Chat with AIExam 1: The Accounting Environment: What Is Accounting and Why Is It Done
Which of the following is one of the benefits of the flexibility allowed by IFRS?
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VerifiedA
Identify the stakeholders in each of the following entities and the decisions they make.
i) A privately owned summer camp for boys and girls.ii) A large publicly owned donut store chain.
iii) A national charity that supports medical research.
(40) Verifiedi) Owners: How profitable is the camp? How much should they charge in fees? Suppliers to the camp: Are they going to get paid? How long until they get paid? Staff: Will the camp be able to pay the wages all summer?
Campers' parents: They normally pay their fees up front so want to know that the camp will be able to operate all summer and provide the services paid for.That it is a reputable and reliable organization.
Lenders and suppliers: Has the camp borrowed money? Will they be able to repay it?
Government regulators: Interested in compliance with health and safety regulations.Want to assess and collect taxes.
ii) Shareholders: How profitable is the company? Will they receive any of the profits as dividend payout or as increases in the share price? Is management doing a good job running the company?
Lenders and suppliers: Can the company repay any loans or amounts owing and interest? Do they have any security to offer in case they cannot pay?
Management: How well has the company done? What compensation should they expect? Do they have the resources available to expand?
Employees: Is the company viable in the long-term.What level of wages and benefits can they afford to pay? Government: Compliance with health and safety regulations.Want to assess and collect taxes.
iii) Researchers: Does the organization have the resources to fund their research?
Donors: What are they using the money for? What portion is going to administrative functions? What portion to the research? Have they had any results? How do they measure their results? How much should they donate?
Government: Does it meet the criteria of a non-for-profit organization? Is it meeting its objectives? Patients or families that will benefit from the research.
Explain what is meant by the cost/benefit trade-off concept in accounting.A high school student is considering spending $500 to spend two days visiting two out-of-town universities he is thinking of attending.Evaluate this decision using the cost/benefit trade-off concept.
(38) VerifiedGathering and analyzing information takes time and is costly.In accounting you want the benefit derived from using the information to exceed the cost of collecting and processing it.As you collect additional information the additional amount of benefits usually decreases.There may come a point where you have enough information to make a decision without needing to incur additional costs.
Attending university out of town is expensive and normally a four-year commitment.The cost of choosing poorly might be a lost year of university work, or having to pay rent or tuition for a full year even if the student is unhappy and drops out.So the $500 cost to visit the universities seems a reasonable application of the cost/benefit trade-off.It is worth the $500 cost to get the benefit of picking the university the student will be happiest at.
Which of the following best describes the purpose of an accounting system?
(43) Mathew has recently graduated from university and started a full-time job.He has used the information on his bank statement for the past two months to start a personal financial plan because he wants to figure out when he can buy a car.The report he prepared for the past two months is shown below.Mathew is frustrated because he can't figure out how the plan is going to help him."I wasted time adding up all my deposits and withdrawals for nothing," he complained."Accounting is just not worth it!"
Mathew's Personal Financial Plan: Goal-to buy a car! September October Deposits \ 3,200 \ 3,200 ATM withdrawals 1,200 1,600 Cheques written 1,400 1,375 Difference \6 00 \2 25 Required:
Explain to Mathew how an accounting system could help him determine when he can buy a car.What suggestions would you make to him to improve his current system?
(38) Sandy's Sandwiches is a small business owned and operated by Sandy Southerly that is not publicly traded and has never borrowed any money.Which of the following would be a constraint in the preparation of its financial statements?
(39) Because managers can exercise professional judgment when preparing the financial statements for their company, the stakeholder should:
(39) You have a collection of 200 international stamps that you have collected over the years.Most of them cost you nothing, as you just took them off letters or postcards that you or friends and family had received.If you add up the face value (the amount printed on the stamp), your collection totals $125.37.You recently saw a story in a local newspaper that someone else sold a similar collection of 400 stamps for $500.Which of the following statements is most likely true?
(40) A new shareholder of a small company is concerned about being able to adequately monitor their investment and has asked management to provide them with weekly financial statements.From the company's point of view this would violate which of the following concepts?
(33) Identify the stakeholders in each of the following entities and the decisions they make.
i) A non-for-profit day care centre operated by the parents of the children.ii) A small family owned convenience store.
iii) A large publicly owned grocery chain.
(33) You have been approached to invest in a real estate venture.A small group is going to buy a piece of land and construct single-family homes on it and then sell them.The group has done similar deals in the past, but one of the participants has left the group and they are now looking for new investors.
Required:
Explain how accounting information would help you decide whether or not to invest in the proposed venture.What non-accounting information would you also want?
(36) You are considering buying a house and have found one that meets all of your criteria.When you are trying to decide how much to pay for it, which of the following parties involved in the process would give you the most reliable information?
(31) Replacement cost is one way to measure the value of an item.Which of the following best describes replacement cost?
(36) Which of the following is an important feature of external auditors?
(34) Your brother borrowed your 2010 Toyota Corolla and had an accident.He is okay, but the car is write-off.You paid $5,000 for it a year ago, and your brother has offered to give you $3,000, the cost he estimates of another 2010 Toyota Corolla.A new Toyota Corolla costs $22,500.Which of the following statements is true?
(42) Which of the following types of organization includes all of the business's income in the owner's personal tax return?
(34) An unincorporated entity operated by two or more people is what form of business?
(38) What would be the most likely form of business organization for each of the following?
i) A small bookkeeping business run by an individual from his/her home ii) A national bank
iii) Two brothers operating a landscape business together iv) A firm of twenty lawyers
v) A family business operating a small chain of bookstores
(40) If you wanted to sell your MP3 player to buy a new one with more memory, which of the following methods of valuing an item would be the most useful?
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