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Concept explainers
Concept Introduction:
Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.
Accounting is done with two methods as follows:
Cash Basis accounting:
Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated.
Accrual Basis accounting:
Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period.
To Indicate:
The treatment of employee vacation pay
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Chapter 8 Solutions
Survey of Accounting (Accounting I)
- help me to solve this questionsarrow_forwardThe standard cost of Wonder Walkers includes 3 units of direct materials at $9.00 per unit. During July, the company buys 40,000 units of direct materials at $8.25 and uses those materials to produce 15,000 units. Compute the total, price, and quantity variances for materials.arrow_forwardBranson paid $465,000 cash for all of the outstanding common stock of Wolfpack, Incorporated, on January 1, 2023. On that date, the subsidiary had a book value of $340,000 (common stock of $200,000 and retained earnings of $140,000), although various unrecorded royalty agreements (10-year remaining life) were assessed at a $100,000 fair value. Any remaining excess fair value was considered goodwill. In negotiating the acquisition price, Branson also promised to pay Wolfpack's former owners an additional $50,000 if Wolfpack's income exceeded $120,000 total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability-adjusted present value of this contingent consideration at $35,000. On December 31, 2023, based on Wolfpack's earnings to date, Branson increased the value of the contingency to $40,000. During the subsequent two years, Wolfpack reported the following amounts for income and dividends: Dividends Declared Year Net Income $ 65,000…arrow_forward
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