...COMPREHENSIVE EXAMINATION A (Chapters 1 - 4) Problem A - I — Multiple Choice (20 points) Circle the one best answer. 1. Cost of goods manufactured during a period is obtained by taking the total manufacturing costs incurred during the period and adding and subtracting the following inventories: Adding Subtracting a. Beginning finished goods inventory Ending finished goods inventory b. Beginning work in process inventory Ending finished goods inventory c. Beginning raw materials inventory Ending work in process inventory d. Beginning work in process inventory Ending work in process inventory 2. Cost of goods sold is equal to a. total manufacturing costs plus beginning work in process less ending work in process. b. cost of goods sold plus beginning work in process less ending work in process. c. total manufacturing costs plus ending work in process less beginning work in process. d. cost of goods manufactured plus beginning finished goods less ending finished goods. 3. Inventory accounts for a manufacturer consists of a. direct materials, work in process, and finished goods. b. direct labor, work in process, and finished goods. c. manufacturing overhead, direct materials, and direct labor. d. work in process, direct labor, and manufacturing overhead. 4. In a process cost system, equivalent units of production are the a. work done on physical units expressed in fully completed units. b. units that are transferred to...
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...PRACTICAL ACCOUNTING 2 1. Katy Perry developed an interesting idea for marketing sailboats in Death Valley. She interested Lady Gaga in joining her in a partnership. Following the information you have collected relative to their original contribution. Lady Gaga contributed P 30,000 cash, a track of land, and delivery equipment. Katy Perry contributed P 60,000 cash. After giving special consideration to the tax bases of the assets contributed, the relative usefulness of the assets to the partnership versus the problems of finding buyers for the assets and contributing cash, and other such factors, the partners agreed that Katy Perry’s contribution was equal to 40 percent of the partnership’s tangible assets, measured in terms of the fair value of the assets to the partnership. However, since marketing idea originated with Katy Perry, it was agreed that she should receive credit for 50 percent of the recorded capital. Recent sales of land similar to that contributed by Lady Gaga suggest a market value of P 40,000. Likewise, recent sales of delivery equipment similar to that contributed by Lady Gaga suggest P 40,000 as the market value of the equipment. These sales, of course, were not entirely representative of the particular assets contributed by Lady Gaga and therefore may be a better indicator of their relative values than their absolute values. In reflecting on their venture, the partners agree that it is a rather risky affair in respect to anticipated profits...
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...Ghbkhkgg2223543 The third approach is most consistent with the actual substance of sales transactions involving equipment and an extended warranty contract. Revenue from warranty has to be recognized when a period of a warranty is fulfilled. It would be wrong to consider revenue from the sale of an extended warranty or product maintenance contract at the time of sale since the company is still liable or obliged to the customers with the warranty. All are major elements of Partial Revenue Recognition on the sale of extended warranty and product maintenance contracts were applied in the Circuit City case since it was mentioned in the text that the sales has rapidly grew from $705 million in 1986 to $2.1 billion in 1990. This is when the company had introduced the extended warranty contracts and the profit margin form the extended warranty sales were high in comparison to the profit margin from the sale of products. The warranty contract relates to the product sold by Circuit City where the pricing of the sale of the extended warranty is an integral part of pricing the related product The third approach is most consistent with the actual substance of sales transactions involving equipment and an extended warranty contract. Revenue from warranty has to be recognized when a period of a warranty is fulfilled. It would be wrong to consider revenue from the sale of an extended warranty or product maintenance contract at the time of sale since the company is still liable or obliged to...
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...STATEMENT OF CASH FLOWS © Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM scf.doc Please observe all copyright laws OPERATING INVESTING FINANCING Cash Receipts From: - Sale of goods and services - Interest and dividend income Cash Receipts From: - Sale of property & equipment - Sale of investment securities - Collections on loans receivable Cash Receipts From: - Short-term borrowing - Long-term borrowing - Issuance (sale) of stock Cash Payments For: - Inventory - Wages - Interest - Taxes - All other operating expenses Cash Payments For: - Purchase of property & equipment - Purchase of investments - Making of loans receivable Cash Payments For: - Repayment of amounts borrowed - Dividends to stockholders - Purchase of treasury stock Operating Accounts: Investing Accounts: - All income statement accounts - Long-lived assets - Current assets* - Current liabilities** - Retained earnings change from net income or loss ----------------------- Financing Accounts: - Long-term liabilities - Stockholders’ equity - Retained earnings decrease from dividends paid to owners * except for money loans made and subsequently collected. ** except for money borrowed and subsequently repaid . The following would be shown at the bottom of the statement or mentioned in the footnotes to the financial statements. These are changes to assets, liabilities and/or equity accounts (other than current) that occur without...
