Accounting 200 Final
o The information system that measures business activities, processes the
information into reports and communicates the results to decision makers.
o Security and exchange commission
o Overseas public companies
Efficient Securities Markets
1. Considering efficient securities market theory, what is the primary reason for the existence of
2. What is the definition (semi-strong form) of an efficient securities market?
1. What is a major lesson accountants learned from the Great Depression?
Values are fleeting, resulted in a strengthening of the historical cost basis of accounting. Also led
to the creation of the Securities and Exchange C
An Analysis of Conflict
1. What is agency theory?
A branch of game theory that studies the design of contracts to motivate a rational agent to act on
behalf of a principal when the agents interests would otherwise conflict with those of
The Value Relevance of Accounting Information
1. Is it true that the best accounting policy is the one that produces the greatest market response?
Why or why not?
No, while accountants still want to produce the most relevant information, they ca
The Measurement Approach to Decision Usefulness
1. What is the measurement approach?
An approach to financial reporting under which accountants undertake a responsibility to
incorporate current values into the financial statements prope
The Decision Usefulness Approach to Financial Reporting
1. What is decision usefulness?
The ability of financial accounting information to help users make good decisions.
2. What two major questions must be addressed in adopting the decision use
The Efficient Contracting Approach to Decision Usefulness
1. What is efficient contracting theory? Be complete.
Studies the role of financial accounting information in moderating information asymmetry
between contracting parties, thereb
Accounting Under Ideal Conditions
1. Define relevant information.
Information about the firms future economic prospects (dividends, cash flows, and profitability).
2. Define reliable information.
Information that faithfully represents w
3. Explain why a firm may not necessarily want to reduce its price risks to zero by entering into
Zero risk may be too costly, or not even possible. It may not even be desirable, si
1) The two information asymmetries that are implied by the quote are adverse selection and
moral hazard. Adverse selection occurs when some persons, such as firm managers and other
insiders, will have better information about the current condition and fut
Biltrite Module V (10 points)
1. Retrieve the Biltrite Module 5 spreadsheet and answer the following. Please use text
boxes in excel for any answers you need to write out. (3 points)
a. What proportion of the total dollar amount of accounts receivable hav
Manning County General Fund: example transactions
Manning County levied its 2017 property taxes on January 1, 2017. The total tax
levy was $60,000,000; 1% of the total tax is expected to be uncollected.
The collection of pr
Auditing inventory, goods and
services, and accounts payable
Acquisition and Payment
Ocost of goods sold
Acquisition and Payment
ORequisition for go
Auditing Cash and Marketable
Is cash an easy or dull
account to audit?
Consider the Risks
Related to Cash
O Materiality and Risk Considerations
O Volume of transactions flowing
through the account
Liquidity and easy transfera
Auditing Long-Lived Assets
Audit strategies in
Perform controls testing
and substantive testing
Perform substantive testing
O Revenue cycle
O Long-lived assets
O Acquisition and
O Long-term liabilities
O Large numb
Auditing the revenue cycle
Overview of the Revenue
(Merchandising company; Sales made on
Receive customer purchase order
Check inventory stock status
Generate back order if item not in stock
Obtain credit approva
Learning Objective 1 (Chapters
Understands what a financial
statement audit is and how it
should be done
a)Is familiar with financial
statements and what is included
b)Knows the five management
Learning Objective 1
Ex. 15-131Lump sum issuance of stock-
Parker Corporation has issued 2,000 shares of common stock and 400 shares of preferred stock
for a lump sum of $76,000 cash.
(a) Give the entry for the issuance assuming the par value of the common was $5
Ex. 23113Eects of transactions on statement of cash ows.
Indicate for each of the following what should he cisclosed on a statement of cash ows cfw_indirect
method]. If not cisclosed, write "Not shown." There may he more than one answer for some
El. 18-124Joumal entriespercentageofcompletion.
Dixon Constnrction Company was awarded a contract to construct an interchange at the junction
of U.S. 94 and Highway 30 at a total contract price of $12,000,000. The estimated total costs to
complete the pro
Ex. 1 B-135Convertible Bonds.
Garr Co- issued $3,000,000 of 12%, 5year convertible bonds on December 1, 2012 for
$3,013,000 plus accrued interest- The bonds were dated April 1, 2012 with interest payable
April 1 and October 1. Bond premium is amortized ea
BE. 1T120Investment in debt securities at premium.
On April 1, 2014, West Company purchased $400,000 of 031. bonds for $415,?50 plus aoaned
interest as an availableforsale security. Interest is paid on July 1 and January 1 and the bonds
mature on July 1,
Ex. 24BESegment reporting.
Finnev Companv's condensed income statement is presented below:
Cost of goods sold $400,000
Operating and administrative expenses 200,000
Depreciation expense 40,000 54
Income before taxes 2
Acct 312 Intermediate Accounting II
Financial Statement Spreadsheet Project
1. Choose a company from the Dow Jones Industrial Index to analyze. There are many sites to get
this list from, including the following site: http:/www.cnbc.com/dow-c
The revenue recognition principle provides that revenue is recognized when
a. it is realized.
b. it is realizable.
c. it is realized or realizable and it is earned.
d. None of these answers are correct.
When goods or services are exchanged for cas
Taxable income of a corporation
a. differs from accounting income due to differences in intraperiod allocation between
the two methods of income determination.
b. differs from accounting income due to differences in interperiod allocation and
Which of the following should be disclosed in a Summary of Significant Accounting
a. Types of executory contracts
b. Amount for cumulative effect of change in accounting principle
c. Claims of equity holders
d. Depreciation method followed
The residual interest in a corporation belongs to the
c. common stockholders.
d. preferred stockholders.
The pre-emptive right of a common stockholder is the right to
a. share proportionately in corporate assets upon l