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Study Resources (Accounting)

CASE 1.In October 2002, Duke Power, the regulated electricity utility of the United States (US) corporation Duke Energy, agreed to pay $25 million to its customers to settle allegations by regulators in North and South Carolina that it had underreported net earnings by about $123 million between 1998 and 2002. The.
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4.Xavier Plata operates a small manufacturing business, trading under the name of Plata Products. The following list of financial data relates to the business as at 30 June. Cash Receivables Inventories Prepaid insurance Intangibles $131 950 70 300 13 026 1500 8750Plant & equipment (net) Accounts payable Salaries payable Interest-bearing, long-term Borrowings Contributed capital Retained profits$183 000 8500 1450 155 000 198 626 44 950 Additional information •Receivables will be collected within.
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PROBLEM 1.Doug Murphy, a newly hired accountant, wanted to impress his boss, so he stayed late one night to analyse the office supplies expense. He determined the cost by month, for the past 12 months, of each of the following: computer paper, copy paper, fax paper, pencils and pens, note pads,.
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SHORT ANSWER 1.What is a conceptual framework from the perspective of financial reporting? 2.Describe four objectives of a conceptual framework. 3.Outline the nature and purpose of general-purpose financial reports (GPFR). 4.Under what circumstances does an entity represent a ‘reporting entity’ for the purposes of the Australian conceptual framework? 5.Describe the purpose of the external auditor.
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MULTIPLE CHOICE 1.Which of the following is not true of sole traders? A.They are one-owner businesses. B.They are not normally reporting entities. C.They are separate legal entities. D.They usually have limited funds at their disposal. 2.Which of the following is not true for a partnership? A.Suppliers can supply goods on credit to a partnership. B.Customers can purchase goods.
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11.For which of the following accounts would the use of historical cost normally be a greater limitation than for the other three? A.Cash B.Accounts Receivable C.Plant and Machinery D.Prepaid Rent 12.For which of the following accounts would the limitation ‘use of estimates and allocations’ not be a concern? A.Inventory B.Cash C.Equipment D.Accounts Receivable 13.Which of the following statements about the.
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CASE 1.In June 2002 WorldCom, a US telecommunications firm, announced that it had misreported financial information in previous accounting periods – to the sum of USD $3.9 billion – by recording routine operating expenses as capital expenditure. Discuss (a)The impact of the treatment on the financial statements. (b)The possible reasons for management’s accounting policy.
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MULTIPLE CHOICE 1.Which of the following statements is true of profit and wealth? A.Profit is money and wealth is savings. B.Profit is a non-static measure and wealth is a static measure. C.Profit and wealth are non-circular. D.Profit and wealth are not related. 2.Which of the following statements is incorrect? A.Profit is a non-static measure and wealth is.
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TRUE/FALSE 1.Deontologists judge the moral correctness of actions by only looking at the consequences of such actions. 2.For accountants to use judgement in providing advice would be unethical. 3.It is ethical for an accountant to minimise the amount of tax his client is required to pay. 4.Effective corporate governance may reduce agency costs. 5.Corporate governance.
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PROBLEM 1.The accountant for Tiny Tots has compiled the following information about the company and its accounts: Cash $1500Prepaid Rent$1000 Revenues 4000Expenses2000 Accounts Payable4500Equipment10 000 Wages Payable2500Notes Payable 1000 (a)What is the total amount of assets belonging to Tiny Tots? (b)What is the total amount that Tiny Tots owes for liabilities? (c)Using the accounting equation, what is the.
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TRUE/FALSE 1.Liquidity refers to the ease with which assets can be converted to cash in the normal course of business. 2.The historical cost assumption requires that an asset that is used for personal use and not for business use should be recorded at cost in the business balance sheet. 3.The business entity assumption.
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TRUE/FALSE 1.The wealth of an entity is determined by what it controls and what it owes. 2.Choosing a measurement system affects profit but does not affect wealth. 3.Profit represents an increase in wealth. 4.From the Hicksian economic viewpoint, profit is the amount which an individual can consume over a period and still be as.
