expenses are reported on the income statement. In the accrual basis of accounting revenues are reported when they are earned‚ which most of the time happens before customers pay out the cash. Unlike cash basis‚ in accrual basis‚ expenses are reported on the income statement in the same period they occur. Accrual basis accounting oftentimes provides a more accurate picture of a company’s profits during an “accounting period.” The reason for this is that the income statement that is prepared during
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unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records. TRUE 5. The drawings account is a subdivision of the owner’s capital account and appears as an expense on the income statement. FALSE 6. Revenues are a subdivision of owner’s capital. TRUE 7. The trial balance has no limitations or weaknesses. FALSE 8. In an automated system‚ the entering of data and transferring of information is done by following
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value. Earnings forecasting considers earning power‚ estimation techniques‚ and monitoring mechanisms for analysis. This chapter describes several useful tools for equity analysis and valuation. We describe recasting and adjustment of financial statements. We also distinguish between recurring and nonrecurring‚ operating and nonoperating‚ and extraordinary and nonextraordinary earnings components. Throughout the chapter we emphasize the application of earnings-based analysis with several illustrations
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Solutions to Problems and Exercises TABLE OF CONTENTS * Chapter 1 1 Concepts for Analysis 1-5 1 Concepts for Analysis 1-6 2 Concepts for Analysis 1-10 3 Concepts for Analysis 1-11 3 * Chapter 2 4 Brief Exercise 2-3 4 Brief Exercise 2-4 4 Brief Exercise 2-5 4 Exercise 2-3 5 * Chapter 3 6 Exercise 3-6 6 Exercise 3-9 6 Exercise 3-11 8 Exercise 3-14 10 Exercise 3-15 10 Exercise 3-16 10 * chapter 4 12 Exercise 4-2 12 Exercise 4-4 13 Exercise 4-5 16 Exercise 4-12 17
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various accounting firms. A topical listing of the cases is presented with the case and solution following the listing. Topical Index of Student Cases INTERMEDIATE ACCOUNTING Cases Case 1: Reporting acquisition and repayment transactions in the Statement of Cash Flows Case 2: Recording a forfeited payment Case 3: Revenue and expense recognition associated extended warranties Case 4: Accounting for “due on demand” note payable Case 5: Purchase of a controlling interest with a greenmail premium Case
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Categorize the accounting tasks performed by Urlacher as relating to either the identification (I)‚ recording (R)‚ or communication (C) aspects of accounting. E1-2 (a) The following are users of financial statements. ___I___Customers __I___Securities and Exchange Commission ___C__Internal Revenue Service __C__Store manager ___I___Labor unions __R__Suppliers ___C__Marketing manager __C_ Vice-president
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The GAP‚ Inc. The Fiscal year Ended January 28‚ 2012 A. INTRODUCTION AND OVERVIEW 1. Financial Statements Included in the Annual Report 2.1. Consolidated Statements of Cash Flow 2. Major Competitors of the GAP‚ Inc. American Eagle Outfitters‚ Inc.‚ J. Crew Group‚ Inc.‚ and the TJX Companies‚ Inc. can be shown as the major competitors for the GAP‚ Inc. Based on the data given in annual reports of the companies‚ gross margin % for GAP‚ Inc. is 36%‚ while American Eagle Outfitters
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record‚ classify‚ report‚ and interpret financial data. The accrual concepts states that accounting income is measured by matching the expenses incurred in a given accounting period with the revenues earned in that period. The accounting cycle is 6 steps. The accounting cycle is a logical series of steps that accountants follow to keep necessary accounting records and prepare financial statements. The first two steps are very closely related and are accomplished during the month as transactions
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RM2·42 per acquired share of Sardonic. Patronic’s cost of capital is 10% per annum. The reserves of Sardonic on 1 April 2007 were RM69 million. Patronic has held an investment of 30% of the equity shares in Acerbic for many years. The summarised income statements for the three companies for the year ended 31 March 2008 are: Patronic RM’000 150‚000 (94‚000) –––––––– 56‚000 (7‚400) (12‚500) (2‚000) –––––––– 34‚100 (10‚400) –––––––– 23‚700 –––––––– Sardonic RM’000 78‚000 (51‚000) ––––––– 27‚000 (3‚000) (6
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some accounting terms beginning with Generally Accepted Accounting Principles. Generally Accepted Accounting Principles (GAAP) is a codification of how CPA firms and corporations prepare and present their business income and expense‚ assets and liabilities on their financial statements. GAAP is not a single accounting rule‚ but rather the aggregate of many rules on how to account for various transactions. GAAP are more like accounting standards (Wikipedia‚ 2009). Next we have Contra-Asset Accounts
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