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accounting essay ques -Environment and Theoretical Structure of Financial Accounting

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Question;Alpaca Corporation had revenues of $200,000 in its;first year of operations. They have not collected on $20,000 of their sales;and still owe $25,000 on $70,000 of merchandise they purchased. The company had;no inventory on hand at the end of the year. The company paid $15,000 in;salaries. Owners invested $20,000 in the business and $20,000 was borrowed on a;five-year note. The company paid $2,000 in interest that was the amount owed;for the year, and paid $6,000 for a two-year insurance policy on the first day;of business. Alpaca has an effective income tax rate of 40%.;98. Compute net income for the first year for Alpaca;Corporation.;99. Compute the cash balance at the end of the first;year for Alpaca Corporation.;Tri Fecta, a partnership, had revenues of $360,000 in;its first year of operations. The partnership has not collected on $35,000 of;its sales, and still owes $40,000 on $150,000 of merchandise they purchased.;There was no inventory on hand at the end of the year. The partnership paid;$25,000 in salaries. The partners invested $40,000 in the business and $25,000;was borrowed on a five-year note. The partnership paid $3,000 in interest that;was the amount owed for the year and paid $8,000 for a two-year insurance;policy on the first day of business.;100. Compute net income for the first year for Tri;Fecta.;101. Compute the cash balance at the end of the first;year for Tri Fecta.;The following information ($ in millions) comes from;a recent annual report of Amazon.com, Inc.;102. Compute Amazon's balance in cash at the beginning;of the year.;103. Compute Amazon's total liabilities at the end of;the year.;104. Compute cost of goods sold for the year.;105. Compute the income before income tax for;Amazon.;106. Compare net income (loss) for the year to net;cash flow from operating activities. Why are these amounts different? Briefly;explain.;107. For each of the following situations, state;whether you agree or disagree with the financial reporting practice employed;and briefly explain the reason for your answer.;1. Cantor Corporation's accountant increased the book value of a patent from;its original cost of $1 million to its recently appraised value of $6 million.;2. Stanton Corporation paid for the personal travel of its chief financial;officer and charged travel expense.;3. At the end of its 2011 fiscal year, Dower, Inc. received an order from a;customer for $60,000. The merchandise will ship early in 2012. Because the sale;was made to a long-time customer and the invoice was paid in 2011, the;controller recorded the sale in 2011.;4. In the middle of its 2011 fiscal year, Sanguinetti, Inc. paid $12,000 to its;insurance company for one-year comprehensive insurance coverage. Sanguinetti;recorded the entire expenditure as an expense in 2011.;5. The Churchill Pharmaceutical Company included a note in its financial;statements that described a pending lawsuit against the company.;6. The Daily Corporation, a company whose securities are publicly traded;prepares monthly, quarterly, and annual financial statement for internal use;but disseminates to external users only the annual financial statements.;The following answers point out the key phrases that;should appear in students' answers. They are not intended to be examples of;complete student responses. It might be helpful to provide detailed;instructions to students on how brief or in-depth you want their answers to be.;108. Identify or define the following terms: a.;economic entity, b. going concern.;109. List the four financial statements most;frequently provided to external users.;110. Explain and show an example of how the FASB's;conceptual framework is needed in formulating standards on controversial;topics.;111. What is the SEC and how is it involved with;accounting standard setting?;112. What is the EITF and what is its purpose?;113. Accounting standard setting has been;characterized as a political process. Discuss this proposition giving an;example.;114. What are the key provisions of the Public Company;Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?;115. How does the value of an audit affect financial;statements?;116. What provisions did the Public Company Accounting;Reform and Investor Protection (Sarbanes-Oxley) Act of 2002 make for;performance of non-audit services by an audit firm?;117. Briefly describe the materiality;constraint.;118. Give an example of a violation of the stable;monetary unit assumption. How would it affect the quality of financial;statement information?;119. Identify or define the following terms: a.;periodicity, b. monetary unit.;120. Identify or define the following terms: a.;historical cost, b. realization.;121. How does GAAP define fair value?;122. Accounting standards have developed over time to;reflect changes in the business world as well as changes in our ability to;account for such changes. Using the example of marking assets and liabilities;to their fair value, explain why you would expect accounting standards to;change.

 

Paper#41258 | Written in 18-Jul-2015

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