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QS 1-1

Identifying accounting users

C2

Identify the following users as either external users (E) or internal users (I).

1. Shareholders

2. Lenders

3. Controllers

4. FBI and IRS

5. Consumer group

6. Sales staff

7. Customers

8. Suppliers

9. Brokers

10. Business press

11. Managers

12. District attorney

QS 1-2

Identifying accounting terms

C1

Reading and interpreting accounting reports requires some knowledge of accounting terminology. (a) Identify the meaning of these accounting-related acronyms: GAAP, SEC, FASB and IASB. (b) Briefly explain the importance of the knowledge base or organization that is referred to for each of the accounting-related acronyms.

QS 1-3

Accounting opportunities

C3

There are many job opportunities for those with accounting knowledge. Identify at least three main areas of opportunities for accounting professionals. For each area, identify at least three job possibilities linked to accounting.

QS 1-4

Explaining internal control

C1

An important responsibility of many accounting professionals is to design and implement internal control procedures for organizations. Explain the purpose of internal control procedures. Provide two examples of internal controls applied by companies.

QS 1-5

Identifying accounting principles

C5   <a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_Chesspiece1_22.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>

This icon highlights assignments that enhance decision-making skills.

Identify which accounting principle or assumption best describes each of the following practices:

1. In December 2009, Ace Landscaping received a customer's order and cash prepayment to install sod at a new house that would not be ready for installation until March 2010. Ace should record the revenue from the customer order in March 2010, not in December 2009.

2. If $51,000 cash is paid to buy land, the land is reported on the buyer's balance sheet at $51,000.

3. Jay Keren owns both Sailing Passions and Dockside Supplies. In preparing financial statements for Dockside Supplies, Keren makes sure that the expense transactions of Sailing Passions are kept separate from Dockside's statements.

QS 1-6

Identifying ethical concerns

C4   <a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_Chesspiece1_22.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>

Accounting professionals must sometimes choose between two or more acceptable methods of accounting for business transactions and events. Explain why these situations can involve difficult matters of ethical concern.

QS 1-7

Applying the accounting equation

A1

Use the accounting equation to compute the missing financial statement amounts (a), (b), and (c).

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_tb0108.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>

QS 1-8

Applying the accountingequation

A1   <a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_Chesspiece1_22.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>

1. Total assets of Charter Company equal $500,000 and its equity is $320,000. What is the amount of its liabilities?

2. Total assets of Golfland equal $900,000 and its liabilities and equity amounts are equal to each other. What is the amount of its liabilities? What is the amount of its equity?

QS 1-9

Identifying and computing assets, liabilities, and equity

A2

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_Chesspiece1_22.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>   <a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_Apple_logo.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>

Use Apple's September 30, 2006, financial statements, in Appendix A near the end of the book, to answer the following:

1. Identify the dollar amounts of Apple's 2006 (1) assets, (2) liabilities, and (3) equity.

2. Using Apple's amounts from part a, verify that Assets = Liabilities + Equity.

QS 1-10

Identifying transactions and events

A2

Accounting provides information about an organization's business transactions and events that both affect the accounting equation and can be reliably measured. Identify at least two examples of both (a) business transactions and (b) business events that meet these requirements.

QS 1-11

Identifying items with financial statements

P1

Indicate in which financial statement each item would most likely appear: income statement (I), balance sheet (B), statement of retained earnings (RE), or statement of cash flows (CF).

1. Equipment

2. Expenses

3. Liabilities

4. Net decrease (or increase) in cash

5. Revenues

6. Total liabilities and equity

7. Assets

8. Cash from operating activities

9. Dividends

QS 1-12

Computing and interpreting return on assets

A3   <a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_Chesspiece1_22.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>

In a recent year's financial statements, Home Depot reported the following results. Compute and interpret Home Depot's return on assets (assume competitors average a 12% return on assets).

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379573/wiL79573_tb0109.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>