate eight principles. One of the principles relates to “tradeoffs” and another principle relates to “opportunity costs” for scarce resources. Describe how public administrators must make trade-offs by assessing opportunity costs relating to scarce resources.

 

Answer:

 

Trade-offs create opportunity costs, one of the most important concepts in economics.  Whenever you make a trade-off, the thing that you do not choose is your opportunity cost.  To butcher the poet Robert Frost, opportunity cost is the path not taken (and that makes all the difference).  You bought that bike? Then the snowboard was your opportunity cost.  Decided to work on the Fourth of July? Your opportunity cost was a relaxing day hanging out with the fam at the BBQ.Everything has opportunity costs.  If you just bought something, you could have always chosen to buy something else instead.  If you just chose to spend your time in a particular way, you could have always done something else.  “Something else” is your opportunity cost.

 

 

 

Explain how scarcity and poverty are different. Give examples to support your reasoning

 

Answer:

 

Poor people often do things that are against their long-term interests such as playing the lottery, borrowing too much and saving too little. immediate problems draw people’s attention and as people use cognitive resources to solve these problems they have fewer resources left over to solve or even notice other problems. In essence, it’s easier for the rich than the poor to follow the Eisenhower rule–“Don’t let the urgent overcome the important”–because the poor face many more urgent tasks. My car needed a brake job the other day – despite this being a relatively large expense I was able to cover it without a second’s thought. Compared to a poorer person I benefited from my wealth twice, once by being able to cover the expense and again by not having to devote cognitive resources to solving the problem.

There are some discrepancies in the public budget and public needs because the public budget is developed on the basis of the resources on hand or expected in the budget period while the public needs are unlimited but they fulfilled through the public budget. There is direct relationship between the public budget and demand for the public goods because if there is demand for more public goods than the public budget will have to be increased to meet these demands for the public goods by producing more public goods. Once these public goods are produced and the demand for the public goods are fulfilled then the government will get the receipts in that are forecasted and included in the budget are increased.

References

Smith, Robert W. and Thomas D. Lynch. (2004) Public Budgeting in America. 5th Edition. Pearson; Upper Saddle River, New Jersey. 37.

The government can adjust the market by using subsidies as a tool to allocate the resources to major party of population.  The governments give subsidies to the business in order to keep the prices in check to a low level so that these resources become reachable for the lower income people as well as the higher income people. The Pareto efficiencies are not achieved or are tough to be achieved as there is no prices lower enough to make the resources available to a person who has no money.

            The subsidies are very important component of the Affordable Care Act. The government has give subsidies to the healthcare providers which make the cost of healthcare low for the low income people or even free from extremely low income people. In the US 85 or 8.7 million customers out of 10.2 million enrollees of the Obamacare are receiving tax credits which help them reduce their monthly payments of health premium.

References:

Watkins, Thayer.(2015) “The Impact of an Excise Tax or Subsidy on Price”. San José State University Department of Economics. Retrieved 2016-11-22

A monopoly refers to an enterprise that is the only of a certain good or service. A monopoly is normally free to set any price without intervention from the government. A monopoly sets a price that generates the largest profit (Moaze& Johnson 2016).

Monopolies have both positive and negative impacts on the economy. The positive impacts of monopolies on the economy include the following: avoids duplication of products and hence wastage of resources is minimized .Duplicate and fake products are normally a major problem in most countries and hence monopolies help in curbing this problem.

The other advantage of monopolies in the economy is the fact that monopolies make use of price discrimination normally helps the weaker sections of the society. Monopolies are also of revenue to the government since the government gets its revenues in form of tax from the monopoly firms.

Conversely, monopolies also have negatives impacts on the economy since they reduce the aggregate economic welfare since they reduce the income of the society through charging high prices. A monopoly has the ability of using it market power and hence paying  its suppliers lower prices and this inhibits the growth of such suppliers .Monopolies do not face any competition and hence  have less incentives to work on innovation and come up with better products.

In my opinion I think monopolies are bad for the economy since they supply inferior goods to the customers in most cases despite charging high prices. Monopolies also lead to inflation in the economy since they are free to set any price they want. This in turn raises the costs to consumers hence causing cost push inflation (Beach, 2007).

