...1 CHAPTER ONE: ACCOUNTING IN BUSINESS Chapter Outline I. Importance of Accounting—we live in the information age, where information, and its reliability, impacts the financial well-being of us all. A. Accounting Activities Accounting is an information and measurement system that identifies, records and communicates relevant, reliable, and comparable information about an organizations business activities. B. Users of Accounting Information 1. External Information Users—those not directly involved with running the company. Examples: shareholders (investors), lenders, customers, suppliers, regulators, lawyers, brokers, the press etc. a. Financial Accounting—area of accounting aimed at serving external users by providing them with generalpurpose financial statements. b. General-Purpose Financial Statement—statements that have broad range of purposes which external users rely on. 2. Internal Information Users—those directly involved in managing and operating an organization. a. Managerial Accounting—is the area of accounting that serves the decision-making needs of internal users. b. Internal Reports—not subject to same rules as external reports. They are designed with special needs of external users in mind. 3. Internal Controls—procedures set up to protect company property and equipment, ensure reliable accounting reports, promote efficiency, and encourage adherence to company policies. C. Opportunities in Accounting Four broad areas of opportunities are financial, managerial...
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...01/09/2013 International Accounting, 7/e Frederick D.S. Choi Gary K. Meek Chapter 6: Foreign Currency Ch 6 F i C Translation 1 Learning Objectives Why do firms translate from one currency to another? What is the difference between a spot forward and swap spot, forward, transaction? What exchange rates are used in the currency translation process and what are their financial statement effects? How does a translation gain or loss differ from a transactions gain or loss? Is there more than one way of translating financial statements from one currency to another? If so, what are they? y , y How does the temporal method of currency translation differ from the current rate method? What is the relationship between currency translation and inflation? 2 1 01/09/2013 Why do Firms Translate? Facilitates the preparation of consolidated financial statements that allow readers to see the performance of a multinational company s total operations both domestic and company’s foreign. Facilitates the measurement of a firm’s exposure to foreign exchange risk. Facilitates the recording of foreign currency transactions; i.e., f foreign currency sales, purchases, borrowing or lending in the consolidated entity’s reporting currency. Facilitates reporting domestic accounts to foreign audiences-of-interest. 3 Types of Transaction Rates Spot transactions: the physical exchange of one currency for another in which delivery takes place...
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...Resources: Ch. 1, 2, & 7 of Financial Accounting Chapter 1: Exercise E1-1 Urlacher Company performs the following accounting tasks during the year. ___C___ Analyzing and interpreting information. ___R___ Classifying economic events. ___C___ Explaining uses, meaning, and limitations of data. ___R___ Keeping a systematic chronological diary of events. ___R___ Measuring events in dollars and cents. ___C___ Preparing accounting reports. ___C __ Reporting information in a standard format. ___I__ Selecting economic activities relevant to the company. ___R__ summarizing economic events. Exercise E1-5 Meredith Cleaners has the following balance sheet items. Accounts payable Incorrect Liabilities Accounts receivable Correct Assets Cash Correct Assets Notes payable Incorrect Liabilities Cleaning equipment Incorrect Asset Salaries payable Incorrect Liabilities Cleaning supplies Correct Assets Common stock Incorrect Stockholders equity Exercise E1-12 Income Statement Advertising expense $ 1,800 Rent expense 10,400 Utilities expense 3,100 Salaries expense 30,000 Service revenue 62,500 Retained Earnings Statement Retained earnings, January 1, 2008 $ 48,000 Dividends during 2008 6,000 Exercise E1-13 Mendez Company Balance Sheet December 31, 2008 Assets Liabilities Cash $15,000 Accounts payable $20,000 Supplies 8,000 Common stock 50,000 Accounts receivable (8,500) Retained...
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...international financial reporting standards CERTIFICATE Learning materiaLs Contents FINANCIAL REPORTING CONTEXT..............................................................3 THE IFRS FRAMEWORK ..............................................................................17 PRESENTATION OF FINANCIAL STATEMENTS ........................................35 ACCOUNTING POLICIES .............................................................................49 REVENUE......................................................................................................61 INVENTORIES...............................................................................................75 PROPERTY, PLANT, AND EQUIPMENT......................................................87 BORROWING COSTS.................................................................................105 GOVERNMENT GRANTS ...........................................................................113 NON-CURRENT ASSETS HELD FOR SALE ..............................................123 INVESTMENT PROPERTY .........................................................................133 INTANGIBLES .............................................................................................145 IMPAIRMENT ..............................................................................................159 PROVISIONS AND CONTINGENCIES .......................................................171 TAXATION...........................................
