Question 1

The intermingling of performance of one period with that of preceding or succeeding periods is characteristic of which basis of accounting? 
$\text { Cash basis}\quad\quad\text { Accrual basis }$
A)$\text { Yes } \quad \text { Yes }$
B)$\text { Yes } \quad \text { No }$
C)$\text { No } \quad \text { Yes }$
D)$\text { No } \quad \text { No }$

Accepted Answer

The answer of The intermingling of performance of one period...

Question 2

Match between columns Premises: The FASB is an agency of the federal government that has the authority to establish accounting standards. The Sarbanes-Oxley Act of 2002 requires the AICPA to register firms conducting independent audits.
Auditors are the agents of the shareholders and have responsibility for safeguarding and properly using the firm's resources.
The governing board, or board of directors, is responsible for selecting, compensating, and overseeing managers; for establishing dividend policy; and for making decisions on major issues such as acquisitions of other firms and divestitures of lines of business.
The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB), which is responsible for monitoring the quality of audits of SEC registrants.

Accepted Answer

The Answer of True and False is...

Question 3

Match between columns
                        Premises: Salaries expense
Supplies inventory
Merchandise inventory
Land
Retained earnings
Income taxes expense
Note receivable, due June 1, Year 2
Accounts payable
Building, net of accumulated depreciation
Common stock
Note payable, due in March, Year 1
Bank loan payable, due April 5, Year 2
Commissions paid to sales staff
Bonds payable, due Year 17
Equipment, net of accumulated depreciation
Accounts receivable
Note receivable, due December 2, Year 10

Accepted Answer

The Answer of Current assets and Current liabilities and Noncurrent is...

Question 4

Compute the missing balance sheet amounts in each of the three independent cases that follow:
 $\begin{array}{llrr}&\text { CASE A }& \text { CASE B }& \text { CASE C }\
\text { Noncurrent assets } & \$ 460,000 & \$ 90,000 & \$ 280,000 \
\text { Shareholders' equity } & \mathbf{A} & 870,000 & 340,000 \
\text { Total assets } & \text { B } & \text { E } & 500,000\
\text { Current liabilities } & 270,000 & 20,000 & \text { I } \
\text { Current assets } & 250,000 & \text { F } & \text { J } \
\text { Noncurrent liabilities } & 100,000 & \text { G } & \text { K } \
\text { Total liabilities and shareholders' equity } & \text { C } & 990,000 & \text { L }\
\text { Current assets minus current liabilities } & \text { D } & H & 200,000
\end{array}$

Accepted Answer

The answer of Compute the missing balance sheet amounts in...

Question 5

Broke Inc is experiencing a cash flow problem finding that its cash decreases, even though net income increases. Which of the following is/are a possible reason(s)?
A)Lag between cash expenditures incurred in producing goods and cash collections from customers once the firm sells those goods.
B)The firm must generally produce more units than it sells during a period of growth if it is to have sufficient quantities of inventory on hand for future sales.
C)Cash needed for a higher level of production exceeds the cash received from the prior period's sale.
D)all of the above
E)none of the above

Accepted Answer

All three options A, B, and C can contribute to a cash flow problem when net income is increasing. Option A is related to the timing of cash inflows and outflows, where cash collections from customers may not match the cash expenditures incurred in producing goods. Option B is related to the need for maintaining inventory levels, which increases cash outflows without an immediate corresponding increase in cash inflows. Finally, option C is related to the need for investing in higher levels of production capacity to sustain growth, which can increase cash outflows before the benefits of increased sales are realized.

Question 6

Selected balance sheet amounts for Puff Group International Limited, a diversified electronics firm, appears next, as of December 31, 2014, and December 31, 2013.Compute the missing amounts for the two years.

Accepted Answer

The answer of Selected balance sheet amounts for Puff Group...