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...Intermediate Accounting 2 Week 1 homework 12-5 Research & Development Costs 940,000 Legal Costs 75,000 Prepaid Rent 26,000 Rent Expense 65,000 Discount on Bonds Payable 82,950 Interest Expense 1.050 Advertising Expense 207,000 Income Summary 141,000 Paid in Capital in Excess of par on Common Stock 250,000 Intangible Assets 1,288,000 12-15 (a.) 335,000,000 Fair Value -160,000,000 net identifiable assets 175,000,000 impaired value of Goodwill 200,000,000 Carrying amount of Goodwill -175,000,000 Impaired value of Goodwill 25,000,000 Loss on Impairment Loss on Impairment 25,000,000 Goodwill 25,000,000 (b.) Once goodwill is written off, it cannot be written back up so no entry is necessary. CA12-2 Interest on Mortgage Bonds: 2009 amount is due to normal construction and wasn’t impacted by the tornado. They knew it would accrue during the construction and add to the total cost of building the shopping center. The 2010 amount is also what would have normally accrued; there just wasn’t any income to offset it. IF the tornado hadn’t hit, it would have been a normal operating expense. Cost of Obtaining Tenants: Both years are normal expenses that would have been incurred regardless of the tornado. These are considered a start-up cost that would get expensed when they are incurred. Promotional Advertising- The 2009 costs were not affected by the tornado and should be expensed...
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...Manufacturing costs- direct materials, direct labor, manufacturing overhead Manufacturing overhead- indirect materials, indirect labor, maintenance, repair on equipment, property taxes, and things dealing with operating the factory Nonmanufacturing costs- selling costs: costs incurred to secure customer orders and get finished product to them, like advertising, shipping, sales travel, sales commission, sales salaries. Administrative costs: cost associated with general management like executive compensation, general accounting Product costs-all costs involved making product, treated as expenses in period Period costs-all costs that are not product costs, expenses in income statement Prime costs-sum of direct materials cost and direct labor cost Conversion costs-sum of direct labor cost and manufacturing overhead cost Variable cost per unit is constant, fixed cost per unit varies by activity, activity rises=per unit cost decrease, activity lowers=per unit cost increase Mixed costs- y=a+bX; y=total mixed cost, a=total fixed cost, b= variable cost per unit, x=level of activity High-low Method-variable cost=change in cost/change in activity Traditional income statement:uses COGS= beg. Invent+purchases-end invent. Used externally, doesn’t distinguish fixed and variable costs. Gross margin=sales-COGs Contribution income statement- distinguishes fixed and variable costs, sales-variable expenses=contribution margin. Contribution margin-fixed expenses= net income Direct costs-...
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...CHAPTER 5 Revenue Recognition after Delivery * Assumes we are able to make reasonable estimates of amounts due from customers that potentially might be uncollectible. * For product sales this also includes amounts not collectible due to customers returning the products they purchased. Installment Sales * Increasing the length of time allowed for payment usually increases the uncertainty about whether the store actually will collect a receivable * The increased uncertainty concerning the collection of cash from installment sales can be accommodated satisfactorily by estimating uncollectible amounts. * If the installment sale creates significant uncertainty concerning cash collections, making impossible a reasonable assessment of future bad debts, then revenue and expense recognition should be delayed * GAAP requires that they installment sales method be applied to retail land sale that meets certain criteria. * At times, revenue recognition is delayed due to a high degree of uncertainty related to ultimate cash collection. * The installment sales and cost recovery methods are only used in unusual circumstances Profit recognition by the full accrual method is appropriate provided: * The profit is determinable * The earnings process is virtually complete * Unless both of the above conditions exist, recognition of all or part of the profit shall be postponed and other methods of profit recognition shall be followed Installment Sales...
