Chapter 2 final submission

Chapter 2 final submission - b) sales: distribution to...

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13) Accounting data should still be based on cost because assets and liabilities of are to be reported according to their prices. It would be easier to determine income statements for example. And it is always better to have an agreed price for items assets or liabilities rather than have a replacement value that can vary and can sometimes be confusing when it comes to items that have not been sold. BE2-1 a) These changes require recognition in the CPA’s audit report because they are using a different inventory method because numbers and information will be changing too. b) This case is more with consistency even thought they are dropping a subsidiary. However it doesn’t mean they changed their accounting methods. c) Consistency in this case because the same accounting principles would be used in this case d) CPA’s audit report is definitely recognized in this case because a different method of valuating inventory is used. BE2-3 a) retained earnings : Revenues
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Unformatted text preview: b) sales: distribution to owners c) additional paid in capital: Comprehensive income d) inventory: Assets e) depreciation: Assets f) loss on sale of equipment: Losses g) interest payable: Equity h) dividends: Liabilities i) gain on sale of investment: Gains j) issuance of common stock: Investment by owners BE2-7 a) industry practices b) conservatism c) materiality d) cost-benefit relationship BE2-11 a) Asset because land is something that would always be needed by the company. b) Expense because the its an expense made to improve the path to the office building c) Asset because that machine will be used for ever over time for the companys benefit d) Asset because it is rent e) Asset f) Expense E2-3 a) Liabilities b) Distribution to owners c) Equity d) Distribution to owners e) Comprehensive income f) Assets g) Gains h) Revenues i) Equity j) Revenue k) Loss l) Expenses E2-4 a) 7 b) 6 c) 8 d) 11 e) 2 f) 1 g) 4 h) 5 i) 12 j) 3...
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Chapter 2 final submission - b) sales: distribution to...

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