two methods. Revenues and income under non-GAAP recording are exponentially larger which seems like the obvious choice in recording revenues. However, because Apple must recognize revenues under GAAP they are required to use the “subscription method of accounting.” Under GAAP Apple is required to record under software revenue recognition. This requires that Apple have to recognize revenues and product costs on a straight line basis for the life of its service coverage periods. Revenue has to be deferred
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Exam 1 Research Xilin Song 1. Exam Question Number: 3 Facts: asymmetric information of capital market Issue: Which of the following best illustrates the concept of asymmetric information in a capital market? Analysis: In the article “ Transparency Financial Accounting Information and Corporate Governance” Robert and Abbie stated that “In the investigation of the economic effects of private information acquisition and dissemination, future research can consider the independent
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take 3 years to complete drug X from the execution of the agreement •The PEI will contribute funds to the development of X and is entitled to receive future royalties from Pharmagen in return oThe PEI will receive royalties associated with future revenues of X (if/when it has been successfully developed) oThe PEI will also receive future royalties associated with an existing commercialized drug for a defined period 3.Present your answer and the GAAP that supports your position. Use GAAP to explain
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Accruals occur when cash flows: A) Occur before expense recognition. B) Occur after revenue or expense recognition. C) Are uncertain. D) May be substituted for goods or services. Answer: B _____ 2. An example of a contra account is: A) Depreciation expense. B) Accounts receivable. C) Sales revenue. D) Accumulated depreciation. Answer:
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Lesson Preparation Project Chapter 11: Earnings Management 11.1 Overview “Earnings management is the choice by a manger of accounting policies so as to achieve some specific objective” There are two ways to think about earnings management: as an opportunistic behaviour by managers to maximize their utility and from an efficient contracting perspective. Issues arise in regards to earnings management due to the choice of accounting policies, discretionary accruals, and finally the line
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manipulated both revenues and earnings in an effort to show itself in a more favorable light. 2. Why do you think that the SEC (and others) prefer GAAP-based measures (in spite of the known limitations), and recommend these to investors for decision-making? Groupon opted a revenue recognition procedure that presented Groupon as primary service provider instead of a broker or intermediary between its customer and merchant. It presented the amount it received from its customer as gross revenue while money
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Distinct Beer’s reserve should remain unchanged until new circumstances arise that force the reserve to be recalculated. There is one concern that I have in regards to the reporting of revenues and accounts receivable. My sole concern is the approach that management takes in reporting the company’s revenue. It was mentioned that management maintains a conservative approach in its accounting for accounts receivable, therefore it would be ideal to assume
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case is the revenue recognition principle. United’s director of the southern sales division, Frank Campbell, reviewed purchase orders for the end of the year to determine if shipments could be made to customers prior to year end. Campbell looks at it that this could simply be fixed by accelerating production and shipping to increase sales revenue for the current fiscal year (Mintz & Morris, 2011). Campbell chooses to go ahead with the shipments that caused an increase in the revenue by 150,000;
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Strategic Issue CUTCO must select a strategic focus for the decade ahead and must also make a decision as to whether to continue the retail sales pilot program, halt it, or expand it. Analysis and Evaluation Direct Sales Industry While direct selling has proven to be quite effective for CUTCO, the industry has positives as well as negatives. Because there are no brick and mortar stores and very little advertising, the industry and subsequently the companies that operate within that industry
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CHAPTER 3 The Accounting Information System ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. 2. 3. 4. Transaction identification. Nominal accounts. Trial balance. Adjusting entries. Questions 1, 2, 3, 5, 6, 7, 8 4, 7 6, 10 8, 11, 13, 14 3, 4, 5, 6, 7, 8, 9, 10 2, 3, 4 5, 6, 7, 8, 9, 10, 20 11, 12, 15, 22, 23 12 9 11 13, 14, 16 14, 15 1, 2, 6, 12 15, 16, 17 18 19 12 13 18, 19 20 21, 22, 23 12 11 1, 2, 7, 8 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12 1, 2, 4, 6 1, 4, 9, 10, 12 Brief Exercises 1, 2 Exercises
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