Questions and Answers of Survey of Accounting 2nd

Review our sample company’s financial performance, both the balance sheet and income statement, and offer three potential financial covenants that you feel would be reasonable for a lender to
A simple but very helpful exercise here: Go on-line and type in your search engine “business loans” and see what appears on the first page.More than likely, everyone will see different results,
Referring to our sample company as presented in Figures 13-1 through 13-3, business issues suddenly arise that force it to sell out for$20,000,000 in early 2021. The acquiring company purchases all
Instead of the VC firm investing $5,000,000 for 500,000 shares of preferred stock, update the cap table to reflect that the VC firm invested $8,000,000 and received 800,000 shares of preferred
Can you determine the ownership percentage for each investor in a company based purely on the amount of money invested or used to purchase stock?
A blank SWOT analysis is provided for a company that has a new cryptocurrency, which it plans on introducing to the market shortly.Complete the following SWOT analysis by offering one item in each
A business prepares three sets of forecast, a high or best case, a medium or expected case, and a low or worst case. What concept best describes this strategy?
Identify three different business situations or opportunities (other than those previously presented) when a business plan should be developed and implemented by management or the owners.
List three sources of information and/or data that a company may use to support the development of a business plan.
Refer to Company X’s operating profit report and summary of manufacturing activity presented in Figure 12-1. Note that its annual production capacity is 150,000 units, but the business manufactured
Assume that Company Z manufactures 2,100,000 units during the year (instead of the 2,500,000 units production output shown in Figure 12-2). Determine its operating profit for the year. Assume that
Refer to your answer to Question 10, in which Company Z produces only 2,000,000 units during the year. In the scenario shown in Figure 12-2, the business manufactures 2,500,000 units, which is its
Toward the end of the year, the president of Company Y looks at the preliminary numbers for operating profit and doesn’t like what he sees. He’s “promised” the board of directors that
Assume that Company Z’s production output for the year is 2,000,000 units (instead of 2,500,000 units as in Figure 12-2). In other words, assume that the business manufactures the same number of
Company Y was on track to sell 550,000 units in the year, but late in the year, a major customer canceled a large order for 50,000 units. The business reduced its production output to 500,000 units,
Determine what Company Z’s operating profit would have been if it had sold 2,100,000 units during the year, which is 100,000 more units than in the example shown in Figure 12-2. Assume that
Assume that Company Y uses the LIFO method to charge out raw materials to production. In this question, assume that supply shortages of raw materials meant that Company Y couldn’t purchase all the
Refer to Figure 12-2 for the operating profit report and manufacturing activity summary of Company Z for the year. Assume that the business had no work-in-process inventory at the start or end of the
Refer to Figure 12-2 for the operating profit report and manufacturing activity summary of Company Y for the year. Assume that the business had no work-in-process inventory at the start or end of the
Company X produced 120,000 units and sold 110,000 units during the year (see Figure 12-1). Therefore, the company increased its inventory 10,000 units. Does this increase seem reasonable? Or is the
Suppose that Company X uses the FIFO method instead of the LIFO method shown in Figure 12-1. The company starts the year with 25,000 units in beginning inventory at a cost of $735 per unit according
As you can see in Figure 12-1, Company X recorded $42,000,000 fixed manufacturing overhead costs in the year. Suppose, instead, that its fixed manufacturing overhead costs were $45,600,000 for the
The company’s total manufacturing costs for the year are $91,200,000(see Figure 12-1), but only $83,600,000 is charged to cost of goods expense. What happened to the other $7,600,000 ($91,200,000
Suppose that Company C’s product cost increases $0.50 per unit.Assume that all other profit factors for Company C remain the same as shown in Figure 11-2. Determine its operating profit for this
Suppose that Company B was able to improve (lower) its product cost per unit $10. Assume that all other profit factors for Company B remain the same as shown in Figure 11-2. Determine its operating
Suppose Company C sold 10 percent fewer units during the year than it did according to Figure 11-2. Determine Company C’s operating profit for this scenario. (Assume fixed operating expenses remain
Suppose Company C sold 5 percent more units during the year than it did according to Figure 11-2. Determine Company C’s operating profit for this scenario. (Assume fixed operating expenses remain
Suppose Company B sold 5 percent fewer units during the year than it did according to Figure 11-2. Determine Company B’s operating profit for this scenario. (Assume fixed operating expenses remain
Suppose Company B sold 10 percent more units during the year than it did according to Figure 11-2. Determine Company B’s operating profit for this scenario. (Assume fixed operating expenses remain
Suppose that Company C’s fixed operating expenses were $4,440,000 for the year. Otherwise, other profit factors are the same as in Figure 11-2. Using the sources of capital and interest expense
Suppose that Company B’s fixed operating expenses were $3,030,000 for the year. Otherwise, other profit factors are the same as in Figure 11-2. Using the sources of capital and interest expense
Assume the following:Company C’s sources of capital amounts to $6,000,000 of debt and$6,000,000 of owners’ equity for total capital of $12,000,000.See Figure 11-2 for Company C’s profit data
Assume the following:Company B’s sources of capital amounts to $8,000,000 of debt and$4,000,000 of owners’ equity for total capital of $12,000,000.See Figure 11-2 for Company B’s operating
Please refer to Figure 11-2. Using the three profit analysis methods explained in this section, analyze the profit performance of Company C. (You may note that both businesses in Figure 11-2 earned
Figure 11-2 presents profit performance information for two businesses for their most recent years. Using the three profit analysis methods explained in this section, analyze the profit performance
Instead of the scenario shown in Figure 11-1 assume that Company A had a bad year. Its internal operating profit report for this alternative scenario is presented here. Using the three methods
One of Company A’s marketing managers was overheard to comment,“If we had sold 10 percent more units than we did in the year, our profit would have been 10 percent higher.” Do you agree with
A company’s net worth decreased $585,000 during the year just ended. It didn’t pay cash dividends during the year, but it issued additional capital stock shares during the year for
A company’s net worth decreased $425,000 during the year just ended. It didn’t pay cash dividends during the year, and it didn’t issue or retire capital stock during the year. Determine its
From the information presented in Figure 10-3, determine the company’s cash flow from profit (operating activities) for 2021.
