...| 3 | Amortization | 4-5 | 4 | Amortization of Intangible Assets | 6-7 | 5 | Sinking Fund | 8-9 | 6 | Examples Problems | 9-12 | 7 | References | 13 | | | | | | | | | | | | | | | | | | | | | | Loan Definition Written or oral agreement for a temporary transfer of a property (usually cash) from its owner (the lender) to a borrower who promises to return it according to the terms of the agreement, usually with interest for its use. If the loan is repayable on the demand of the lender, it is called a demand loan. If repayable in equal monthly payments, it is an installment loan. If repayable in lump sum on the loan's maturity (expiration) date, it is a time loan. Banks further classify their loans into other categories such as consumer, commercial, and industrial loans, construction and mortgage loans, and secured and unsecured loans. A written promise to repay the loan is called a promissory note. Use loan in a sentence I really wanted a home because I saw other people living in nice homes but I am poor so I decided to apply for a loan. A loan may be able to provide you with the cash you need to buy your first, or even, second home. Leland was nervous about his upcoming meeting at the bank because if they didn't give him the loan he needed, he wouldn't be able to hang onto his small business. Amortization What is 'Amortization' 1. The paying off of debt with a fixed repayment schedule in regular installments...
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...acct 1511 notes Chapter 6 – Financial Reporting Principles, Accounting Standards and Auditing 6.2 Accounting Principles and the use of Accounting Information Doing accounting takes expert knowledge, considerable experience and continuous attention to new problems and solutions. Concepts and principles are important, as they form logical structure that practising accountants use every day to consider problems to make recommendations GAAP (Generally Accepted Accounting Principles) applied differently for different entities Rules, standards and usual practices that companies are expected to follow when preparing financial statements Stock market crash of 1929 brought GAAP AASB (Aust Accounting Standards Board) IASB (International Accounting Standards Board) AASB uses IASB as foundation, but includes more details applicable to Aust environment SACS – Statement of Accounting concepts SAVS established for general concepts and principles to be used in preparing financial statements SAC 1 – Definition of a Reporting Entity SAC 2 – Objective of General Purpose Financial Reporting SAC 3 – Qualitative Characteristics of Financial Information SAC 4 – Definition and Recognition of the Elements of Financial Statements Now, SAC 3 and SAC 4 is replaced with “Framework for Preparation and Presentation of Financial Statements” FYI: Difficulties that face accounting and managers by GAAP Difference in company structures – e.g. ABC = not for profit, publicly...
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...Cleveland State University | Name: | Jadira Yacila | Course: | ACT 451: Auditing | Term: | Spring 2012 | Assignment: | Code 3 | Date: | 4/4/2012 | 1. Access the glossary (Master Glossary) to answer the following. a. What is the definition of “ordinary income” (loss) (740-270-20) Ordinary income (or loss) refers to income (or loss) from continuing operations before income taxes (or benefits) excluding significant unusual or infrequently occurring items. Extraordinary items, discontinued operations, and cumulative effects of changes in accounting principles are also excluded from this term. The term is not used in the income tax context of ordinary income versus capital gain. The meaning of unusual or infrequently occurring items is consistent with their use in the definition of the term extraordinary item. Ordinary income is income (or loss) exclusively from operations. Taxes expenses are not deducted. It does not include capital gains, or any other gain that could be infrequent or unusual. b. What is an error in previously issued financial statements? (250-10-20) An error in recognition, measurement, presentation, or disclosure in financial statements resulting from mathematical mistakes, mistakes in the application of generally accepted accounting principles (GAAP), or oversight or misuse of facts that existed at the time the financial statements were prepared. A change from an accounting principle that is not generally accepted to one that is...
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...propositions, including one suggested by the Securities and Exchange Commission (SEC) about the relation between nonaudit fees paid by a registrant to its auditor and the registrant’s earnings quality. In this discussion we use comments from participants at The Accounting Review Conference on Quality of Earnings and our own analyses to evaluate FJN’s approach from both conceptual and operational perspectives. We organize our discussion around a ‘‘Predictive Validity Model’’ (displayed later in Figure 1) that shows conceptual relations between independent and dependent variables, as well as their operational measures and treatment of other causal factors. We use this model to describe and evaluate the authors’ approach, which blends complex behavioral and contractual relations with aggregate observable fee, accounting, and market price data. We hope that the discussion will encourage others to conduct additional research to address the important questions raised by both FJN and the SEC. F II. FJN’s APPROACH The underlying proposition examined by FJN is that the strength of the audit firm’s economic dependence on the client, or economic bond, consciously or unconsciously reduces the auditor’s independence, or willingness to resist client-induced biases in the reporting process. The lack of auditor independence results in lower earnings quality. The underlying cause (the economic bond) and the effect (lowered earnings quality) are the two theoretical constructs examined...
