Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 6DQ
Compare and contrast the different accounting methods that are available to construction companies.
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Give an example of situation to show how a business adheres to each of the following accounting principles:
Historical cost
Revenue recognition
The primary objective of financial accounting is
Group of answer choices
A. to serve the decision-making needs of the company’s management.
B. to determine whether to build, buy or rent a building.
C. to provide financial statements to help external users analyze and interpret an organization’s activities.
D. to provide information on the costs and benefits of producing a new product.
Explain the impact of using direct material on accounting equation.
Chapter 2 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 2 - What are the purposes of the accounting system?Ch. 2 - What is the difference between cost reporting and...Ch. 2 - What are the key components of an accounting...Ch. 2 - What are the different accounting ledgers used by...Ch. 2 - What is the relationship among the chart of...Ch. 2 - Compare and contrast the different accounting...Ch. 2 - What are the key relationships that must be...Ch. 2 - What are the key relationships that must be...Ch. 2 - What are the key relationships that must be...Ch. 2 - Prob. 10DQ
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- Each of the following situations relates to a different company. A. For each of these independent situations, find the missing amounts. B. How would stakeholders view the financial performance of each company? Explain.arrow_forwardAn accountant must be familiar with the concepts involved in determining earnings of a business entity. The amount of earnings reported for a business entity is dependent on the proper recognition, in general, of revenues and expenses for a given time period. In some situations, costs are recognized as expenses at the time of product sale. In other situations, guidelines have been developed for recognizing costs as expenses or losses by other criteria. Instructions a. Explain the rationale for recognizing costs as expenses at the time of product sale. b. What is the rationale underlying the appropriateness of treating costs as expenses of a period instead of assigning the costs to an asset? Explain. c. In what general circumstances would it be appropriate to treat a cost as an asset instead of as an expense? Explain. d. Some expenses are assigned to specific accounting periods on the basis of systematic and rational allocation of asset cost. Explain the underlying rationale…arrow_forwardExplain the different accounting concepts and conventions with examplesarrow_forward
- Which of the following is TRUE of both financial accounting and management accounting? a. The emphasis is on timeliness and flexibility b. They use the information provided by the cost accounting system c. It generates general-purpose financial statements d. They are regulated by accounting standards and statutearrow_forwardAn analyst must be familiar with the determination of income. Income reported for a business entity depends on proper recognition of revenues and expenses. In certain cases, costs are recog- nized as expenses at the time of product sale; in other situations, guidelines are applied in capi- talizing costs and recognizing them as expenses in future periods. Required: a. Under what circumstances is it appropriate to capitalize a cost as an asset instead of expensing it? Explain. b. Certain expenses are assigned to specific accounting periods on the basis of systematic and rational allocation of asset cost. Explain the rationale for recognizing expenses on such a basis.arrow_forwardIndicate the proper accounting for the following items.(a) Organization costs. (c) Operating losses.(b) Advertising costs.arrow_forward
- Describe the difference between financial accounting and managerial accounting, highlighting their respective roles and objectives?arrow_forwardWhat are some of the expenses associated with the provision of accounting data? What are some of the advantages of having accounting information on hand? Describe the cost-benefit considerations that should be taken into account when new accounting standards are being evaluated.arrow_forwardWhat are some of the accounting information costs? What are some advantages of accounting data? Describe the cost-benefit considerations to consider when proposing new accounting rules.arrow_forward
- Distinguish the rationales for some companies to adopt environmental accounting as part of their accounting system.arrow_forwardThe accompanying chart shows the qualitative characteristics of useful accounting information. Fill the blanksarrow_forwardExplain the following for a manufacturing, retail, or service business: The primary purpose of the entity The types of activities that accountants would record (hint: what is the source of the business’ funding, and what costs might the business have? The types of decisions that might be made in this organization and how financial and nonfinancial information might help the decision-making process?arrow_forward
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