Are all financial statements presented with some kind of an accountant’s report? Explain.
> Describe the managerial accountant’s role in the decision-making process.
> Why does the dual-allocation approach improve the resulting cost allocation?
> Refer to the data given in Exercise 1 for Aurora National Bank. Data given in Exercise 1: Aurora National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directl
> "In the long run, a profit-maximizing firm would never knowingly market unsafe products. However, in the short run, unsafe products can do a lot of damage." Discuss this statement.
> Why is the concept of enlightened self-interest important in economics?
> Some argue that prescription drug manufacturers, like Pfizer, gouge consumers with high prices and make excessive profits. Others contend that high profits are necessary to give leading pharmaceutical companies the incentive to conduct risky research and
> Which concept--the business profit concept or the economic profit concept--provides the more appropriate basis for evaluating business operations? Why?
> How is the popular notion of business profit different from the economic profit concept? What role does the idea of normal profits play in this difference?
> In the wake of corporate scandals at Enron, Tyco, and WorldCom, some argue that managers of large, publicly owned firms sometimes make decisions to maximize their own welfare as opposed to that of stockholders. Does such behavior create problems in using
> What does a perfect business look like? For Warren Buffett and his partner Charlie Munger, vice- chairman of Berkshire Hathaway, Inc., it looks a lot like Coca-Cola. To see why, imagine going back in time to 1885, to Atlanta, Georgia, and trying to inven
> A spreadsheet is a table of data organized in a logical framework similar to an accounting income statement or balance sheet. At first, this marriage of computers and accounting information might seem like a minor innovation. However, it is not. For exam
> Amos Jones and Andrew Brown own and operate Amos & Andy, Inc., a Minneapolis-based installer of conversion packages for vans manufactured by the major auto companies. Amos & Andy has fixed capital and labour expenses of $1.2 million per year, and variabl
> Presto Products, Inc., recently introduced an innovative new frozen dessert maker with the following revenue and cost relations: P = $60 - $0.005Q TC = $88,000 + $5Q + $0.0005Q2 MR = ∂TR/∂Q = $60 - $0.01Q MC = ∂TC/∂Q = $5 + $0.001Q a. Set up a spreadshee
> Pharmed Caplets is an antibiotic product with monthly revenues and costs of: TR = $900Q - $0.1Q2 TC = $36,000 + $200Q + $0.4Q2 MR = ∂TR/∂Q = $900 - $0.2Q MC = ∂TC/∂Q = $200 + $0.8Q a. Set up a spreadsheet for output (Q), price (P), total revenue (TR), ma
> For those 50 or older, membership in AARP, formerly known as the American Association of Retired Persons, brings numerous discounts for health insurance, hotels, auto rentals, shopping, travel planning, etc. Use the marginal profit concept to explain why
> Describe the effects of each of the following managerial decisions or economic influences on the value of the firm: a. The firm is required to install new equipment to reduce air pollution. b. Through heavy expenditures on advertising, the firm's marketi
> “The personal computer is a calculating device and a communicating device. Spreadsheets incorporate the best of both characteristics by allowing managers to determine and communicate the optimal course of action.” Discuss this statement and explain why c
> In 2007, Chrysler Group said it would cut 13,000 jobs, close a major assembly plant and reduce production at other plants as part of a restructuring effort designed to restore profitability at the auto maker by 2008. Its German parent, DaimlerChrysler sa
> In estimating regulatory benefits, the Environmental Protection Agency (EPA) and other government agencies typically assign a value of approximately $6 million to each life saved. What factors might the EPA consider in arriving at such a valuation? How w
> "It is often impossible to obtain precise information about the pattern of future revenues, costs, and interest rates. Therefore, the process of economic optimization is futile.” Discuss this statement.
> Economists have long argued that if you want to tax away excess profits without affecting allocative efficiency, you should use a lump-sum tax instead of an excise or sales tax. Use the concepts developed in the chapter to support this position.
