Chapter 20 Accounting Changes and Error Corrections True / False Questions 1. Most‚ but not all‚ changes in accounting principle are reported using the retrospective approach. True False 2. Prior years’ financial statements are restated when the prospective approach is used. True False 3. The after-tax cumulative effect on income is no longer required for changes in accounting principles. True False 4. Most changes in accounting principle require
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Module 6 Reporting and Analyzing Operating Assets QUESTIONS Q6-1. When a company increases its allowance for uncollectible accounts‚ it also records bad debt expense in the income statement. If a company overestimates the allowance account‚ bad debt expense is too high and net income is understated. As well‚ accounts receivable (net of the allowance account) and total assets are both understated on the balance sheet. In future periods‚ the company will not need to add as much to its allowance
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The factory overhead budget for the year was budgeted at $481‚798 less $150‚000 depreciation. Total depreciation over the last three years has remained at $130‚000 per year for the past three years as identified on the company’s balance sheets. Therefore setting depreciation at $150‚000 for the 9th year is too high without identifying any new major purchases that would add to this depreciation. Even though depreciation is not actual cash flow it does define the reduction of company assets and should
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Chapter 1 1. In a contest ‚all twenty finalists were given cash prize.The first winner was given RM860 ‚ the second RM 800 ‚the third RM740 and so on.Calculate the total amount of money awarded to all the finalists. Solution:The prizes are RM860‚RM800 ‚RM740….. It is an arithmetic progression .The first term a=rm860 ‚ common difference d=-60 and n=20. The total amount given is Sn = n/2[ 2a + (n-1)] S26 =20/2[ 2(860) +(20-1)(-60)] =RM5800 The amount is RM 5800 2. Find the minimum number of
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CONFIDENTIAL AC/SEP 2011/AIS280/CAC230 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE COURSE CODE EXAMINATION TIME COMPUTERIZED ACCOUNTING/ COMPUTERISED ACCOUNTING AIS280/CAC230 SEPTEMBER 2011 3 HOURS INSTRUCTIONS TO CANDIDATES 1. This question paper consists of four (4) parts : PART A (20 Questions) PART B (3 Questions) PART C (3 Questions) PART D (2 Questions) 2. Answer ALL questions from all four (4) parts : i) Answer PART A in the Objective Answer Sheet. ii) Answer PART B‚ C and D in the
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Corporate Finance Case 1 1. To calculate the present value of future cash flow in 2013‚ we first calculate the free cash flow between 2014-2020: Table 1: Free cash flow of 2014-2020 (in $million) After-tax profits Depreciation Gross investment in fixed assets Investment in net working capital Free cash flow 2014 2015 2016 2017 2018 2019 2020 5.25 2.40 5.70 3.10 3.00 3.12 3.40 3.17 4.35 3.26 6.00 3.44 7.60 3.68 (4.26) (10.50) (3.34) (3.65) (4.18) (5.37) (6.28) (1.39) (0.60)
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Cr. Rs.‚ the plant wont be operational at half the capacityS The Capex decisions are irreversible Projected P&L : Less Sales Raw Materials Utilities Employee Cost Depreciation Sales and Distn. Repair and maintenance + Administrative Exp. Int. on Working capital Total Cost PBT Tax PAT PAT + Depreciation Non manufacturing Expenses x Cash outflow‚ Inflow: Cash outflow – Investment‚ Incremental working capital (as all the capacity won’t be utilised in some cases) Cash Inflow
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expected to provide services to the company for a number of years. Except for land‚ plant assets decline in value over their useful lives. Plant assets are usually subject to depreciation. Depreciation methods are not covered in detail in this paper. The book value of plant assets is the cost of the asset less accumulated depreciation. This amount is not an indication of the market value of the asset‚ which may be much higher than the book value in most cases. The difference between the market and book
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income earned but not yet received 2. Accrued Expense – expenses incurred but not yet paid 3. Deferred Income – income received but not yet earned 4. Prepaid Expense – expenses paid but not yet paid Also‚ adjusting entries are made for: 5. Depreciation Expense‚ and 6. Doubtful Accounts Expense or Bad Debts Expense Composition of an Adjusting Entry Adjusting entries affect at least one nominal account and one real account. A nominal account is an account whose balance is measured from period
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PPE – Cost Problem 11 – 1 On August 1‚ 2012‚ Benigno Company purchased a new machinery on a deferred payment basis. A down payment of P 500‚000 was made and 4 monthly instalments of P 1‚250‚000 each are to be made starting September 1‚ 2012. The cash equivalent price of the machine was P 4‚750‚000. Benigno incurred and paid installation costs amounting to P 150‚000. What si the amount to be capitalized as a cost of the machine? a. P 4‚750‚000 b. P 5‚500‚000 c. P 4‚900‚000
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