Accounts receivables: Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet To determine : The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

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Answer 1

Question

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

(4)

To determine

The Course of action taken by B.

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Ethics and income Reporting You have been hired as an “accounting consultant” by Watson Company to evaluate its financial reporting policies. Watson is a small corporation with a few shareholders owning stock that is not publicly traded. In a discussion with you, Chris Watson, the company president, say, “ For Watson Company’s annual income statement, it is our policy to always record and report revenues when we collect the cash and to record and report expenses when we pay the cash. I like this approach, and I think our shareholders and creditors do too. This policy results in income that is reliable and conservative, which is the way accounting should be. Besides, it is easy to keep track of our income. All I need are the receipts and payments recorded in the company’s checkbook.” Required: From financial reporting and ethical perspectives, how would you reply to Chris?

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Answer 2

Question

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

(4)

To determine

The Course of action taken by B.

Expert Solution & Answer

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Answer 3

Question

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

(4)

To determine

The Course of action taken by B.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

(4)

To determine

The Course of action taken by B.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

(4)

To determine

The Course of action taken by B.

Answer 6

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

Answer 7

Chapter 11, Problem 11.8APEM

(1)

To determine

Accounts receivables:

Accounts receivable is an asset of the firm, which refers to the amount which the company would receive in near future for the goods or services provided; hence it is shown in the balance sheet

To determine: The reason for increase in accounts receivables and effect of increase in accounts receivable in net income of the company.

Answer 8

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

Answer 9

(2)

To determine

Earnings management:

Earnings management is the tool that is concerned about the organizations’ financial position and activities of business in a positive manner.

To determine: The reason for increase in risk of earnings management of the company due to salary arrangements for CEO and CFO officers.

Answer 10

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

Answer 11

(3)

To determine

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

To determine: The reason for which the trend in cash flows from operations is combined with the additional events.

Answer 12

(4)

To determine

The Course of action taken by B.

Answer 13

(4)

To determine

The Course of action taken by B.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 11 - 1.Identify and briefly describe the three...Ch. 11 - Prob. 2RQ Ch. 11 - Explain what we mean by noncash activities and...Ch. 11 - Why is it necessary to use an income statement,...Ch. 11 - Prob. 5RQ Ch. 11 - Prob. 6RQ Ch. 11 - Distinguish between the indirect method and the...Ch. 11 - Prob. 8RQ Ch. 11 - Prob. 9RQ Ch. 11 - 10.Explain how we report depreciation expense in...

Solution Summary: The author explains that increase in accounts receivables decreases operating cash flows of the company but increases the net income.

Concept explainers

The Course of action taken by B.

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Chapter 11 Solutions