Can you please summarize what this is saying? It is part of the "TheTop 10 reasons to Fix the FASB's Conceptual Framework"

10. Role for Transactions

Traditionally, great respect has been paid in financial accounting to the entityâs own transactions as reliable sources of information about its assets and liabilities. We speculate that this tradition has roots in the tight rela- tionship between financial reporting and internal control, specifically the fact that an accounting system is the first line of defense against improper transactions. The companyâs own transactions may be sparse, even impoverished, sources of useful information. Far more information resides in the multitudes of transactions exe- cuted by other entities.

Can it be wise to constantly look inward and backward at past one-time events that no longer reflect current con- ditions? For example, could investors who bought shares of Wal-Mart in the 1970s or Enron in late 2000 predict current cash flows from these investments using only their original costs? While their original transactions were evi- dence (although incomplete) of probable cash flow poten- tial at the purchase dates, much more information content resides in recent transactions involving other entities. The same applies to all other assets and liabilities as well.

Suppose the goal is to infer the distribution of red and white marbles in an opaque jar by drawing a sample. How useful is a sample of only one marble? And how useless is it to infer the mix in todayâs jar based on a past sample of one marble from a jar that existed weeks, months, or years ago? We find no rational justification for acting as if useful information is provided by continuing to report the results of an entityâs historical transactions.

We urge the Boards to break the constraining tie between a companyâs financial statements and its unique experiences that may or may not be representative of eco- nomic truth, even at the time they happen.

Who can say an assetâs original purchase price really represented its market value at that date? It was only one event in the population of similar transactions, and thereâs no valid reason to believe it was executed exactly at that distributionâs mean. Instead, a sincere search for reliable financial representations leads to considering the much more useful facts inherent in the many transactions engaged in by others.

The consequence has to be more reliable and useful financial reporting.

chocolatebadger165

Question 1

Identify the item below that is not one of the four different types of data processing activities.

		deleting
		reading
		creating
		using

Question 2

All of the following are advantages of an ERP system except

		ERPs permit manufacturing plants to receive new orders in real time.
		in an ERP, data input is captured or keyed once.
		it takes considerable experience and training to use an ERP system effectively.
		ERPs permit management to gain greater visibility into every area of the enterprise.

Question 3

Sam Jones has been the controller of Downtown Tires for 25 years. Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records. The audit has been unable to reproduce financial reports that were prepared by Sam. While there is no evidence of wrongdoing, the auditors are concerned that the discrepancies might contribute to poor decisions. Which of the following characteristics of useful information is absent in the situation described above?

		relevant
		reliable
		complete
		timely
		understandable
		verifiable
		accessible

Question 4

An ERP system might facilitate the purchase of direct materials by all of the following except

		preparing a purchase order when inventory falls to reorder point.
		routing a purchase order to a purchasing agent for approval.
		communicating a purchase order to a supplier.
		selecting the best supplier by comparing bids.

Question 5

Antia Carmie is the largest collector and retailer of Japanese fans in the St. Louis area. Antia uses computer technology to provide superior customer service. The store's database system was designed to make detailed information about each Japanese fan easily accessible to her customers. Accordingly, the fan price and condition are provided for each fan, along with many pictures of each fan. In Antia's database, the price of the Japanese fans is a(n)

		entity.
		attribute.
		field.
		record.

Question 6

Which of the following is not considered a source document?

		A copy of the company's shipping document.
		A copy of the company's ledger.
		A copy of the company's sales journal.
		A copy of the company's financial statements.

Question 7

In an ERP system, the module used to record data about transactions in the disbursement cycle is called

		financial.
		order to cash.
		customer relationship management.
		purchase to pay.

Question 8

Baggins Incorporated identifies new product development and product improvement as the top corporate goals. An employee developed an innovation that will correct a shortcoming in one of the company's products. Although Baggins current Return on Investment (ROI) is 12%, the product innovation is expected to generate ROI of only 10%. As a result, awarding bonuses to employees based on ROI resulted in

		goal conflict.
		information overload.
		decreased value of information.
		goal congruence.

Question 9

________ are examples of activities that constitute inbound logistics.

		Activities that transform inputs into final products or services
		Activities that provide post-sale support to customers
		Activities that consist of receiving, storing, and distributing the materials used as inputs by the organization to create goods and/or services it sells
		Activities that help customers to buy the organization's products or services

Question 10

In which transaction cycle would information for inventory purchases be most likely to pass between internal and external accounting information systems?

		the revenue cycle
		the expenditure cycle
		the human resources / payroll cycle
		the financing cycle

Question 11

The collection of customer payment is part of which transaction cycle?

		the human resources cycle
		the production cycle
		the revenue cycle
		the expenditure cycle

Question 12

Which of the following is an example of source data automation?

