What difficulties do differences in accounting standards create for multinational corporations in preparing their financial statements?
> Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2025, for $12,000. They expect to use the Suburban for five years and then sell the vehicle for $4,500
> Horizon Corporation manufactures personal computers. The company began operations in 2012 and reported profits for the years 2015 through 2022. Due primarily to increased competition and price slashing in the industry, 2023’s income statement reported a
> Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1. For the most recent year, what is the amount of inventory in the balance sheet? What does this amount represent? 2. American Eagle refers to its cost
> Refer to the information in BE5–4. Determine the financial statement effects of the adjusting entry to allow for uncollectible accounts. Data from BE 5-4: At the end of the first year of operations, Mayberry Advertising had accounts receivable of $20,00
> Presented below is a partial amortization schedule for a three-year installment note requiring monthly payments of $1,128.11. 1. What is the principal amount of the note? 2. What is the total number of monthly payments? 3. What is the total cash paid ove
> Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watch
> Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Avon Products for the year ended December 31, 2019. Locate the “Consolidated Statement of Operations” (income statement) and “Consolidated Balance
> Financial information for American Eagle and financial information for Buckle is presented. Required: Try to estimate each company’s ratio of total current receivables to total current assets. Do you see problems with either company’s management of recei
> Financial information for Buckle is presented. Required: 1. Determine whether the trend in net sales has been increasing or decreasing for the past three years. 2. In which financial statement is the balance of accounts receivable reported? Explain why u
> Financial information for American Eagle is presented. Required: 1. Determine whether the trend in net sales has been increasing or decreasing for the past three years. 2. In which financial statement is the balance of accounts receivable reported? Expla
> Tony and Suzie are ready to expand Great Adventures even further in 2025. Tony believes that many groups in the community (for example, Boys and Girls Clubs, church groups, civic groups, and local businesses) would like to hold one-day outings for their
> Consider the following independent situations: 1. John Smith is the petty-cash custodian. John approves all requests for payment out of the $200 fund, which is replenished at the end of each month. At the end of each month, John submits a list of all acc
> Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for The Kroger Company for the year ended February 1, 2020. Locate the “Consolidated Balance Sheets” and “Consolidated Statements of Cash Flows.” You m
> Financial information for American Eagle and financial information for Buckle is presented. Required: 1. Which company has a higher ratio of cash to noncash assets? What might this mean about the two companies’ operations? 2. Which company has a higher r
> Financial information for Buckle is presented. Required: 1. What does the Report of Independent Registered Public Accounting Firm indicate about Buckle’s internal controls? 2. In the summary of significant accounting policies, how does Buckle define cash
> Refer to the information in BE5–2. Determine the financial statement effects when the company provides services on account on February 3 and collects cash from the customer on February 9. Data from BE 5-2: On February 3, a company provides services on a
> Financial information for American Eagle is presented. Required: 1. What does the Report of Independent Registered Public Accounting Firm indicate about American Eagle’s internal controls? 2. In the summary of significant accounting policies, how does Am
> An examination of the cash activities during the year shows the following. Suzie has not reconciled the company’s cash balance with that of the bank since the company was started. She asks Summit Bank to provide her with a six-month ban
> You have recently been hired as the assistant controller for Stanton Temperton Corporation, which rents building space in major metropolitan areas. Customers are required to pay six months of rent in advance. At the end of 2024, the company’s president,
> Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for McDonald’s for the year ended December 31, 2019. Locate the “Consolidated Statement of Income” (income statement) and “Consolidated Balance Sheets.
> Financial information for American Eagle and financial information for Buckle is presented. Required: 1. Determine which company maintains a higher ratio of current assets to total assets. How might this be an advantage for the company? 2. Determine whic
> Financial information for Buckle. Required: 1. For the most recent year, what amount does Buckle report for current assets? What is the ratio of current assets to total assets? 2. For the most recent year, what amount does Buckle report for current liabi
> Financial information for American Eagle. Required: 1. For the most recent year, what amount does American Eagle report for current assets? What is the ratio of current assets to total assets? 2. For the most recent year, what amount does American Eagle
> You may refer to the opening story of Tony and Suzie and their decision to start Great Adventures. July 1 Sell $10,000 of common stock to Suzie. 1 Sell $10,000 of common stock to Tony. 1 Purchase a one-year insurance policy for $4,800 ($400 per month) to
> What difficulties do differences in accounting standards create for investors?