Question 7

Match between columns
                        Premises: Note payable, due in March, Year 1
Administrative office space rent on a month-to-month lease
Accounts payable
Common stock
Sales from services
Sales from products
Commissions earned by sales staff
Acquisition of common stock
Supplies inventory
Retained earnings
Sales
Yearly depreciation on equipment
Note receivable, due June 1, Year 2
Cost of goods sold
Officer salaries
Cash from operating activities
Dividends paid

Accepted Answer

The Answer of Expenses and Revenues and Item generally not is...

Question 8

Education Power is a charitable organization that promotes educational opportunities for inner city children and adults.Describe how the four common key activities would differ for this organization as opposed to a for-profit business entity.

Accepted Answer

The answer of Education Power is a charitable organization that...

Question 9

The accrual basis of accounting is often contrasted with the cash basis of accounting.Which of the following is/are true of the cash basis of accounting?
A)The cash basis is not subject to manipulation.
B)Most larger companies use the cash basis of accounting.
C)The cash basis of accounting provides a strong basis to determine the total assets of the company.
D)The cash basis provides an inferior picture of operating performance.
E)All of the above are true.

Accepted Answer

The cash basis of accounting provides an inferior picture of operating performance because it only records transactions when cash is received or paid out, and does not account for transactions that have not yet been paid for or received. This can lead to an incomplete and misleading view of the company's financial health and business operations. A is incorrect because the cash basis can be subject to manipulation. B is incorrect because most larger companies use the accrual basis of accounting. C is incorrect because the cash basis does not provide a complete picture of a company's total assets.

Question 10

The cash basis of accounting, as a basis for measuring performance for a particular accounting period, has/have which of the following weakness(es)?
A)does not adequately match the cost of the efforts required to generate inflows with the inflows themselves
B)separates the recognition of revenue from the process of earning those revenues.
C)sensitive to the timing of cash expenditures
D)all of the above
E)none of the above

Accepted Answer

The cash basis of accounting has all the weaknesses mentioned in the options. It does not match the cost of efforts with inflows, separates revenue recognition from the process of earning those revenues, and is sensitive to the timing of cash expenditures. These weaknesses limit the accuracy and usefulness of financial statements prepared using the cash basis of accounting.

Question 11

(CMA adapted, Jun 94 #6) Accounting systems vary widely from one business to another, depending on the size of the firm, the volume of data to be handled, and the nature of the business.An accounting system should provide information for management decision-making and generate reports on the enterprise's financial condition and operations.The accounting profession relies on general-purpose financial statements to provide information to users; the intent of these general-purpose statements is to provide the most useful information possible to diverse user groups at minimal cost.The principal financial statements used for public reporting purposes are the statement of earnings (income statement), statement of financial position (balance sheet), and statement of cash flows.
Required:

a.Financial statements should provide information that is useful to users. Describe the level of sophistication expected of the external users of financial statements.

b.	For each of the financial statements listed below, define its purpose and briefly explain how it meets the needs of external users. 
 	1.	Statement of earnings.
 	2.	Statement of financial position.
 	3.	Statement of cash flows.

c.	Footnotes and responsibility for the financial statements
 	1.	Explain the role of the notes to the financial statements.
 	2.	Explain management's responsibility for the financial statements.
 	3.	Explain the auditor's responsibility for the financial statements.

Accepted Answer

The answer of (CMA adapted, Jun 94 #6) Accounting systems...