Figure 10-3 presents a business’s comparative balance sheet that’s missing the information for owners’ equity. Assume that the company didn’t issue additional capital stock shares during the
Suppose the business in the example (see Figure 10-2) did not issue additional shares of capital stock in 2021 and did not distribute dividends to its stockholders in either 2020 or 2021. In this
Please refer to Figure 10-1 that presents the comparative balance sheet of the business and to Figure 10-2 that presents its statement of changes in stockholders’ equity. Suppose the business had
Can the net worth of a business go negative? If so, explain briefly how this may happen and if it means that the business would have a negative cash balance.
A business reports $500,000 net loss for the year just ended. It didn’t issue or retire any capital stock shares during the year, and it didn’t pay cash dividends because of its loss in the year.
After you revise your net income answer (see the example question in this section), the president tells you that he has since talked with other directors of the business and realized that he was
Based on the sample company’s income statement and balance sheet, if the company wanted to generate a return on equity (defined as net income divided by total stockholders’ equity) of 30 percent,
Based on the sample company’s income statement and balance sheet, if the company wanted to maintain a total debt to asset ratio of 60 percent, what would the total liabilities of the company amount
Assume that the balances of assets, accounts payable, and accrued expenses payable were the same as shown in Figure 9-4. However, the balance in intangible assets amounted to $1,300,000 and the
Instead of the amounts shown in Figure 9-4, suppose that the cost of our sample company’s fixed assets was $10,170,000 and that accumulated depreciation was $5,120,000. Determine the amount of
Determine the balance of accrued expenses payable based on the normative operating ratio for this liability account. (Refer to the preceding list of normative adjusted operating ratios for sample
Determine the balance of accounts payable based on the normative operating ratios for this liability account. (Refer to the preceding list of normative adjusted operating ratios for sample company.)
Determine the balance of inventory based on the normative operating ratio for this asset account. (Refer to the preceding list of normative adjusted operating ratios for the sample company.)
Determine the balance of accounts receivable based on the normative operating ratio for this asset account. (Refer to the preceding list of normative adjusted operating ratios for the sample company.)
Determine the balance of cash based on the normative operating ratio for this asset account. (Refer to the preceding list of normative adjusted operating ratios for sample company.)
For the business in the example question, the average amount borrowed on notes payable during the year was $1,500,000. The average annual interest rate on these notes was 6.5 percent. What amount of
The business in the example question has annual operating expenses in the amount of $1,378,000 (which excludes depreciation, amortization, interest, and income tax expenses). Historically, its
The business in the example question has an annual cost of goods sold expense of $3,120,000. Historically, the business’s accounts payable for inventory purchases equals about four weeks of annual
The business in the example question has an annual cost of goods sold expense of $3,120,000. Historically, its ending inventory balance equals about 13 weeks of annual costs of goods sold expense.
Do you see anything suspicious in the balance sheet in Figure 8-1 that may indicate accounting fraud?
Refer to the company’s most recent balance sheet in Figure 8-1. The business uses very conservative accounting methods for certain expenses, but it could have used more liberal accounting methods
A new business has just been organized. A group of investors put$5,000,000 in the business, and the business issued 5,000,000 shares of capital stock to them. The business borrowed $2,500,000 from a
Following its initial financing and investing transactions in Question 5, the business manufactured its first batch of products. The cost of products manufactured was $650,000, depreciation was
Instead of the initial financing and investing transactions presented in the preceding example questions, assume the business issued 100,000 capital stock shares for $1,500,000, borrowed $2,000,000
A business has $725,000 total assets and $425,000 total owners’equity. Present three balance sheet formats for the business.
