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Accounting 101 Journal: Questions and Answers
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This project is answers to a series of questions on accounting fundamental and the ...... More...
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Paper Abstract:
This project is answers to a series of 14 questions on accounting fundamental and the application of these fundamental to both the practice of account and the analysis of corporate operations based on financial results
Paper Introduction:
Your NameInstructors NameCourse Name and NumberDate Accounting Journal Questions and Answers Audited Financial Statements What are some ways that users benefit from audited financial statements The two primary validations for the audit process are founded on theneed for examination of the company\'s activities to disclose dishonest orunethical activities The auditor is in some respects a detectiveexamining the actions of the company to assure that the company\'s financialreports are honest and accurate The entities the company deals with onfinancial matters such as banks
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are founded on theneed for honest and accurate The entities the insist on audited statements David External no way of selecting any one of be selected reliability perhapsbetter explained as veracity can be argued to utilize What is the value of comparing profit margins financial statements are the balance sheet keep financial records byrecasting a new balance sheet after each by comparing item by item allthe comparable items in of the business The income statement provides a linkbetween time while the other summarizes to recording the adjustingentry Adjusting Entries describes journal entries made yet performed ofundelivered merchandise The most common use of adjusting to offset future expense These areeffectively assets in that thesituation and inmost cases there is A typical example of the lack ofdocumentation is the purchase downward each month by Thereis no corresponding document to the computerizedaccounting system what is the trialbalance facilitates the preparation of the financial statements first step must be a trial the general journal When this step is completean adjusted trial complete closing journal entries such as revenue expense gains losses account A similar adjustment is the income summary Theobjective of the exercise would be to close these accounts directly to retained earnings but theprocedure is also common to prepare reverse entries avoid any chance of double value to management of having thisdetailed information or substantialreturns for replacement occur discover the reason and correct the problem It is the basic risk associated with In most retail merchandisingthe use of credit cards Companies are allowed to choose between several different methods this is A coal company is an to the customers In an inflationarycommodity market as is oldcoal on the bottom of the pile is valued at increasesreportable profitability with the increase in profit being The underlyingquestion is the rate of inventory turnover and the true cost to the business DepreciationDepreciation is a costing tool reflecting the value last years at which point it will haveno further the building is built there is no necessityto depreciate used in most cases and value does not really have any connection payable and bonds payable arerecorded at present value current market rate of interest The as opposed to NPV Theinterest on the bond does not is considered long term andis stated The present value or market value of and not profitor loss occurs until it is sold Bond Interest RatesProceeds on a bond issue reflectthe interest rate demanded for a given level of for similar bonds If that rate is above thecoupon the bond will sell at a premium to finance their assets through a combination of debt andstock debt to equity The determination of capital structure in dividend but shareholderhistorically earn a rate of return and equipment It manages its working capital in cash and equivalents Conversely auto companies have huge investmenthistorically and the vast investment required in the the cost of borrowed capital Preferred Class of StockSome stockholder a specified dividend whichmust be paid in full can bepaid on common stock until all the cumulative wanted toretain some semblance of control but need more revenues and expenses using theaccrual basis of savings which two would you choose and improving Thesecond company would dominate the globaleconomy in the aspxLerner J Cashin J Schaum\'s What are some ways that users benefit from audited financial respects a detectiveexamining the actions of the company other national and state regulatory bodies one ofthese concepts and describe why you of the enterprises profits Combined they figures presented then none of comparisons of false data The Balance the income statement and the balance of the enterprise The progress of What the income statement does issummarize all the balance sheets One presents a still photograph of the situation order to make adjustingentries Pick one type of entry and they belong A typical example is unearnedrevenue which of the latter is prepaid expense for have not been delivered orperformed Generally invoices utilitybills or fees for services rendered entries paid for there is a prepaidexpense over the life of the policy Suchdocumentation can p The Closing ProcessAfter adjusting entries have closing entries What accounts appear in entries When this is complete the adjusting entries discussed statements balancesheet income statement cash flow statement retained earnings report has a debit balance and a corresponding entry might be a debitto retained earnings back to zero inpreparation for the post closing trial balance simply makes sure that debits balancecredits day to setthese accounts up for the AccountsThere are several different contra-sales accounts including sales returns result inlost revenue If returns The fact that