d. Supplies. 24. Why are inventories included in the computation of net income? a. To determine cost of goods sold.
B. Under the cash basis method, warranty costs are charged to expense as they are
D. The seller's price to the buyer is fixed or determinable. Original AACSB: Analytic AICPA BB: Legal AICPA FN: Research Bloom's: Knowledge Difficulty: Medium 7-27 Chapter 07 - The Revenue and Collection Cycle 3. "Bill and Hold" refers to an arrangement where A. Sales are recorded but are not shipped. B.
Measurement and recognition concepts such as assumptions, principles, and constraints b. Qualitative characteristics of accounting information c. Elements of financial statements d. Objectives of financial reporting 27. The underlying theme of the conceptual framework
a. In a direct-financing lease, initial direct costs are added to the net investment in the lease. b. In a sales-type lease, initial direct costs are expensed in the year of incurrence. c. For operating leases, initial direct costs are deferred and allocated over the lease term.
The excess of nonbusiness capital losses over nonbusiness capital gains must be added to taxable income to compute the net operating loss of an individual. ANS: T PTS: 1 REF: p. 7-21 49. An individual taxpayer who does not itemize deductions uses the standard deduction to compute the excess of nonbusiness deductions over the sum of nonbusiness income and net nonbusiness capital gains for purposes of computing net operating loss. ANS: T PTS: 1 REF: p. 7-22 50. When a net operating loss is carried back to a non-loss year, the net operating loss is a miscellaneous itemized deduction.
Those financial statements are income statement, retained earnings statement, balance sheet, and cash flow statement (Weygandt, 2008). The income statements show operations results of the revenues, expenses, net profit, or net loss for the accounting period. The information obtained from the retained earnings statement listing the revenue followed by the expenses is used to prepare it. The income statement reflects the organization’s success through its profits. The retained earnings statement reconciles the beginning and ending balances of the retained earnings.
This ratio determines the rate and ability in which the company is able to pay its debts off. For Huffman Trucking the calculation would look like this for 2011: $94,520/$466 = 202.83 (Huffman Trucking, 2013). Liabilities and Shareholders' Equity Current Liabilities Accounts Payable $40,843 $45,381 Salaries & Wages 37,299
| Liquidity RatioCurrent Ratio | Current assets/ Current liabilites | 203,100,000/37,500,000 | 5.416 | a measurement of CanGo to pay off current liabilities using current assets | Liquidity RatioQuick Ratio | current assets-inventory/current liability | 203,100,000-32,000,000/37,500,000 | 4.5627 | Measures CanGo ability to meet its short term obligation MSOT liquid assets. | Profitability RatioReturn On Equity | | | |
Information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statement. b. The amount of loss can be reasonably estimated. (FASB 450-20-25-2) In the case it states that management of M determined that a loss was in the range of $15 million to $20 million, with $17 million being the most likely amount of loss within the range. FASB states that if some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, that amount shall be accrued (FASB 450-20-30-1).