 

 

References

Beach, C. F. (2007). A treatise on the law of monopolies and industrial trusts, as administered in England and in the United States of America. Clark, N.J: Lawbook Exchange.

Moazed, A., & Johnson, N. (2016). Modern monopolies: What it takes to dominate the 21st-century economy.

Cyclic unemployment is the situation whereby people lose jobs due to economic cycles. This is the situations where the economy experiences ups and downs. For example, when an economy experience a boost more jobs are created and people get high pay while when the economy gets to a recession, more jobs are lost and many salaries are slashed. Frictional unemployment is the type of employment that happens when an individual is searching for a new job or in the transition from one job to the other. Structural unemployment is the type of unemployment brought about by low demand in certain types of workers (Stroup,  Sobel, and Macpherson, 161). This is usually brought about by a mismatch of the skills individuals want and the skills wanted by the employer.

If economic resources could be used effectively, the economy could not experience ups and down an indication that there could be no cyclic unemployment. In addition, if the economic resources were utilized effectively, the professional skills could match with what the employer want thus avoiding structural unemployment. Matching of skills and employer requirements would reduce time spent in searching for job and people would not change from one job to the other frequently. Therefore, proper use of the economic resources would help in avoiding unemployment.

 

Reference

Richard L. Stroup, Russell S. Sobel, and David A. Macpherson. Macroeconomics: Private and Public           Choice. Australia: South-Western Cengage Learning, 2013. Print.

The flow of income in a god and services market has two players, the firms, and the household. The flow of money and goods in such a market flows a circuit that corresponds to the value of the goods. The exchange runs in opposite direction, as the firms obtain the money from the households, they get the finished products in return(Schofield and Troy 23). On the production side, the company spends money to obtain raw materials from the household.

In the resource markets, the circular flow of income expands to include financial markets, the government sector, and the international sector. In this flow, the household contains the consumers; the business sector has the producers, the resource markets in the flow offer direct services from the business sector to the households(Schofield and Troy 23). The foreign sector obtains the gods from the corporate sector in exchange for money. The government in this flow offers regulation to the sector.

The loanable funds market involves the financial institutions as the significant player in the market. The forces of demand and supply, the existing policies among other factors dictate the flow of income. The amount of national savings also determines the quantity of loanable funds. On the borrowers side is the firms and individual, firms ae the dominant borrowers(Schofield and Troy 23). The financial institutions gain from the interest paid by the borrowers. While firms benefit from the investment, they initiate with the money.

Foreign exchange involves imports and exports. Goods move from one country to another and money is obtained in return. Importers get the goods and give money in exchange to the exporters. Two factors that are dominant in this flow of money is production and consumption, represented by firms and households respectively.

 

 

 

Work cited

Schofield, Neil C, and Troy Bowler. Trading the Fixed Income, Inflation and Credit Markets: A Relative Value Guide. Chichester, West Sussex: Wiley, 2011. Internet resource.

 

 

The 2008 market crisis that led to the loss of $16.4 trillion American households and wipes out $2 million American retirement savings was a tribute to various causes. However, one significant factor had the greatest contribution to this market crisis. A speculative bubble caused the crisis. The speculation was over real estate. The statistics about home prices indicates that home process went up from 1996 to 2006. An example is the Robert Shiller home price index that increased from 87.0 to 160.6 showing a growth of 65 percent. In 2006, the prices were at its peak. When the bubble busted, the prices went down drastically.

The bursting of the bubble in the market prices can be traced to various reasons. The effects of the post-dotcom crash in 2000. The effects of the crash were adverse since investors deserted the technology industry and moved to real estate industry. In their judgment, real estate sector was the best alternative. There were low-interest rates set by the federal reserves in the 1990s and 2000s. This provided big incentives for buying. Lending standards were also relaxed so people could borrow easily.

The federal government took various measures to correct the situation. One such factor was the development of central bank monetary policies. These policies sought to revise the lending regulations. Stringent lending rules were introduced for banks in the finance sector. The loan rates were also increased so that few people could be able to borrow from banks. The government adopted a financial rescue plan to salvage the financial market. $ 800 billion was injected into the sector.

