c. The owner believes it is foolish to report financial information on a yearly basis. Instead, the owner believes that financial information should be disclosed only when significant new information is available related to the company's operations. d. Because the enterprise's income is low this year, the owner decided to ignore depreciation incurred this year. e. Inventories costing P100,000 is reported at its current market value of P140,000.
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- Business damages, as a result of financial fraud, directly impact the operations of any company. Under this premise: What can be, in your opinion, some of the commercial damages resulting from financial fraud? What methods can you use to assess the damages caused by financial fraud? How do generally accepted accounting principles help prevent financial statement fraud?The filing of a 10-K and an annual report are required by the Securities and Exchange Commission. Failure to do so can result in civil penalties levied against the corporation. True False A negative cash flow from operations, a positive cash flow from investing and a positive cash flow from financing can indicate the a company is in financial trouble. True False1. According to the accrual accounting model, recognition of loss leads to decrease in a company’s net assets that did not arise due to a transaction with an owner of the business. Select one: True False 2. If the transferor of receivables surrenders control over them, the transaction involving receivables is treated as a sale, and any gain or loss is recognized in earnings. Select one: True False 3. Which of the following statements about the accrual accounting is NOT true? Accrual earnings help measure a company’s performance better. Accrual accounting income for a given period always provides a precise picture of a company’s economic performance in this period. Accrual accounting better matches revenue with economic effort to receive it. It is normal that accrual accounting revenue for a period does not correspond to cash receipts for the same period. 4. Which of the following statements about Loss Contingencies is TRUE? According…
- Identify which one of the following is a meaning of the term Bankrupt: a. A person or company is unable to pay bank charges in time b. A person or company is able to discount bills with a bank c. A person or company is unable to pay debts in time d. A person or company is able to pay debts in timeWhat is a chance recently implemented by FASB that required a company to change its accounting principal? How did it impact the companies financial statements?Assume in the DigitPrint case that the venture capitalists do not provide additional financing to the company, even though the accrued expense adjustments have not been made. The company hires an audit firm to conduct an audit of its financial statements to take to a local bank for a loan. The auditors become aware of the unrecorded $1 million in accrued expenses. Liza Doolittle pressures them to delay recording the expenses until after the loan is secured. The auditors do not know whether Henry Higgins is aware of all the facts. Identify the stakeholders in this case. What alternatives are available to the auditors? Use the AICPA Code of Professional Conduct and Josephson’s Six Pillars of Character to evaluate the ethics of the alternative courses of action.
- It is the amount collected by the business in advance from the customers before the business actually provide the goods or services to the customers. a. Bank overdrafts b. Outstanding expenses c. Accounts payable d. Unearned revenuesGive and explain two unethical ways in which a business may prepare its financial statements1.Read the statements below and answer the question - The earnings process should be completed entitling the bank to the right to receive - Obligations arises on the part of the customer to remit fixed or determinable obligations - Amount received is known and if not collected is collectable with reasonable certainty What do the above statement reflect? (A) Revenue recognition principles (B) Expenses recognition principles (C) Provision recognition (D) Debt recognition principles 2.An asset is anything that is capable of generating positive cash flows or other economic benefits in the future either by itself or in combination with other assets which the financial institution has acquired the right to as a result of past transactions or events. Although the capacity of the financial institution to control benefits is usually the result of legal rights, an item may nonetheless satisfy the definition of an asset even there is no legal control. Based on the above statement which of…
- A first-year accounting student is confused by a statement made in a recent class. Her instructor stated that theassets listed in the balance sheet of the IBM Corporation include computers that are classified as current assetsas well as computers that are classified as long-term (noncurrent) assets. In addition, the instructor stated thatinvestments in marketable securities of other corporations could be classified in the balance sheet as either currentor long-term assets.Required:Explain to the student the distinction between current and long-term assets pertaining to the IBM computers andthe investments in marketable securities.The usefulness of the balance sheet is enhanced when assets and liabilities are grouped according to commoncharacteristics. The broad distinction made in the balance sheet is the current versus long-term classification ofboth assets and liabilities.Required:1. Discuss the factors that determine whether an asset or liability should be classified as current or…The only accurate way to account for the success or failure of an entity is to accumulate alltransactions from the opening of business until the business eventually liquidates. Comment andexplain whether this is true or not. Moreover, how do you think the concept of consistency aidin the analysis of financial statements? What type of accounting disclosure is required if thisconcept is not applied?