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ACC 100 Chapter Notes - Chapter 2: Income Statement, Retained Earnings, Financial Statement

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School
Ryerson University
Department
Accounting
Course
ACC 100
Professor
Richard Deklerk

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Document Summary

Chapter 2: financial statements and the annual report: describe the objective of financial reporting. Reflect enterprise"s resources (assets) and claims to its resources (liabilities, shareholder"s equity) and effects of transactions and events that change these resources: explain the concept and purpose of a classified balance sheet. Purpose: evaluates liquidity of business, working capital: indicates buffer of protection for creditors, current ratio: provides reader with relative measure of liquidity, explain components of income statement. Provides link between income statement and balance sheet: identify components of statement of retained earnings. Explains changes in retained earnings during the period (cid:224) incorporates net income/loss: identify components of statement of cash flows.

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Related Questions

The objective of this exercise is to get you familiar with theaudited financial statements and IRS Form 990 of a NonprofitEntity, the American Cancer Society (www.cancer.org) and obtain theaudited financial statements for the fiscal year ended December 31,2014 and Form 990 for 2014. Form 990 can also be obtained fromwww.Guidestar.org

Answer the following question.

The annual financial statements of the Cancer Society indicatethat these are Combined Audited Financial Statements. Whichentities are included in this combined report?

1) Chapter 6: Questions and Exercises: 6.1, 6.2, and 6.3 (p.471):

6.1 Concept of Earnings Quality. The concept of accountingquality has two principal characteristics: the accounting datashould be a fair representation of performance for the reportingperiod, and the information should be pertinent to forecastexpected future earnings. Provide a specific example of pooraccounting quality that would hinder the forecasting of expectedfuture earnings.

6.2 Balance Sheet Quality and Earnings Quality. You will providea specific example of a management judgment, estimate, or choicethat could decrease both balance sheet and earnings quality. Bespecific as to how the judgment decreased quality in each of thetwo financial statements. Give a different example of how amanagement judgment, estimate, or choice could increase balancesheet quality, but potentially impair earnings quality.

6.3 Concept of Earnings Management. Define earnings management.Discuss why it is difficult to discern whether a firm does in factpractice earnings management.

2) Chapter 10: Questions and Exercises: 10.7 (p. 830):

10.7 Dividends as a Flexible Financial Account. Schwartz usesdividends as a flexible financial account. Compute the amount ofdividends you can assume that Schwartz will pay. Present theprojected balance sheet.

19. What of the following is not consistent with the primary purpose of financial accounting? A. To provide the SEC audited financial statements on a quarterly and annual basis. B. To provide investors with relevant information to use in decision making. C. To provide financial institutions with information relevant to lending decisions. D. All of the above are consistent with the purpose of financial accounting.