> McDonald’s restaurants do the bulk of their business at lunchtime but have found that promotionally-priced meals at breakfast and dinner make a significant profit contribution. Does the success of McDonald’s restaurants in this regard reflect an effectiv
> Intel Corp. designs, develops, manufactures and sells integrated circuit solutions for wireless data and personal computer (PC) applications. The company is expanding rapidly to achieve hoped-for reductions in average costs as output expands. Does the po
> Southwest Airlines is known for offering cut-rate promotional fares to build customer awareness, grow market share, and boost revenues in new markets. Would you expect total revenue to be maximized at an output level that is typically greater than or les
> If a baseball player hits .285 during a given season, the player’s lifetime batting average of .278 will rise. Use this observation to explain why the marginal cost curve always intersects the related average cost curve at either a maximum or a minimum p
> Meredith Grey is a regional sales representative for Dental Laboratories, Inc., a company that sells alloys created from gold, silver, platinum, and other precious metals to several dental laboratories in Washington, Oregon, and Idaho. Grey's goal is to
> Explain how the valuation model given in Equation 1.2 could be used to describe the integrated nature of managerial decision making across the functional areas of business
> Founded in 1985, Starbucks Corporation offers brewed coffees, espresso beverages, cold blended beverages, various complementary food items, and related products at over 12,000 retail outlets in the United States Canada, the United Kingdom, Thailand, Aust
> Climate Control Devices, Inc., estimates that sales of defective thermostats cost the firm $50 each for replacement or repair. Boone Carlyle, an independent engineering consultant, has recommended hiring quality control inspectors so that defective therm
> Giant Screen TV, Inc., is a Miami-based importer and distributor of 60-inch screen HDTVs for residential and commercial customers. Revenue and cost relations are as follows: TR = $1,800Q - $0.006Q2 MR = ∂TR/∂Q = $1,800 - $0.012Q TC = $12,100,000 + $8
> The Portland Sea Dogs, the AA affiliate of the Boston Red Sox major league baseball team, have enjoyed a surge in popularity. During a recent home stand, suppose the club offered $5 off the $12 regular price of reserved seats, and sales spurted from 3,2
> Fill in the missing data for price (P), total revenue (TR), marginal revenue (MR), total cost (TC), marginal cost (MC), profit (Ï€), and marginal profit (MÏ€) in the following table: B. At what output level is profit maximized? C. At
> 21st Century Insurance offers mail-order automobile insurance to preferred-risk drivers in the Los Angeles area. The company is the low-cost provider of insurance in this market but doesn't believe its annual premium of $1,500 can be raised for c
> Characterize each of the following statements as true or false and explain your answer. A. If marginal revenue is less than average revenue, the demand curve will be downward sloping. B. Profits will be maximized when total revenue equals total cost. C.
> The Denver Athlete's Club (DAC) is a private, not-for-profit athletic club located in Denver, Colorado. DAC currently has 3,500 members but is planning on a membership drive to increase this number significantly. An important issue facing John Blavatsky,
> Is it reasonable to expect firms to take actions that are in the public interest but are detrimental to stockholders? Is regulation always necessary and appropriate to induce firms to act in the public interest?
> Is it appropriate to view firms primarily as economic entities?
> Which two principal financial statements explain the difference between two balance sheet dates? Describe how these financial statements explain the difference between two balance sheet dates.
> What are the major sections of a statement of cash flows?
> Comment on the typical number of financial pages in a summary annual report as compared to a full annual report.
> If a company issues a summary annual report, where can the more extensive financial information be found?
> Briefly describe a summary annual report.
> Describe a proxy statement.
> Which of the following events, occurring subsequent to the balance sheet date, would require a note? a. Major fire in one of the firm’s plants b. Increase in competitor’s advertising c. Purchase of another company d. Introduction of new management te
> What are contingent liabilities? Are lawsuit against the firm contingent liabilities?
> Why are notes to statements necessary?
> What are the three principal financial statements of a corporation? Briefly describe the purpose of each statement.
> The following information for Lesky Corporation covers the year ended December 31, 2012: / Required Change this statement to a multiple-step format, as illustrated in this chapter.
> What type of opinion is expressed on a compilation?
> Will the accountant express an opinion on reviewed financial statements? Describe the accountant’s report for reviewed financial statements.
> Describe an auditor’s review of financial statements.
> Why do some unqualified opinions have explanatory paragraphs?
> What is the purpose of the SEC’s integrated disclosure system for financial reporting?
> What are the roles of management and the auditor in the preparation and integrity of the financial statements?
> In what year did the IASB publish an IFRS for SMEs? How did this impact the road map of convergence between IFRSs and U.S. GAAP?
