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MGAC01H3 Chapter Notes -John Wiley & Sons, Conceptual Framework, Financial Statement

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bronzegerbil668
14 Dec 2014
School
UTSC
Department
Financial Accounting
Course
MGAC01H3
Professor
G.Quan Fun

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Document Summary

Summary of question types by learning objective and level. Item lo lod item lo lod item lo lod item lo lod. Item type: mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc, mc. Learning objective 4: mc, mc, mc, mc, mc, mc, mc, mc, mc, mc. Chapter study objectives: indicate the usefulness and describe the main components of a conceptual framework for financial reporting. The first level deals with the objective of financial reporting. The second level includes the qualitative characteristics of useful information and elements of financial statements. The third level includes foundational principles and conventions: identify the qualitative characteristics of accounting information. The overriding criterion by which accounting choices can be judged is decision usefulness; that is, the goal is to provide the information that is the most useful for decision-making. Enhancing characteristics include comparability, verifiability, timeliness, and understandability.

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Related Questions

Jennifer Lopez opened a school for administrative skills called Lopez Office Training and completed the following transactions:

a. Contributed the following assets to the business:

Cash $5,700
Computers 4,300
Office Equipment 3,600

b. Found a location for her business and paid the first month’s rent, $260.

c. Paid for an advertisement announcing the opening of the school, $190.

d. Received applications from three students for a four-week administrative program and two students for a ten-day keyboarding course. The students will be billed a total of $1,300.

e. Purchased supplies on credit, $330.

f. Billed the enrolled students, $1,740.

g. Purchased a second-hand computer, $480, and office equipment, $380, on credit.

h. Paid for the supplies purchased on credit in e, $330.

i. Paid cash to repair a broken computer, $40.

j. Received partial payment from students previously billed, $1,080.

k. Paid the utility bill for the current month, $90.

l. Paid an assistant one week’s salary, $440.

m. Made a cash withdrawal of $300.

Hint(s)

1. Record the transactions directly in the T accounts, using the transaction letter to identify each debit and credit. Enter in the order presented above.

Cash
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 1 of Item 1 Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 3 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 5 of Item 1 Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 7 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 9 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 11 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 13 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 15 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 17 of Item 1
Bal.
Accounts Receivable
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 22 of Item 1 Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 24 of Item 1
Bal.
Supplies
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 27 of Item 1
Computers
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 29 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 31 of Item 1
Bal.
Office Equipment
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 34 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 36 of Item 1
Bal.
Accounts Payable
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 39 of Item 1 Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 41 of Item 1
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 43 of Item 1
Bal.
J. Lopez, Capital
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 48 of Item 1
J. Lopez, Withdrawals
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 50 of Item 1
Tuition Revenue
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 52 of Item 1
Salaries Expense
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 54 of Item 1
Utilities Expense
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 56 of Item 1
Rent Expense
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 58 of Item 1
Repair Expense
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 60 of Item 1
Advertising Expense
Selecta.b.c.d.e.f.g.h.i.j.k.l.m.Correct 62 of Item 1

Hint(s)

Hide

2. Prepare a trial balance using today's date. List all the accounts, in the order the T accounts are given. If an amount box does not require an entry, enter "0".

Lopez Office Training

Trial Balance

(Current Date)

Unit 6 GAAP Application-Conceptual Framework of Accounting TheConceptual Framework allows for the systematic adaptation ofaccounting standards to a changing business environment. The FASBuses the conceptual framework to aid in an organized and consistentdevelopment of new accounting standards. The conceptual frameworkoutlines the objectives of financial reporting and the qualities ofgood accounting information, precisely defines commonly used termssuch as asset and revenue, and provides guidance about appropriaterecognition, measurement, and reporting. Understanding theterminology associated with the framework is imperative. Match thenumbered statements below with the lettered terms. An answer(letter) may used more than once, and some terms require more thanone answer (letter). 1. Key ingredients in quality of relevance. 2.Traditional assumptions that influence the FASB's conceptualframework. 3. The idea that information should represent what itpurports to represent. 4. An important constraint relating to costsand benefits. 5. An example of conservatism 6. The availability ofinformation when it is needed. 7. Recording an item in theaccounting records. 8. Determines the threshold for recognition. 9.Implies consensus. 10. Transactions between independent parties. a)Cost-effectiveness b) Representational faithfulness c) Recognitiond) Verifiability e) Time periods f) Unrealized g) Completeness h)Timeliness i) Materiality j) Predictive value k) Economic entity l)Lower-of-cost-or-market rule m) Phrenology n) Arm's-lengthtransactions Now that you have reviewed the terminology, for eachsituation listed below, indicate by letter the appropriatequalitative characteristic(s) or accounting concept(s) applied. Aletter may be used more than once, and more than one characteristicor concept may apply to a particular situation. Explain why youchose your answer.