Question 12

Compute the missing amounts affecting the change in cash for Year 1 in each of the 5 independent cases that follow.Amounts are in thousands.
 $\begin{array}{llllll}&\text { CASE A }&\text { CASE B }&\text { CASE C }&\text { CASE D }&\text { CASE E }\\hline
\text { INFLOWS OF }\\text { CASH: }\
\text { Operations } & \$ 600 & \$ 450 & \$ 650 & \$(390) & \text { E } \
\text { New financing } & 200 & 120 & \mathbf{C} & 400 & \$ 400 \
\text { Sale of noncurrent } & 190 & 50 & 0 & 160 & 50 \
\text { assets } & & & & &\\text { OUTFLOWS OF }\\text { CASH: }\\text { Dividends } & 150 & 150 & 300 & 0 & 175 \
\text { Reduction in } & 110 & 0 & 100 & 70 & 75 \
\text { financing } & & & &\\begin{array}{l}
\text { Acquisition of } \
\text { noncurrent assets }
\end{array} & 650 & \text { B } & 900 & 180 & 200 \\text { Change in cash } &\text { A } & 50 & (60) & \text { D } & 100
\end{array}$

Accepted Answer

The answer of Compute the missing amounts affecting the change...

Question 13

Determine the missing amount "X" for each of the following:
 $\begin{array}{|l|l|l|}
\hline \text { Assets } & \text { Liabilities } & \text { Shareholders' Equity } \
\hline \text { a. } \$ 85,700 & \$ 40,000 & \mathrm{X} \
\hline \text { b. } \mathrm{X} & \$ 66,570 & \$ 145,000 \
\hline \text { c. } \$ 57,900 & \mathrm{X} & \$ 34,000 \
\hline
\end{array}$

Accepted Answer

The answer of Determine the missing amount "X" for each...

Question 14

Here is data from Cellular Communications, Inc.
$\begin{array}{lll}&\text { December } 31\
\text { BALANCE SHEET ITEMS }&\text { Year } 7&\text { Year } 6\
\text { Accounts Payable } & \$ 5,219 & \$ 7,873 \
\text { Accounts Receivable } & 58,363 & 48,645 \
\text { Bonds Payable (due Year 20) } & 10,313 & 4,602 \
\text { Cash } & 821 & 668 \
\text { Common Stock } & 560 & 540 \
\text { Income Taxes Payable } & 414 & 580 \
\text { Inventories } & 33,305 & 30,752 \
\text { Other Current Assets } & 2,681 & 742 \
\text { Other Current Liabilities } & 185 & 1,115 \
\text { Other Noncurrent Assets } & 90 & 152 \
\text { Property, Plant, and Equipment } & 21,881 & 15,972 \
\text { Retained Earnings } & 99,969 & 81,627 \
\text { Salaries Payable } & 481 & 594
\end{array}$

$\begin{array}{ll}\text { INCOME STATEMENT ITEMS }&\text { Year } 7\
\hline \text { Administrative Expense } & \$ 20,588 \
\text { Cost of Goods Sold } & 246,864 \
\text { Income Tax Expense } & 7,267 \
\text { Interest Expense } & 1,803 \
\text { Sales Revenue } & 361,026 \
\text { Salary and Wage Expense } & 21,367 \
\text { Selling Expense } & 44,795
\end{array}$ Required:
 a.Prepare a comparative balance sheet for Cellular Communications Inc. as of December 31, Year 6 and Year 7. Classify each balance sheet item into one of the following categories: current assets, noncurrent assets, current liabilities, noncurrent liabilities, and shareholders' equity.

b.Prepare an income statement for Cellular Communications Inc. for Year 7.

c.Prepare a schedule explaining the change in retained earnings between the beginning and the end of Year 7.

d.Compare the amounts on Cellular Communications Inc. balance sheet on December 31, Year 6, and December 31, Year 7. Identify the major changes and suggest possible explanations for the changes.

Accepted Answer

The answer of Here is data from Cellular Communications, Inc.
\(\begin{array}{lll}&\text...

Question 15

Match between columns
                        Premises: Interest revenue
Cash on hand
Common stock issued by the corporation
Employee taxes payable
Factory
Unsettled damage suit against the corporation, probability and amount of settlement uncertain
Trucks used for deliveries
__________ prepaid insurance
Note payable, due in 7 years
Commissions earned by the sales staff

Accepted Answer

The Answer of Current liabilities and Retained earnings and Noncurrent is...

