Comment on what Section 404 of the Sarbanes Oxley Act requires of companies.
> 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.
> Are all financial statements presented with some kind of an accountant’s report? Explain.
> 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?
> 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?
> Is a statement of changes in net worth required when presenting personal financial statements?
> What is the basic personal financial statement?
> May personal financial statements be prepared only for an individual? Comment.
> Why are the financial data of a component unit included with the government entities reporting entity?
> For the government-wide statements, governmental activities are to be presented separately from the financial statements of business-type activities. Give one example of a governmental activity and one example of a business-type activity.
> Under GASB, which statement has been the most substantial pronouncement?
> It is proper to handle immaterial items in the most economical, expedient manner possible. In other words, generally accepted accounting principles do not apply. Comment, including a concept that justifies your answer
> What is the purpose of the book, Codification of Governmental Accounting and Financial Reporting Standards?
> How many members serve on the GASB? How many votes are needed to issue a pronouncement?
> Could a profit-oriented enterprise use fund accounting practices? Comment Answer: No. The accounting for a profit enterprise is centered on the entity concept and the efficiency of the entity. Fund accounting is centered on a self-balancing set of acc
> The accounting for not-for-profit institutions does not typically include the concept of efficiency. Indicate how the concept of efficiency can be incorporated in the financial reporting of a not-for-profit institution.
> The rating on an industrial revenue bond is representative of the probability of default of bonds issued with the full faith and credit of a governmental unit. Comment.
> Which organization provides a service whereby it issues a certificate of conformance to governmental units with financial reports that meet its standards?
> The budget for a state or local government is not as binding as a budget for a commercial business. Comment.
> How many funds will be used by a state or local Government?
> The accounting for governments is centered on the entity concept and the efficiency of the entity. Comment.
> Do not-for-profit organizations, other than governments, use fund accounting? Comment.
> No estimate or subjectivity is allowed in the preparation of financial statements. Discuss.
> List some objectives that could be incorporated into the financial reporting of a professional accounting organization.
> If quoted market prices are not available, a personal financial statement cannot be prepared. Comment.
