Final Exam Review- Hitzig parts 1-3 1. Revenue Recognition: General: 25-1 The recognition of revenue and gains of an entity during a period involves consideration of the following two factors, with sometimes one and sometimes the other being the more important consideration: ← a. Being realized or realizable. Revenue and gains generally are not recognized until realized or realizable. Paragraph 83(a) of FASB Concepts Statement No. 5, Recognition and Measurement in Financial Statements
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Mid semester Exam notes Topic 1 Function of accounting Decision Making * Investment – buy/sell shares, buy new shares offered by company * Lending – lend money to company in the form of bonds, loan conditions such as interest rates, security, other conditions Contracting – legally binding obligation that gives party the right to demand the performance of whatever promised * management (agency problem) – information asymmetry, act in self interest * debt Stewardship – compliance
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liabilities exceed assets. b. dividends exceed revenues. c. expenses exceed revenues. d. revenues exceed expenses. _____ 4. As of December 31, 2008, Anders Company has assets of $35,000 and stockholders' equity of $20,000. What are the liabilities for Anders Company as of December 31, 2008? a. $15,000 b. $10,000 c. $25,000 d. $20,000 _____ 5. A credit is not the normal balance for which account listed below? a. Common stock account b. Revenue account c. Liability account d. Dividend
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(1)Revenue Recognition Telus has three major revenue source: (1)wireless; (2)wireline; (3)voice local and voice long distance For “Voice and data” recognition of revenue: * based upon access to, and usage of telecommunications infrastructure and upon contract fees (note a) * Advance billings/activation, deferred recognized when services are provided (note b) For “Other and wireless equipment “: * Recognized when products are delivered and accepted by the end-user customers *
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Chapter 1 – Ethics are standards used to judge someone’s actions as right or wrong – Analyzing an ethical dilemma: Recognize the situation, Identify and analyze the elements of the situation, Identify the alternatives and their effects – Internal users: finance, marketing, human resources, production – External users: investors, creditors, labour unions, customers – Information systems do 3 things: identify, record, and communicate economic activities – GAAPs are the common
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investigation by the Securities and Exchange Commission (SEC) for certain accounting practices, this case explores the Microsoft’s financial reporting strategy related to two policies through two accounting issues – software capitalization and revenue recognition. Analyzing the performance of its stock, annual income statement, balance sheets, cash flow and some other data, the company was found that it selects relatively conservative accounting methods. In addition, it discusses the issue of managing
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We discovered several areas of concern: revenue recognition, allowance for doubtful accounts/bad debt, inventory valuation/cost of goods sold, capitalization/depreciation of assets, and accounting for dividends. We based our audit on the U.S. GAAP, IRS and FASB standards, which includes the sources listed at the end of this letter. Revenue Recognition Wag Company reports revenue when a price is agreed upon with a buyer. According to GAAP, revenue is recognized only when realized or realizable
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CHAPTER 18 Revenue Recognition ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis *1. Realization and recognition; sales transactions; high rates of return. 1, 2, 3, 4, 5, 6, 22 1 1, 2, 3 1 1, 2, 3, 4, 5, 7, 8, 9 *2. Long-term contracts. 7, 8, 9, 10, 11, 12, 22 2, 3, 4, 5, 6 4, 5, 6, 7, 8, 9, 10 1, 2, 3, 4, 5, 6, 7, 14, 15, 16, 17 1, 2, 3, 6 *3. Installment sales. 13, 14, 15, 16, 17,
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either expense or revenue recognition. Accruals occur when the cash flow comes after the expense or revenue recognition. 2. Describe the appropriate adjusting entry for prepaid expenses and for unearned revenues. What is the effect on net income, assets, liabilities, and shareholders’ equity of not recording a required adjusting entry for prepayments? The appropriate adjusting entry for a prepaid expense is a debit to expense and a credit to the prepaid asset. For unearned revenue the appropriate
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new client, Legal Plan Services, Inc. In order to acquaint yourself and the firm with the accounting procedures used at Legal Plan Services, your manager has asked you to review, assess, and make any necessary recommendations about the revenue and expense recognition currently used and assess the appropriateness of the associated presentation in the financial statements for Legal Plan Services. Company Information Legal Plan Services, Inc is a company that designs, underwrites, and markets legal
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