> Which factor explaining why accounting practices differ across countries do you think is most important? Explain why.
> Refer to the information in BE5–17. Record (a) lending of $40,000 cash to an employee on October 1, 2024, (b) the adjusting entry for interest on December 31, 2024, and (c) collection of cash for the note and interest on October 1, 2025. Data from BE 5-
> Describe at least five reasons accounting practices differ across countries.
> What is meant by convergence of U.S. GAAP?
> We compared Live Nation Entertainment and AMC Networks at the end of this chapter. What reasons were given for the differences of amounts held in their Cash accounts?
> What is the definition of a liability?
> Disney has several types of long-term assets. What are the primary ones shown in its balance sheet?
> What is the purpose of the adjusted trial balance? How do the adjusted trial balance and the (unadjusted) trial balance differ?
> For each of the following accounts, indicate whether we use a debit or a credit to decrease the balance of the account. a. Cash. b. Salaries Payable. c. Utilities Expense. d. Service Revenue.
> Explain what it means to say that an accounting class is not the same as a math class.
> How is preferred stock reported differently under U.S. GAAP and IFRS? Do you think preferred stock is a liability or an equity item? Why?
> Would a company be more likely to report a contingent liability under U.S. GAAP or IFRS? Which is more conservative in the reporting of contingent liabilities, U.S. GAAP or IFRS?
> On October 1, 2024, Ogneva Corporation loans one of its employees $40,000 and accepts a 12 month, 9% note receivable. Calculate the amount of interest revenue Ogneva will recognize in 2024 and 2025.
> How do IFRS rules differ in the reporting of research and development costs? Which is more conservative in the reporting of research and development costs, U.S. GAAP or IFRS?
> What does it mean to revalue a long-term asset? How do U.S. GAAP and IFRS differ regarding revaluation of long-term assets?
> What effect does writing down inventory have on total assets and net income in that reporting period? The reversal of an inventory write-down in a future period, which is recorded under IFRS but not allowed under U.S. GAAP, has what effect on total asset
> Which inventory cost flow assumption is allowed under U.S. GAAP but not under IFRS? Explain why some U.S. companies will lobby strongly to keep this method as an allowable alternative.
> Explain how an income statement might be organized along the same categories currently used in the statement of cash flows—operating, investing, and financing activities.
> What is meant by a conceptual framework in accounting? Why is it important that the FASB and the IASB develop a common conceptual framework?
> Provide at least one argument against the trend toward convergence between U.S. GAAP and IFRS.
> Describe the Norwalk Agreement. What is the significance of this agreement?
> Explain the difference between principles-based accounting standards and rules-based accounting standards.
> What is the main objective of the International Accounting Standards Board (IASB)?
> Refer to the information in BE5–18. Determine the financial statement effects of (a) lending $40,000 cash to an employee, (b) interest on the note as of December 31, 2024, and (c) collecting cash for the note and interest on October 1, 2025. Data from B
> Tar Heel Corporation provides the following information at the end of 2024. Required: Prepare the income statement, statement of stockholders’ equity, and balance sheet for Tar Heel Corporation on December 31, 2024.
> Below are incomplete financial statements for Cyclone, Inc. Required: Calculate the missing amounts.
> Gator Investments provides financial services related to investment selections, retirement planning, and general insurance needs. At the end of the year on December 31, 2024, the company reports the following amounts: In addition, the company had common
> Horned Frogs Fine Cooking maintains its books using cash-basis accounting. However, the company recently borrowed $50,000 from a local bank, and the bank requires the company to provide annual financial statements prepared using accrual-basis accounting
> Consider the following transactions. Required: For each transaction, determine the amount of revenue or expense, if any, that is recorded under accrual-basis accounting and under cash-basis accounting.
> Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2024 and 2025: a. Receivables turnover ratio b. Inventory turnover ratio. c. Current ratio. d. Debt to equity ratio. 2
> Data for The Athletic Attic are provided in P12–4B. Earnings per share for the year ended December 31, 2024, are $1.36. The closing stock price on December 31, 2024, is $22.42. Required: Calculate the following profitability ratios for
> The following income statement and balance sheets for The Athletic Attic are provided. Required: Assuming that all sales were on account, calculate the following risk ratios for 2024: 1. Receivables turnover ratio. 2. Average collection period. 3. Invent
> The balance sheets for Fantasy Football for 2024 and 2023 are provided below. Required: 1. Prepare a vertical analysis of Fantasy Football’s 2024 and 2023 balance sheets. Express each amount as a percentage of total assets for that year
> Refer to the information in BE3–13. Determine the financial statement effects for (1) the borrowing on July 1, 2024, and (2) the adjusting entry for interest owed on December 31, 2024. Data from BE 3-13: Refer to the information in BE3–12. (1) Record th
> The income statements for Galaxy Tennis for the years ending December 31, 2024 and 2023, are provided below. Required: 1. Complete the “Amount” and “%” columns to be used in a horizo
> Game-On Sports operates in two distinct segments: athletic equipment and accessories. The income statement for each operating segment is presented below. Required: 1. Complete the “%” columns to be used in a vertical a
> Cash flows from operating activities for both the indirect and direct methods are presented for Electronic Transformations. Required: Complete the following income statement for Electronic Transformations. Assume all accounts payable are to suppliers.
> The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. Additional Information for 2024: 1. Purchased additional investment in stocks for $95,000. 2. Sold land for $62,
> Portions of the financial statements for Software Associates are provided below. Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method.
> Natalie King has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CPU Hardware Designers. All amounts are in thousands (000s). Below, in random order, are line items to be included in the statement of c
> National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2024, National League’s first year of operations: February 2 Issue 1.5 million shares
> Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2024, 125 shares of preferred stock and 3,000 shares of common stock have been issued. The following transactions affect stockholdersâ&
> Selected financial data for Surf City and Paradise Falls are as follows: Required: 1. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent year. Which company has the higher ratio? 2. Calculate the return on assets for
> On January 1, 2024, Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: Calculate the issue price of a bond and complete the first three rows of an amortizatio
> Refer to the information in BE3–11. Determine the financial statement effects of the adjusting entry for salaries owed on December 31, 2024. Data from BE 3-11: Fighting Irish Incorporated pays its employees $5,600 every two weeks ($400/day). The current
> Super Splash issues $1,000,000, 7% bonds on January 1, 2024, that mature in 15 years. The market interest rate for bonds of similar risk and maturity is 6%, and the bonds issue for $1,098,002. Interest is paid semiannually on June 30 and December 31. Req
> Temptation Vacations issues $60 million in bonds on January 1, 2024, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Required: 1. Were the bonds issued at face amount, a discount, or a p
> Viking Voyager specializes in the design and production of replica Viking boats. On January 1, 2024, the company issues $3,000,000 of 9% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: 1. If the
> Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2024. Required: Determine the appropriate way Compact Electronics would report the contingencies. Record
> Togo’s Sandwich Shop had the following long-term asset balances as of January 1, 2024: Additional information: · Togo’s purchased all the assets at the beginning of 2022. · The building is
> The following information relates to the intangible assets of Lettuce Express: a. On January 1, 2024, Lettuce Express completed the purchase of Farmers Produce, Inc., for $1,600,000 in cash. The fair value of the identifiable net assets of Farmers Produc
> The Fun Zone sells a variety of children’s toys, games, books, and accessories. Assume that a local store has the following amounts for the month of March 2024. Required: 1. Prepare a multiple-step income statement for the month ended M
> Sylvester has a bird shop that sells canaries. Sylvester maintains accurate records on the number of birds purchased from its suppliers and the number sold to customers. The records show the following purchases and sales during 2024. Sylvester uses a per