ACCT 504 Week 3 Case Study 1 (The Complete Accounting Cycle)

 

 

 

 

 

 

ACC 504 Week 4

International Business & Career Research

Part I: Career Research

            For my research on International business I went to the U.S. Department of State website; www.state.gov and learned about Global Hunger and Food Security.  The topic of discussion was that there are more than one billion people who suffer from chronic hunger.  This is one sixth of the world’s population.  There has to be an increase in global food supply to meet the demand in the future.

            The United States will work with other governments, multinational institutions, NGOs, private companies, and the poor to:

  • Reduce hunger
  • Raise the incomes of the rural poor
  • Reduce the number of children suffering from under-nutrition

In order to achieve the above stated goals the U.S. will advance sustainable agricultural-led growth through increased investment across the entire agricultural production and market chain, strengthen post-harvest infrastructure, and protect the natural resource base.  The U.S. increase access to diverse and quality foods, and strengthening prevention, identification and treatment.  We will also increase the impact of humanitarian food assistance by strengthening government capacity to mitigate hunger crises and improving local and regional procurement.

            This article relates to international business in that companies that are established overseas should be able to help other countries who are below the poverty line.  A company that wants to expand should be aware of the economy of the country that they are going to be involved in.  Global hunger and food security should have an impact on international business.

Part II: Career Research

            My career research comes from www.futurist.com; Creative Conflict: Generating Innovative Ideas by Jagoda Perich-Anderson.  This article impacts my future career options in that I will change how I think about conflict.  “Insights, inventions and innovations hardly ever come about when we are feeling satisfied and satisfied with the status quo.  They come from the energy created when there is a push, a need or a desire for something to be different –a tension between what is and what could be.”

            Creative conflict according to the author is “recognizable for its spirit of curiosity and mutual respect and its commitment to learning and finding the best solution or direction to take.”  When conflict is creative, interactions are characterized by questions and listening to other points of view.

            As a part of my career path I must understand that conflict invites me to explore new possibilities, combine or rearrange ideas, gain insight to myself and others that I will interact with in my business.  I know that conflict is a natural part of life but I want to use it to increase learning potential and open doors to new possibilities.  I will take advantage of the creative forces of conflict.

 

 

 

           

 

 

 

 

 

 

 

 

 

 

 

Case Study 2

 

1.

If the company decides to go public the company must adhere to the new regulations. According to Securities and Exchange Commissionhttp://www.sec.gov/rules/final/33-8238.htm.As directed by Section 404 of the Sarbanes-Oxley Act of 2002, we are adopting rules requiring companies subject to the reporting requirements of the Securities Exchange Act of 1934, other than registered investment companies, to include in their annual reports a report of management on the company’s internal control over financial reporting. The internal control report must include: a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the company; management’s assessment of the effectiveness of the company’s internal control over financial reporting as of the end of the company’s most recent fiscal year; a statement identifying the framework used by management to evaluate the effectiveness of the company’s internal control over financial reporting; and a statement that the registered public accounting firm that audited the company’s financial statements included in the annual report has issued an attestation report on management’s assessment of the company’s internal control over financial reporting. Under the new rules, a company is required to file the registered public accounting firm’s attestation report as part of the annual report. Furthermore, we are adding a requirement that management evaluate any change in the company’s internal control over financial reporting that occurred during a fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. Finally, we are adopting amendments to our rules and forms under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to revise the Section 302 certification requirements and to require issuers to provide the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as exhibits to certain periodic reports.

The company should go under an audit of internal control which are new to the company but not new to the business.

2.

The one thing that I see that the company is doing right is that one person is responsible and accountable for each important task in the accounting process. The company is in compliance with the internal control of Establishment of Responsibility. There is no significant benefit of any type to the company other than a more professional appearance with the check writing machine. It is an unnecessary cost of money. The money would be better spent on improving other internal controls such as hiring a second person for the accounting process (separation of duties).

3.

