Robin Smith is considering buying shares in Mah Company. The company has reported an increase in net income this year. On careful reading of the notes to the financial statements, Robin learns that the company had a LIFO liquidation this year. Robin understands what caused the liquidation but has asked you for advice about how to interpret it. Required: 2. Could a LIFO liquidation profit create ethical issues?

Robin Smith is considering buying shares in Mah Company. The company has reported an increase in net income this year. On careful reading of the notes to the financial statements, Robin learns that the company had a LIFO liquidation this year. Robin understands what caused the liquidation but has asked you for advice about how to interpret it. Required: 2. Could a LIFO liquidation profit create ethical issues?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

B2. Mark has a great idea for business and investigates his idea. He spends $2,000 for a market survey and $2,200 for a feasibility study. After the investigation, he proceeds to establish the business in Year 1. He also has start-up expenses of $1,500 for pre-opening advertising. The business starts to operate on July 1, Year 1. Can much investigation and start-up expenses can he deduct in Year 1?
Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Coleen has told her accountant to provide the bank with just the balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year. The accountant, Jim Long, only sent over the balance sheet to First Federal Bank Did Jim act ethically or unethically? Why?
plz help
In 2019, Zain Oil company was being sued for damages the seaside because its chemical material dropped to the sea. The settlement of which could threaten the financial stability of the company. The company decided to choose non-disclosure with the hope that its lawyer may win the case at court. - what kind of qualitative characteristics of useful financial information?
Ms. Muchomoney is incredibly wealthy and has a net worth of $1,000,000,000. She starts a business by giving $100,000 to the company and receiving stock in return. That is the only transaction to date this year. The new business's balance sheet would have: Group of answer choices Total owners' equity of $1,000,100,000. Total owners' equity of $100,000. No owners' equity Total owners' equity of $1,000,000,000.
Pick only one option: The owner of Tommy's Technicians has found that his shop is losing money and he is in jeopardy of going out of business. Sales have remained constant for quite some time and now he is looking at ways to cut expenses to stay in business. Which of the following expenses is his best choice to try to immediately reduce and save him meaningful dollars so he can remain in business? (Hint: First consider which ones he has ultimate control over?) Rent expense Utilities expense Payroll expense Shop insurance expense Advertising expense
Indicate whether the following is true or false: If Triple D wants to compile the Debtors Ledger, the accountant of Triple D never has to take transactions in the General Journal into account, since debtor’s transactions will only appear in the Debtors journal and Debtors allowance journal.ScenarioDamen Dayal, Charles Dlamini, and Darren Denbury are three young entrepreneurs. While at school, at the age of 17, they turned their love for surfing into a business by manufacturing customisable surfboards. Customers (Debtors) can choose the dimensions to suit their height and body weight, and can submit images and quotes to be used in the graphic design. They named their business Triple D. Triple D started as a little shoestring operation in Damen’s grandparent’s garage. Initially sales were slow, however after displaying a few posters throughout the neighbourhood and asking family and friends to ‘spread the word’, the number of orders began to increase. Now that they have matriculated,…
Beryl Barkam is starting a new business, Barkam Enterprises, which will be a sole proprietorship selling retail novelties. Barkam recently received a discharge in a Chapter 7 bankruptcy case, but certain proved claims were unpaid for lack of funds. Which of the following would be a claim against Barkam? C) A personal loan by her father made in an attempt to stave off bankruptcy. A) The unpaid amounts owed to secured creditors who received less than the full amount after resorting to their security interests. D) The unpaid amount of taxes due to the United States that became due and owing within 3 years preceding bankruptcy. B) The unpaid amounts owed to trade suppliers for goods purchased and sold by Barkam in the ordinary course of her prior business.
Ralph Collins founded Collins Consignment Sales Company and the company was operated from his home. As of September 1, 2021, Collins decided to move to rented quarters and to operate the business on a full-time basis. He wishes to know how much net income the business has earned but has no prior knowledge of accounting and has approached your group for advice. The company entered the following transactions during September: Sept 1. The following assets were received from Ralph in exchange for capital of Collins Consignment Sales Company: cash - $19,000, accounts receivable - $2,800, supplies - $2,050, and office equipment - $15,000. There were no liabilities received. Paid three (3) months rent on a lease rental contract, $6,000. Paid the premiums on the property and peril insurance policies, $3,000. Received cash from clients as an advance payment for services to be provided in the coming months, $5,900. Purchased additional office equipment on account from…
After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a corporation. She then starts the process of getting the business running. In November 2022, the following activities take place. Nov. 8 Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account in exchange for common stock. 11 Natalie pays $65 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Expense.) 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. 14 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer…
please answer in detail with steps
Although Deborah Adefowope has run a small business for many years, she has never kept adequate accounting records. However, a need to obtain a bank loan for the expansion of the business has necessitated the preparation of ‘final’ accounts for the year ended 31 August 2009. As a result, the following information has been obtained after much careful research: Deborah Adefowope’s business assets and liabilities are as follows: As at 1/09/08 31/08/09 Stock in trade GHS8,600 GHS16,800 Debtors for sales 3,900 4,300 Creditors for purchases 7,400 8,900 Rent prepaid 300 420 Electricity accrued due 210 160 Balance at bank 2,300 1,650 Cash…