> Professor Ball noted a number of problems with implementing IFRS. What were the problems noted by Professor Ball?
> The SEC announced that it would accept financial statements from private issuers without reconciliation to U.S. GAAP if they are prepared using IFRS, as issued by the International Accounting Standards Board. Comment on possible problems with this positi
> The following information for Decher Automotives covers the year ended 2012: Administrative expense………………………….. $ 62,000 Dividend income…………………………………… 10,000 Income taxes $............................................. 100,000 Interest expense ……………………………
> Describe the Norwalk Agreement.
> The SEC released for public comment a proposed road map for adoption of IFRS by public companies in the United States. What were the serious concerns?
> Briefly describe the PCAOB.
> Comment on the materiality implications of the Sarbanes-Oxley Act.
> Describe the book Accounting Trends & Techniques.
> If its accounting period ends December 31, would a company be using a natural business year or a fiscal year?
> Comment on the responsibility of private companies under the Sarbanes-Oxley Act.
> Comment on perceived benefits from Section 404 of the Sarbanes-Oxley Act.
> Under the Sarbanes-Oxley Act, what must the financial statement auditor do in relation to the company’s internal control?
> Comment on what Section 404 of the Sarbanes Oxley Act requires of companies.
> China Unicom (Hong Kong) Limited provides a full range of telecommunications services, including mobile and fixed line service, in China. They are listed on the New York Stock Exchange and filed a Form 20-F with the SEC for the period ended December 31,
> It is not important to know when cash is received and when payment is made. Comment.
> The cash basis does not reasonably indicate when the revenue was earned and when the cost should be recognized. Comment.
> Briefly explain the difference between an accrual basis income statement and a cash basis income statement.
> There are five different measurement attributes currently used in practice. List these measurement attributes.
> SFAC No. 5 indicates that, to be recognized, an item should meet four criteria, subject to the cost-benefit constraint and materiality threshold. List these criteria.
> According to SFAC No. 2, relevance and reliability are the two primary qualities that make accounting information useful for decision making. Comment on what is meant by relevance and reliability.
> Financial accounting is designed to measure directly the value of a business enterprise. Comment.
> The objectives of general-purpose external financial reporting are primarily to serve the needs of management. Comment.
> Briefly describe the following: a. Committee on Accounting Procedures b. Committee on Accounting Terminology c. Accounting Principles Board d. Financial Accounting Standards Board
> What is the FASB Conceptual Framework for Accounting and Reporting intended to provide?
> For those assets deemed to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company’s determination of fair value is primarily ba
> Briefly describe the operating procedure for Statements of Financial Accounting Standards.
> Briefly explain the term generally accepted accounting principles.
> Explain the matching principle. How is the matching principle related to the realization concept?
> What is the basic problem with the monetary assumption when there has been significant inflation?
> Which U.S. government body has the legal power to determine generally accepted accounting principles?
> Dexter Company charges to expense all equipment that costs $25 or less. What concept supports this policy?
> Elliott Company constructed a building at a cost of $50,000. A local contractor had submitted a bid to construct it for $60,000 a. At what amount should the building be recorded? b. Should revenue be recorded for the savings between the cost of $50,000
> At which point is revenue from sales on account (credit sales) commonly recognized?
> Would an accountant record the personal assets and liabilities of the owners in the accounts of the business? Explain.
> Why did the FASB commence the Accounting Standards Codification™ project?
> Boston Celtics Limited Partnership II and Subsidiaries presented the following consolidated statements of income for 1998, 1997, and 1996. Required a. Comment on Amortization of NBA Franchise and Other Intangible Assets. b. Would the discontinued opera
> An entity may choose between the use of the accrual basis of accounting and the cash basis. Comment.
> Some industry practices lead to accounting reports that do not conform to the general theory that underlies accounting. Comment.
> Many important events that influence the prospects for the entity are not recorded in the financial records. Comment and give an example.
> Is the presentation of a personal income statement appropriate?
> The same generally accepted accounting principles apply to all companies. Comment.
> What personal financial statement should be prepared when an explanation of changes in net worth is desired?
> In a personal statement of financial condition, what is the equity section called?
> When preparing a personal statement of financial condition, should assets and liabilities be presented on the basis of historical cost or estimated current value?
> Are comparative financial statements required when presenting personal financial statements?
