FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 13, Problem 13.8EYCT
To determine
To draft: Memo to LD providing explanation for analysis of financial statements.
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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?
1-Accounting software is related to which system of accounting?
a.
Manual Individual customer records
b.
Manual system of accounting
c.
Computerized accounting
d.
Any system of accounting
2-A Creditor of the business uses the financial statement for
a.
Day to day decision making related to the business
b.
Making the decisions to buy or sell the shares
c.
Evaluating the risks of granting credit or lending money
d.
Verifying whether the company complies with tax laws
3-For every debit there will be an equal credit according to
a.
Dual aspect concept
b.
Matching concept
c.
Money measurement concept
d.
Cost concept
4-Mr. Asif is an accountant. Purchase of Merchandise on credit for OMR 75000 was entered in Furniture Account for OMR 75000 but he posted Accounts payable entry is correct. Which of the following rectification entry is correct?
a.
Debit Accounts payable RO 75000 Credit Furniture RO 75000
b.
Debit Purchase RO 75000 Credit Accounts payable account RO…
Why should an individual learn to read and interpret financial statements?(a) Understanding financial statements will guarantee at least a 20% return on investments.(b) An individual need not learn to read and interpret financial statements because auditors offer a report indicating whether the company is financially sound or not.(c) Learning to read and interpret financial statements will enable individuals to gain employment.(d) Individuals cannot necessarily rely on auditors and management of firms to offer honest information about the financial well-being of firms.
Chapter 13 Solutions
FINANCIAL ACCOUNTING>IC<
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - (a) Distinguish among the following bases of...
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 20QCh. 13 - Prob. 21QCh. 13 - Prob. 22QCh. 13 - Prob. 13.1BECh. 13 - Prob. 13.2BECh. 13 - Prob. 13.3BECh. 13 - Prob. 13.4BECh. 13 - Prob. 13.5BECh. 13 - Prob. 13.6BECh. 13 - Prob. 13.7BECh. 13 - Prob. 13.8BECh. 13 - Prob. 13.9BECh. 13 - Prob. 13.10BECh. 13 - Prob. 13.11BECh. 13 - Prob. 13.12BECh. 13 - Prob. 13.13BECh. 13 - Prob. 13.14BECh. 13 - Prob. 13.15BECh. 13 - Prob. 13.1DIECh. 13 - Prob. 13.2DIECh. 13 - Prob. 13.3DIECh. 13 - Prob. 13.1ECh. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Prob. 13.11ECh. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Prob. 13.3APCh. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.1EYCTCh. 13 - Prob. 13.2EYCTCh. 13 - Prob. 13.3EYCTCh. 13 - Prob. 13.4EYCTCh. 13 - Prob. 13.7EYCTCh. 13 - Prob. 13.8EYCTCh. 13 - Prob. 13.9EYCTCh. 13 - Prob. 13.1IFRS
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