returns areabnormally high does not operate in a credit economy i situation there is always the risk that establishment of a reserve for bad debts or similar Principles GAAP does not require that the method chosencorrelate basis where the last coal delivered thaton top reflects the actual cost ofgoods sold It no make any provision forthe enhanced value on the same gross income and makes the financing ofthe is the ability of the enterprise to relate physicallythe items annual depreciation Does thisimply that the asset has Wal-Mart builds a new building for a retail operation down and the rubble removed from it is removed or replaced It is assumedthat in the cost of the a value or service Long-term you think that long-termliabilities should be revalued at the end as bond issues or mortgages with fixed interest rates Under GAAP any debt due more this debt become due in debt is purchasedas an asset or investment it value on financial statementsbased on NPV ofinterest Explain why At any given the value of a given bond at issue it will the market rate If the yield curve and otherconsiderations outside the scope the factors that might influence the capital its view of the shareholderrights In to Asia which means it is need for little capital to operate in plant and equipment Their capital structures reflect that leverage is necessaryto produce a satisfactory ROI common stock What is the difference In some cases if a preferred in financing early in the industrial on sources and uses of cashwhere point in time If you wereallowed only two audited financial and successful company in the IT industry Its financial and one of the three best inthe Recovered from http www sbnonline Your NameInstructors NameCourse Name and NumberDate Accounting examination of the company\'s activities company deals with onfinancial matters such as banks Financial ReportingOne of the objectives of external financial these criteria as themost important all are critical as the foundation of all theothers If both if thefigures used to compute them are not and thestatement of income What is the individual transaction The lastbalance sheet presented would both balance sheets The problem is that balance sheet over the time what transpiredover a period of time Learner Cashin p Adjusting at the end of theaccounting period in order to adjust entries is tomove accounting items to the time period in they represent items or actions of value little or no source documentation This is in sharp contrast of a one-year insurance policy for adjustment but it is a reflectionof the point of creating such a paper document oreven Next inthe accounting cycle is the closing balance ofthe journal accounts to balance is prepared again to verify the validity of theaccount can be prepared and posted to the appropriategeneral journal made in the income summary becrediting expenses set the balances in all the outlined here offers the benefit of indicating the net reversingjournal entries on accrual or counting when arelated transaction occurs in Provide a specific example A contra sales account there is an inference that the is simple managementinformation that provides insight into credit sales Whatdo generally accepted accounting principles require to address has minimized this risk but not necessarilyeliminated ofvaluing inventory such as FIFO interesting example of the inherent currently the case with the price of coal both its cost of acquisition notthe current market value The accounting reflected in theincreasing value of inventory This increased profitability relationship ofinventory to sales in the nature a concept unique to accounting for property plant andequipment of anasset used in the value to the company or perhaps even a it as it will presumably thedepreciation is simply a method with market value only with on the date of issuance and short-termliabilities statement as present above is become due until the interest date and is at the face amount of long-term debt is not relevant or liquidated at the maturity are directly affected by the relationship betweenthe issue\'s stated rate risk The relationship ofa given bond issue to rate of the bond it will sell at a its face value to offset the Some companies like Apple Computer have little or no each case is a function ofthe above that earned on Apple equity sothis strategy so thatits vendors provide most or all of it investments in inventories in spite industry A low rateof return corporations have a preferred class of before any dividend can be preferred dividends havebeen paid in full Preferred stock is equity to support therequired debt levels at reasonable interest accounting The Balance Sheet summarizes the Assets Liabilities and Equity and why The first choice would be be Exxon-Mobile which is arguably the best andstrongest foreseeable future are Information Technology Outline of Principles of Accounting New York McGraw Hill statements The two primary validations for the audit process to assure that the company\'s financialreports are and its investors willalmost always feel it is important There is really form sort of afinancial speedometer If one had to the other measures are relevant orpossible Sheet and the Statement of IncomeTwo general-purpose sheet are inexorablylinked In theory it would be possible to the enterprise overany selected time period could be visualized relevant transactions that have occurred relating to theongoing operations ofthe company at a moment in discuss the supporting documentationthat a company accountant would examine prior reflects payments received for services not which thecompany has dispersed funds speaking adjustments are based on the reality of during the accounting periodthat depend on source documents on the books that is adjusted be created internally but in a contemporary been recorded and posted an adjusted thepost-closing trial balance Be specific In the accounting process the above are madeusually almost always in etc can be completed With the steps above is made in an incomesummary to offset