SOLUTIONS TO BRIEF EXERCISES AND EXERCISES - CH 14 - BRIEFEXERCISE141 FinancialAccounting Primaryusers Externalusers Internalusers Typesofreports

SOLUTIONS TO BRIEF EXERCISES AND EXERCISES - CH 14 -...

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SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 14-1 Financial Accounting Managerial Accounting Primary users External users Internal users Types of reports Financial statements Internal reports Frequency of  reports Quarterly and annually As frequently as needed Purpose of reports General-purpose Special-purpose  information for specific  decisions Content of reports Generally accepted  accounting principles Relevance to decisions Verification process Annual audit by  certified public  accountant No independent audits BRIEF EXERCISE 14-2 One   implication   of   SOX   was   to   clarify   top   management’s responsibility   for   the   company’s   financial   statements.   CEOs   and CFOs   must   now   certify   that   financial   statements   give   a   fair presentation   of   the   company’s   operating   results and its financial condition. In addition, top managers must certify that the company maintains an adequate system of internal controls   to  safeguard   the   company’s   assets   and   ensure   accurate financial reports. Also, more attention is now paid to the composition of the company’s board of directors. In particular, the audit committee of the board of directors must be comprised entirely of independent members   (that   is,   non-employees)   and  must   contain   at   least   one financial expert. Finally, to increase the likelihood of compliance with these   and   other   new   rules,   the   penalties   for   misconduct   were substantially increased.
BRIEF EXERCISE 14-3 (a) 1. Planning. (b) 2. Directing. (c) 3. Controlling.
BRIEF EXERCISE 14-4 (a)    DM        Frames and tires used in manufacturing bicycles. (b)    DL         Wages paid to production workers. (c)    MO       Insurance on factory equipment and machinery. (d)    MO       Depreciation on factory equipment. BRIEF EXERCISE 14-5 (a) Direct materials. (b) Direct materials. (c) Direct labor. (d) Manufacturing overhead. (e) Manufacturing overhead. (f) Direct materials. (g) Direct materials. (h) Manufacturing overhead. BRIEF EXERCISE 14-6 (a) Product. (b) Period. (c) Period. (d) Period. (e) Product. (f) Product. BRIEF EXERCISE 14-7 Product Costs Direct Materials Direct Labor Factory Overhead (a) (b) (c) (d) X X X X
BRIEF EXERCISE 14-8 (a) Direct materials used ............................................................. $180,000 Direct labor ............................................................................. 209,000 Total manufacturing overhead ............................................. 208,000 Total manufacturing costs ............................................ $597,000 (b) Beginning work in process ................................................... $ 25,000 Total manufacturing costs .................................................... 597,000 Total cost of work in process ........................................ $622,000 BRIEF EXERCISE 14-9 RUIZ COMPANY Balance Sheet December 31, 2014                                                                                                                                 Current assets Cash .....................................................................

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