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...Partnership – Basic Considerations and Formation 1 CHAPTER 1 MULTIPLE CHOICE ANSWERS AND SOLUTIONS 1-1: a Jose's capital should be credited for the market value of the computer contributed by him. 1-2: b (40,000 + 80,000) ÷ 2/3 = 180,000 x 1/3 = 60,000. 1-3: a Cash P100,000 Land 300,000 Mortgage payable ( 50,000) Net assets (Julio, capital) P350,000 1-4: b Total Capital (P300,000/60%) P500,000 Perla's interest ______40% Perla's capital P200,000 Less: Non-cash asset contributed at market value Land P 70,000 Building 90,000 Mortgage Payable ( 40,000) _120,000 Cash contribution P 80,000 1-5: d - Zero, because under the bonus method, a transfer of capital is only required. 1-6: b Reyes Santos Cash P200,000 P300,000 Inventory – 150,000 Building – 400,000 Equipment 150,000 Mortgage payable ________ ( 100,000) Net asset (capital) P350,000 P750,000 1-7: c AA BB CC Cash P 50,000 Property at Market Value P 80,000 Mortgage payable ( 35,000) Equipment at Market Value _______ _______ P55,000 Capital P 50,000 P 45,000 P55,000 2 Chapter 1 1-8: a PP RR SS Cash P 50,000 P 80,000 P 25,000 Computer at Market Value __25,000 _______ __60,000 Capital P 75,000 P 80,000 P 85,000 1-9: c Maria Nora Cash P 30,000 Merchandise inventory P 90,000 Computer equipment 160,000 Liability ( 60,000) Furniture and...
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...TRUE/FALSE. (3 points each) Write 'True' if the statement is true and 'False' if the statement is false. 1) A direct cost is a cost that cannot be easily traced to the particular cost object under consideration. 2) All other things the same, an increase in variable expense per unit will increase the break-even point. 3) When a job is completed, the goods are transferred from the production department to the finished goods warehouse and the journal entry would include a debit to Work in Process. 4) A traditional format income statement organizes costs on the basis of behavior. 5) Direct material costs are generally fixed costs. 6) When completed goods are sold, the transaction is recorded as a debit to Cost of Goods Sold and a credit to Finished Goods. 7) On a cost-volume-profit graph, the revenue line will be shown below the total expense line for any activity level below the break-even point. 8) The margin of safety in dollars equals the excess of actual sales over budgeted sales. 9) Unit variable cost is expected to remain unchanged as activity changes within the relevant range. MULTIPLE CHOICE. (3 points each) Circle the one alternative that best completes the statement or answers the question. 10) Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table? A. The amount paid to the individual who stains the table. B. The commission...
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...Tax Exam 1 Chapter 1: Overview of Taxes, Audit Process Transfer Tax: Tax on donor, not donee * Gift Tax: living transfer of property; $14,000/yr/donee exclusion ($28,000 if joint), unlimited marital & charity deduction, once in a lifetime exemption for gifts & estate of $5,340,000 * Estate Tax: combine with taxable gifts; to derive taxable estate, you are entitled to subtract contributions to spouse & charity. Only eligible for exemption if not used for gift tax purposes. Sales Tax: applied by state w/additional amnt imposed by city level Use Tax: prevents avoidance of sales tax (same rate as sales tax- use or consumption of personal property) FICA Tax: employee & employer--social security tax (6.2% up to $117,000) & medicare tax (1.45% unlimited); .9% med. tax on earned income above $200,000 for single & HOH and $250,000 for joint (only employees & on combined earned income of both spouses) Payment Requirements: must pay by normal filing date (April 15); unpaid taxes = fed short-term rate + specified %. Gov is not required to pay interest on refund within 45 days after the filing due date for return, otherwise same rate as underpayments. Late-Filing and Late-Payment Penalty: fail to file an income tax return = 5% penalty/mo of the unpaid balance up to 25% of tax balance due. After 5 mo, drops to ½%/mo of balance due in addition to interest due – no penalty for failure to file a tax return when no balance is due, can wave penalty charge...
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...Historical cost is based on actual, not merely possible transaction. * Record done based on actual transactions made. * Ijiri- it possible to prepared a balance she on the basis of year-end market price without references to actual transactions. * Historical cost provides evidences for determining how efficiency management has meet their responsibilities. iii. Through history, FS based on historical cost have been found to be useful. * Mautz – “if whose who make management n investment decision had found financial reports based on historical cost useful over the years, changes in acctg would long since have been mad” iv. The best understood concept of profit is the access of selling price over historical cost. * People understand the basic notion of actual cost compared to the selling price as an access or profit. v. Acctg must guard the integrity of their data against internal modifications. * Historical cost is less subject to manipulation bcoz it is based on actual transaction occurred. vi. How useful is profit information based on current cost or exit price? * Current cost or exit price induce a short term view of profit. * But...
