...Chapter 2 The CPA Profession ← Review Questions 2-1 The four major services that CPAs provide are: 1. Audit and assurance services Assurance services are independent professional services that improve the quality of information for decision makers. Assurance services include attestation services, which are any services in which the CPA firm issues a report that expresses a conclusion about the reliability of an assertion that is the responsibility of another party. The four categories of attestation services are audits of historical financial statements, attestation on the effectiveness of internal control over financial reporting, reviews of historical financial statements, and other attestation services. 2. Accounting and bookkeeping services Accounting services involve preparing the client's financial statements from the client's records. Bookkeeping services include the preparation of the client's journals and ledgers as well as financial statements. 3. Tax services Tax services include preparation of corporate, individual, and estate returns as well as tax planning assistance. 4. Management consulting services These services range from suggestions to improve the client's accounting system to computer installations. 2-2 The major characteristics of CPA firms that permit them to fulfill their social function competently and independently are: 1. Organizational form A CPA firm exists as a separate entity to avoid...
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...Chapter -2 Discussion Questions Page-41 1. What is the fundamental accounting equation? Fundamental accounting equation is the relationship between assets and liabilities plus owner’s equity i.e. Assets = Liabilities + Owner’s Equity 2. What are expenses? An expense is an outflow of cash, use of other assets, or the incurring of a liability. Expenses cause a decrease in owner’s equity. 3. What is revenue? Revenue is the inflow of money or other assets that results from the sales of goods or services or from the use of money or property. 4. Describe the effects of each of the following business transactions on assets, liabilities, and owner’s equity. a. Sold services on credit It means revenue account on owner’s equity increases and account receivable on assets increases. b. Bought furniture for cash It means furniture account on assets increases and the cash account on assets decreases. c. Paid cash to a creditor It means cash account on asset decreases and account payable on liabilities decreases. d. Sold services for cash It means cash account on assets increases and revenue account on owner’s equity increases. e. Paid salaries to employees. It means cash account on assets decreases and expenses account on owner’s equity increases. f. Bought equipment on credit. It means equipment account on assets increases and account payable on liabilities increases. 5. What information does the income statement...
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...Veronica B.--Week 2 – Homework Chapter 3 # 13 Required: a. Calculate the cost per equivalent unit for materials & conversion costs. Materials = $446,970 / (45,000 + 2,550)= $9.40 Conversion Cost = $407,880 / (45,000 + 1,350) = $8.80 b. Calculate the cost of items completed during November. 45,000 x $18.20 = $ 819,000… $18.20 came by adding $9.40 + 8.80 c. Calculate the cost of ending Work in Process Material Cost: (2,550 x $9.40) = $23,970 Conversion: (1,350 x $8.80) = $ 11,880 $35,850 Total cost of ending work in process #14 Quantity Schedule Required: Prepare a reconciliation of units and a computation of equivalent units for June for the cleaning department. Unit Reconciliation Units in begininning Work in Process 40,000 Units started in June 500,000 540,000 (Units to account for) Units in ending Work in Process -- 540,000 – 30,000 = 510,000 Units Completed 510,000 Problem # 11 Unit Reconciliation Units in Beginning WIP 7,000 Units started during WIP 97,000 Units to account for 104,000 Units completed and transferred to bottling 91,000 Units in ending WIP 13,000 Units accounted for ...
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...conceptual framework? Why is a conceptual framework necessary in financial accounting? .A conceptual framework establishes the concepts that underlie financial reporting. A conceptual framework is a coherent system of interrelated objectives and fundamentals that are expect to lead to consistent standards'. A coherent system of concepts that flow from an objective. The objective identifies the purpose of financial reporting. The other concepts provide guidance on (1) identifying the boundaries of financial reporting; (2) selecting the transactions, other events, and circumstances to be represented; (3) how they should be recognized and measured; and (4) how they should be summarized and reported. What is the primary objective of financial reporting? The objective of general-purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling, or holding equity and debt instruments, and providing or settling loans and other forms of credit. Information that is decision-useful to capital providers may also be useful to other users of financial reporting, who are not capital providers What is meant by the term “qualitative characteristics of accounting information”? Qualitative characteristics of accounting information that distinguish better or (more useful) information from...
