- Study guides, Class notes & Summaries

What is meant by the phrase efficient allocation of resources? What mechanism fosters the efficient allocation of resources in the United States? - ANSResources are efficiently allocated if they are given to enterprises that will use them to provide goods and services desired by society and not to enterprises that will waste them. The capital markets are the mechanism that fosters this efficient allocation of resources. What is the primary objective of financial accounting? - ANSThe primary...

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7 pages

Written in 2022/2023

Grade A+

nighthawk117

Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services. - ANSTrue Revenue should be recognized over time for the construction of an annex to a building that the customer owns, even if the seller will not receive payment until the annex is completed. - ANSTrue Which of the following is one of the steps for recognizing revenue? -Identify the performance obligations...

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19 pages

Written in 2022/2023

Grade A+

nighthawk117

1. lack physical existence, derive value from the rights and privileges granted to the company 2. non financial instruments - ANS what are the main characteristics of an intangible asset - Generally expensed - Only capitalize direct costs incurred in developing the intangible, such as legal costs - ANS internally created intangibles limited life tangibles - ANS companies only amortize their an indefinite life - ANS a trade mark or trade name has intangible assets that occur as a result of...

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6 pages

Written in 2024/2025

Grade A+

Brightstars

Accounting 5110 exam two Questions and Answers Already Passed 1. lack physical existence, derive value from the rights and privileges granted to the company 2. non financial instruments - Answers what are the main characteristics of an intangible asset - Generally expensed - Only capitalize direct costs incurred in developing the intangible, such as legal costs - Answers internally created intangibles limited life tangibles - Answers companies only amortize their an indefinite life - Answ...

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4 pages

Written in 2024/2025

Grade A+

TutorJosh

what are the major characteristics of property, plant, and equipment? correct answers they are required for use in operations and not held for resale, long term in nature and usually depreciated, possess physical substance historical cost correct answers measures the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use subsequent to acquisition, companies should ____ write up property, plant, and equipment, to ref...

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8 pages

Written in 2024/2025

Grade A+

SirAnton

economic events - ANScause changes in the fianancial position of the company external events - ANSinvolve an exchange between company and separate economic entity purchase inventory for cash internal events - ANSdo not involve exchange btw company and separate economic entity (depreciation on eqpt or use of supplies) the accounting cycle - ANSunderlies the process used to capture the effect of economic events Assets= liabilities + stock holder's equity - ANSthe accounting c...

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6 pages

Written in 2022/2023

Grade A+

nighthawk117

capital markets - ANSprovide a mechanism to help our economy allocate resources efficiently; all investors and creditors net operating cash flow - ANSthe difference between cash receipts and cash disbursements from providing goods and services cash basis accounting - ANSproduces a measure called net operating cash flow net income - ANSthe difference between revenues and expenses; a better indicator of future operating cash flows than net operating cash flow accrual accounting - ...

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5 pages

Written in 2022/2023

Grade A+

nighthawk117

Cash - Substantive - ANSReceipt of bank confirmations ◦ Not required for non-public entity audits; however, auditors usually obtain a direct receipt of a confirmation from every bank or other financial institutions ◦ Confirms usually verify loan information on the same form ◦ After auditors receive the completed bank confirmation, the confirmed balance should be traced to the amount stated on the bank reconciliation. ◦ Similarly, all other information on the reconciliation should be...

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16 pages

Written in 2022/2023

Grade A+

nighthawk117

Companies' motivations for investing in debt or equity securities issued by other companies: - ANS1) To earn a high rate of return 2) To secure certain operating or financing arrangements with another company How to provide useful information - ANSCompanies account for investment based on the type of security (debt or equity) and their intent with respect to the investment. Debt securities - ANSFinancial securities that represent a creditor relationship with another entity. Examples a...

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11 pages

Written in 2022/2023

Grade A+

nighthawk117

Intangible assets desire their value from the right (claim) to receive cash in the future - t/f - ANSFalse Internally generated intangible assets are initially recorded at fair value - t/f - ANSFalse Limited-life intangibles are amortized by systematic charges to expense over their useful lives - t/f - ANSTrue Amortization of limited life intangible assets should not be affected by expected residual values - t/f - ANSFalse Some intangible assets are not required to be amortized -...

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12 pages

Written in 2022/2023

Grade A+

nighthawk117

Role of financial accounting - ANSto identify, measure, and report relevant and reliable financial information about companies to present and potential future stakeholders Who are stakeholders? - ANSStakeholders are parties with an interest in a company and are impacted by companies decision. Ex; shareholders, banks, creditors, managers, customers, etc. Separation of Ownership and Control - ANSthe need to bridge the gap between the principals (investors) and agents (management) creates...