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...traditional ones. PRICELINE.COM Net unique offers by users 3.0 million 2.0 1.0 0 I II III IV 1999 I II III IV 2000 DRUGSTORE.COM Unique customers 2.0 million 1.5 1.0 0.5 0 I II III IV 1999 I II III IV 2000 Stock price $120 a share 80 40 0 I II III IV 1999 I II III IV 2000 2000-IV close $2.13 Stock price $40 a share 30 20 10 0 I II III IV 1999 I II III IV 2000 2000-IV close $1.03 Source: Story and graphs adapted from Gretchen Morgenson, “How Did They Value Stocks? Count the Absurd Ways,” New York Times (March 18, 2001), section 3, p. 1. 34 Copyright ©2008 John Wiley & Sons, Inc. Preview of Chapter 2 As the opening story indicates, users of financial statements need relevant and reliable information. To help develop this type of financial information, financial accounting and reporting relies on a conceptual framework. In this chapter, we discuss the basic concepts underlying the conceptual framework, as follows. CONCEPTUAL FRAMEWORK U N D E R LY I N G F I N A N C I A L A C C O U N T I N...
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...is the best definition of an internal user of accounting information? Managers who use accounting information to plan, organize, and run a business. 5. Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules? Regulatory agencies 6. Which of the following groups uses accounting information to determine whether the company can pay its obligations? Creditors 7. Which of the following financial statements is divided into major categories of operating, investing, and financing activities? The Statement of cash flows 8. Ending retained earnings for a period is equal to: Beginning retained earnings + Net income – Dividends 9. The financial statement that summarizes the changes in retained earnings for a specific period of time is the retained earnings statement. 10. To show how successfully your business performed during a period of time, you would report its revenues and expense in the income statement. 11. Which financial statement is prepared first? Income statement 12. An income statement shows revenues, expenses, and net income. 13. Dawson Corporation has the following information available for 2011: | | (in millions) | | Issued common stock | $45 | | Retired common stock | $65 | | Paid dividends | $75 | | Net income | $130 | | Beginning common stock balance | $575 | | Beginning retained earnings balance | $425 | Based in this information, what is Dawson's...
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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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...we can get lost in the argument. Let us first explain what the definition of stem cell is: A stem cell is a “generic” cell that can make exact copies of itself indefinitely. In addition, a stem cell has the ability to produce specialized cells for various tissues in the body such as heart muscle, brain tissue, and liver tissue. Scientists are able to maintain stem cells forever, developing them into specialized cells as needed. There are two basic types of stem cell: Embryonic stem cells- these are obtained from either aborted fetuses or fertilized eggs that are left over from in vitro fertilization (IVF). They are useful for medical and research purposes because they can produce cells for almost every tissue in the body. Adult stem cells- these are not as versatile for research purposes because they are specific to certain cell types, such as blood, intestines, skin, and muscle. The term “adult stem cell” may be misleading because both children and adults have them (Healthline, online). The most controversial one is embryonic stem cells because it brings up a huge debate from research opponents who say it is wrong because it destroys human life and supporters say the embryos were going to be destroyed anyway, and that research from their cells holds the potential to cure debilitating diseases such as diabetes, Alzheimer's and Parkinson's. Creating embryos intended only for research raises new questions about the ethics of stem cell Stem Cell 3 science and now the church...
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...constitutes admissible accounting standards. The purpose of our effort is to stimulate broad discussion of alternative approaches to foundational documents and to offer a specific example of such an alternative approach. Keywords: FASB; IASB; conceptual framework; accounting standards; financial reporting. JEL Classifications: M40. In 2008, the American Accounting Association’s Executive Committee asked the Financial Accounting Standards Committee ͑hereafter, the Committee͒ to develop alternative approaches to conceptual frameworks for financial reporting standards. The Committee agreed to add this assignment to its normal tasks of commenting on financial reporting proposals from standard setters and regulators. As a consequence of discussions about how to fulfill this assignment, the Committee determined that it would periodically...
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...ACC 563 Quizzes and Exams – Perfect Score Guaranteed Follow the link below to purchase Solutions http://www.hwmojo.com/products/acc563-quizzes-and-exams We have all assignments, Cases and Exams for ACC 563 and many other classes. Email us support@hwmojo.com All Quizzes, Midterm Exam, Final Exam Solution Instant Download Chapter 1 Multiple Choice: 1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States? a. Securities and Exchange Commission b. Financial Accounting Standards Board c. International Accounting Standards Committee d. Internal Revenue Service Answer 2. What historical evidence of the business operations of the private estate of Apollonius was discovered early inthe20th century? a. The Iliad b. Plato's Republic c. The Zenon papyri d. Pacioli’s work, Summa de Arithmetica Geometria Proportioni et Proportionalita, Answer 3. Who has been given credit or developing the double-entry system of bookkeeping? a. Francis Wheat b. Fra Luca Pacioli c. A. C. Littleton d. William Paton Answer 4. Which of the following was not a criticism of the development of accounting standards by the Accounting Principles Board? a. The independence of the members of the APB. The individuals serving on the board had full-time responsibilities elsewhere that might influence their views of certain issues. b. The structure of the board. The largest eight public accounting firms...
