Show:
Qualities
Assumptions
Principles
Constraints
Financials
100
This quality can predict and confirm the predictions
What is relevance?
100
Harry would like to measure sales in chicken feet. His accountant says sales must be measured in money.
What is the monetary unit assumption
100
James Inc bought a car for $10,000 dollars. It was a great car. It lasted for 10 years and is now at 200,000 miles. The car is worth $500 but is still listed on the balance sheet at $10,000
What is the measurment principle?
100
Lana makes $50 per hour but loves to shop for deals. She is determined to buy the new pair of nike sneakers at a bargain price. The list price is $150. She pends 10 hours doing research on the internet and making phone calls. She is excited becasue she was able to buy the sneakers for $100. She saved $50 or did she.
What is cost constraint?
100
This statement answers the question is a business profitable?
What is the income statement?
200
This communicates what actually happend including the good and the bad.
What is faithful representation
200
Jim's boss just asked him to pull the sales figures for January, February, March, April and May seperately. He wants to look at the sales figures by month?
What is the periodicity assumption?
200
Apple just reported sales of $100,000,000 for 2012. Unfortunately, Apple just found out one of it's biggest customers just filed for bankruptcy. This customer bought $30,000,000 worth of apple products. Apple consults with its accountants to find out what to do.
What is the full disclosure principle?
200
Okera is frugal. He goes to the car dealership to buy a new Carolla for $10,000. The dealer offers to drop the price to $9,500. Okera says, "if you don't drop the price to $9,490, I'm walking. "
What is the materiality constraint?
200
This statement divides activities into operating, investing and financing activities?
What is the cash flow statement?
300
These five qualities enhance the fundamental qualities
What is comparability, consistency, verifiability, Timeliness and Understandability
300
Charles cannot figure out why his accountant makes such a big deal about it. He owns 100% of the company. He should be able to use the corporate account for personal stuff his personal account for company stuff?
What is the economic entity assumption?
300
Barack bought lemons for his lemonade business. He wants to record the cost of lemons as an expense. His accountant told him to wait until he sells the lemonade to record the expense.
What is the revenue and expense recgonition principle?
300
Samantha is trying to decide whether to invest in new accounting software. Her business makes $100,000 a year and the software costs $30,000 and would require a part time accountant for $20,000 a year. This is a one time cost of $50,000 and recurring costs of $20,000 for a business that makes $100,000 a year.
What is the cost constraint?
300
This statement answers the question, is a business solvent?
What is the balance sheet?
400
To adhere to this principles you must be complete, neutral and free from error
What is faithful representation
400
Twinkies just filed for bankruptcy in 2012. There 2011 financial statements did not assume Twinkies would be going out of business.
What is the going concern assumption?
400
Harry has two items on his balance sheet. Stocks and a car. The car is listed at its orignal cost but the stocks are listed based on the market value per the new york stock exchange?
What is the measurment principle?
400
This constraint ensures tries to match the effort expended for data against the benefit received from that data.
What is the cost constraint?
400
This item is found on the retained earnings statement and on the balance sheet
What is retained earnings or what is ending retained earnings?
500
Accurate Accounting Agency prides itself on producing the most accurate financial statements. There is only one problem. They are going out of business because they always submit the financial statements late. There insistence on getting things accurate to the penny caused them to get stuff to their clients late.
What is Timeliness?
500
Sally is the number 1 sales woman for her company. She just closed a $10,000,000 sale today. Her deliver the goods in February and get paid in March. Sally is able to get her bonus check in February when the sale is booked not in March when the cash is received.
What is the accrual assumption?
500
Phillip is a sneaky accountant. To make his company numbers look great. He decided to record the sales he receives in December but the costs in January. His rule is as long as the costs are being booked less than 5 days after the sales. It is fine.
What is the revenue and expense recognition principle?
500
Lonestar just sent its financial report to the printers. It costs $50,000 to print the financials. Sabrina the accountant runs in and says, I made a mistake. The sales figures show $10,000,0000 but it should really be $9,999,000. We are off by $1,000 dollar.
What is the cost costraint and what is the materiality constraint?
500
net income is found on these three statements
What is the income statement, cash flow statement and statement of retained earnings?