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MULTIPLE CHOICE 1.Accounting information: A.is helpful for financing decisions but not for marketing decisions. B.is useful for profit-making entities but is not needed for not-for-profit entities. C.must follow accounting principles provided by management. D.is useful for all economic organisations. 2.The primary purpose of accounting is to: A.help people make decisions about economic activities. B.provide information that management can.
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21.General-purpose financial reports provide the information that is required for both internal and external user group needs. 22.Accrual accounting refers to the method of measuring profit on the basis of cash flow, rather than when revenues and expenses occur. 23.The going concern assumption assumes that an entity will continue to operate successfully.
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41.Which of the following accounts is a liability? A.Interest Expense B.Interest Payable C.Interest Revenue D.Interest Receivable 42.Liabilities are: A.resources under an organisation’s legal control. B.obligations owed by an organisation to its suppliers of goods and services on credit creditors. C.the amount of investment made by owners in a business. D.the profits earned by a corporation. 43.Which of the following accounts.
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31.The fundamental element equity does not require recognition criteria, because it represents the residual interest in assets, after deducting liabilities. 32.In accordance with the IASB Conceptual Framework, income includes both revenue and gains. 33.The external auditor is responsible for preparing the general-purpose financial reports of a company. 34.The responsibilities of the Australian Financial.
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PROBLEMS 1.Explain what is meant by the term limited liability as it relates to the shareholders of a corporation; and explain why shareholders are able to gain the benefit of limited liability whereas sole traders cannot. 2.Describe three advantages of a company over a partnership and a sole trader. 3.R2 and E2 have.
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TRUE/FALSE 1.An objective of accounting is to provide information to predict and evaluate the going concern of an entity. 2.Accounting information is always quantitative and objective. 3.Stewardship is the term used to refer to management’s role in protecting an entity’s economic resources from theft, fraud and wastage. 4.Management is an external user of accounting.
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TRUE/FALSE 1.Mutual agency refers to the fact that each member of the partnership form of business entity can bind the other(s) in contract within the scope of normal operations. 2.There are several advantages to forming a partnership, including the ease with which it can be formed and the limited rules and regulations.
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21.Charging an interest cost as an expense when it should be capitalised as an asset will result in: A. an overstatement of total assets. B. the understatement of net profit for the next period. C. an overstatement of interest expense for the next period. D. the understatement of net profit for the current period. 22.Which of the following statements.
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SHORT ANSWER 1.What is the role of accounting information in business? 2.Distinguish managerial accounting from financial accounting. Your answer should include a brief discussion of differences in the types of information provided to users as well as differences in the identity of users of financial and managerial accounting information. .
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SHORT ANSWER 1.What is meant by the concept of duality? Illustrate your answer with respect to the following three transactions (events): 2.Briefly describe four sources of the common types of errors that may be made in recording transactions (events) in the worksheet. 3.What is the operating cycle of a business? How does this.
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21.The separation of ownership and control is normally a characteristic of: A.companies. B.partnerships. C.sole traders. D.partnerships and companies. 22.The factors that should be considered before forming the partnership and company forms of entity would include: A.income taxation implications. B.the liability of the equity participants for the debts of the business. C.the scale/magnitude of the operations involved and the.
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11.Political costs create incentives for managers to select accounting policies that increase reported profits. 12.Triple bottom line reporting confirms the maximisation of profit as the major objective of listed companies. 13.A triple bottom line report refers to the publication of economic, environmental and corporate governance information in an integrated report. 14.Because triple bottom.
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11.Match the type of accounting information to the term that best describes it. Information prepared for                     Information prepared for external decision makers                      internal decision makers A.Financial accounting                             Financial accounting B.Financial accounting                             Managerial accounting C.Managerial accounting                           Financial accounting D.Managerial accounting                           Managerial accounting 12.Information contained in external financial reports can be useful to a firm’s: Suppliers              Employees A.No                      No B.No                      Yes C.Yes                     No D.Yes                    .
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21.Arguments in favour of triple bottom line reporting include: A.enhanced all-round company credibility from greater transparency. B.that it facilitates the implementation of an environmental strategy. C.enhanced communication with stakeholders. D.all of the above. 22.The Global Reporting Initiative: A.refers to an institution based in Sweden. B.is the most widely cited benchmark for the determination of the content of.
