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ACCT 2101 Study Guide - Midterm Guide: Accounts Payable, Deferral, Current Asset

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pinkbeaver225
25 Dec 2018
School
GSU
Department
Accounting
Course
ACCT 2101
Professor
Kris J.Clark 

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Document Summary

Sole prop: there is only one owner, they have tax advantages, and they are simple to own. Partnership: this is also simple to establish, its instead owned by more than one person, and with this comes more people to help with resources and skills. Corporation: no personal liabilities and it is easier to transfer ownership. These are all the workings going on inside of the business. So they have this classified under just 4 types of internal control. Marketing: what would be a good selling price. Human resources: giving your employees a raise. Management: get rid of what isn"t making us money. These are the people from the outside looking in and potentially helping to fund the business. This has to do with the public eye and business workings. Investors: the investors that have already invested time and money and are making sure everything is going smoothly. Creditors: the ones collecting the debt you have over time.

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Related Questions

Please read and share your thoughts on this recent brief article from the Journal of Accountancy on accountant skills needed for success in a tech-enabled future. Do you agree? Can you think of other skills that future accountants will need?

JOFA Article: (https://www.journalofaccountancy.com/issues/2018/jun/technology-skills-for-accountants.html)

"Many experts expect accountants' work and duties to change fundamentally in the coming years. As technology is developed to handle tasks that accountants traditionally have performed, CPAs' attention is likely to shift toward advisory roles, investigating exceptions and anomalies identified by technology, and developing processes and controls that will enable technology to perform certain necessary tasks. The technology will allow for a more complete audit that uses all available data rather than samples. And the scrutinizing of anomalies will provide opportunities for auditors to provide more useful information to clients.

Here are some of the skills CPAs will need to succeed in these new duties:

Understand how processes work. Even the most well-designed technological solutions are useless if they are not set up properly and monitored to determine whether they are performing effectively. Advising and consulting on business process improvements also will be a promising niche for CPAs in the future.

Communicate effectively with technologists. Successful CPAs who understand processes likely will not have the technological skills to code and implement systems. Technology experts, meanwhile, are unlikely to understand accounting and auditing rules and the deliverables required from systems. CPAs will need to be able to team with technologists and describe the decision trees that must be embedded in the technology to process the correct data and deliver the desired intelligence.

Learn to advise or consult, not command. Accountants are used to providing rule-based, definitive answers about making appropriate journal entries, information to be included in footnotes, and whether financial statements are materially misstated. But as accountants take on more advisory and consulting duties, they will need to learn how to provide opinions and advocate for their ideas without being overbearing.

Analyze data and communicate with clients. As technology results in the automation of more compliance-based services, accountants will have more time to spend with clients. To make the most of this time, accountants will need to learn how to analyze data for business insights and then be able to communicate those insights to clients."

QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

CC13 Natalie’s friend, Curtis Lesperance, decides to meet withNatalie after hearing that her discussions about a possiblebusiness partnership with her friend Katy Peterson have failed.(Natalie had decided that forming a partnership with Katy, a highschool friend, would hurt their friendship. Natalie had alsoconcluded that she and Katy were not compatible to operate abusiness venture together.) Because Natalie has been so successfulwith Cookie Creations and Curtis has been just as successful withhis coffee shop, they both conclude that they could benefit fromeach other’s business expertise. Curtis and Natalie next evaluatethe different types of business organization. Because of theadvantage of limited personal liability, they decide to form acorporation. Curtis has operated his coffee shop for 2 years. Hebuys coffee, muffins, and cookies from a local supplier. Natalie’sbusiness consists of giving cookie-making classes and selling fineEuropean mixers. The plan is for Natalie to use the premises Curtiscurrently rents to give her cooking-making classes anddemonstrations of the mixers that she sells. Natalie will alsohire, train, and supervise staff to bake the cookies and muffinssold in the coffee shop. By offering her classes on the premises,Natalie will save on travel time going from one place to another.Another advantage is that the coffee shop will have one centrallocation for selling the mixers. The current market values of theassets of both businesses are as follows. Curtis’s Coffee CookieCreations Cash $7,130 $12,000 Accounts receivable 100 800 Inventory450 1,200 Equipment 2,500 1,000* *Cookie Creations decided not tobuy the delivery van considered in Chapter 10. Combining forceswill also allow Natalie and Curtis to pool their resources and buya few more assets to run their new business venture. Combiningforces will also allow Natalie and Curtis to pool their resourcesand buy a few more assets to run their new business venture. Curtisand Natalie then meet with a lawyer and form a corporation onNovember 1, 2017, called Cookie & Coffee Creations Inc. Thearticles of incorporation state that there will be two classes ofshares that the corporation is authorized to issue: common sharesand preferred shares. They authorize 100,000 no-par shares ofcommon stock, and 10,000 no-par shares of preferred stock with a$0.50 noncumulative dividend. The assets held by each of their soleproprietorships will be transferred into the corporation at currentmarket value. Curtis will receive 10,180 common shares, and Nataliewill receive 15,000 common shares in the corporation. Therefore,the shares have a fair value of $1 per share. Natalie and Curtisare very excited about this new business venture. They come to youwith the following questions: 1. “Curtis’s dad and Natalie’sgrandmother are interested in investing $5,000 each in the businessventure. We are thinking of issuing them preferred shares. Whatwould be the advantage of issuing them preferred shares instead ofcommon shares?” 2. “Our lawyer has sent us a bill for $750.When wediscussed the bill with her, she indicated that she would bewilling to receive common shares in our new corporation instead ofcash for her services. We would be happy to issue her shares, butwe’re a bit worried about accounting for this transaction. Can wedo this? If so, how do we determine how many shares to giveher?”