Grading Summary Essay Example for Free

Grading Summary Essay heading 1. query (TCO A) The Financial Accounting Standards Board employs a due process system, which has all CPAs in the United States vote on a new statement. enables interested parties to express their views on issues under consideration. identifies the taleing issues that be the most important. requires that all accountants receive a copy of fiscal standards. Points Received 5 of 5 straits 2. apparent movement (TCO A) The cash method of accountingis used by most publicly traded corporations for financial statement purposes. is not in accordance with the matching principle for most publicly traded corporations. often is used on the income statement by large, publicly held companies. exclusively of the aboveQuestion 3. Question (TCO A) Which of the following is an ingredient of relevance?VerifiabilityCompletenessNeutralityPredictive valueQuestion 4. Question (TCO A) The characteristic that is demonstrated when a proud degree of consensus can be sec ured among independent measurers using the same measurement methods isrelevance.reliability.verifiability.neutrality.Question 5. Question (TCO A) Which of the following is not a base element of financial statements?Assets residuum sheetLossesRevenuesQuestion 6. Question (TCO A) Which basic element of financial statements arises from peripheral or incidental transactions?AssetsLiabilitiesGainsExpensesQuestion 7. Question (TCO A) Which basic assumption may not be followed when a firm in bankruptcy reports financial results? Economic entity assumptionGoing concern assumptionperiodicity assumptionMonetary unit assumptionQuestion 8. Question (TCO D) Balance sheet instruction is useful for all of the following except to compute order of return.analyze cash inflows and outflows for the period.evaluate capital structure.assess future cash flows.Question 9. Question (TCO D) The amount of cartridge clip that is expected to elapse until an asset is recognize or otherwise converted into ca sh is referred to as solvency.financial flexibility.liquidity.exchangeability.Question 10. Question (TCO A) The quality of information that gives assurance that is reasonably free of error and diverge and is complete is relevance.faithful representation.verifiability.neutrality.Question 1. Question (TCO D) The basis for classifying assets as cur subscribe or noncurrent is conversion to cash within the accounting cycle or one year, whichever is shorter.the operating cycle or one year, whichever is longer.the accounting cycle or one year, whichever is longer.the operating cycle or one year, whichever is shorter.Question 2. Question (TCO A) What is FASB Codification? Explain in detail.Instructor score The codification takes the statements and other pronouncements and arranges the information by topic. Per the FASB, the new system will 1. reduce the amount of time and effort required to solve an accounting research issue 2. mitigate the risk of noncompliance with standards through imp roved usability of the literature 3. provide accurate information with real-time updates as new standards ar released and 4. assist the FASB with the research and convergence efforts required during the standard-setting process.Question 3. Question (TCO C) At Ruth Company, events and transactions during 2010 included the following. The tax income rate for all items is 30%. (1) Depreciation for 2008 was found to be understated by $30,000. (2) A strike by the employees of a supplier resulted in a loss of $25,000. (3) The inventory at December 31, 2008 was overstated by $40,000. (4) A flood destroyed a building that had a book value of $500,000. Floods are very uncommon in that area. What would the effect of these events and transactions on 2010 income from continuing operations net of tax be? Instructor Explanation $25,000 $7,500 = $17,500Question 4. Question (TCO C) For the year ended December 31, 2010, Transformers Inc. reported the following. Net income $60,000Preferred dividend s declared $10,000Common dividend declared $2,000Unrealized holding loss, net of tax $1,000Retained earnings, stock balance $80,000Common stock sold during the year Retained earnings, beginning balance $80,000 Common stock $40,000Accumulated Other Comprehensive Income, Beginning Balance $5,000 What would Transformers report as the ending balance of retained earnings? Instructor Explanation $80,000 + $60,000 $10,000 $2,000 = $128,000Question 5. Question (TCO C) Madsen Company reported the following information for 2010. gross sales revenue $510,000Cost of goods sold $350,000Operating depreciates $55,000Unrealized holding gain on available-for-sale securities $40,000 Cash dividends received on the securities $2,000For 2010, what would Madsen report as other all-around(prenominal) income? Instructor Explanation Other comprehensive income = $40,000Question 6. Question (TCO B) Allowance for doubtful accounts on 1/1/10 was $50,000. The balance in the pay account on 12/31/10 after m aking the annual adjusting entry was $65,000, and during 2010, bad debts written eat up amounted to $40,000. You are to provide the scatty adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account rubric, and place a comma between the account title and the amount of the adjustment. Instructor Explanation DR Bad Debt Expense 55,000 CR Allowance for Doubtful Accounts 55,000 death balance $65,000Beginning balance 50,000Difference 15,000 written off 40,000Adjustment $55,000Question 7. Question (TCO B) Allowance for doubtful accounts on 1/1/10 was $75,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000, and during 2010, bad debts written off amounted to $30,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. Instructor Explanation DR Bad Debt Expense 1 5,000 CR Allowance for Doubtful Accounts 15,000Ending balance $60,000Beginning balance 75,000Difference -15000Written off 30000Adjustment $15,000Question 8. Question (TCO B) Allowance for doubtful accounts on 1/1/10 was $60,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $55,000, and during 2010, bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. Instructor Explanation 12/31/10 Ending Balance 55,0001/1/10 Beginning Balance 60,000Adjustment -5,000Written off 40,000Adjusting entry 35,000DR Bad Debts Expense, 35,000CR Allowance for Doubtful Accounts, 35,000Question 9. Question (TCO B) Prepaid rent at 1/1/10 was $30,000. During 2010, rent payments of $120,000 were made and charged to rent expense. The 2010 income statement shows as a general expen se the item rent expense in the amount of $125,000. You are to assemble the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment Instructor Explanation DR Rent Expense 5,000CR Prepaid Rent 5,000Rent expense $125,000Less cash paid 120,000Reduction in prepaid rent $5,000Question 10. Question (TCO D) Which of the following should be reported for capital stock?The shares receivedThe shares issuedThe shares outstandingAll of the aboveQuestion 11. Question (TCO D) An example of an item that is not an element of working capital is accrued interest on notes receivable.goodwill.goods in process.temporary investments.Question 12. Question (TCO A) Financial information exhibits the characteristic of consistency when expenses are reported as charges against revenue in the period in which they are paid. ac counting entities give accountable events the same accountingtreatment from period to period. extraordinary gains and losses are not included on the income statement. accounting procedures are adopted which give a consistent rate of net incomeQuestion 13. Question (TCO D) The current assets section of the balance sheet should includemachinery.patents.goodwill.inventory.Question 14. Question (TCO D) Houghton Company has the following items common stock, $720,000 treasury stock, $85,000 deferred taxes, $100,000, and retained earnings, $313,000. What total amount should Houghton Company report as stockholders equity? $848,000$948,000$1,048,000$1,118,000Instructor Explanation General Feedback b. $720,000 $85,000 + $313,000 = $948,000.