Which statements can be prepared from the adjusted trial balance? What must be done before preparing the financial statements?
> 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?
> Describe what is meant by the term “general-purpose financial statements.” Discuss what group(s) benefit(s) from general-purpose financial statements.
> 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.
> 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?
> Who does the FASB consult in the standard-setting process?
> Sherlock Locksmiths, Inc. has the following adjusted trial balance for the year ended December 31, 2018. Required a. Journalize and post the necessary closing entries. Omit explanations. b. Prepare a post-closing trial balance as of December 31.
> Using the information in P4-6 and P4-7, perform the following steps for Tides Tea Company: Required a. Journalize and post the necessary closing entries. Omit explanations. b. Prepare a post-closing trial balance as of December 31. Data from P4-6 and P
> The post-closing trial balance for Heron Consulting Services, Inc. at December 31 of the prior year is presented here. The company reported the following transactions during the current year: • January 2: Heron took out a 5%, 2-year n
> Using the information provided in P4-6, perform the following steps for Tides Tea Company: Required a. Journalize and post adjusting journal entries based on the following additional information (omit explanations): • At December 31, i
> Tides Tea Company began operations on January 1, 2018. During the first year of business, the company had the following transactions: • January 18: The owners invested $200,000 (the par value of the stock) into the business and acquire
> Using the information in P4-3 and P4-4, perform the following steps for Herman and Sons’: Required a. Journalize and post the necessary closing entries at year-end. Omit explanations. b. Prepare a post-closing trial balance as of Dec
> Using the information provided in P4-3, perform the following steps: Data From P4-3: Required a. Journalize and post adjusting journal entries for Herman and Sons’ based on the following additional information: • Of
> Gates Accounting Services (GAS), a sole proprietorship, entered into a new 18-month office space contract on September 15, Year 1, paying the full $36,000 rent contract to the real estate company on that day (lease expiration March 15, Year 3). Assuming
> Jefferson, CPAs provides accounting services for a client at a flat contract rate of $10,000 a month. The terms of the contract include a required payment on the 15th day of each month for the prior month’s accounting services. Assuming Jefferson, CPAs p
> Choco-Delite Cookies Company (Choco) declared a $1,600,000 cash dividend on December 15, Year 2, payable to all stockholders on record the following month. On December 31, Year 2, the company completed a two-for-one stock split (Note: Prior to the split
> Why is a conceptual framework of accounting necessary and justifiable?
> The Cougars football team sells season tickets in advance for $480 each. The season consists of 16 games. Half of these games are home games, and half of them are away games. For Year 3, the team has sold and collected payment for 10,000 season tickets.
> Embree Corp. purchased a four-year insurance policy on May 1, Year 2, for $12,000, effective immediately. The company expensed the full cost of the policy in Year 2. The correct journal entry for Year 2 (ending December 31) will include a: a. Debit to p
> On July 15, Year 1, Southeastern University hired an associate professor for its Math Department at an annual (12-month) salary of $150,000. The salary is effective for its new school year, which commences August 16, and is payable in four quarterly cale
> Sampson Manufacturing Company (SMC) has an empty warehouse that it rents out to a local beer distributor for a monthly rental fee of $6,000. Terms of the rental agreement include a 10-day payment grace period and an additional $200 monthly utility expens
> During the fourth quarter ended December 31, Year 1, Lighting Fixtures Inc. (LFI) had average outstanding revolving bank loans of $1.2 million. Assume that the quarterly interest charges associated with these loans was $7,500. If LFI makes the interest p