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...Chapter 2 Transaction Analysis Short Exercises (5 min.) S 2-1 The transaction had a financial impact on the business and should be recorded. The payment for the computer was not an expense. The payment related to the purchase of an asset, “Equipment,” because the computer is an economic resource of the business. The computer will provide benefit over more than one fiscal period. (5 min.) S 2-2 a. $12,000 (Cash $10,000–$5,000; Supplies $2,000, Computer $5,000) b. $2,000 Accounts Payable Chapter 2 Transaction Analysis Copyright © 2012 Pearson Canada Inc. 65 (5-10 min.) Cash 25,000 2,000 23,000 Supplies 9,000 S 2-3 4,000 Accounts Receivable 6,000 Bal. Accounts Payable 9,000 Rent 4,000 Service Revenue 8,000 Common Shares 25,000 (5 min.) S 2-4 Increased total assets: May 1 (Cash) May 1 (Medical supplies) May 3 (Cash, Accounts receivable) Decreased total assets: May 2 (Cash) 66 Financial Accounting Fourth Canadian Edition Instructor’s Solutions Manual Copyright © 2012 Pearson Canada Inc. (10 min.) S 2-5 CREDIT Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT June 15 Cash ................................................. Note Payable ............................... Borrowed money from the bank. 25,000 25,000 22 Accounts Receivable ...................... 9,000 Service Revenue ......................... Delivered portrait to be paid on account. 28 Cash .................................................
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...C H A P T E R 2 CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING LEARNING OBJECTIVES After studying this chapter, you should be able to: •1 •2 •3 •4 Describe the usefulness of a conceptual framework. Describe efforts to construct a conceptual framework. Understand the objective of financial reporting. Identify the qualitative characteristics of accounting information. Define the basic elements of financial statements. •6 •7 Describe the basic assumptions of accounting. Explain the application of the basic principles of accounting. Describe the impact that constraints have on reporting accounting information. •8 •5 What Is It? Everyone agrees that accounting needs a framework—a conceptual framework, so to speak—that will help guide the development of standards. To understand the importance of developing this framework, let’s see how you would respond in the following two situations. SITUATION 1: “Taking a Long Shot . . . ” To supplement donations collected from its general community solicitation, Tri-Cities United Charities holds an Annual Lottery Sweepstakes. In this year’s sweepstakes, United Charities is offering a grand prize of $1,000,000 to a single winning ticket holder. A total of 10,000 tickets have been printed, and United Charities plans to sell all the tickets at a price of $150 each. Since its inception, the Sweepstakes has attracted area-wide interest, and United Charities has always been able to meet its sales target. However, in the...
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...CHAPTER 2: Recording Process ( SWD: Lecture Review) What is an account? An account is an accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. For example, Softbyte (the company discussed in Chapter 1) would have separate accounts for Cash, Accounts Receivable, Accounts Payable, Service Revenue, and Salaries Expense. In its simplest form, an account consists of three parts: (1) a title, (2) a left or debit side, and (3) a right or credit side. Because the format of an account resembles the letter T, we refer to it as a T account. Debits and Credits The terms debit and credit are directional signals: Debit indicates left, and credit indicates right.They indicate which side of a T account a number will be recorded on. Entering an amount on the left side of an account is called debiting the account. Making an entry on the right side is crediting the account.We commonly abbreviate debit as Dr. and credit as Cr. Double-entry accounting system • Each transaction must affect two or more accounts to keep the basic accounting equation in balance. • Recording done by debiting at least one account and crediting another. • DEBITS must equal CREDITS. If Debits are greater than Credits, the account will have a debit balance. If Credits are greater than Debits, the account will have a credit balance. The normal balance of an account is on the side where an increase in the account is recorded. The Journal Companies initially record transactions...
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...Excel Chapter 2 1. Entering data into an excel worksheet is very simple. The user just has to click on the desired cell where information is to be entered, and then type what they want in the box. Whatever the user types, whether it be labels such as text entries or values such as numbers and formulas, will be automatically entered into the formula bar as well. 2. Labels and values both refer to data entered into cells in an Excel worksheet. However, they differ in that labels are texts entries whereas values are number or formula entries. 3. A series of # signs means that the number entered into the cell was wider than the column permitted. This can be resolved by resizing the column with to show the entire number and removing the # signs. 4. Changing column width or row height is a very easy task in Excel. The user can place the mouse pointer between the gray area of the columns containing letter headings, click, and drag the column left or right to expand or reduce its size. The same can be done for rows, but the user must drag up or down to resize the row height. Another neat feature is that if the user double clicks in the gray area between letters, the column size will automatically adjust to fit the largest data entry. Furthermore, the user can automatically adjust all the rows and columns of a worksheet by clicking on the arrow in the gray box in the upper left corner and then double clicking the gray at the top between any column or row. 5. The appearance of data...