Question 16

Compute the missing amounts affecting the net income for Year 1 in each of the five independent cases that follow.Amounts shown are in thousands.
 $\begin{array}{llllll}&\text { CASE A }& \text { CASE B }& \text { CASE C }& \text { CASE D }& \text { CASE E}\
\text { Sales revenue } & \$ 650 & \text { B } & \$ 400 & \$ 800 & \$ 390 \
\text { Cost of goods sold } & 300 & \$ 110 & \text { C } & 400 & 200 \
\text { Selling and } & 150 & 150 & 120 & 65 & \text { E } \
\text { administrative expenses } & & & & &\
\text { Income tax expense } & 56 & 30 & 55 & \text { D } & 0 \
\text { Net income } & \text { A } & 10 & 75 & 235 & (15)\
\end{array}$

Accepted Answer

The answer of Compute the missing amounts affecting the net...

Question 17

The _____ matches revenues with the costs associated with earning those revenues and is not sensitive to the timing of expenditures.
A)tax basis of accounting
B)modified accrual basis of accounting
C)cash basis of accounting
D)accrual basis of accounting
E)present value basis of accounting

Accepted Answer

The answer of The _____ matches revenues with the costs...

Question 18

Compute the missing information in each of the four independent cases below.The letters in parentheses refer to the following:
 $\begin{array}{ll}
\text { BS } & \text { - Balance sheet } \
\text { IS } & \text { - Income statement } \
\text { SCF } & \text { - Statement of cash flows }
\end{array}$

a.$\begin{array}{ll}
\text { Accounts Receivable, Jan. 1, Year 2 (BS) } & \$ 500 \
\text { Sales on Account for Year 2 (IS) } & 1900 \
\text { Collections from Customers on Account during Year 2 (SCF) } & 1,350 \
\text { Accounts Receivable, Dec. 31, Year 2 (BS) } & -?-
\end{array}$

b.$\begin{array}{ll}
\text { Salaries Payable, Jan. 1, Year 2 (BS) } & \$ 175 \
\text { Salary Expense for Year 2 } & -?- \
\text { Payments to Salaried Employees during Year 2 (SCF) } & 725 \
\text { Salaries Payable, Dec. 31, Year 2 (BS) } & 100
\end{array}$

c.$\begin{array}{ll}
\text { Equipment (net of depreciation), Jan. 1, Year 2(BS) } & \$ 900 \
\text { Depreciation Expense for Year 2 (IS) } & -?- \
\text { Sales of Equipment during Year 2 (SCF) } & -0- \
\text { Acquisition of Equipment during Year 2 (SCF) } & 330 \
\text { Equipment (net of depreciation), Dec. 31, Year 2 (BS) } & 910
\end{array}$

d.$\begin{array}{ll}
\text { Retained Earnings, Jan. 1, Year 2 (BS) } & \$ 1,550 \
\text { Net Income for Year 2 (IS) } & 400 \
\text { Dividends Declared and Paid during Year 2 (SCF) } & -?- \
\text { Retained Earnings, Dec. 31, Year 2 (BS) } & 1,350
\end{array}$

Accepted Answer

The answer of Compute the missing information in each of...

Question 19

The _____ basis of accounting typically recognizes revenue when a firm sells goods (manufacturing and retailing firms) or renders services (service firms), and recognizes expenses in the period when the firm recognizes the revenues that the costs helped produce.
A)cash
B)accrual
C)funds flow
D)tax
E)none of the above

Accepted Answer

The answer of The _____ basis of accounting typically recognizes...