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...international financial reporting standards CERTIFICATE Learning materiaLs Contents FINANCIAL REPORTING CONTEXT..............................................................3 THE IFRS FRAMEWORK ..............................................................................17 PRESENTATION OF FINANCIAL STATEMENTS ........................................35 ACCOUNTING POLICIES .............................................................................49 REVENUE......................................................................................................61 INVENTORIES...............................................................................................75 PROPERTY, PLANT, AND EQUIPMENT......................................................87 BORROWING COSTS.................................................................................105 GOVERNMENT GRANTS ...........................................................................113 NON-CURRENT ASSETS HELD FOR SALE ..............................................123 INVESTMENT PROPERTY .........................................................................133 INTANGIBLES .............................................................................................145 IMPAIRMENT ..............................................................................................159 PROVISIONS AND CONTINGENCIES .......................................................171 TAXATION...........................................
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...C H A P T E R 2 CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING LEARNING OBJECTIVES After studying this chapter, you should be able to: •1 •2 •3 •4 Describe the usefulness of a conceptual framework. Describe efforts to construct a conceptual framework. Understand the objective of financial reporting. Identify the qualitative characteristics of accounting information. Define the basic elements of financial statements. •6 •7 Describe the basic assumptions of accounting. Explain the application of the basic principles of accounting. Describe the impact that constraints have on reporting accounting information. •8 •5 What Is It? Everyone agrees that accounting needs a framework—a conceptual framework, so to speak—that will help guide the development of standards. To understand the importance of developing this framework, let’s see how you would respond in the following two situations. SITUATION 1: “Taking a Long Shot . . . ” To supplement donations collected from its general community solicitation, Tri-Cities United Charities holds an Annual Lottery Sweepstakes. In this year’s sweepstakes, United Charities is offering a grand prize of $1,000,000 to a single winning ticket holder. A total of 10,000 tickets have been printed, and United Charities plans to sell all the tickets at a price of $150 each. Since its inception, the Sweepstakes has attracted area-wide interest, and United Charities has always been able to meet its sales target. However, in the...
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...Chapter 1 Environment and Theoretical Structure of Financial Accounting AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments, and faculty may approach assessment and its documentation differently, one approach is to provide specific questions on exams that become the basis for assessment. To aid faculty in this endeavor, we have labeled each question, exercise and problem in Intermediate Accounting, 7e with the following AACSB learning skills: Questions 1–1 1–2 1–3 1–4 1–5 1–6 1–7 1–8 1–9 1–10 1–11 1–12 1–13 1–14 1–15 1–16 1–17 1–18 1–19 1–20 1–21 1–22 1–23 1–24 1–25 1–26 1–27 1–28 1–29 AACSB Tags Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking 1–30 1–31 1–32 Reflective thinking Reflective thinking Reflective thinking Brief Exercises 1–1 1–2 1–3 1–4 1–5 1–6 AACSB Tags Analytic Reflective thinking Reflective thinking Reflective thinking...
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...CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING Show Me the Earnings! The growth of new-economy business on the Internet has led to the development of new measures of performance. When Priceline.com splashed onto the dot-com scene, it touted steady growth in a measure called “unique offers by users” to explain its heady stock price. To draw investors to its stock, Drugstore.com focused on the number of “unique customers” at its website. After all, new businesses call for new performance measures, right? Not necessarily. In fact, these indicators failed to show any consistent relationship between profits and website visits. Eventually, as the graphs below show, the profits never materialized, and stock prices fell. The lesson here: Although the new economy may require some new measures, investors need to be careful not to forget the reliable traditional ones. PRICELINE.COM Net unique offers by users 3.0 million 2.0 1.0 0 I II III IV 1999 I II III IV 2000 DRUGSTORE.COM Unique customers 2.0 million 1.5 1.0 0.5 0 I II III IV 1999 I II III IV 2000 Stock price $120 a share 80 40 0 I II III IV 1999 I II III IV 2000 2000-IV close $2.13 Stock price $40 a share 30 20 10 0 I II III IV 1999 I II III IV 2000 2000-IV close $1.03 Source: Story and graphs adapted from Gretchen Morgenson, “How Did They Value Stocks? Count the Absurd Ways,” New York Times (March 18, 2001), section 3, p. 1. 34 Copyright ©2008 John Wiley & Sons, Inc. Preview of Chapter 2 ...