The first and most important violation of internal control is that one person is both the controller and treasurer. This violates Segregation of Duties. One person should not be responsible for all parts of a transaction. This person can get away with fraud. The petty cash procedure is out of control. There are too many hands in it and that is not how you handle petty cash. Written notes are not generally great sources of documents, it should be receipts. This is a violation of Documentation procedures. Checks should not be left out over the weekend no one should be able to access the drawer. This is in violation Of Physical controls. The treasurer and accountant is too busy, this does not exist because there is only one person doing it and the company would have to have two people to meet the internal control The company (President) should verify records periodically as well as discrepancies should be reported to a management level that can take appropriate corrective action. This is a violation of Independent internal verification. The company also violates the Human resource control by not bonding the employees who handle cash. The company does not rotate employees’ duties nor does it require the employees to take vacations.

The role of government in the American economy extends far beyond its activities as a regulator of specific industries. The government also manages the overall pace of economic activity, seeking to maintain high levels of employment and stable prices. It has two main tools for achieving these objectives: fiscal policy, through which it determines the appropriate level of taxes and spending; and monetary policy, through which it manages the supply of money.
     Much of the history of economic policy in the United States since the Great Depression of the 1930s has involved a continuing effort by the government to find a mix of fiscal and monetary policies that will allow sustained growth and stable prices. That is no easy task, and there have been notable failures along the way.
     But the government has gotten better at promoting sustainable growth. From 1854 through 1919, the American economy spent almost as much time contracting as it did growing: the average economic expansion (defined as an increase in output of goods and services) lasted 27 months, while the average recession (a period of declining output) lasted 22 months. From 1919 to 1945, the record improved, with the average expansion lasting 35 months and the average recession lasting 18 months. And from 1945 to 1991, things got even better, with the average expansion lasting 50 months and the average recession lasting just 11 months.

 

As a monetarist, Milton Freidman suggested that the government should only release the amount of money into the economy that matches the GDP production. Discuss how the entire demand curve for money will adjust to the equilibrium point. Would you agree with Milton Freidman’s opinion on the ability of monetary policy to address economic problems? Explain your rationale.

 

Answer:

 

Likewise, a change in the intercept term in the money demand function would permanently shift the relationship between the levels of money and prices, but would, once the shift to the new intercept was complete, wash out entirely from the first differenced money demand function which is the underpinning of the money growth/inflation relationship. Furthermore, a one-time shift in the long-run  

 

interest semielasticity of money demand, such as has been argued by Ireland (2009) to have occurred in recent years in the case of M1 demand, does not affect the longer-term relation between money growth and inflation, provided averages zero. Summing up, while the price level homogeneity of the money demand function iscrucial for delivering quantity-theory relations, instability in several other aspects of the long-run money demand relation does not preclude a close relation between money growth and inflation.

 

Economic growth refers to the increase in the capacity of an economy to yield more goods and amenities compared from one period of another. An economy that is growing can make more goods and services than it used to before. Various government policies promote economic growth. These policies involve either man increase in cumulative demand or supply. Policies that affect demand are more important during a recession while supply side strategies are essential when defining long-run growth in productivity. Examples of demand policies include monetary policy, Quantitative easing, fiscal policy, devaluation.

Monetary strategy is the most common policy that influences economic activity. The government can reduce interest rates which reduce the incentives to save. Quantitative Easing entails increasing the money supply and buying of bonds, so that make the bond rates low. Fiscal policy is a government policy where the government boosts demand by reducing tax and raising public policy. An increase in government spending creates more jobs and hence increases stimulus.

Flexible labor markets are also another government policy that promotes economic growth. Markets that are highly regulated hinder companies from employing. Markets that are more flexible provide long-term boost investment. Lower Income taxes –The government tries to lower income tax so as to increase labor supply. When income tax is reduced people, get encouraged to work more and hence improve the economy. Better international relationships are also a government policy that makes the economy to grow. Robust and collaborative relationships promote efficient production processes. Institutions that promote economic growth are such as the World Bank as well as the International Monetary Fund (IMF) through the regulation of money supply ( Acemoglu, 2009).  

References

Acemoglu, D. (2009).   Introduction to modern economic growth . Princeton: Princeton University Press.