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...The BIGGER Picture (Ch. 1) Why do we need financial reporting? What is its purpose? Who are some of the key players in financial reporting? PROVIDER EXTERNAL USERS REGULATORS Your textbook (as most out there) evaluates accounting issues from a FASB perspective. We will discuss issues from the FASB’s conceptual framework, but also will try to think about others’ perspectives as well. Before we talk about the conceptual framework, we will discuss the structure of the ultimate product of the financial reporting process – the company’s annual report/10-K. What does it look like? What information is typically included? 1. Description of the company’s business and risk factors 2. Management’s Discussion and Analysis (MD&A) 3. Comparative Financial Statements (including notes to financial statements) 4. Independent Auditor’s Report on Financial Statements 5. Management’s Report on Financial Statements and Internal Controls 6. Auditor’s report on internal controls 7. Who develops financial reporting standards in the U.S.? That is, who influences Generally Accepted Accounting Principles (GAAP)? (1) Securities and Exchange Commission (2) AICPA (1938-1973) (3) FASB What constitutes GAAP? Generally accepted accounting principles have authoritative support. * Either a rule-making body has established a principle or, over time, a practice has been adopted as appropriate because of universal application. What are the sources of GAAP...
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...the firm’s strategy which focuses on teamwork with experienced staff, who have an average of 18 years of investment experience in the sector and have dealt with recession and major market downturns and most of them are CFAs, thus this high quality professionals allow ZAM serving its clients and performing the company’s strategies effectively. More specifically, with individually managed account, the company apply the minimum fund requirement of $2 million, and for those clients their portfolios are customized based on their investment objectives and risk-return profile alongside with other particular constraints, such as: tax, liquidity, legal restrictions, etc. Besides, ZAM has constructed a range of mutual funds, including equity fund, bond fund, balance fund and international fund, to meet the requirements of different clients. 1.1 Why is estimation of risk-adjusted returns of particular interest to Zeus? ZAM is taking consideration into risk-adjusted return methods to properly evaluate the performance of a particular asset class in association with its risk since the firm’s capital is allocated in a range of portfolios which have different level...
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...perspectives on politics can be fruitfully applied simultaneously, we describe and analyze a case of a hospital administration engaged in budgeting games and illusion making. The data for the case were collected using naturalistic inquiry and multiple methods including structured and unstructured interviews, review of documents, observation of meetings and casual interaction facilitated by frequent visits over a ten-month period. The case revolves around the hospital administrators' attempts to deal with what they termed a "disastrous deficit" and the most serious financial situation in the hospital's history. Strategies for dealing with the funding agency and board of directors included the management of meaning and communications about the term "deficit." The three perspectives on organizational politics highlight different dynamics in the case. The interpretive perspective on politics assumes that parties exert influence by constructing the meaning of what others experience. Focusing on a deeper structure of power, the elements of politics which become highlighted are the use of...
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...debt, preferred stock, and common equity. (Birgham & Houston, 2009) This is the minimum rate that a company must earn on its assets in order to satisfy the company’s shareholders (most importantly, the creditors and the owners). WACC is calculated as a weighted average, or composite, of the various types of funds used over time, regardless of the specific financing used in a given year. (Birgham & Houston, 2009) The WACC is a useful tool to measure how a company is financed and what the costs are of its capital. Furthermore WACC sets the minimum level that a company has to earn in order to satisfy creditors and owners (see above), therefore the model can be used as a benchmark figure (a minimum return rate) that a new project has to meet. The expected rate of return when evaluating such new projects has to be higher than the WACC (benchmark) in order to be profitable. We don’t agree with the way Joanna Cohen calculated the WACC. Her assumptions made to calculate the cost of equity by the CAPM were not accurate. She only made general assumptions about the general economic environment, namely to calculate the risk-free rate of return and the market risk premium. We believe that the value of beta can’t be more precise, because of the limitations of the data provided. 2. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and justify your assumptions. As mentioned above, we do not agree with the way the WACC was calculated in...
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...Art and Science Management is both art and science. It is the art of making people more effective than they would have been without you. The science is in how you do that. There are four basic pillars: plan, organize, direct, and monitor. Make Them More Effective Four workers can make 6 units in an eight-hour shift without a manager. If I hire you to manage them and they still make 6 units a day, what is the benefit to my business of having hired you? On the other hand, if they now make 8 units per day, you, the manager, have value. The same analogy applies to service, or retail, or teaching, or any other kind of work. Can your group handle more customer calls with you than without? Sell higher value merchandise? Impart knowledge more effectively? etc. That is the value of management - making a group of individual more effective. Basic Management Skill #1: Plan Management starts with planning. Good management starts with good planning. And proper prior planning prevents… well, you know the rest of that one. Without a plan you will never succeed. If you happen to make it to the goal, it will have been by luck or chance and is not repeatable. You may make it as a flash-in-the-pan, an overnight sensation, but you will never have the track record of accomplishments of which success is made. Figure out what your goal is (or listen when your boss tells you). Then figure out the best way to get there. What resources do you have? What can you get? Compare strengths and...
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