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...(GAAP) prefers that financial statements are based entirely on the accrual basis accounting instead of the cash basis accounting. In its simplest terms, the accrual basis accounting assumes that income is recognized when earned regardless of the date of payment. On the other hand, expenses are recorded when incurred regardless of whether it was paid in cash or in credit terms. Going Concern Assumption: Every financial statement reports a business firm’s capacity and performance based on the understanding that the business will continue its operations indefinitely – except if there is evidence that the business firm will close its operations in the near future. A business firm whose status is going concern reports assets based on their historical value. Similarly, assets carry a book value equivalent to the difference between their historical value and accumulated depreciation. Under this assumption, market values are ignored as the business firm will continue operating indefinitely. Accounting Entity Assumption: Basically, the accounting entity assumption is the same as the business entity principle. In this system, a business firm is considered a separate and distinct entity from its owner. The accounting entity assumption calls for the separation of accounting records between a business firm and its owner. Time Period Concept: The time period concept holds the idea that business transactions should be recorded when they occur. Recording of business transactions should be done...
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...ACC 557 WK 2 Chapter 1 Quiz - All Possible Questions To Purchase Click Link Below: http://strtutorials.com/ACC-557-WK-2-Chapter-1-Quiz-All-Possible-Questions-ACC5574.htm ACC 557 WK 2 Chapter 1 Quiz - All Possible Questions TRUE-FALSE STATEMENTS 1. Owners of business firms are the only people who need accounting information. 2. Transactions that can be measured in dollars and cents are recorded in the financial information system. 3. The hiring of a new company president is an economic event recorded by the financial information system. 4. Management of a business enterprise is the major external user of information. 5. Accounting communicates financial information about a business enterprise to both internal and external users. 6. Accounting information is used only by external users with a financial interest in a business enterprise. 7. Financial statements are the major means of communicating accounting information to interested parties. 8. Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process. 9. The origins of accounting are attributed to Luca Pacioli, a famous mathematician. 10. The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm. 11. Private accountants are accountants who are not employees of business enterprises...
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...Name______________________ Sample Test Key for Midterm 1 (Chapters 1 – 4) Multiple Choice - Circle the one best answer. 1. The primary accounting standard-setting body in the United States is the a. Securities and Exchange Commission. b. Internal Revenue Service. c. Financial Accounting Standards Board. d. Corporate Board of Directors. 2. An increase in an expense a. increases revenues. b. increases assets. c. decreases liabilities. d. decreases capital. 3. A corporation with total owners’ equity of $85,000 paid a $5,000 business debt. As a result of this transaction, total capital equity a. did not change. b. increased by $5,000. c. decreased by $5,000. d. increased to $90,000. 4. The right side of an account is always a. the debit side. b. the credit side. c. the balance of that account. d. carried forward to the next accounting period. 5. Posting is the process of a. preparing a chart of accounts. b. adding a column of figures. c. transferring journal entries to ledger accounts. d. recording entries in a journal. 6. The purpose of recording depreciation on productive assets is to a. reflect the decline in the market value of the assets each period. b. reduce income when the company has an exceptionally profitable year. c. be in conformity with the revenue recognition principle. d. allocate...
