Questions from Intermediate Accounting

Q: “The balance sheet does not reflect the value of a business

“The balance sheet does not reflect the value of a business.” Do you agree or disagree? Explain.

Q: What are the five labels in the earnings management continuum (see

What are the five labels in the earnings management continuum (see Exhibit 6-4), and what general types of actions are associated with each label?

Q: What does the difference between current assets and current liabilities measure?

What does the difference between current assets and current liabilities measure?

Q: Is there anything wrong with using a different accounting estimate this year

Is there anything wrong with using a different accounting estimate this year compared to last year so long as both estimates fall within a generally accepted range for your industry?

Q: You are on the accounting staff of Chisos Manufacturing Company. Chisos

You are on the accounting staff of Chisos Manufacturing Company. Chisos has a $100 million loan with Rio Grande National Bank. One of the covenants associated with the loan is that Chisos must maintai...

Q: Indicate under what circumstances each of the following can be considered noncurrent

Indicate under what circumstances each of the following can be considered noncurrent: (a) Cash and (b) Receivables.

Q: Company A has created fictitious transactions to report more favorable earnings.

Company A has created fictitious transactions to report more favorable earnings. Is it likely that this is the only action Company A has taken to manage earnings? Explain.

Q: How can expected refinancing impact the classification of a liability?

How can expected refinancing impact the classification of a liability?

Q: List and describe the steps in the accounting process. Why are

List and describe the steps in the accounting process. Why are these steps necessary? Are any steps optional?

Q: What is the benefit of “taking a big bath”?

What is the benefit of “taking a big bath”?