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1.
Concept Introduction:As per materiality principle, company should records or shows only those information or data in books of accounts which are material for the business and for the purpose of accounting. All unnecessary information must not be recorded in books of accounts.
To explain: Whether the information gathered by employee is useful.
2.
Concept Introduction:As per materiality principle company should records or shows only those information or data in books of accounts which are material for the business and for the purpose of accounting. All unnecessary information must not be recorded in books of accounts.
To Explain: Whether the information gathered by employee is useful for hardware or real-estate company.
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Chapter 2 Solutions
Financial Accounting: The Impact on Decision Makers
- Materiality Joseph Knapp, a newly hired accountant wanting to impress his boss, stayed late one night to analyze the office supplies expense. He determined the cost by month for the previous 12 months of each of the following: computer paper, copy paper, fax paper, pencils and pens, notepads, postage, stationery, and miscellaneous items. Required What did Joseph think his boss would learn from this information? What action might be taken as a result of knowing it? Would this information be more relevant if Joseph worked for a hardware store or for a real estate company? Discuss.arrow_forwardDinesh bhaiarrow_forwardPick one answer: Brian is trying to analyze his income and expenses for the past week. He comes across an invoice from the local parts store for a circuit board for a Carrier furnace. He knows he needed the part to fix Mrs. Crow's furnace last week. What type of an expense is the circuit board? Indirect expense Direct Expense Fixed expense Overhead expensearrow_forward
- B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year (before the proposed contract). Sales revenue Costs Labor Equipment lease B-YOU Annual Income Statement Rent Supplies Officers' salaries Other costs Total costs Operating profit (loss) $ 560,000 260,000 42,000 35,000 30,000 160,000 20,000 $ 547,000 $ 13,000 If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $85,500. The equipment lease will increase by 20 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work.arrow_forwardSuppose that you have been given a summer job as an intern at Issac Aircams, a company that man- ufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan. You have been asked to help prepare the financial statements and were given the following list of costs: Depreciation on salespersons’ cars. Rent on equipment used in the factory. Lubricants used for machine maintenance. Salaries of personnel who work in the finished goods warehouse. Soap and paper towels used by factory workers at the end of a shift. Factory supervisors’ salaries. Heat, water, and power consumed in the factory. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) Advertising costs. Workers’ compensation insurance for factory employees. Depreciation on…arrow_forward6 Becky and Carl work for a marketing firm. The two accountants discuss the organization’s financial performance. Carl asks Becky, “What’s the bottom line?” Becky reviews a financial report that shows the firm’s profitability over the last quarter. The document Becky reviews is called the Multiple Choice tax return. ledger. audit. income statement. 7 Diedre works at Sally’s Autobody Workshop. Her main job responsibility is to record the routine, day-to-day business transactions of the firm. Based on this information, Diedre is a Multiple Choice tax accountant. forensic accountant. bookkeeper. CMA. 8 A new fitness company called Jump Athletics receives a trademark for its brand name. The trademark received by Jump Athletics is a Multiple Choice return on asset. current asset. liquid asset. fixed asset. 9 Rowena, a senior manager at Top of the Line Publishing, wants a quick snapshot of the company’s financial position before she goes to a manager’s meeting. In this case, which of the…arrow_forward
- Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufacturessophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which isprivately owned, has approached a bank for a loan to help it finance its growth. The bank requires financialstatements before approving such a loan. You have been asked to help prepare the financial statements andwere given the following list of costs:1. Depreciation on salespersons’ cars.2. Rent on equipment used in the factory.3. Lubricants used for machine maintenance.4. Salaries of personnel who work in the finished goods warehouse.5. Soap and paper towels used by factory workers at the end of a shift.6. Factory supervisors’ salaries.7. Heat, water, and power consumed in the factory.8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.)9. Advertising costs.10. Workers’ compensation insurance for factory employees.11. Depreciation on chairs…arrow_forwardGadubhaiarrow_forwardDescription and Instructions You are a student from a prominent university and were sent out to work with a leading merchandizing company as a part of a work experience program. Having been introduced to the general manger you were told that the accountant who normally prepares the financial statements has suddenly resigned and there is no one available to prepare the company’s financial statements which are now due. As aspiring university student, you have expressed an interest in taking on the task. You are required to analyse the problem at hand then apply the accrual basis of accounting in the preparation of the company’s financial statements.arrow_forward
- Scenario Jane is the accounts payable clerk for ABC Corporation. One of her job duties is to process the travel expenses of the chief financial officer and pay the associated business credit card bill. Jane has noticed lately that the CEO’s expense reports are steadily increasing in amount and frequency. From receipts and other documentation that Jane processes, she suspects the CEO is running personal expenses through the company; however, she is not 100% sure. Questions 1. What responsibility or role does the accountant have in this process? 2. Should information provided by management and other non-accounting personnel be assumed accurate or is it the accountant’s responsibility to investigate each item submitted for legitimacy? 3. In the situation that follows, does Jane have any responsibility to find out the legitimacy of the expenses she is processing or is her job to just pay the bill?arrow_forwardYou are employed as an accountant for Innovative Computing. Your company is in the process of signing a large contract with an electronics components supplier. You have a friend who works for the electronics components supplier, and you are aware of the company having trouble paying bills. *Explain why you should or should not report this to your employer before the purchase.arrow_forwardMunabhaiarrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeAccounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
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