Part A
Introduction: Accounting is the language of business used by all types of organizations to communicate financial information to its users for better decision making. The users of accounting information are divided into internal and external users, internal users are those who are associated with the organization directly such as managing employees, etc. Whereas external users are stakeholders who are affected by the organization such as creditors, governments, etc.
The user of accounting information from the given questions asked.
Part B
Introduction: Accounting is the language of business used by all types of organizations to communicate financial information to its users for better decision making. The users of accounting information are divided into internal and external users, internal users are those who are associated with the organization directly such as managing employees, etc. Whereas external users are stakeholders who are affected by the organization such as creditors, governments, etc.
The user of accounting information from the given information.
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FINANCIAL ACCOUNTING FUNDAMENTALS W/ CO
- Codification Situation You are conducting an accounting research project for your boss. Your boss has asked you to determine the appropriate U.S. GAAP that specifies how your company should recognize revenues from the sales of products in a retail store. Your boss is confused because most customers pay cash, but some customers purchase on credit terms, and pay in cash 30 days later. Your manager also wants you to determine the GAAP guidance for how revenue should be recognized in income. Your manager has a lot of knowledge and experience in accounting and has heard about, but has never used, the FASB Accounting Standards Codification system. Directions Use the FASB Accounting Standards Codification system to conduct the research your manager has assigned to you. Use the Codification to determine how to recognize revenue from retail sales, including the right to return. Be prepared to show your manager the specific FASB ASC references that provide the appropriate guidance. Also prepare a brief memo explaining to your manager the different levels of the Codification and how to use the Codification system.arrow_forwardExercise 1-31 Decisions Based on Accounting Information Decision-makers use accounting information in a wide variety Of decisions including the following: 1. Deciding whether or not to lend money to a business 2. Deciding whether or not an individual has paid enough in taxes 3. Deciding whether or not to place merchandise on sale in order to reduce inventory 4. Deciding whether Or not to invest in a business 5. Deciding whether or not to demand additional benefits for employees Required: Match each decision with one of the following decision-makers who is primarily responsible for the decision: a government (G), an investor (I), a labor union (U), business managers (M), or a bank (B).arrow_forwardPURPOSE OF ACCOUNTING Match the following users with the information needed. 1. Ownersa. Whether the firm can pay its bills on time 2. Managersb. Detailed, up-to-date information to measure business performance (and plan for future operations) 3. Creditorsc. To determine taxes to be paid and whether other regulations are met 4. Government agenciesd. The firms current financial conditionarrow_forward
- Integrative Case 1.1 introduced the industry economics of coffee shops and the business strategy of Starbucks to compete in this industry. Exhibit 1.26 presents balance sheets for Starbucks for the years ending 20092012. Exhibit 1.27 presents its income statements and Exhibit 1.28 presents the statement of cash flows for the same years. Exhibit 1.29 presents common-size balance sheets and Exhibit 1.30 presents common-size income statements for Starbucks. Before beginning preparation of Integrative Case 4.1, we recommend that you review Integrative Case 1.1 in Chapter 1. Part A of Integrative Case 4.1 analyzes changes in the profitability of Starbucks. REQUIRED a. Exhibit 4.43 presents profitability ratios for Starbucks for fiscals 2010 and 2011. Using the financial statement data in Exhibits 1.26 and 1.27, compute the values of these ratios for fiscal 2012. The income tax rate is 35%. For accounts receivable turnover, use only specialty revenues for the numerator, because the accounts receivable are primarily related to licensing and food service operations, not the retail operations. Use cost of sales, including occupancy costs, for the numerator of the inventory turnover, because Starbucks does not disclose separately the cost of products sold (the appropriate numerator) and occupancy costs. b. What are the most important reasons for Starbucks ROA fluctuation during the three-year period? Analyze the financial ratios to the maximum depth possible with the information given. Using the nomenclature from the schematic in Exhibit 4.21 (page 298), Exhibit 4.44 (page 320) provides information for analyzing profitability at Level 1, Level 2, and Level 3. Exhibit 4.44 presents additional information for Starbucks at a business segment level to permit analysis at Level 4. Differences between the sum of segment expenses and total expenses reflect corporate-level expenses not allocated to the individual segments. Additionally, if necessary, access Starbucks annual report or form 10-K, which you should be able to access at the companys investor relations website. c. What are the most important reasons for Starbucks ROCE fluctuation during the three-year period? Exhibit 4.43arrow_forwardAnswer the following question1) Explain the purpose of GAAP (Generally Accepted Accounting Principles), including the organization currently responsible for the creation and governance of these standards?2) How are assets and liabilities classified as either current or long term? Explain with example. 