Search Results for: Financial Accounting
Introduction: What Is Accounting
LEARNING OBJECTIVES By the end of this lesson, you will be able to: Define accounting Describe the evolution of accounting Identify reasons for the study of accounting. List various types of accounting activities Identify users of accounting information. Explain the importance of Ethics in business and accounting and the reason for the enactment of the Read more »
Exercises: Unit 17
SHORT ANSWER QUESTIONS, EXERCISES AND PROBLEMS Questions ➢ What are the purposes of the statement of cash flows? ➢ What are some of the uses of the statement of cash flows? ➢ What information is contained in the statement of cash flows? ➢ Which activities are generally included in operating activities? ➢ Which activities are Read more »
Exercises: Unit 16
SHORT ANSWER QUESTIONS, EXERCISES AND PROBLEMS Questions ➢ For what reasons do corporations purchase the stock of other corporations? ➢ Explain how marketable securities should be classified in the balance sheet. ➢ Describe the valuation bases used for marketable equity securities. ➢ Under what circumstances is the equity method used to account for stock investments? Read more »
Exercises: Unit 14
Short-Answer Questions, Exercises, and Problems: Corporations: Paid-in Capital, Retained Earnings, Dividends and Treasury Stock Short-Answer Questions ➢ What are dividends in arrears, and how should they be disclosed in the financial statements? ➢ A corporation has 1,000 shares of 8 per cent, $ 200 par value, cumulative, preferred stock outstanding. Dividends on this stock have Read more »
Direct and Indirect Methods for Preparing a Statement of Cash Flows
Cash flows from operating activities Cash flows from operating activities show the net amount of cash received or disbursed during a given period for items that normally appear on the income statement. You can calculate these cash flows using either the direct or indirect method. The direct method deducts from cash sales only those operating Read more »
Investment of Stocks in Other Corporations
When a corporation purchases the stock of another corporation, the method of accounting for the stock investment depends on the corporation’s motivation for making the investment and the relative size of the investment. A corporation’s motivation for purchasing the stock of another company may be as: (1) a short-term investment of excess cash; (2) a Read more »
Items Reported on a Corporate Income Statement
Net income inclusions and exclusions Accounting has long faced the problem of what to include in the net income reported for a period. Should net income include only the revenues and expenses related to normal operations? Or should it include the results of discontinued operations and unusual, nonrecurring gains and losses? And further, should the Read more »
Journalize Entries for Trade-In of Similar Assets
Exchanges of nonmonetary assets Until late 2004, the rules according to APB Opinion No. 29 for recording exchanges of nonmonetary assets depended on whether they were exchanges of dissimilar assets such as a truck for a machine or were similar assets such as a truck for a truck[1]. If the exchange classified as an exchange Read more »
Exercises: Unit 10
SHORT-ANSWER QUESTIONS, EXERCISES, AND PROBLEMS Questions ➢ In view of the difficulty in estimating future events, would you recommend that accountants wait until collections are made from customers before recording sales revenue? Should they wait until known accounts prove to be uncollectible before charging an expense account? ➢ The credit manager of a company has Read more »
Direct Write-Off and Allowance Methods
Because customers do not always keep their promises to pay, companies must provide for these uncollectible accounts in their records. Companies use two methods for handling uncollectible accounts. The direct write-off method recognizes bad accounts as an expense at the point when judged to be uncollectible and is the required method for federal income tax Read more »