Business
Engineering
Math
Science
Social Science
Intermediate Accounting: Reporting...
Solutions
Intermediate Accounting: Reporting...
An accountant must be familiar with the concepts involved in determining earnings of a company. The amount of earnings reported for a company is dependent on the proper recognition, in general, of revenue and expense for a given time period. In some situations, costs are recognized as expenses at the time of product sale; in other situations, costs are recognized as expenses or losses based on other criteria.
Required:
- 1. Explain the rationale for recognizing costs as expenses at the time of product sale.
- 2. What is the rationale underlying the appropriateness of treating costs as expenses of a period instead of assigning the costs to an asset? Explain.
- 3. Sonic expenses are assigned to specific accounting periods on the basis of systematic and rational allocation of asset cost. Explain the underlying rationale for recognizing expenses on this basis.
1.
Identify the cost recognizing rationale for expenses at the time of the sale of product.
Accrual accounting:
The method of accounting that recognizes revenues when they are received before being earned, and recognizes expenses before they are paid, is known as the accrual accounting.
The company following accrual accounting will recognize the revenue in the same period as the service is provided and expense is recognized only in the accounting period when the cost is incurred. The objectives of accrual accounting are to ensure appropriate measure of financial position and performance in the respective accounting period.
The expenses need to be recorded as per the accrual accounting when the costs are actually incurred...
2.
Identify the underlying rationale on the appropriateness of treating costs as expenses of a period instead of assigning costs to an asset.
3.
Identify the underlying concept for recognizing expenses on the basis of systematic and rational allocation basis.
Chapter 2 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions adda. Hasbro, 1.7 Ratio of liabilities to stockholders equity and times interest earned Hasbro, Inc. (HAS), and Ma...
Corporate Financial Accounting
Hercules Inc. uses a performance reporting system that shows data for each subordinate employee who reports to ...
Accounting Information Systems
Estimated warranty liability Quantas Industries sold 325,000 of consumer electronics during July under a nine-m...
Financial And Managerial Accounting
The general merchandise retail industry has a number of segments represented by the following companies: For a ...
Financial Accounting
Use the following information to complete Brief Exercises 10-23 and 10-24: Krumple Inc. produces aluminum cans....
Managerial Accounting: The Cornerstone of Business Decision-Making
The straight-line method of depreciation allocates the cost of an asset more rapidly than the sum-of-the-years-...
College Accounting, Chapters 1-27
United States Postal Service: Mail sorting time variance One of the operations in the United States Postal Serv...
Financial & Managerial Accounting
REAL RISK-FREE RATE You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.8%. Your b...
Fundamentals of Financial Management (MindTap Course List)
What might motivate a central banker to cause a political business cycle? What does the political business cycl...
Brief Principles of Macroeconomics (MindTap Course List)
The Tennessean, an online newspaper located in Nashville, Tennessee, conducts a daily poll to obtain reader opi...
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Describe the four variables of the marketing mix.
Contemporary Marketing
Direct Request: Puppies, Philanthropy, and PR As an assistant in the Community Involvement Program of your corp...
Essentials of Business Communication (MindTap Course List)
How does an increase in productivity affect business?
Foundations of Business (MindTap Course List)
Why do economists oppose policies that restrict trade among nations?
Principles of Macroeconomics (MindTap Course List)
Describe the social factors that affect marketing
MKTG 12:STUDENT ED.-TEXT
The first principle of economics discussed in Chapter 1 is that people face trade-offs. Use a production possib...
Principles of Economics (MindTap Course List)
As we noted when presenting the recommended control plans in the matrix in Figure 12.13 (pp. 482483) that are d...
Accounting Information Systems
You win 100 in a basketball pool. You have a choice between spending the money now and putting it away for a ye...
Principles of Microeconomics (MindTap Course List)
REQUIRED RATE OF RETURN Assume that the risk-free rate is 5.5% and the required return on the market is 12%. Wh...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
(Utility Maximization) Suppose that a consumer has a choice between two goods, X and Y. If the price of X is $2...
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Use a production possibilities frontier to describe the idea of efficiency.
Essentials of Economics (MindTap Course List)
For each of the following items, circle either (a) or (b). In some cases, both (a) and (b) may apply to you. Yo...
Management, Loose-Leaf Version
Sales-related and purchase-related transactions for seller and buyer using perpetual inventory system The follo...
Financial & Managerial Accounting
On an income statement, what is the difference between income from operations and net income? Which is more use...
College Accounting (Book Only): A Career Approach
From the following information, journalize the last two closing entries and present a statement of owners equit...
College Accounting (Book Only): A Career Approach
Contingent liabilities Several months ago, Ayers Industries Int. experienced a hazardous materials spill at one...
Accounting (Text Only)
The financial statements at the end of Wolverine Realtys first month of operations are as follows: Instructions...
Financial Accounting
TIME FOR A LUMP SUM TO DOUBLE If you deposit money today in an account that pays 6.5% annual interest how long ...
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using the following financial data: Tot...
Fundamentals of Financial Management (MindTap Course List)
Use the diagram to answer the following questions (a-d). a. At the equilibrium price before the tax is imposed,...
Exploring Economics
The Bureau of Transportation Statistics Omnibus Household Survey is conducted annually and serves as an informa...
Statistics for Business & Economics, Revised (MindTap Course List)
During the closing process, the credit total in the factory overhead account is debited to (a)Work in Process I...
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Mark can cook dinner in 30 minutes and wash the laundry in 20 minutes. His roommate takes half as long to do ea...
Principles of Macroeconomics (MindTap Course List)
Examine Figure 1.1. Based on your college education to date, with which elements are you most comfortable? With...
Pkg Acc Infor Systems MS VISIO CD
Process yield Perez Inc. manufactures various types of furniture including couches, tables, and chairs. During ...
Survey of Accounting (Accounting I)
Distinguish between the accounting for capital expenditures and revenue expenditures.
Corporate Financial Accounting
What special accounts must usually be opened in the general ledger to record payroll tax entries?
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Thames Assurance Company sells a variety of life and health insurance products. Recently, Thames developed a lo...
Cornerstones of Cost Management (Cornerstones Series)
Look back at Exhibit 2. Suppose that the net benefits and net costs for each person are known a week before ele...
Microeconomics
Which of the following is not part of the Federal Reserve System? a. Council of Economic Advisors b. Board of G...
Economics For Today
In the lawn mower production problem in Example 8.4, experiment with the penalty cost for unsatisfied pickups i...
Practical Management Science
How might the price of corn affect the supply of wheat?
Macroeconomics
What is the perfect order? Why do so few companies measure the perfect order?
Purchasing and Supply Chain Management
Must consumers surplus equal producers surplus at the equilibrium price? Explain your answer.
Economics (MindTap Course List)