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7 pages

Written in 2022/2023

Grade A+

nighthawk117

EDGAR System - ANSimproves efficiencies with which company information is collected and disseminated EDGAR System - ANSprimary purpose increase efficiency and fairness of the securities market for benefit of investors, corporations and the economy by accelerating the receipt, acceptance, corporate information filed with the agency Balance sheet - ANSpurpose to report a company's fiancial position on a particular date Balance sheet arrangement - ANSbased on common characteristics ...

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6 pages

Written in 2022/2023

Grade A+

nighthawk117

Property, Plant, and Equipment - ANSAssets of a durable nature used in the regular operations of a business. Also called fixed assets and plant assets. Plant Assets - ANSAssets of a durable nature used in the regular operations of a business. Also called property, plant, and equipment and fixed assets. Fixed Assets - ANSAssets of a durable nature used in the regular operations of a business. Also called property, plant, and equipment and plant assets. Major Characteristics of Propert...

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14 pages

Written in 2022/2023

Grade A+

nighthawk117

which of the following does not describe intangible assets? a. they lack physical existence b. they are financial instruments c. they provide long-term benefits d. they are classified as long-term assets - ANSthey are financial instruments which of the following characteristics do intangible assets possess? a. physical existence b. claim to a specific amount of cash in the future c. long-lived d. held for resale - ANSlong-lived which characteristic is not possessed by intangible ...

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20 pages

Written in 2022/2023

Grade A+

nighthawk117

The acquisition cost adjusted for the amortization of discount or premium, if appropriate. - ANSAmortized cost. Securities not classified as held-to-maturity or trading securities. - ANSAvailable-for-sale Debt securities. The process of separating the host security from the embedded derivative in a hybrid security for accounting purposes. - ANSBifurcation A __ is a derivative that gives the holder the right, but not the obligation, to buy shares at a preset price. - ANSCall opt...

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44 pages

Written in 2022/2023

Grade A+

nighthawk117

The purpose of the balance sheet - ANS The purpose of the balance sheet, also known as the statement of financial position, is to present the financial position of the company on a particular date. Unlike the income statement, which is a change statement that reports events occurring during a period of time, the balance sheet is a statement that presents an organized array of assets, liabilities, and shareholders' equity at a point in time. It is a freeze frame or snapshot picture of financial...

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4 pages

Written in 2022/2023

Grade A+

nighthawk117

On December 1, 2018, Goetz Corporation leased office space for 10 years at a monthly rental of $80,000. On that date Goetz paid the landlord the following amounts: Rent deposit $ 80,000 First month's rent 80,000 Last month's rent 80,000 Installation of new walls and offices 640,000 Tota: $880,000 The entire amount of $880,000 was charged to rent expense in 2018. What amount should Goetz have charged to expense for the year ended December 31, 2018? a. $80,000 b. $85,333 c. $165,333 d....

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20 pages

Written in 2022/2023

Grade A+

nighthawk117

Which of the following would not be included in a manufacturing company's balance sheet? Finished goods inventory Merchandise inventory Raw materials inventory Work in process inventory - ANSMerchandise inventory All of the following accounts are used under a perpetual inventory system except: Entry field with correct answer cost of goods sold. inventory. purchases. sales. - ANSpurchases. Which of the following statements is not consistent with a per...

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5 pages

Written in 2022/2023

Grade A+

nighthawk117

D - ANS21. Which of the following is true of depreciation accounting? a. It is not a matter of valuation. b. It is part of the matching of revenues and expenses. c. It is the process of cost allocation. d. All of these answers are correct. B - ANS22. Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues? a. Associating cause and effect b. Systematic and rational allocation c. Immediate recognition d. ...

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8 pages

Written in 2022/2023

Grade A+

nighthawk117

Is all SEC guidance contained within the Codification, and is SEC guidance considered authoritative? - ANSNo, not all SEC guidance is housed within the Codification; yes, it is considered authoritative for public companies only. The guidance currently used by the FASB to update the Codification is referred to as which of the following? - ANSAccounting Standards Updates A researcher is looking for Recognition guidance for a public company. He has reviewed the Scope and Recognition section...

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6 pages

Written in 2022/2023

Grade A+

nighthawk117

Which of the following accounts is credited in the loss method of writing-down of inventory to its net realizable value? a. Allowance to Reduce Inventory to NRV b. Loss Due to Decline of Inventory to NRV c. Cost of Goods Sold d. Inventory - ANSd. Inventory When the cost-of-goods-sold method is used to record inventory at net realizable value a. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale....

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10 pages

Written in 2022/2023

Grade A+

nighthawk117