		POS (point-of-sale) scanners in retail stores
		a bill of lading
		a subsidiary ledger
		a utility bill

Question 13

All of the following are guidelines for developing a good coding system except

		be as sophisticated as possible to promote usage.
		be consistent with its intended use.
		be flexible to allow for growth.
		be consistent with the company's organization structure.

Question 14

What is a key decision that needs to be made with regards to borrowing money from lenders?

		the location
		pro forma income statement
		how much capital to acquire
		job descriptions

Question 15

Identify the false statement below.

		A service company does not have an inventory system.
		Retail stores do not have a production cycle.
		Financial institutions have installment-loan cycles.
		Every organization should implement every transaction cycle module.

Question 16

The chart of accounts of a fast-food restaurant would probably include

		a list of customers.
		a list of financial statement accounts.
		a list of vendors.
		a list of employees.

Question 17

Which statement below regarding the AIS is false?

		Traditionally, most AIS have been designed so that both financial and operational data are stored in a manner that facilitates their integration in reports.
		The AIS must be able to provide managers with detailed and operational information about the organization's performance.
		Both traditional financial measures and operational data are required for proper and complete evaluation of performance.
		The AIS was often just one of the information systems used by an organization to collect and process financial and nonfinancial data.

Question 18

In Petaluma, California, electric power is provided to consumers by Pacific Power. Each month Pacific Power mails bills to 186,000 households and then processes payments as they are received. What is the best way for this business to ensure that payment data entry is efficient and accurate?

		well-designed paper forms
		turnaround documents
		source data automation
		sequentially numbered bills

Question 19

Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If the same information can be reproduced by two independent and knowledgeable people, it is representative of the characteristic of

		verifiability.
		truthful.
		relevance.
		reliability.

Question 20

Antia Carmie is the largest collector and retailer of Japanese fans in the St. Louis area. Antia uses computer technology to provide superior customer service. The store's database system was designed to make detailed information about each Japanese fan easily accessible to her customers. Accordingly, the fan price and condition are provided for each fan, along with many pictures of each fan. In Antia's database, the data about each Japanese fan represents a(n)

		entity.
		attribute.
		field.
		record.

lilaccod491

2. Prepare worksheet entries and postto the worksheet for the following items. Identify each adjustmentby the letter used in the problem:

a. Record the January 1, 2015balances of general fixed assets and related accumulateddepreciation accounts. The City of Monroe had the followingbalances (excluding Internal Service Funds):

	Cost	Accumulated Depreciation
Totals	$ 65,900,000	29,800,000

b. Eliminate thecapital expenditures shown in the governmental funds Statement ofRevenues, Expenditures, and Changes in Fund Balances.

c. Depreciation expense(governmental activities) for the year totaled $ 5,750,000.

d. Eliminate theother financing sources from the sale of bonds by recording aliability for bonds payable and the related premium.

e. As of January1, 2015, the City of Monroe had $12,000,000 in general obligationbonds outstanding.

f. Eliminate the expenditures for bondprincipal.

g. Accrueinterest in the amount of $328,000. (Two bond issues wereoutstanding; interest payments for both were last made on July 1,2015. The computation is as follows: ($11,200,000 Ã .03 Ã 6/12) +($4,000,000 Ã. 08 Ã 6/12) = $328,000).

h. Adjust for theinterest accrued in the prior year government-wide statements, butrecorded as an expenditure in the 2015 fund basis statements,($12,000,000 Ã .03 Ã 6/12) = $180,000.

i. Amortize bondpremium in the amount of $ 10,000.

j. Makeadjustments for additional revenue accrual. The only adjustment isfor property taxes to eliminate the current year deferral ofproperty taxes.

k. Adjust for the$21,000 of property taxes that was deferred in 2014 and recognizedas revenue in the 2015 fund-basis statements.

l. Assume theCity adopted a policy in 2015 of allowing employees to accumulatecompensated absences. Make an adjustment accruing the expense of $39,500 Charge compensated absences expense.

m. Bring in thebalances of the internal service fund balance sheet accounts.Again, use a single account for all capital assets and a secondaccount for all accumulated depreciation balances (use a separatecolumn of the worksheet to enter Internal Service Fundentries).

n. No revenuesfrom internal service funds were with external parties. Assume$3,200 of the $11,200 âDue from Other Fundsâ in the internalservice accounts represents a receivable from the General Fund andthe remaining $8,000 is due from the enterprise fund. Eliminate the$3,200 interfund receivables.

o. Reducegovernmental fund expenses by the net operating profit of internalservice funds. As the amount is small, reduce general governmentexpenses for the entire amount.

p. Eliminatetransfers that are between departments reported within governmentalactivities.

Gov'tal Fund Balances

Adjustments &Eliminations

Govern-mental Funds Adjusted

Internal Service Funds

Balances for Gov't-wide Stmts