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...eral ledger. b. Assess whether the impact of the transaction results in a debit or credit to the account balance. c. Use source documents to identify accounts affected by external transactions. d. Analyze the impact of the transaction on the accounting equation. e. Prepare a trial balance. f. Record transactions using debits and credits. Learning Objective: 0201 Identify the basic steps in measuring external transactions. 5 3 1 2 6 4 Worksheet Below are the steps in the measurement process of external transactions. Rank them from first (1) to last (6) by choosing the appropriate numbers in the dropdown box. a. Post the transaction to the Taccounts in the general ledger. b. Assess whether the impact of the transaction results in a debit or credit to the account balance. c. Use source documents to identify accounts affected by external transactions. d. Analyze the impact of the transaction on the accounting equation. e. Prepare a trial balance. f. Record transactions using debits and credits. 5 3 1 2 6 4 http://ezto.mheducation.com/hm_accounting.tpx?todo=printview 1/8 9/4/2014 Assignment Print View award: 2. 1.42 out of 1.42 points The following transactions occur for the Panther Detective Agency during the month of July: a. Purchase a truck and sign a note payable, $14,000. b. Purchase office supplies for cash, $500. c. Pay $700 in rent for the current month...
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...(1) Uses of Accounting Information and the Financial Statements a. Accounting as an Information System i. Accounting is an information system that measures, processes, and communicates financial information about an economic entity. Accountants focus on the needs of decision makers. ii. External decision makers use financial accounting reports to evaluate how well a business has achieved its goals. These reports are called financial statements. iii. The primary external users of accounting information are investors and creditors. Users with indirect financial interests include, among others, tax authorities (IRS) and regulatory agencies (SEC). b. The Corporate Form of Business i. There are three basic forms of business: 1. Sole Proprietorship: One person is the owner, takes all the profits or losses of the business, and is liable for all of its obligations. 2. Partnership: Two or more owners (“partners”) share the profits and losses of the business according to a prearranged formula. Legally, there is no economic separation between the owners and the business. This unlimited liability of its partners is a key disadvantage of a partnership. 3. Corporation: A business unit chartered by the state that is legally separate from its owners (“stockholders”). Stockholders enjoy limited liability. 4. Limited Liability Company (MM addition): c. The Financial Statements and their Elements i. Income Statement 1. Many people consider the income statement (aka the “Statement...
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...CHAPTER 1: Exercise 14 If Ken stayed open on Saturdays, the added income would be $130,000 per year ($2,500 x 52), while the additional costs are shown to be $1,000 ($700 + $500 + $100 + $200). Using these two figures, we can calculate the opportunity cost (the loss from an opportunity not taken), which would be $1,500 ($2,500 - $1,000). To me, this says that Ken should keep his shop open on Saturday’s. Rent or depreciation of office equipment do not need to be calculated because these are fixed costs. They would not change regardless of how many days his shop is open nor his shops production. Also, rent of course would not change if his shop stays open on Saturday’s because rent covers the whole month. Problem 2 a.) If we reference 1-1 so we can see the production costs, we need to add the ingredient costs of $20,000 + labor costs of $12,000, totaling $32,000. Then divide that by the number of jars that actually produced (25,000). This equals $1.28/one jar of salsa. The incremental cost is calculated as follows: $1.28 x 50,000 (extra jars of salsa) = $64,000. b.) The revenue started out at $1,625,000 (325,000 jars x $5.00), while the new revenue would be $1,725,000 (375,000 x $4.60). After calculating the difference, we can see that the incremental revenue after the reduction of price would be $100,000 ($1,725,000 - $1,625,000). c.) Yes, he should lower the price of its salsa. Problem 4 a.) On page 6 of our text book, we learn about the Management...