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...REPLACE (1.5) A500 Prof. & Ethical Responsibilities in Acctg. (3) A511/A312 Fin Acctg Theory & Prac II (3) A515/A328 Federal Income Taxes (1.5) A551 Tax research (concurrent with A515) (3) A514/A424 Auditing Theory & Practice (3) A523 Business Information Systems (3) A539 Adv. Tax – Entity Issues (3) L503 Advanced Business Law ______ ____________________________ 21 hours required or to be replaced: Replacement Courses for required courses above (3) (3) (3) (3) (3) Electives (3) (3) (3) (30) TOTAL REQUIRED HOURS Required Core (21 hrs) A500 Prof. & Ethical Resp. in Acctg.* A511/A312 Fin Acctg Theory & Prac II A514/A424 Auditing Theory & Prac A515/A328 Federal Income Taxes A551/A302 Tax Research* A523 Business Information Systems† A539 Adv. Tax – Entity Issues L503 Advanced Business Law LIPE (Elective) A529 LIPE (internship/work) † counted as a business course for the CPA exam * 1.5 credit hour course Accounting Electives A508 Accounting for Non-Profit Org A516 Estate and Gift Tax A517 Financial Statement Analysis A520 Corporate Financial Reporting A522 Partnership Taxation A528 State and Local Taxation A538 Corporate Taxation A554 Tax of Estates & Trusts* A555 Taxation of S Corporations A556 Tax Acctg Periods & Methods A558 Tax of Tax Exempt Orgs* A560 Auditing Information Technology A562 Adv Financial Acctg A566 Advanced Auditing A567 Tax of Tax Exempt...
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...As a management and business economics major here at UC Merced, my hopes are to pursue a career in accounting upon graduation. In order to do this, I must complete as many accounting courses as I can during my undergraduate time so that I can have an in depth knowledge about this field. However, due to the limited amount of accounting courses and accounting professors available at UC Merced, I am not able to obtain an extensive knowledge about this topic. Therefore, I would like to enroll in the Intersegmental Cross Enrollment Program in order to take Accounting 4A: Managerial Accounting at Merced College, which is the equivalent to Econ 7 here at UCM. Enrolling in ACCTG 4A at the community college will allow me to further my education under...
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...University of Alberta, School of Business Accounting 415/615 (Winter 2016) Department of AOIS Intermediate Financial Accounting II Instructor: Office: Phone: E-mail: Jason Lee BUS 4-30B 780-492-4839 jason.lee@ualberta.ca Office Hours: MW 11:00AM– 12:00AM Or by appointment Lecture Sections: B1 B2 MW MW 9:30AM – 10:50AM 12:30PM – 1:50PM BUS 1-10 BUS 3-10 Course Description and Objectives: ACCTG 415/615 is the second part of Intermediate Financial Accounting. This course builds upon materials learned in previous financial accounting courses including ACCTG 311 and ACCTG 414/614. The focus of this course is on accounting for financing, liabilities and equity, and related income measurement, and disclosure with an in-depth examination of complex measurement issues. Together with ACCTG 414/614, Intermediate Financial Accounting covers virtually every important corporate reporting topic. Students are expected to master the vast body of knowledge on accounting for activities of an enterprise and preparing accounting information. A professional accountant’s expertise depends on both technical skill and professional judgment. During this course, students are expected to work towards developing the expertise through a lot of quantitative practice and a thorough understanding of the rationale (conceptual basis, assumptions, facts of circumstances, etc.) for each accounting method. This is a difficult course. For each topic covered, there...
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...PRIVATE FITNESS, LLC A Case Analysis Presented to MR. EDGEL EARL ABEAR, CPA, MBA Professor DIVISION OF BUSINESS AND ACCOUNTANCY Cor Jesu College Digos City In Partial Fulfillment of the Requirements of the Subject ACCTG 16A and ACCTG 17A MANAGEMENT CONSULTANCY AND SYNTHESIS SUBMITTED BY RAE KRYSTINE AYO GIESELLE MANINGO BRITZIE MARI SOLATORIO RENIEL TABORADA NOVEMBER 23, 2011 I. ISSUES AND CONCERNS 1. Different Hourly Rates for Customers. * With personal trainors/instructoors - $50 * Prime Time (bet. 5:30-9:00am & 4:00-9:00pm) - $50 * Slower Time (9:00am – 4:00pm) - $35 * Students - $12 * Discounts for Prepayments 2. Segragation of duties and responsibilities of Kate Hoffman and others. 3. Salaries and commission. * The instructors are paid on commission, which ranged between 20% and 50% of revenue, varied depending on the instructors experience and on whether the instructor brought the particular client to Private Fitness. * Kate Hoffman was paid a salary and commission on gross revenue. 4. Theft and non-disclosure of clients by Kate Hoffman. 5. Rosemary’s family concerns and responsibilities. 6. Understated income. II. STATEMENT OF THE PROBLEM What should Rosemary do to solve the problems for the betterment of her business? III. POINT OF VIEW Rosemary Worth, owner of Private Fitness, LLC. IV. OBJECTIVES 1. To fix business...
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