CHAPTER 3 THE REPORTING ENTITY AND CONSOLIDATED FINANCIAL STATEMENTS ANSWERS TO QUESTIONS Q3-1 The basic idea underlying the preparation of consolidated financial statements is the notion that the consolidated financial statements present the financial position and the results of operations of a parent and its subsidiaries as if the related companies actually were a single company. Q3-2 Without consolidated statements it is often very difficult for an investor to gain an understanding
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specific factors and the size of member firms but conceptually they are pretty much the same. The main change being the Sarbanes-Oxley Act‚ which did two things. First‚ it created the Public Company Accounting Oversight Board (PCAOB)‚ which is in charge of registering and inspecting public accounting firms‚ and for adopting and modifying audit standards. Second‚ the PCAOB has the power to bring enforcement actions‚ which‚ is concurrent with the SEC’s [Securities and Exchange Commission] enforcement
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The accounting equation is‚ Assets are equal to Liabilities plus Stockholders’ Equity. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of a business. Stockholders’ equity represents the claims of owners on the assets of the business. This equity is divided into two parts: common stock and retained earnings. The balance sheet reports assets and claims to assets at one specific point in time
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University of Michigan Why Do Firms Smooth Earnings?* I. Introduction Corporate earnings management has been much in the news lately. For example‚ Business Week has recently run two cover stories‚ one titled “Who Can You Trust?” (October 5‚ 1998) and the other titled “The Numbers Game” (May 14‚ 2001)‚ that suggest that the credibility of earnings reports is being eroded by earnings management. Arthur Levitt‚ Jr.‚ chairman of the Securities and Exchange Commission (SEC)‚ commented in
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accepted accounting principles Adverse opinion * It is used only when the auditor believes that the overall financial statements are so materiality misstated or misleading that they do not present fairly the financial position or results of operations and cash flows in conforming with GAAP. Disclaimer of opinion * It is issued when the auditor is unable to be satisfied that the overall financial statements are fairly presented 2. Materiality A misstatement in the financial statements
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1302-36405 February 23‚ 2012 Assignment Week 5/6 – Analytical Essay John Updike’s story "A & P" epitomizes that moment of realization for most young adults‚ that following through with the choices one makes‚ and being able to accept the consequences of ones actions goes hand in hand with becoming a mature adult. In the beginning of the story‚ Sammy comes off as just another naive and rebellious teen. He is bored with his mundane job at the A&P‚ and has some very strong opinions about the
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Abstract The observance of international accounting standards is playing an increasingly significant role in dynamic regulatory developments and presents several challenges‚ which may necessitate a variety of procedural and technical data processing changes. Regulatory consolidation under the influence of international accounting standards The observance of international accounting standards is playing an increasingly significant role in dynamic regulatory developments. On the one hand‚ publicly
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Introduction to Accounting Accounting is a profession used to make financial and business decisions. Billions of dollars exchange hands every day‚ in millions of separate business transactions. These are recorded and reported on using a comprehensive set of guidelines‚ referred to as Generally Accepted Accounting Principles (GAAP). Brief History of Accounting Accounting was born before writing or numbers existed‚ some 10‚000 years ago‚ in the area known as Mesopotamia‚ later Persia‚ and today the
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Thomas Edison State College Principles of Managerial Accounting (ACC-102) Final Project 1. Cost-volume-profit relationships (15 points) The following data are available for a product manufactured and sold by Logan Company: Compute the following: (a) Contribution margin per unit: $_______________ Solution: Computation of the Contribution margin per unit Contribution margin per unit = Selling price per unit – Variable Cost per unit Where as Selling price per unit = 212 Variable Cost per
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fiber optic cable at a cost of .87 per ft for a company. Your program should display the company name and the total cost. Step 1: Examine the following algorithm as a base for how the program should flow. (Reference: Designing a Program‚ page 31). 1. Display a welcome message for your program. 2. Get the company name. 3. Get the number of feet of fiber optic to be installed. 4. Multiply the total cost as the number of feet times .87. 5. Display the calculated information and company name.
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