Describe what is meant by the term “general-purpose financial statements.” Discuss what group(s) benefit(s) from general-purpose financial statements.
> Wiz Khalifa would like to invest in an $80,000 face value note payable. The note has a 12-year term and pays 10% annual interest, at the end of each year. Interest is compounded annually. a. What would he pay for the note if he wanted the note to yield 1
> Two independent situations follow. Interest is compounded annually. Solve for the appropriate interest rate using a financial calculator or a spreadsheet. a. A college student wishes to purchase a new car. In order to pay for the vehicle, he borrows $15,
> Indicate which rate and time period you would use in order to select the correct interest factor for the following situations. In addition, indicate the interest factor that would be used. a. Using PV of an Ordinary Annuity of $1 Table 7A.5: b. Using FV
> Compute the net cash flow from operating activities for Bernadino Company under the indirect reporting format. Bernadino Company provided you with the following information for the current year. Accounts Payable relate to Selling, General and Administrat
> Using the information from E6-7, compute net cash flow from operating activities for Tulsa Corporation under the direct reporting format. Data from E6-7:
> Tulsa Corporation provided you with the following information for the current year. Compute the net cash flow from operating activities under the indirect reporting format.
> Lake Company provided the following information for the current year ended December 31. Required: a. Prepare the current-year classified balance sheet using the report format. b. Prepare the current-year classified balance sheet using the account format
> Using the information provided in BE5-7, prepare a condensed, multiple-step income statement for the current year. Include supporting schedules. Data From BE5-7:
> For each item in the following, identify whether it is an advantage or disadvantage of the income statement.
> Explain why it is important to understand cognitive biases in decision making. Identify at least three techniques used to mitigate cognitive biases in practice.
> Match Each Cognitive Bias Below with Its Description.
> Identify areas where managers make estimates and assumptions in accounting for plant and equipment.
> Put the six steps of the research process in correct order (use 1–6).
> Identify areas where managers make estimates and assumptions in accounting for accounts receivable.
> Identify whether the following items are fundamental characteristics (FC) or enhancing characteristics (EC): Comparable. Relevant. Timely. Understandable. Faithful representation. Verifiable
> Discuss how well the historical cost concept satisfies the fundamental characteristics of relevance and faithful representation.
> Explain the costs standard setters consider when comparing the cost of requiring information to the benefits to the users of having the information when setting a new standard.
> Describe when financial information is a faithful representation.
> Describe the fundamental characteristics of financial information. Explain the enhancing characteristics of financial reporting information.
> What is the recognition principle and when is an item considered recognized?
> Identify whether the following items are characteristics of information that are relevant (REL) or a faithful representation (FR): Information that is neutral. Information that has decision-making implications because of its predictive value. Informatio
> Explain the objective of financial reporting.
> Describe the primary users of the financial statements according to the conceptual framework. List the components of the current conceptual framework.
> Explain the difference between revenues and gains.
> Match the enhancing characteristic with its definition:
> Match the component of a faithful representation to its definition:
> List the components of the current conceptual framework.
> Indicate the assumption (going concern, business/economic entity, monetary unit, or periodicity) that best fits the following scenarios.
> The following events occurred at VG Consulting during the most recent month. a. VG provided consulting services and billed clients $2,000. b. VG collected $1,500 for consulting services performed in the prior month. c. VG paid its monthly electric bill o
> Match the measurement basis with its definition.
> What is the definition of an asset?
> Identify whether the following items are part of the general recognition principle under U.S. GAAP, IFRS, or both.
> Identify whether the following elements are elements under U.S. GAAP, IFRS, or both, and point-in-time or period-in-time elements.
> Match each element with its definition.
> Identify whether the following definitions relate to assets, liabilities, or equity.
> Discuss the three main approaches to recognizing expenses.
> Describe capital maintenance adjustments.
> Identify whether the items below are characteristics of a principles-based (P) or rules-based (R) accounting system: Provides a clear discussion of the accounting objective related to the standard. Contains detailed application guidance. Contains numerou
> What is the SEC’s role in standard setting, both historically and currently?
> What is the composition of the IASB’s membership?
> Order the steps in the Financial Accounting Standards Board’s standard setting process from 1 to 7. The Board issues an Exposure Draft (ED), which is intended to solicit input. After consultation with FASB members and others as appropriate, t
> What are the elements of financial reporting and where are they reported?
> What is the standard-setting process followed by FASB?
