Search Results for: Financial Accounting
Exercises: Unit 13
SHORT-ANSWER QUESTIONS, EXERCISES, AND PROBLEMS ➢ Cite the major advantages of the corporate form of business organization and indicate why each is considered an advantage. ➢ What is meant by the statement that corporate income is subject to double taxation? Cite several other disadvantages of the corporate form of organization. ➢ Why is Organization Expense Read more »
Exercises: Unit 12
SHORT-ANSWER QUESTIONS, EXERCISES, AND PROBLEMS Questions ➢ Define current liabilities. ➢ Describe the differences between clearly determinable, estimated, and contingent liabilities. Give one or more examples of each type. ➢ In what instances might a company acquire notes payable? ➢ How is the maturity value of a note calculated? ➢ How is interest on a note calculated? Read more »
Exercises: Unit 11
SHORT-ANSWER QUESTIONS, EXERCISES, AND PROBLEMS Questions ➢ What is the main distinction between inventory and a plant asset? ➢ Which of the following items are properly classifiable as plant assets on the balance sheet? ➢ Advertising that will appear in the future to inform the public about new energy-saving programs at a manufacturing plant. ➢ Read more »
Ratios That Analyze a Company’s Earnings Performance
Equity, or long-term solvency, ratios show the relationship between debt and equity financing in a company. Equity (stockholders’ equity) ratio The two basic sources of assets in a business are owners (stockholders) and creditors; the combined interests of the two groups are total equities. In ratio analysis, however, the term equity generally refers only to Read more »
The Statement of Cash Flows
Purposes of the statement of cash flows The main purpose of the statement of cash flows is to report on the cash receipts and cash disbursements of an entity during an accounting period. Broadly defined, cash includes both cash and cash equivalents, such as short-term investments in Treasury bills, commercial paper, and money market funds. Read more »
Unit 16: Investment in Stocks
Learning Objectives By the end of this section, you will be able to: Describe and illustrate the accounting for long-term investments in stocks. Explain how and why a business may make investments in stocks of other corporations. Prepare journal entries to record investments in stock by the cost method. Prepare journal entries to record investments Read more »
Unit 15: Long-Term Liabilities and Investment in Bonds
Learning Objectives By the end of this section, you will be able to: The students should be able to develop the accounting for long-term obligations and investments in stocks and bonds.  Evaluate the alternatives for financing on a long-term basis. Describe the differences among various types of bonds. Record the entries associated with a Read more »
Retained Earnings: Entries and Statements
Retained earnings The retained earnings portion of stockholders’ equity typically results from accumulated earnings, reduced by net losses and dividends. Like paid-in capital, retained earnings is a source of assets received by a corporation. Paid-in capital is the actual investment by the stockholders; retained earnings is the investment by the stockholders through earnings not yet Read more »
Natural Resources and Depletion
Natural resources Resources supplied by nature, such as ore deposits, mineral deposits, oil reserves, gas deposits, and timber stands, are natural resources or wasting assets. Natural resources represent inventories of raw materials that can be consumed (exhausted) through extraction or removal from their natural setting (e.g. removing oil from the ground). When property is purchased, Read more »
Methods for Computing Depreciation
What is depreciation, amortization and depletion? Watch this video for an overview of these terms each of which will be examined further. Depreciation of plant assets Companies record depreciation on all plant assets except land. Since the amount of depreciation may be relatively large, depreciation expense is often a significant factor in determining net income. Read more »