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...European System of Central Banks − the European Central Bank − the Law on the Bulgarian National Bank − narrow money − М1 plus quasi money − broad money − the International Monetary Fund − Exchange Rate Mechanism II − the Federal Reserve System © The Bulgarian National Bank, 2009 © 2009 by Tsvetan Manchev et al. ISBN 978-954-8579-30-8 Published by the Bulgarian National Bank 1, Knyaz Alexander I Square 1000 Sofia telephone +359 2 9145-750 facsimile +359 2 980 2425, 980 6493 www.bnb.bg 2 International Foreign Exchange Reserves Contents Introduction ......................................................... 11 PART ONE. Chapter 1. 1. 2. 3. 4. 5. THE THEORETICAL FOUNDATIONS Nature and Function .......................................... 19 Definition ............................................................. 19 Gold as a Foreign Reserve Assets ...................... 20 Reasons to Own and Use Foreign Reserves ...... 23 The Functions of Foreign Reserves ..................... 24 Exchange Rate Policy, Monetary Policy, and Foreign Reserves ......................................... 26 6. Foreign Reserve Adequacy ................................ 31 1. 2. 3. Financial Asset Risk and Return ........................ 36 Financial Assets .................................................. 36 Types of Asset Risk...
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...intermediate accounting Chapter two 2-1 (a)True. (b)False – General-purpose financial reports helps users who lack the ability to demand all the financial information they need from an entity and therefore must rely, at least partly, on the information in financial reports. (c)False – Standard-setting that is based on personal conceptual frame works will lead to different conclusions about identical or similar issues. As a result, standards will not be consistent with one another, and past decisions may not be indicative of future ones. (d)False – Information that is decision-useful to capital providers may also be useful to users of financial reporting who are not capital providers. (e)False – An implicit assumption is that users need reasonable knowl edge of business and financial accounting matters to understand the information contained in the financial statements. (f)True. 2-4 (a)(b)(c) | Comparability.Confirmatory Value.Comparability (Consistency.) | (h) (i) | Materiality.Relevance and Faithful representation. | (d)(e) | Neutrality.Verifiability. | (j) | Relevance and Faithful representation. | (f) | Relevance. | (k) | Timeliness | (g) | Comparability, Verifiability, Timeliness, and Understandability. 2-5 (a)Gains, losses.(b)Liabilities.(c)Investments by owners, comprehensive income.(Also possible would be revenues and gains).(d)Distributions to owners.(Note to instructor: net effect is to reduce equity and assets).(e)Comprehensive income...
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...Jyteris Horne Information Security Fund Mr. Everett Chapter 4: Case Project 1-20 1. It is the process of identifying risk represented by vulnerabilities to an organizations information assets and infrastructure. Also taking steps to reduce this risk to an acceptable level. 2. The two key understandings are knowing yourself and knowing the enemy. 3. Security professionals are responsible for risk management in an organization. The IT community takes the lead in information security risk management. 4. Threats are constantly changing for a company and also once any specific vulnerability is completely managed by an existing control it no longer needs to be considered for additional controls. 5. Networking components need more examination from an information security perspective than from a systems development perspective because networking subsystems are often the focal point of attacks against the system. 6. All hardware components are already identified, make and locations, and management can review for the most critical items and assess the values. 7. The IP-address for network device. 8. Comprehensive is more important than mutual. 9. The difference is generating revenue refers to the asset producing a cash flow that is linked directly to the asset. If the assets weren’t there then no money would be made. Assets that generate profit don’t produce cash directly. 10. Vulnerability is a weakness in a controlled system where controls...
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... BASIS FINANCIAL STATEMENTS Chapter Summary Financial statements are the primary means of communicating financial information to users. Chapter 2 covers the income statement, balance sheet, and statement of cash flows. Chapter 1 set forth the objectives of the financial reporting process, and offered the observation that these objectives are met in large part by a set of financial statements. In this chapter, we take up the task of introducing the balance sheet, income statement, and the statement of cash flows. The presentation is organized around the accounting equation. The equation serves as the basis for elementary transaction analysis. A continuing illustration examines the impact of a number of simple transactions upon the balance sheet of a simple service business. Revenue and expense transactions have been included so that we might introduce the income statement and statement of cash flows at an elementary level. This in turn has provided the opportunity to discuss and illustrate statement articulation. Before closing, the chapter emphasizes the importance of adequate disclosure regarding both financial and nonfinancial information, thereby reinforcing the Chapter 1 theme that the financial reporting process is broader than the financial statements. The chapter also covers accounting principles dealing with asset valuation, as well as an introduction to forms of...
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