3) If a business had a net loss for the year, what would be the closing entry to close income summary and transfer the net loss to the capital account? Explain with example.4) The statement of changes in financial position was designed to enable financial statement users to answer questions like these:a) Where did the profit go?b) What do you mean by dividend? Explainc) How was it possible to distribute dividends in the presence of a loss?arrow_forwardDescribe a transaction that would: a. Increase both an asset and a liability. b. Increase one asset and decrease another asset. c. Decrease both a liability and an asset. d. Increase both an asset and retained earnings. e. Decrease both an asset and retained earnings. Identify whether the following group of people belongs to internal or external users of annual reports for a company. Eexplain their need for financial information. a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company. c. Happy Berhad, supplier of the company. d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board.Eng Hardwares has the following balance as at 30 November 2020: Accounts RM’000 Wages(Debit) 110,000 Insurance (Debit) 2,000 Rental (Credit) 50,000 Additional information: i. Eng Hardwares pays wages to its workers at the end of every month. However, some internal problems arise and it did not pay wages amounting to RM10,000 to…arrow_forward
- Balancing the Expanded Accounting Equation Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending equity to answer the rest of the questions. Assets Liabilities Beginning of Year: $29,000 $15,000 End of Year: $64,000 $28,000 6) If the company issues common stock of $42,300 and pay dividends of $2,100, how much is net income (loss)? Net Income (Loss):arrow_forwardBalancing the Expanded Accounting Equation Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending equity to answer the rest of the questions. Assets Liabilities Beginning of Year: $29,000 $15,000 End of Year: $64,000 $28,000 3) If the company issues common stock of $5,100 and pay dividends of $44,000, how much is net income (loss)? Net Income (Loss): 4) If net income is $2,700 and dividends are $7,700, how much is common stock? Common Stock: 5) If the company issues common stock of $16,700 and net income is $19,300, how much is dividends? Dividends: 6) If the company issues common stock of $42,300 and pay dividends of $2,100, how much is net income (loss)? Net Income (Loss):arrow_forward1. What role does management accounting play in helping Starbucks reach its objectives? 2. Besides preparing annual financial statements, how do managers use accounting informationarrow_forward
- Question 1Identify whether the following group of people belongs to internal or external users ofannual reports for a company. Eexplain their need for financial information.a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company.c. Happy Berhad, supplier of the company.d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board.arrow_forwardChoose the correct letter of the answer for each question. 1. Entity A’s income statement shows a line item described as “Cost of goods sold.” Entity A is most likely aA. service business.B. merchandising business.C. sole proprietorship business.D. partnership business. 2. The beginning equity is ₱5,000. If total income for the period is ₱8,000 while total expenses are ₱6,000, how much is the ending balance of equity?A. 7,000B. 5,000C. 3,000D. 1,000 3. Which of the following accounts is increased by a credit?A. CashB. Accounts receivableC. Accounts payableD. Owner’s drawings 4. At the beginning of the period, the owner’s capital account of a business has a balance of ₱220,000. During the period, the total debits and credits to that account were ₱60,000 and ₱70,000, respectively. How much is the ending balance of the owner’s capital account? A. 230,000B. 210,000C. 350,000D. 90,000arrow_forwardQuestion 1Describe a transaction that would:a. Increase both an asset and a liability.b. Increase one asset and decrease another asset.c. Decrease both a liability and an asset.d. Increase both an asset and retained earnings.e. Decrease both an asset and retained earnings. Question 2Identify whether the following group of people belongs to internal or external users of annual reports for a company. Eexplain their need for financial information.a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company.c. Happy Berhad, supplier of the company.d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board. Question 3Eng Hardwares has the following balance as at 30 November 2020:Wages(Debit) 110,000Insurance (Debit) 2,000Rental (Credit) 50,000 Additional information:i. Eng Hardwares pays wages to its workers at the end of every month. However, some internal problems arise and it did not pay…arrow_forward
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