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Accounting Expert Answers & Study Resources : Page 490

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EXERCISES Ex. 3-72Definitions Define the following terms: 1.Event 2.Work sheet 3.Permanent accounts 4.Temporary accounts 5.Income summary 6.General ledger Ex. 3-73Definitions Provide clear, concise answers for the following: 1.What is the accrualbasis of accounting? 2.What is an accrued expense? 3.What is accrued revenue? 4.What is a prepaid expense? 5.What is unearned revenue? *6. State the rule that indicates which adjusting entries for prepaid and unearned items should.

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  • EXERCISES Ex. 3-72Definitions Define the following terms: 1.Event 2.Work sheet 3.Permanent accounts 4.Temporary accoun
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Ex. 3-74Recordable events Before transactions are entered into a corporation's accounting system, the underlying event must be analyzed, to determine how (and if) it should be recorded. The situations below relate to Maxwell Corporation: Instructions Indicate whether the items below are recordable events. 1.A new mortgage contract for its new factory building is signed. 2.The.

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  • Ex. 3-74Recordable events Before transactions entered into a corporation's accounting system,
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Ex. 3-82Explain whether the financial statement excerpt below is from the financial statements of a corporation, a sole proprietorship or a partnership: Abhrams, Capital..........$20,000 Johnston, Capital..........$25,000 Zinck, Capital.............$20,000 Total....................$65,000 Ex. 3-83Expected Cash Flow Approach Assume that Picnic Paper Co. has several minor lawsuits outstanding.To determine the amount of liability to recognize on the statement of financial.

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  • Ex. 3-82Explain whether the financial statement excerpt below from the
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Pr. 3-96 Trial balance correction The Controller of SHD Corporation asks his assistant to correct the company's December 31, 2017 trial balance. The preliminary trial balance, which does not balance, is reproduced below: SHD Corporation Trial Balance December 31, 2017 DebitCredit Cash....................................................$  10,000 Accounts Receivable.......................................15,000 Prepaid Insurance.........................................600 Equipment...............................................40,000 Inventories...............................................9,000 Accounts Payable.........................................$  11,590 Common Shares..........................................110,000 Sales...................................................17,100 Salaries.................................................64,000 Office Supplies............................................2,150 Depreciation Expense......................................2,550_______ $143,300$138,690 The assistant's review uncovered the following errors: 1.The accounts.

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  • Pr. 3-96 Trial balance correction The Controller of SHD Corporation asks
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Exercises Ex. 1-45Effective capital allocation Explain the advantages of an effective capital allocation process. Ex 1-46Financial statements in practice and theory What are the four most frequently provided financial statements?Provide two terminologies used to refer to each statement. Ex. 1-47Stakeholders in the financial reporting environment Briefly describe the much-publicized subprime lending crisis in the United States,.

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  • Exercises Ex. 1-45Effective capital allocation Explain the advantages of an effective capital
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Pr. 3-94Closing Entries Below is a selection of account balances for Howard Ltd. at December 31, 2017: Sales........................$856,000 Sales returns..................$40,000 Cost of goods sold..............$456,000 Advertising expense............$38,000 Salaries expense...............$113,000 Depreciation expense...........$31,000 Insurance expense.............$9,000 Administrative expense..........$10,000 All accounts have their normal balances. Instructions Prepare all necessary closing entries at December 31, 2017. Pr. 3-95Adjusting entries Data relating to the balances of various accounts affected by adjusting.

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  • Pr. 3-94Closing Entries Below a selection of account balances for Howard
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Pr. 3-92 Adjusting and closing entries The following trial balance was taken from the books of Kaslo Corporation at December 31, 2017: AccountDebitCredit Cash....................................................$  40,000 Accounts Receivable.......................................108,000 Note Receivable...........................................8,000 Allowance for Doubtful Accounts..............................$   1,800 Merchandise Inventory.....................................54,000 Unexpired Insurance.......................................4,800 Furniture and Equipment....................................138,000 Accumulated Depreciation...................................15,000 Accounts Payable.........................................10,800 Common Stock...........................................44,000 Retained Earnings.........................................65,000 Sales...................................................410,000 Cost of Goods Sold........................................128,000 Salaries Expense..........................................53,000 Rent Expense............................................    12,800________ Totals...............................................$546,600$546,600 At year end, the following items have not yet.

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  • Pr. 3-92 Adjusting and closing entries The following trial balance was
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Ex. 1-65Professional judgement Explain the principle of professional judgement.When or why might it be necessary to employ professional judgement, even in a rules-based system? Ex. 1-66SOX and standard setting After several highly-publicized accounting scandals in the U.S. such as Enron, Sunbeam, and WorldCom, all of whom, coincidentally, were clients of the now basically.

