...3 Adjusting the Accounts Chapter STUDY OBJECTIVES After studying this chapter, you should be able to: 1 Explain the time period assumption. 2 Explain the accrual basis of accounting. 3 Explain the reasons for adjusting entries. 4 Identify the major types of adjusting entries. 5 Prepare adjusting entries for deferrals. 6 Prepare adjusting entries for accruals. 7 Describe the nature and purpose of an adjusted trial balance. The Navigator ✓ The Navigator Scan Study Objectives Read Feature Story Read Preview Work Demonstration Problem Review Summary of Study Objectives Answer Self-Study Questions Complete Assignments ■ ■ ■ Read text and answer Before You Go On p. 97 ■ p. 104 ■ p. 109 ■ p. 114 ■ ■ ■ ■ ■ ✓ Feature Story WHAT WAS YOUR PROFIT? The accuracy of the financial reporting system depends on answers to a few fundamental questions: At what point has revenue been earned? At what point is the earnings process complete? When have expenses really been incurred? During the 1990s’ boom in the stock prices of dot-com companies, many dot-coms earned most of their revenue from selling advertising space on their websites. To boost reported revenue, some dot-coms began swapping website ad space. Company A would put an ad for its website on company B’s website, and company B would put an ad for its website on company A’s website. No money changed hands, but each company recorded revenue (for the value of the space that it gave the other company on its site). This practice...
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...If I were an accountant two business sectors that I would be interested in would be in management accounting or forensic accounting. Management accounting is being available to management within companies to provide them with information that will overall help them manage and control the business more efficiently. Business recovery is helping businesses in financial distress to recover financially. While I am not interested in the accounting field, these were two sections that really caught my eye. I currently run three Subway stores as a General Manager, so the management accounting is a sector that I know from experience would be very helpful to a business. Personal experience is what would peak my interest into this field. Forensic accounting is investigative accounting or auditing that is suitable for a court of law. Law has always been a big interest for me. I think that auditing and investigation would be a very interesting and fulfilling job. The company that I chose and researched was Feely and Driscoll. This is a company that provides forensic accounting and auditing services. I imagine that working for this company would be very interesting. I imagine that as a CPA I would be handed files and company information that I would have to audit to look for fraud or other issues. There may also be cases of profit analysis. Once the investigations are complete, I imagine that compiling the information suitable for court would be very tedious and time consuming. However, I...
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...Checkpoint: Ratio, Vertical, and Horizontal Analysis The current ratio shows the percentage of liabilities there is compared to the assets. It is the total current assets divided by the total current liabilities. The vertical analysis is the current assets divided by the total assets for that year. The result is shown in percentage. The horizontal analysis is the change in assets. The current assets of one year divided by another year will show the increase or decrease in assets for those years. The same thing applies to the liabilities. Each year’s current liabilities will be identified. The most recent year will be divided by the previous year. The result will show the increase or decrease in liabilities by percentage. PepsiCo, Incorporated Current ratio 2005: Current ratio 2004: Current assets = 10454 = 1.11% Current assets = 8639 = 1.28% Current liabilities 9406 Current liabilities 6752 Vertical Analysis 2005 Vertical Analysis 2004 Current assets = 10454 = 33% Current assets = 8639 = 31% Total assets 31727 Total assets 27987 Horizontal Analysis Total assets 2005 = 31727-27987= 3740 = 0.1336 = 13.4% Total assets 2004 27987 Total liabilities 2005 = 17476-14464 = 3012 = 0.2082 = 20.8% Total liabilities 2004 14464 There...
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...Week 7 Checkpoint: Ratio, Vertical, and Horizontal Analyses XXXXXXXXXX XACC/280 June 28, 2014 Zenos Gavales A financial statement analysis is the process of review financial statements that can include balance sheets and profit or loss statements. The three tools of financial statement analysis are ratio analysis, horizontal analysis and vertical analysis. With ratio analysis we can analyze data and determine the overall financial strength of a company. Horizontal analysis is a procedure in which an analyst compares ratios or line items in business financial statements over a period of time. Vertical analysis most common use is with financial statements for a single time period. Vertical analysis compares between two or more companies in the same industry. PepsiCo, Inc. The current ratio for any company is calculated with the use of the following mathematical equation. Current Ratio = Current Assets Current Liabilities 2005 2004 $10454 =1.11:1 $8639 =1.28:1 $ 9406 $6752 Vertical Analysis = Item on BIS = Percentage Total Assets Or Item on BIS Total Liabilities w/shareholders equity =Percentage Two measures of vertical analysis: Current Assets = 10454 = 33% Total Assets 31727 Short – term Obligations = 2889 = 9% Total Liabilities w/shareholders equity...
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...|[pic] |Syllabus | | |Axia College/School of Business | | |XACC/280 Version 2 | | |Financial Accounting Concepts and Principles | Copyright © 2010, 2009 by University of Phoenix. All rights reserved. Course Description This course covers the fundamentals of financial accounting as well as the identification, measurement, and reporting of the financial effects of economic events on the enterprise. Financial information is examined from the perspective of effective management decision making with special emphasis on the planning and controlling responsibilities of practicing managers. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning...
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