Qualitative characteristics make accounting information useful for decision-making purposes. Identify the qualitative characteristic that is being adopted or not adopted for each of the following situations. The quality of Walmart's financial information helps its users to correct their prior expectations on share prices. Walmart is the only company in its industry to depreciate its plant assets on a straight-line basis. Walmart switches from first-in first-out (FIFO) to average-cost (AVCO) and then back to FIFO over a 2-year period. Walmart does not issue its first-quarter report until after the second-quarter results are reported. Walmart has attempted to determine the replacement cost of its inventory. Three different valuators have produced significantly different amounts for the inventory value. The CFO decided to report the middle value for external reporting purposes. Identify which financial statement elements apply to each item described below. The first one is done as an example. Item Financial Statement Element for Account to be Debited Financial Statement Element for Account to be credited A cash dividend is declared and Equity Current Assets paid to shareholders. Cash is used to purchase a machine that will be used in the production process over the next five years. Income taxes are calculated based on a company's profit. The taxes will be paid next year. A shareholder invests money in a business in exchange for issued shares. An insurance settlement is received for a fully depreciated asset that was destroyed in a fire. An allowance for doubtful accounts is established based on estimates of future uncollectible accounts. = = ÷ ÷ =
Qualitative characteristics make accounting information useful for decision-making purposes. Identify the qualitative characteristic that is being adopted or not adopted for each of the following situations. The quality of Walmart's financial information helps its users to correct their prior expectations on share prices. Walmart is the only company in its industry to depreciate its plant assets on a straight-line basis. Walmart switches from first-in first-out (FIFO) to average-cost (AVCO) and then back to FIFO over a 2-year period. Walmart does not issue its first-quarter report until after the second-quarter results are reported. Walmart has attempted to determine the replacement cost of its inventory. Three different valuators have produced significantly different amounts for the inventory value. The CFO decided to report the middle value for external reporting purposes. Identify which financial statement elements apply to each item described below. The first one is done as an example. Item Financial Statement Element for Account to be Debited Financial Statement Element for Account to be credited A cash dividend is declared and Equity Current Assets paid to shareholders. Cash is used to purchase a machine that will be used in the production process over the next five years. Income taxes are calculated based on a company's profit. The taxes will be paid next year. A shareholder invests money in a business in exchange for issued shares. An insurance settlement is received for a fully depreciated asset that was destroyed in a fire. An allowance for doubtful accounts is established based on estimates of future uncollectible accounts. = = ÷ ÷ =
Chapter5: Completing The Accounting Cycle
Section: Chapter Questions
Problem 1PB: Identify whether each of the following accounts would be considered a permanent account (yes/no) and...
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Transcribed Image Text:Qualitative characteristics make accounting information useful for decision-making
purposes. Identify the qualitative characteristic that is being adopted or not adopted for
each of the following situations.
The quality of Walmart's financial information helps its users to correct their prior
expectations on share prices.
Walmart is the only company in its industry to depreciate its plant assets on a straight-line
basis.
Walmart switches from first-in first-out (FIFO) to average-cost (AVCO) and then back to FIFO
over a 2-year period.
Walmart does not issue its first-quarter report until after the second-quarter results are
reported.
Walmart has attempted to determine the replacement cost of its inventory. Three different
valuators have produced significantly different amounts for the inventory value. The CFO
decided to report the middle value for external reporting purposes.
Transcribed Image Text:Identify which financial statement elements apply to each item described below. The first one is done
as an example.
Item
Financial Statement Element
for Account to be Debited
Financial Statement Element
for Account to be credited
A cash dividend is declared and Equity
Current Assets
paid to shareholders.
Cash is used to purchase a
machine that will be used in the
production process over the next
five years.
Income taxes are calculated
based on a company's profit.
The taxes will be paid next year.
A shareholder invests money in
a business in exchange for
issued shares.
An insurance settlement is
received for a fully depreciated
asset that was destroyed in a fire.
An allowance for doubtful
accounts is established based on
estimates of future uncollectible
accounts.
=
=
÷
÷
=
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