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  • Ex. 1-65Professional judgement Explain the principle of professional judgement.When or why
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Ex. 3-80Adjusting the Closing Entries The adjusted trial balance of Ryan Financial Planners appears below. Instructions Using the information from the adjusted trial balance, you are to prepare for the month ending December 31: a)an income statement. b)a retained earnings statement. c) a balance sheet. Ryan Financial Planners Adjusted Trial Balance December 31, 2017 DebitCredit Cash....................................................$  2,900 Accounts Receivable.......................................2,200 Supplies.................................................1,800 Equipment...............................................16,000 Accumulated Depreciation—Equipment........................$  4,000 Accounts.

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  • Ex. 3-80Adjusting the Closing Entries The adjusted trial balance of Ryan
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Ex. 1-67Challenges facing financial reporting In North America, the financial reporting environment is changing at a very rapid pace. Briefly describe four challenges facing the accounting profession today. Ex. 1-68Role of executives and management in a post-SOX world SOX introduced sweeping changes to the institutional structure of the accounting profession.What key provision was.

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  • Ex. 1-67Challenges facing financial reporting In North America, the financial reporting
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Ex. 3-78 Calculation of expense The records for Jay Inc. showed the following for 2016: Jan 1Dec 31 Accrued expenses...................$2,000$3,600 Prepaid expenses...................900800 Cash paid during the year for expenses..$55,000 Instructions Calculate the total amount of expenses that should be reported on the 2016 statement of comprehensive income. Ex. 3-79 Calculation of revenue The records for Oriole Corp. showed the.

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  • Ex. 3-78 Calculation of expense The records for Jay Inc. showed
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31.In Canada, the body which is NOT instrumental in the development of financial reporting standards is the a) Accounting Standards Board (AcSB). b) Financial Accounting Standards Board (FASB). c) International Accounting Standards Board (IASB). d) American Institute of Certified Public Accountants. 32.The adoption of International Financial Reporting Standards in Canada is an example of a) the.

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  • 31.In Canada, the body which NOT instrumental in the development
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MULTIPLE CHOICE QUESTIONS 1.The essential characteristic(s) of accounting is (are) a) communication of financial information to interested internal parties only. b) communication of economic information to external parties. c) identification and measurement of financial information only. d) identification, measurement, and communication of financial information. 2.Financial accounting is concerned with the process that culminates in a) the preparation.

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  • MULTIPLE CHOICE QUESTIONS 1.The essential characteristic(s) of accounting (are) a) communication of
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21.The “efficient markets hypothesis” proposes that a) market prices reflect information known only to internal stakeholders. b) market prices reflect all information about a company. c) market prices reflect information known only to external stakeholders. d) information asymmetry is required. 22.Which of the following does NOT describe a cause of management bias? a) the need to.

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  • 21.The “efficient markets hypothesis” proposes that a) market prices reflect information
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Ex. 1-55Merits of accrual- vs. cash-basis accounting Investors are interested in assessing a company’s ability to generate net cash inflows, as well as its ability to protect and enhance capital investments.Briefly explain how each of the accrual- and cash-basis methods, respectively, might enhance these objectives. Ex. 1-56Information asymmetry In markets where information asymmetry.

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  • Ex. 1-55Merits of accrual- vs. cash-basis accounting Investors interested in assessing
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Ex. 2-73Control and the economic entity assumption Consolidated financial statements are prepared from the perspective of the economic entity.Determination of which business units, or subsidiaries, are to be included in the entity is rooted in the definition of control.Describe how this concept is interpreted under IFRS and ASPE, respectively.Discuss the significance.

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  • Ex. 2-73Control and the economic entity assumption Consolidated financial statements prepared
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Ex. 2-65Comprehensive Income Describe the income concept of comprehensive income.That is included in this notion of income under IFRS?What is included in it under ASPE? Ex. 2-66Foundational principles Briefly explain the foundational principles of recognition, measurement, presentation and disclosure that underlie financial accounting. .

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  • Ex. 2-65Comprehensive Income Describe the income concept of comprehensive income.That included
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Pr. 3-90Adjusting entries The information shown below relates to Flower Corporation. At December 31, 2017 Flower's general ledger shows the following balances: Prepaid lease.............$7,000Debit Prepaid insurance.........$1200Debit Unearned revenue.........$84,000Credit In addition, the following information is available: 1.The entire amount shown as prepaid lease has expired. 2.One-third of the amount shown as prepaid insurance has expired. 3.Half of the amount.

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  • Pr. 3-90Adjusting entries The information shown below relates to Flower Corporation.
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Ex. 2-77Fraudulent financial reporting and the accountant’s role Explain what the accountant’s responsibility is in preparation of a company’s financial records. Ex. 2-78Financial reporting pressures caused by budgets Explain why budgets might exert negative influence into accounting decisions.Offer some examples to illustrate where this might be the case. .