Question 20

Compute the missing amount affecting retained earnings for Year 2 in each of the five independent cases that follow.Amounts shown are in millions.
 $\begin{array}{llllllr}&\text { CASE A } & \text { CASE B } & \text { CASE C } & \text { CASE D } & \text { CASE E }\
\text { Retained earnings, Dec. 31, }  \text { Year 1 } & \$ 95 & \text { B } & \$ 75 & \$ 87 & \$ 175 \
\text { Net income }  & 30 & \$ 450 & 45 & \mathbf{D} & (50) \
\text { Dividends declared and paid } & 10 & 120 & \mathbf{C} & 35 & \text { E } \
\text { Retained earnings, Dec. 31, }  \text { Year 2 } & \mathbf{A} & 670 & 60 & 105 & 75
\end{array}$

Accepted Answer

The answer of Compute the missing amount affecting retained earnings...

Quiz 1: Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The intermingling of performance of one period with that of preceding or succeeding periods is characteristic of which basis of accounting? $\text { Cash basis}\quad\quad\text { Accrual basis }$

Presented below are statement regarding the roles of participants in the financial reporting process.Identify these as either true or false. If false, explain why the statement is false.

Use the abbreviations below to classify the following balance sheet items.

Broke Inc is experiencing a cash flow problem finding that its cash decreases, even though net income increases. Which of the following is/are a possible reason(s) ?

Selected balance sheet amounts for Puff Group International Limited, a diversified electronics firm, appears next, as of December 31, 2014, and December 31, 2013.Compute the missing amounts for the two years.

Use the abbreviations below to classify the following income statement items.

Education Power is a charitable organization that promotes educational opportunities for inner city children and adults.Describe how the four common key activities would differ for this organization as opposed to a for-profit business entity.

The accrual basis of accounting is often contrasted with the cash basis of accounting.Which of the following is/are true of the cash basis of accounting?

The cash basis of accounting, as a basis for measuring performance for a particular accounting period, has/have which of the following weakness(es) ?

Accountants classify various items on the balance sheet or the income statement in one of the following ways: Using the abbreviations above, indicate the classification of each of the following items:

The _____ matches revenues with the costs associated with earning those revenues and is not sensitive to the timing of expenditures.

The _____ basis of accounting typically recognizes revenue when a firm sells goods (manufacturing and retailing firms) or renders services (service firms) , and recognizes expenses in the period when the firm recognizes the revenues that the costs helped produce.

Quiz 1: Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The intermingling of performance of one period with that of preceding or succeeding periods is characteristic of which basis of accounting? Cash basis Accrual basis \text { Cash basis}\quad\quad\text { Accrual basis } Cash basis Accrual basis

Presented below are statement regarding the roles of participants in the financial reporting process.Identify these as either true or false. If false, explain why the statement is false.

Use the abbreviations below to classify the following balance sheet items.

Broke Inc is experiencing a cash flow problem finding that its cash decreases, even though net income increases. Which of the following is/are a possible reason(s) ?

Selected balance sheet amounts for Puff Group International Limited, a diversified electronics firm, appears next, as of December 31, 2014, and December 31, 2013.Compute the missing amounts for the two years.

Use the abbreviations below to classify the following income statement items.

Education Power is a charitable organization that promotes educational opportunities for inner city children and adults.Describe how the four common key activities would differ for this organization as opposed to a for-profit business entity.

The accrual basis of accounting is often contrasted with the cash basis of accounting.Which of the following is/are true of the cash basis of accounting?

The cash basis of accounting, as a basis for measuring performance for a particular accounting period, has/have which of the following weakness(es) ?

Accountants classify various items on the balance sheet or the income statement in one of the following ways: Using the abbreviations above, indicate the classification of each of the following items:

The _____ matches revenues with the costs associated with earning those revenues and is not sensitive to the timing of expenditures.

The _____ basis of accounting typically recognizes revenue when a firm sells goods (manufacturing and retailing firms) or renders services (service firms) , and recognizes expenses in the period when the firm recognizes the revenues that the costs helped produce.

The intermingling of performance of one period with that of preceding or succeeding periods is characteristic of which basis of accounting? $\text { Cash basis}\quad\quad\text { Accrual basis }$