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...ACCT 312 Intermediate Accounting III – Entire Course http://hwguiders.com/downloads/acct-312-intermediate-accounting-iii-entire-course/ ACCT 312 Intermediate Accounting III Complete Homework Sets ACCT 312 Week 1 Homework Chapter 16, Exercise 16-3, 16-5, 16-10,16-22 ACCT 312 Week 2 Homework Chapter 17, Exercise 17-5, 17-10, 17-12, 17-15 ACCT 312 Week 3 Homework Chapter 18, Exercise 18-5, 18-11, 18-13, 18-19 ACCT 312 Week 4 Homework Chapter 19, Exercise 19-2, 19-5, 19-10, 19-17 ACCT 312 Week 5 Homework Chapter 20, E20-1, E20-10, E20-17, E20-24 ACCT 312 Week 6 Homework Chapter 21, E21-14, E21-21, P21-4] ACCT 312 Week 7 Homework Problems P21-5, P21-6 ACCT 312 Intermediate Accounting III Complete Quizzes ACCT 312 Week 1 Quiz 1. (TCO 1) Which causes a temporary difference between taxable and pretax accounting income? 2. (TCO 1) Which difference between financial accounting and tax accounting ordinarily creates a deferred tax liability? 3. (TCO 1) Which temporary difference ordinarily creates a deferred tax asset? 4. (TCO 1) Under current tax law, a net operating loss may be carried forward up to 5. (TCO 1) Which causes a permanent difference between taxable income and pretax accounting income? ACCT 312 Week 2 Quiz 1. (TCO 2) Which causes a temporary difference between taxable and pretax accounting income? 2. (TCO 2) Which statement typifies defined contribution plans? 3. (TCO 2) Which is not a way of measuring the pension obligation...
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...ACCOUNTING THEORY AND PRACTICE (FAR 600) Teaching and Learning Arrangements (SEMESTER: JAN 2007 – APRIL 2007) COURSE CODE : FAR 600 PROGRAM : BACHELOR OF ACCOUNTING (HONS) CREDIT HOURS : 4 CONTACT HOURS : 4 STATUS : CORE SYNOPSIS This financial accounting course exposes students to accounting theory, corporate accounting policies and financial reporting practices. The importance of history is introduced through a brief discussion on accounting history from both experiences of both western and Muslim Civilization. In understanding the theoretical framework of accounting, the various perspectives on financial accounting theory are examined with particular emphasis on their rationale and implications on accounting practice. General concepts of theory formulation are discussed and types of accounting perspectives and research are also introduced in this course. Corporate Accounting Policies are explained by the development of the Conceptual Framework and the Importance of a Regulatory Environment. The Standard Setting process in Malaysia is discussed. An analytical approach of the accounting standards is adopted by examining the recognition, measurement, disclosure and presentation of accounting information is discussed. Significant emphasis is placed on Asset Measurement, Nature of Liabilities, Types of Equity, Recognition of Revenue and Income Finally contemporary accounting practices and...
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...during the course. ****************************************************************************** Learning Objectives This course will utilize a “hands on” approach for the recording and reporting of economic transactions. This course will provide students with a thorough understanding of the accounting process and its application and introduce students to audit, tax and GAAP and IFRS standard setting processes. Prerequisites: ACCT 2231 and ACCT2232 (or concurrent enrollment in ACCT2332) Mission of the Department of Accountancy and Taxation Prepare accounting graduates for leadership roles in the accounting profession; Conduct research that advances the body of accounting knowledge, and inevitably has implications on accounting practice; Perform service that leads to the efficient and effective practice of accounting. Objectives of the Department of Accountancy and Taxation Prepare its undergraduate students for graduate education or productive careers by establishing the foundations for life-long learning; Prepare its master-level students for positions of leadership in the accounting profession; Prepare its doctoral students for successful careers in accounting education and research; Develop innovative and effective instructional methods that...
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...| UCSI UNIVERSITYFACULTY OF BUSINESS AND INFORMATION SCINECE (FoBIS) | Teaching Plan 1. | Unit Code &Unit Title: | BA106 INTRODUCTORY ACCOUNTING | 2. | Course of Study: | BACHELOR OF ACCOUNTING AND FINANCE, BACHELOR OF ACCOUNTING, BACHELOR OF FINANCE AND INVESTMENTS | 3. | Year of Study: | 1 | 4. | Year and Semester: | JAN 2015 | 5. | Credit Hour & Contact Hours: | 3 credit hours Lecture: 3Tutorial: 3Practical: | 6. | Lecturer: | SHAKERIN ISMAIL | 7. | Tutor: | SHAKERIN ISMAIL | 8. | Mode of Delivery: | LECTURE, TUTORIAL | 9. | Objective: | This subject would enable the students: 1. To understand and appreciate of the accounting concepts and accounting practice. 2. To prepare the recording process and understand the whole accounting cycle. 3. To possess the technical ability in preparing basic financial statements. | 10. | Learning Outcome: | At the end of the course, students should be able to:Knowledge 1. Distinguish different forms of business and its reporting environment. 2. Explain the accounting principles and the role of accounting reports.Thinking Skills 3. Use accounting equation to analyse the economic effect of a transaction. 4. Use double entry system of accounting to record business transactions.Subject-based Practical Skills 5. Prepare trial balance. 6. Prepare adjusting entries and closing entries. 7. Prepare entry for special journals and subsidiary...
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