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  • Ex. 2-77Fraudulent financial reporting and the accountant’s role Explain what the
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1.Which of the following is NOT part of the conceptual framework for financial reporting? a) elements of financial statements b) qualitative characteristics of accounting information c) notes to financial statements d) foundationalprinciples 2.Which of the following is NOT an objective of financial reporting? a) to provide information about an entity’s economic resources, obligations and equity/net assets b).

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  • 1.Which of the following NOT part of the conceptual framework
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21.For adjusting entries relating to accrued revenues, a) a liability-revenue account relationship exists. b) the adjusting entry involves a credit to an asset account and a debit to a revenue account. c) if an adjustment is not made, assets will be overstated. d) before adjustment, both assets and revenues are understated. 22.Which of the following.

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  • 21.For adjusting entries relating to accrued revenues, a) a liability-revenue account
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51.Principles-based GAAP is sometimes criticized for being a) too inflexible. b) too flexible. c) too inconsistent. d) too difficult for the reader to understand. 52.Which of the following situations does NOT demonstrate an attempt at financial engineering? a) creating complex legal arrangements and financial instruments b) structuring debt financing so that it meets the GAAP definition of.

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  • 51.Principles-based GAAP sometimes criticized for being a) too inflexible. b) too flexible. c)
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Ex. 2-61Enhancing Qualitative Characteristics Although fundamental qualitative characteristics of relevance and reliability are considered most important, financial statement preparers also place value upon certain enhancing qualitative characteristics.Briefly describe each of these characteristics and their contribution to providing decision-useful accounting information. Ex. 2-62Accounting terminology – fill in the blanks Fill in the blanks below.

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  • Ex. 2-61Enhancing Qualitative Characteristics Although fundamental qualitative characteristics of relevance and
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MULTIPLE CHOICE–Conceptual 1.Which of the following statements is true regarding accounting information systems? a) Both large and small firms should use the same type of accounting system. b) All firmsshould have the same types of transactions. c) The volume of data to be handled should not vary between firms. d) The kind of information that.

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  • MULTIPLE CHOICE–Conceptual 1.Which of the following statements true regarding accounting information
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11.The overriding criterion by which accounting information can be judged is that of a) usefulness for decision making. b) freedom from bias. c) timeliness. d) comparability. 12.Which statement is correct regarding enhancing qualitative characteristics? a) Full discussion of the information presented is a substitute for comparable information. b) Numbers that are easily verifiable with a reasonable degree.

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  • 11.The overriding criterion by which accounting information can be judged
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Ex. 2-69Foundational accounting principles and qualitative characteristics –matching Listed below are several foundational accounting principles and qualitative characteristics. Match the letter of each with the appropriate phrase describing its application. Note that each itemmay be used more than once or not at all. a.Economic entity assumptiong.Matching principle b.Going concern assumptionh.Full disclosure principle c.Monetary unit.

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  • Ex. 2-69Foundational accounting principles and qualitative characteristics –matching Listed below several
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Ex. 2-67Identification of foundational accounting principles State the accounting principle or assumption that is most applicable in the following situations: 1.A company prepares consolidated financial statements for a subsidiary that it owns. 2.The decision to remove an asset from the balance sheet 3.A large sale on account is not recognized as revenue because collectability.

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  • Ex. 2-67Identification of foundational accounting principles State the accounting principle or
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11.Audited financial statements are prepared by a) auditors. b) financial analysts. c) Canada Revenue Agency. d) management. 12.The auditor’s primary responsibility is to a) review financial statements and discuss them with management. b) prepare financial statements. c) report to Canada Revenue Agency. d) report to standard setters. 13.The widely publicized subprime lending crisis was NOT caused by a) capital market participants.

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  • 11.Audited financial statements prepared by a) auditors. b) financial analysts. c) Canada Revenue
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41.Fair value (of an asset) is a) an entry price. b) an entity-specific measure. c) an exit price. d) not used when following IFRS. 42.Application of the full disclosure principle a) is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits. b) is violated when important financial information is buried in the.

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  • 41.Fair value (of an asset) is a) an entry price. b) an
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21.Equitable obligations arise due to a) statutory requirements. b) contractual obligations. c) moral or ethical considerations. d) union agreements. 22.Under IFRS, equity does NOT include a) long term leases. b) common and/or preferred shares. c) accumulated other comprehensive income. d) retained earnings. 23.Gains are defined as a) increases in economic resources resulting from an entity’s ordinary activities. b) decreases in economic resources.

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  • 21.Equitable obligations arise due to a) statutory requirements. b) contractual obligations. c) moral
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