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11.Accounting Standards set by the Australian Accounting Standards Board (AASB) apply to both the private and public sectors in Australia. 12.Due process is primarily concerned with producing Accounting Standards that meet managers’ objectives. 13.The Corporations Act 2001 requires that financial statements include a directors’ report, a directors’ statement and an auditor’s report. 14.The.
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CASE 1.In October 2002, Duke Power, the regulated electricity utility of the United States (US) corporation Duke Energy, agreed to pay $25 million to its customers to settle allegations by regulators in North and South Carolina that it had underreported net earnings by about $123 million between 1998 and 2002. The.
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TRUE/FALSE 1.The statement of comprehensive income shows the results of operations over a period of time, and the balance sheet shows the financial condition of a business at a specific date. 2.The statement of comprehensive income reports revenues and expenses for the period but does not report income. 3.The statement of comprehensive income.
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3.In the 2014–15 English Premier League season, Manchester United signed 26-year-old Argentina winger, Angel di Maria, from Real Madrid for a British record transfer fee of £59.7 million. di Maria signed on with Manchester United for a five-year deal that will net him £6.5 million a year after tax, just.
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21.The Davis Company purchases a new delivery truck by making a 10% cash down payment and signing a note payable for the balance. How will assets, liabilities and owners’ equity be affected by this transaction? Assets              Liabilities             Owners’ Equity A.decrease            increase                no change B.increase            increase                no change C.increase            decrease                increase D.no change          increase                decrease 22.On 31.
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MULTIPLE CHOICE 1.Which of the following statements is incorrect? A.A balance sheet reports assets, liabilities and equity at a point in time. B.The exclusion of an asset from the business balance sheet because it is for private use is due to the going concern assumption. C.The average period between the purchase of merchandise and.
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11.Which of the following is classified as a liability? A.Wages expense B.Accounts payable C.Owners’ drawings D.Retained profits 12.Amounts owed by a business enterprise to external parties are described as: A.assets. B.liabilities. C.equities. D.revenue. 13.Owners’ equity is: A.the owners’ interest in the total assets of the firm. B.only profits retained in the business. C.the contributions by the proprietor plus all profits retained by the.
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2.Identify the impact of the following events on the balance sheet equation. a. The owner pays $3000 into the business bank account. b. The business acquires equipment for $8000, paying a $3000 deposit, with the balance payable in 90 days. c. The business provides services for $850 cash. d. Paid salaries and wages $2300. e..
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31.On a balance sheet, assets are usually classified as: A.Current Assets, Fixed Assets, Plant and Equipment, and Intangible Assets. B.Current Assets, Long Term Assets, Plant and Equipment, and Intangible Assets. C.Current Assets, Fixed Assets and Long-term Investments. D.Current Assets and Non-current Assets. 32.What is the value of total assets if current assets equal $2200, current.
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MULTIPLE CHOICE 1.The statement of comprehensive income shows financial information: A. at a point in time. B. over a period of time. C. at the time of the originating transaction. D. at the time of sale of an item. 2.What information does a statement of comprehensive income not show? A. Net Profit B. Revenues C. Liabilities D. Tax Expense 3.Which one of the following statements is true? A. The statement of.
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31.Which one of the following groups is not generally regarded as an external user of the accounting information of an enterprise? A.Employees B.Customers C.Management D.Lenders 32.FeelGood Limited has been set up specifically for the building of an inner-city women’s refuge. When the building has been erected and becomes operational (estimated time four months), the company.
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MULTIPLE CHOICE 1.According to Josephson (1992), characteristics of an ethical person include: A.honesty, caring and listening to clients’ orders. B.promise-keeping, not listening to client’s orders and respectfulness. C.loyalty, fairness and caring. D.honesty, coolness and being smart. 2.According to Josephson (1992), people do not behave in an ethical manner because of: A.faulty reasoning and loyalty. B.self-righteousness and greed. C.self-deception and.
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11.Where the expenses of an entity exceed income for a period, a loss results. 12.Drawings by owners are an expense. 13.Gross profit is the sales revenue received, less the cost of the goods sold (i.e. cost of sales) from ordinary operating activities. 14.The statement of changes in equity includes transactions with owners. 15.Earnings management.
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