A business has $3,600,000 total assets and $4,600,000 total liabilities.Present three balance sheet formats for the business.
A business has $4,800,000 total liabilities and $6,500,000 total owners’ equity. Present three balance sheet formats for the business.
A business has $2,500,000 total assets and $1,000,000 total liabilities.Present three balance sheet formats for the business.
Refer to the summary selling and general expenses entry earlier in this section. Assume that prepaid expenses didn’t change during the year. The amounts for depreciation expense and the increases
Refer to the summary cost of goods sold expense entry earlier in this section. Assume that inventory decreased $3,500,000 during the year because the business sold more products than it purchased.
Refer to the summary sales revenue entry earlier in this section.Assume that accounts receivable increased $3,165,000 instead of the$2,165,000 increase in that entry. Prepare the summary journal
Some years ago, businesses in the cosmetic industry did not report sales revenue and cost of goods sold expense. Their income statements started with the gross profit or margin line, and their gross
A business’s income statement doesn’t disclose its marketing, advertising, and promotional expenses for the year. Give an argument for not disclosing this expense and give an argument for
A business reports $836,000 loss for the year just ended. In its statement of cash flows for the year (see Chapter 10), the business reports that its cash flow from operating activities (from its
A business reports $5,250,000 net income for the year just ended. In its statement of cash flows for the year (see Chapter 10), the business reports that its cash flow from operating activities (from
A business reports $3,800,000 loss for the year just ended. Determine two valid scenarios for changes in its assets and liabilities resulting from its loss for the year.
A business reports $346,000 net income (profit) for the year just ended. Determine two valid scenarios for changes in its assets and liabilities resulting from its profit for the year.
Prepare the company’s income statement for its first year of business using the liberal accounting methods for cost of goods sold expense, depreciation expense, and bad debts expense.
Prepare the company’s income statement for its first year of business using the conservative accounting methods for cost of goods sold expense, depreciation expense, and bad debts expense.
The president of the business outlined in the example question attends an industry update seminar at which the speaker says that the average bad debts experience of businesses in this field is about
The controller of the business outlined in the example question is from the double-breasted, dull grey suit, old guard school of accounting (and most likely wears a green eye shade). He argues that a
Instead of using the double-declining depreciation method for its machines, suppose the business used the straight-line depreciation method over seven years. Determine the year-by-year difference in
Determine the annual depreciation amounts on the machines for years two through seven according to the double declining accelerated depreciation method. Also, determine the declining balance of the
Suppose the business whose inventory acquisition history appears in Figure 6-3 sold all 186,000 units that it had available for sale during the year. In this situation, does the business’s choice
Figure 6-3 presents the inventory acquisition history of a business for its first year. The business sold 158,100 units during the year. By the LIFO method, determine its cost of goods sold expense
In the example shown in Figure 6-3, the purchase cost per unit bounces up and down over successive acquisitions, and the quantities purchased each time vary quite a bit. Do these two factors play a
Figure 6-3 presents the inventory acquisition history of a business for its first year. The business sold 158,100 units during the year. By the FIFO method, determine its cost of goods sold expense
Refer to the purchase history in Figure 6-3. The bookkeeper said he was using the average cost method. He calculated the average by adding the seven cost per unit amounts and dividing by 7 to get an
During its first year, a business made seven acquisitions of a product that it sells. Figure 6-3 presents the history of these purchases.Compare the purchases history in Figure 6-3 with the one in
In Figure 6-1 the Owners’ Equity — Retained Earnings account has a zero balance. Why?
In Figure 6-1, note the Accrued Liabilities account at the end of the year. What are two or three examples of such accrued costs that have been incurred but not yet paid? Are the methods for
In Figure 6-1, note the Prepaid Expenses asset account at the end of the year. What are three examples of such prepaid costs? Are the methods for allocating these costs to expense fairly objective
Does the interest expense in Figure 6-1 look reasonable, or does it need an adjustment at the end of the year?
Identify four technology software systems or platforms (excluding the primary accounting software system such as QuickBooks or Xero)that can be used to store, access, produce, and/or report important
True or False? Third-party data rooms offer an efficient means to store vital company information, reports, and data that is safe from prying eyes.
Enhanced technological security associated with digital accounting data and payment processing is absolutely essential in today’s world.Name three strategies that can be utilized to help manage and
Identify two benefits and two risks associated with using alternative or non-bank forms of payments.
What does the acronym CART stand for?
What statement makes the most sense here? Safeguarding physical or tangible assets such as equipment, inventory, and buildings is more important, of equal importance, or less important than
True or false? Advancements in technology have guaranteed that the accuracy and reliability of accounting information is greater today than it’s ever been in the past.

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