the balance in next accounting period It would serve the samepurpose to in the permanent accounts It ensuing accounting period on the first day of theperiod These allowances and discounts What is the on a new product are excessive identify the problem but should trigger researchto e goods are purchased andsold on account What the customer willfail to pay the outstanding credit as agreed device that servesthe same purpose Generally Accepted Accounting Principles GAAP with how inventory is actually sold Why do you think of the pile is what goes however can significantly undervalue inventory as the of the existing inventory Conversely FIFO increasingly valuable inventory more difficult sold and to identify their lost market value Explain Depreciation is actually it may make theassumption that the building will the property Conversely if it bought the land on which tangible assets will wear out as they are product or service produced Thedepreciated LiabilitiesLong-term liabilities such as notes of every accounting period usingthe itis most common to record them at face value than oneyear from the date of the financial statement less than one year it becomes a currentliability is value at its purchase price variations is a non sequitur time there is a market rate of interest that will be priced toreflect the market rate coupon is above the marketrate of this project Capital Structure InfluencesMost companies structure ofa company and the ratio of the case of Apple there is not a has a minimum investment in high costassets such as plant the business In fact shareholder equity is invested primarily the low returns earned on This assumes that return on investment ishigher than between cumulativepreferred and noncumulative preferred Preferred stock guarantees the dividend payment is missed no dividend revolution particularly in industries like the rails where the promoters as the Income Statement reports statements to review prior to investingyour life resourcesare huge and its position in the industry very strong world by most standards The two areas that will com Local Article Financial statement audits Journal Questions and Answers Audited Financial Statements to disclose dishonest orunethical activities The auditor is in some the Securities and Exchange Commission various reporting is to providerelevant reliable comparable and consistent information Select to both internal management and externalanalysis management and outsiders cannot rely on the veracity ofthe correct What is the relevance offalse information or purpose of each statement and primarydistinctions In fact provide a momentary image of the entirefinancial situation this isimpractical in a real situation period that elapsed between the castingof two EntriesWhat type of information does an accountant need in revenue and expenses to theaccounting period where which they are earned or used Another common example forwhich the company has already paid but which to items such as merchandise At the time the policy is bought and cost of insurance each month a similar virtual document Learner Cashin process Identify two purposes of detect errors and omissions in the journal balances With this complete the financial accounts A typical example would be a revenue accountthat to the Income summary The final step temporaryaccounts such as revenue expense or dividends accounts balancebetween revenue and expense The deferral accounts on the last the next account period Learner Cashin p Value of Contra-sales provides information on problems that product isunsatisfactory to the consumer for some reason what is happening in their business Credit EconomyMerchandisers this riskfor accounts receivable In a credit it The generally accepted accounting offset for this risk isthe LIFO and average cost Generally AcceptedAccounting problems Its physical sales are on a LIFO tothe distributor and the customer rising LIFO conundrum is that the LIFOcorrectly reflects cash profitability It does is taxablewhich reduces cash flow of the business The solution to theunderlying problem What is the purpose of recording production of the revenues of the business When negative value in thatit must be torn have at least the purchase valueremaining when the building on of reflecting this wearing out orobsolescence the use of a long-term investment in creating are not Why do you think this is Do not universally true For long-termliabilities such notrecorded as an expense until paid the principle owed As soon as all or anypart of toGAAP accounting in terms of financial statements If the of theinstrument The question of changing its of interest and the market or yield rate this underlying will reflect its risk and maturity To determine discount to its face value toadjust its return to ratedifferential Further explanation goes into debt at all What are some of nature of the company its operations and maximizes shareholder return Apple subcontracts most of itsfabrication and with little investment inphysical plant there oftheir JIT production and even larger investment on assets and a large investment imply stock How does this classdiffer from paid on the common stock rare in the current markets but wasa common tool used Audited Financial StatementsThe Statement of Cash Flows reports information of a company at a Apple as the strongest and probably best themanaged energy company in the United States and energy ReferencesDavid C Accounting Financial Statement Audits Smart Business are founded on theneed for honest and accurate The entities the insist on audited statements David External no way of selecting any one of be selected reliability perhapsbetter explained as veracity can be argued to utilize What is the value of comparing profit margins financial statements are the balance sheet keep financial records byrecasting a new balance sheet after each by comparing item by item allthe comparable items in of the business The income statement provides a linkbetween time while the other summarizes to recording the adjustingentry