> On April 15, 2024, Sampson Consulting provides services to a customer for $110,000. To pay for the services, the customer signs a three-year, 12% note. The face amount is due at the end of the third year, while annual interest is due each April 15. (Hint
> Facial Cosmetics provides plastic surgery primarily to hide the appearance of unwanted scars and other blemishes. During 2024, the company provides services of $410,000 on account. Of this amount, $60,000 remains uncollected at the end of the year. An ag
> Refer to the information in BE3–10. Determine the financial statement effects for (1) the cash received in advance on November 1 and (2) the adjusting entry for services provided by December 31. Data from BE 3-10: Suppose a customer rents a vehicle for
> The following events occur for Municipal Engineering during 2024 and 2025, its first two years of operations. February 2, 2024 Provide services to customers on account for $38,000. July 23, 2024 Receive $27,000 from customers on account. December 31, 202
> Assume the following scenarios. Scenario 1: During 2024, The Hubbard Group provides services of $900,000 for repair of a state highway. The company receives an initial payment of $300,000 with the balance to be received the following year. Scenario 2: Ro
> Following is a summary of all transactions of Dreamworks Bedding Supplies for the month of August 2024. Required: Prepare a statement of cash flows for the month of August, properly classifying each of the transactions into operating, investing, and fina
> The cash records and bank statement for the month of July for Glover Incorporated are shown next. Additional information: a. The difference in the beginning balances in the company’s records and the bank statement relates to check #530,
> The general ledger of Jackrabbit Rentals at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. January 12 Provide services to customers on account, $62,400. 2. February 25 Provide ser
> Grasshopper Lawn Service provides general lawn maintenance to customers. The company’s fiscal year-end is December 31. Information necessary to prepare the year-end adjusting entries appears below. 1. On October 1, 2024, Grasshopper lent $60,000 to anoth
> Thunder Cat Services specializes in training and veterinary services to household pets, such as dogs, birds, lizards, fish, horses, and of course, cats. After the first 11 months of operations in 2024, Thunder Cat has the following account balances. The
> The general ledger of Pipers Plumbing at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. January 24 Provide plumbing services for cash, $20,000, and on account, $65,000. 2. March 1
> Jaguar Auto Company provides general car maintenance to customers. The company’s fiscal year-end is December 31. The December 31, 2024, trial balance (before any adjusting entries) appears below. In addition, the company had the followi
> The information necessary for preparing the 2024 year-end adjusting entries for Bearcat Personal Training Academy appears below. Bearcat’s fiscal year-end is December 31. 1. At the end of the year, Bearcat calculated that it owed $24,000 in income taxes.
> Refer to the information in BE3–7. Determine the financial statement effects for (1) the payment of rent in advance on October 1 and (b) the adjusting entry for rent expired by December 31. Data from BE 3-7: Suppose Hoosiers, a specialty clothing store,
> The cash records and bank statement for the month of May for Diaz Entertainment are shown below. Additional information: a. The difference in the beginning balances in the company’s records and the bank statement relates to checks #469
> The general ledger of Zips Storage at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. January 9 Provide storage services for cash, $134,100, and on account, $52,200. 2. February 12
> RiverHawk Expeditions provides guided tours in scenic mountainous areas. After the first 11 months of operations in 2024, RiverHawk has the following account balances. The following transactions occur during December 2024: December  1 P
> The general ledger of Red Storm Cleaners at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. March 12 Provide services to customers, $60,000, of which $21,000 is on account. 2. May
> Crimson Tide Music Academy offers lessons in playing a wide range of musical instruments. The unadjusted trial balance as of December 31, 2024, appears below. December 31 is the company’s fiscal year-end. In addition, the company had th
> Oscar’s Red Carpet Store maintains a checking account with Academy Bank. Oscar’s sells carpet each day but makes bank deposits only once per week. The following provides information from the company’s
> Cornhusker Company provides the following information at the end of 2024. Required: Prepare the income statement, statement of stockholders’ equity, and balance sheet for Cornhusker Company on December 31, 2024. No common stock is issue
> The information necessary for preparing the 2024 year-end adjusting entries for Gamecock Advertising Agency appears below. Gamecock’s fiscal year-end is December 31. 1. On July 1, 2024, Gamecock received $6,000 from a customer for advertising services to
