Question;unit 2 discussionsYou are one of three partners who own and operate Marys Maid;Service. The company has been operating for seven years. One of the other;partners has always prepared the companys annual financial statements.;Recently, you proposed that the statements be audited each year because it;would benefit the partners and prevent possible disagreements about the;division of profits. The partner who prepares the statements proposed that his;uncle, who has a lot of financial experience, can do the job at little cost.;Your other partner remained silent.;Required;What position would you take on the proposal? What would you strongly;recommend?;Unit 3 discussion;You work as an accountant;for a small land development company that desperately needs additional;financing to continue in business. The president of your company is meeting;with the manager of a local bank at the end of the month to try to obtain this;financing. The president has approached you with two ideas to improve the;company?s reported financial position. First, he claims that because a big part;of the company?s value comes from its knowledgeable and dedicated employees;you should report their Intellectual Abilities as an asset on the balance;sheet. Second, he claims that although the local economy is doing poorly and;almost no one is buying land or new houses, he is optimistic that eventually;things will turn around. For this reason, he asks you to continue reporting the;company?s land on the balance sheet at its cost, rather than the much lower;amount that real estate appraisers say its really worth.;Required: Comment;on the following questions. Why do you think the president is so concerned with;the amount of assets reported on the balance sheet? What accounting;concept relates to the presidents first suggestion to report Intellectual;Abilities as an asset? What accounting concept relates to the presidents;second suggestion to continue reporting land at its cost? Who might be;hurt by the presidents suggestions, if you were to do as he asks? What should;you do?;Unit 5 discussion;Assume you work as an;assistant accountant in the head office of a national movie rental business, a;la Blockbuster Inc. With the increasing popularity of online movie rental;operations, your company has struggled to meet its earnings targets for the;year. It is important for the company to meet its earnings targets this year;because the company is renegotiating a bank loan next month, and the terms of;that loan are likely to depend on the companys reported financial success. Also;the company plans to issue more stock to the public in the upcoming year, to;obtain funds for establishing its own presence in the online movie rental;business. The chief financial officer (CFO) has approached you with a solution;to the earnings dilemma. She proposes that the depreciation period for the;stock of reusable DVDs be extended from 3 months to 15 months. She explains;that by lengthening the depreciation period, a smaller amount of depreciation;expense will be recorded in the current year, resulting in a higher net income.;She claims that generally accepted accounting principles require estimates like;this, so it would not involve doing anything wrong.;Required: Discuss;the CFOs proposed solution. In your discussion, consider the following questions.;Will the change in depreciation affect net income in the current year in the;way that the CFO described? How will it affect net income in the following;year? Is the CFO correct when she claims that the change in estimated;depreciation is allowed by GAAP? Who relies on the video companys financial;statements when making decisions? Why might their decisions be affected by the;CFOs proposed solution? Is it possible that their decisions would not be;affected? What should you do?;Unit 7 discussions;Snake Creek Company has one trusted employee who, as the owner;said, handles all of the book-keeping and paperwork for the company. This;employee is responsible for counting, verifying, and recording cash receipts;and payments, making the weekly bank deposit, preparing checks for major;expenditures (signed by the owner), making small expenditures from the cash;register for daily expenses, and collecting accounts receivable. The owners;asked the local bank for a $ 20,000 loan. The bank asked that an audit be;performed covering the year just ended. The independent auditor (a local CPA);in a private conference with the owner, presented some evidence of the;following activities of the trusted employee during the past year;a. Cash sales sometimes were not entered in the cash register, and the trusted;employee pocketed approximately $ 50 per month.;b. Cash taken from the cash register (and pocketed by the trusted employee);was replaced with expense memos with fictitious signatures (approximately $ 12;per day).;c. $ 300 collected on an account receivable from a valued out- of- town;customer was pocketed by the trusted employee and was covered by making a $ 300;entry as a debit to Sales Returns and a credit to Accounts Receivable.;d. $ 800 collected on an account receivable from a local customer was pocketed;by the trusted employee and was covered by making an $ 800 entry as a debit to;Sales Discounts and a credit to Accounts Receivable.;Required;1.;What was the approximate amount stolen during the past year?;TIP: Assume employees work 5 days a week, 52 weeks a year.;2. What would be your recommendations to the owner?
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