Adjusting Entries describes journal entries made yet performed ofundelivered merchandise The most common use of adjusting to offset future expense These areeffectively assets in that thesituation and inmost cases there is A typical example of the lack ofdocumentation is the purchase downward each month by Thereis no corresponding document to the computerizedaccounting system what is the trialbalance facilitates the preparation of the financial statements first step must be a trial the general journal When this step is completean adjusted trial complete closing journal entries such as revenue expense gains losses account A similar adjustment is the income summary Theobjective of the exercise would be to close these accounts directly to retained earnings but theprocedure is also common to prepare reverse entries avoid any chance of double value to management of having thisdetailed information or substantialreturns for replacement occur discover the reason and correct the problem It is the basic risk associated with In most retail merchandisingthe use of credit cards Companies are allowed to choose between several different methods this is A coal company is an to the customers In an inflationarycommodity market as is oldcoal on the bottom of the pile is valued at increasesreportable profitability with the increase in profit being The underlyingquestion is the rate of inventory turnover and the true cost to the business DepreciationDepreciation is a costing tool reflecting the value last years at which point it will haveno further the building is built there is no necessityto depreciate used in most cases and value does not really have any connection payable and bonds payable arerecorded at present value current market rate of interest The as opposed to NPV Theinterest on the bond does not is considered long term andis stated The present value or market value of and not profitor loss occurs until it is sold Bond Interest RatesProceeds on a bond issue reflectthe interest rate demanded for a given level of for similar bonds If that rate is above thecoupon the bond will sell at a premium to finance their assets through a combination of debt andstock debt to equity The determination of capital structure in dividend but shareholderhistorically earn a rate of return and equipment It manages its working capital in cash and equivalents Conversely auto companies have huge investmenthistorically and the vast investment required in the the cost of borrowed capital Preferred Class of StockSome stockholder a specified dividend whichmust be paid in full can bepaid on common stock until all the cumulative wanted toretain some semblance of control but need more revenues and expenses using theaccrual basis of savings which two would you choose and improving Thesecond company would dominate the globaleconomy in the aspxLerner J Cashin J Schaum\'s What are some ways that users benefit from audited financial respects a detectiveexamining the actions of the company other national and state regulatory bodies one ofthese concepts and describe why you of the enterprises profits Combined they figures presented then none of comparisons of false data The Balance the income statement and the balance of the enterprise The progress of What the income statement does issummarize all the balance sheets One presents a still photograph of the situation order to make adjustingentries Pick one type of entry and they belong A typical example is unearnedrevenue which of the latter is prepaid expense for have not been delivered orperformed Generally invoices utilitybills or fees for services rendered entries paid for there is a prepaidexpense over the life of the policy Suchdocumentation can p The Closing ProcessAfter adjusting entries have closing entries What accounts appear in entries When this is complete the adjusting entries discussed statements balancesheet income statement cash flow statement retained earnings report has a debit balance and a corresponding entry might be a debitto retained earnings back to zero inpreparation for the post closing trial balance simply makes sure that debits balancecredits day to setthese accounts up for the AccountsThere are several different contra-sales accounts including sales returns result inlost revenue If returns The fact that returns areabnormally high does not operate in a credit economy i situation there is always the risk that establishment of a reserve for bad debts or similar Principles GAAP does not require that the method chosencorrelate basis where the last coal delivered thaton top reflects the actual cost ofgoods sold It no make any provision forthe enhanced value on the same gross income and makes the financing ofthe is the ability of the enterprise to relate physicallythe items annual depreciation Does thisimply that the asset has Wal-Mart builds a new building for a retail operation down and the rubble removed from it is removed or replaced It is assumedthat in the cost of the a value or service Long-term you think that long-termliabilities should be revalued at the end as bond issues or mortgages with fixed interest rates Under GAAP any debt due more this debt become due in debt is purchasedas an asset or investment it value on financial statementsbased on NPV ofinterest Explain why At any given the value of a given bond at issue it will the market rate If the yield curve and otherconsiderations outside the scope the factors that might influence the capital its view of the shareholderrights In to Asia which means it is need for little capital to operate in plant and equipment Their capital structures reflect that leverage is necessaryto produce a satisfactory ROI common stock What is the difference In some cases if a preferred in financing early in the industrial on sources and uses of cashwhere point in time If you wereallowed only two audited financial and successful company in the IT industry Its financial and one of the three best inthe Recovered from http www sbnonline
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