1. Goodwill is recorded in the accounts only when it arises fromthe purchase of another entity at a price higher than the fairmarket value of the purchased entity's identifiable assets. 2. Landis valued at cost. 3. All payments out of petty cash are debited toMiscellaneous Expense. 4. Plant assets are classified separately asland or buildings, with an accumulated depre-ciation account forbuildings. 5. Periodic payments of $1,500 per month for services ofH. Hay, who is the sole propri-etor of the company, are reported aswithdrawals. 6. Small tools used by a large manufacturing firm are^recorded as expenses when purchased. 7. Investments in equitysecurities are initially recorded at cost. 8. A retail storeestimates inventory rather than taking a complete physical countfor purposes of preparing monthly financial statements. 9. A notedescribing the company's possible liability in a lawsuit isincluded with the financial statements even though no formalliability exists at the balance sheet date. 10. Depreciation onplant assets is consistently computed each year by thestraight-line method. a) Understandability b) Verifiability c)Timeliness d) Representational faithfulness e) Neutrality f)Relevance g) Going concern h) Economic entity i) Historical cost j)Measurability k) Materiality l) Comparability Type your answers ina Word Document, and submit to the Drop Box.
GAAP Application-Conceptual Framework of Accounting the ConceptualFramework allows for the systematic adaptation of accountingstandards to a changing business environment. The FASB uses theconceptual framework to aid in an organized and consistentdevelopment of new accounting standards. The conceptual frameworkoutlines the objectives of financial reporting and the qualities ofgood accounting information, precisely defines commonly used termssuch as asset and revenue, and provides guidance about appropriaterecognition, measurement, and reporting. Understanding theterminology associated with the framework is imperative. Match thenumbered statements below with the lettered terms. An answer(letter) may used more than once, and some terms require more thanone answer (letter). 1. Key ingredients in quality of relevance. 2.Traditional assumptions that influence the FASB's conceptualframework. 3. The idea that information should represent what itpurports to represent. 4. An important constraint relating to costsand benefits. 5. An example of conservatism 6. The availability ofinformation when it is needed. 7. Recording an item in theaccounting records. 8. Determines the threshold for recognition. 9.Implies consensus. 10. Transactions between independent parties. a)Cost-effectiveness b) Representational faithfulness c) Recognitiond) Verifiability e) Time periods f) Unrealized g) Completeness h)Timeliness i) Materiality j) Predictive value k) Economic entity l)Lower-of-cost-or-market rule m) Phrenology n) Arm's-lengthtransactions Now that you have reviewed the terminology, for eachsituation listed below, indicate by letter the appropriatequalitative characteristic(s) or accounting concept(s) applied. Aletter may be used more than once, and more than one characteristicor concept may apply to a particular situation. Explain why youchose your answer.

1. Goodwill is recorded in the accounts only when it arises fromthe purchase of another entity at a price higher than the fairmarket value of the purchased entity's identifiable assets. 2. Landis valued at cost. 3. All payments out of petty cash are debited toMiscellaneous Expense. 4. Plant assets are classified separately asland or buildings, with an accumulated depreciation account forbuildings. 5. Periodic payments of $1,500 per month for services ofH. Hay, who is the sole proprietor of the company, are reported aswithdrawals. 6. Small tools used by a large manufacturing firm are^recorded as expenses when purchased. 7. Investments in equitysecurities are initially recorded at cost. 8. A retail storeestimates inventory rather than taking a complete physical countfor purposes of preparing monthly financial statements. 9. A notedescribing the company's possible liability in a lawsuit isincluded with the financial statements even though no formalliability exists at the balance sheet date. 10. Depreciation onplant assets is consistently computed each year by thestraight-line method. a) Understandability b) Verifiability c)Timeliness d) Representational faithfulness e) Neutrality f)Relevance g) Going concern h) Economic entity i) Historical cost j)Measurability k) Materiality l) Comparability