Can anyone help me with my Accounting homework. I have already answered part of it but the questions below had put me into trap. Hopefully someone will help me answer the question and they are greatly appreciated. Thank you very much in advance:):)
Here are the questions:
1. Application of the full disclosure principle
a.is demonstrated by the inclusion of information such as information about contingencies.
b.is violated when important financial information is buried in the notes to the financial statements.
c.requires that the financial statements be consistent and comparable.
d.is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits.
2.Sources of GAAP.
The CICA Handbook is the primary source of GAAP in Canada. It is, however, insufficient to address all of the accounting issues facing accountants. Explain why this is so and outline some other sources of GAAP accountants use.
3.Role of Securities Commissions and Stock Exchanges.
Explain the role of securities commissions and stock exchanges in financial reporting.
4.Challenges Facing Financial Reporting.
Briefly describe the Enron fiasco and describe some of the changes in regulations related to accounting and auditing that have resulted.
5.Accounting concepts—identification.
State the accounting assumption, principle, information characteristic, or constraint that is most applicable in the following cases.
1.All payments less than $25 are expensed as incurred. (Do not use conservatism.)
2.The company employs the same inventory valuation method from period to period.
3.Assuming that dollars today will buy as much as ten years ago.
4.Rent paid in advance is recorded as prepaid rent.
5.Financial statements are prepared each year.
6.All significant post-balance sheet events are reported.
7.Personal transactions of the proprietor are distinguished from business transactions.
6.Accounting concepts—identification.
Presented below are a number of accounting procedures and practices in Sanchez Corp. For each of these items, list the assumption, principle, information characteristic, or modifying convention that is violated.
1. Because the company's income is low this year, a switch from accelerated amortization to straight-line amortization is made this year.
2. The president of Sanchez Corp. believes it is foolish to report financial information on a yearly basis. Instead, the president believes that financial information should be disclosed only when significant new information is available related to the company's operations.
3. Sanchez Corp. decides to establish a large loss and related liability this year because of the possibility that it may lose a pending patent infringement lawsuit. The possibility of loss is considered remote by its attorneys.
4. An officer of Sanchez Corp. purchased a new home computer for personal use with company money, charging miscellaneous expense.
5. A machine that cost $40,000 is reported at its current market value of $50,000.
7.Principles vs. rules based GAAP.
There has been much discussion about principles based standards versus rules based standards. Discuss the advantages and disadvantages of a principles based approach.
8.Terminology.
In the space provided at the right, write the word or phrase that is defined or indicated.
1.Revenue and expense accounts.
2.An optional step in the accounting cycle.
3.A revenue collected, but not earned.
4.A revenue earned, but not collected.
5.Asset, liability, and equity accounts.
6.An expense paid, but not incurred.
7.An expense incurred, but not paid.
9.Adjusting entries.
Yago Co. wishes to enter receipts and payments in such a manner that adjustments at the end of the period will not require reversing entries at the beginning of the next period.
Instructions
Record the following transactions in the desired manner and give the adjusting entry on December 31, 2006. (Two entries for each part.)
1. An insurance policy for two years was acquired on April 1, 2006 for $4,800.
2. Rent of $4,200 for six months for a portion of the building was received on November 1, 2006.
10.Adjusting entries and account classification.
Selected amounts from Trent Company's trial balance of 12/31/06 appear below:
(All of the above accounts have their standard or normal debit or credit balance.)
Part A.
Prepare adjusting journal entries at the year end, December 31, 2006, based on the following supplemental information.
a. The equipment has a useful life of ten years with no salvage value. (Straight-line method being used.)
b. Interest accrued on the bonds payable is $15,000 as of 12/31/06.
c. Unexpired insurance at 12/31/06 is $8,000.
d. The rent payment of $120,000 covered the four months from November 30, 2006 through March 31, 2007.
e. Salaries and wages earned but unpaid at 12/31/06, $22,000.
Part B.
Indicate the proper balance sheet classification of each of the 15 numbered accounts in the 12/31/06 trial balance before adjustments by placing appropriate numbers after each of the following classifications. If the account title would appear on the income statement, do not put the number in any of the classifications.
a.
Current assets
b.
Property, plant, and equipment
c.
Current liabilities
d.
Long-term liabilities
e.
Shareholders' equity