> Briefly explain how the financial statement preparers, users, and other interested parties are involved in the standard-setting process for U.S. GAAP.
> What is an economic entity?
> Identify at least three types of parties in the financial reporting process and discuss why each would be interested in the financial statements.
> Identify at least four different types of financial statement users and discuss why each would use the financial statements.
> Match the financial statement users and other parties involved in the use of and preparation of financial information with their role.
> What is the definition of financial accounting?
> What is the function of the accounting standard setters?
> What are the roles and responsibilities of an external auditor?
> What is the difference between a point-in-time element and a period-of-time element?
> How is the allocation of capital linked to the demand for financial reporting?
> What is the purpose of generating financial statements and who are the primary users of this information?
> Which items are included in the definition of financial information? Is this concept synonymous with the term financial statements? Explain.
> Are account balances found in the general ledger? Explain.
> Why is the general journal referred to as the “book of original entry”? How are transactions presented in the journal?
> What is meant by the term normal balance? Provide the normal balance for assets, liabilities, and stockholders’ equity.
> What do the terms debit and credit mean?
> Will all transactions have a dual effect on the accounting equation? Explain
> When will retained earnings contain a positive balance? Negative balance?
> What is equity? What are the three components of shareholders’ equity? Explain each component.
> In recent years, what has been the FASB’s approach to standard setting?
> What is the accounting equation and what does it demonstrate?
> What are closing entries? Describe the four closing entries and their effects.
> Which statements can be prepared from the adjusted trial balance? What must be done before preparing the financial statements?
> What is the purpose of the adjusted trial balance? What items are included in the adjusted trial balance?
> What is a deferred revenue? When will the full amount of the deferred revenue be recorded?
> Why are adjusting journal entries made? When do companies make these entries?
> Under the accrual basis of accounting, when do companies record deferrals and accruals?
> Explain the difference between the accrual basis of accounting and the cash basis of accounting? Which basis is acceptable under U.S. GAAP? Explain.
> What is the purpose of an unadjusted trial balance?
> Describe the accounting cycle.
> How does a principles-based standard differ from a rules-based standard?
> What types of biases are individual decision makers subject to when exercising judgment in addressing accounting issues?
> What types of biases are individual decision makers subject to when exercising judgment in addressing accounting issues?
> What is the difference between the availability and confirmatory biases?
> Does IFRS require that companies disclose their accounting policies? Explain.
> Does U.S. GAAP require that companies disclose their accounting policies? Explain.
> Does IFRS require that companies disclose information about the assumptions and estimates they make in their financial statements? Explain.
> Does U.S. GAAP require that companies disclose information about the assumptions and estimates they make in their financial statements? Explain.
> How can management create an impediment to the exercise of good judgment?
> What is research and when is financial accounting research required?
> Explain how accountants and auditors use judgment as they prepare and audit financial statements.
> Is the promulgation of financial accounting standards a political process? Explain.
> What is the Basis for Conclusions and where can they be found for IFRS?
> What is the Basis for Conclusions and where can they be found for U.S. GAAP?
> What is the purpose of a literature hierarchy?
> What is judgment and when is it used by accountants?
> What is the difference between predictive value and confirmatory value?
> What is predictive value?
> Explain the concept of materiality.
> What are the attributes of relevance?
> Explain the concept of relevance.
> Herman and Sons’ Law Offices opened on January 1, 2018. During the first year of business, the company had the following transactions: • January 2: The owners invested $250,000 (the par value of the stock) into the bu
> Branton Stores began operations on January 1, 2018. Branton had the following transactions in its first year of business: • January 4: Owners invested $400,000 (the par value of the stock) in exchange for 40,000 shares of common stock. • January 31: Bran
> Jester Entertainment Company began operations on January 1, 2018. The company had the following transactions in its first year of business: • January 4: Owners invested $120,000 (the par value of the stock) in exchange for 20,000 shares of common stock.
> The Jiayin Li Corporation, which is a technology company, was formed on January 1 of the current year. Transactions completed during the first year of operation follow. January 1: Issued 1,000,000 shares of common stock for $15,000,000, which is the par
> The Umbro Company, which is a fitness center, was formed on January 2 of the current year. Transactions completed during the first year of operation are presented below. January 2: Issued 900,000 shares of common stock for $15,000,000, which is the par v
> Who are the primary financial statement user groups identified in the objective of financial reporting?
