XACC 280 Week 1 Assignments
E1-1 Urlacher Company performs the following accounting tasks during the year.
_____ Analyzing and interpreting information.
_____ Classifying economic events.
_____ Explaining uses, meaning, and limitations of data.
_____ Keeping a systematic chronological diary of events.
_____ Measuring events in dollars and cents.
_____ Preparing accounting reports.
_ ___ Reporting information in a standard format.
____ Selecting economic activities relevant to the company.
_____ Summarizing economic events.
Accounting is “an information system that identifies, records, and communicates the economic events of an organization to interested users.”Instructions Categorize the accounting tasks performed by Urlacher as relating to either the identification (I), recording (R), or communication (C) aspects of accounting.
E1-2 (a) The following are users of financial statements.
______Securities and Exchange Commission
______Internal Revenue Service
______Vice-president of finance
Identify the users as being either external users or internal users.
(b) The following questions could be asked by an internal user or an external user.
______Can we afford to give our employees a pay raise?
______Did the company earns a satisfactory income?
______Do we need to borrow in the near future?
______How does the company’s profitability compare to other companies?
______What does it cost us to manufacture each unit produced?
______Which product should we emphasize?
______Will the company be able to pay its short-term debts?
Instructions: Identify each of the questions as being more likely asked by an internal user or an external user.
E1-3 Larry Smith, president of Smith Company, has instructed Ron Rivera, the head of the accounting department for Smith Company, to report the company’s land in thecompany’s accounting reports at its market value of $170,000 instead of its cost of $100,000. Smith says, “Showing the land at $170,000 will make our company look like a better investment when we try to attract new investors next month.”
Instructions: Explain the ethical situation involved for Ron Rivera, identifying the stakeholders and the alternatives.
E1-4 The following situations involve accounting principles and assumptions.
1. Grossman Company owns buildings that are worth substantially more than they originally cost. In an effort to provide more relevant information, Grossman reports the buildings at market value in its accounting reports.
2. Jones Company includes in its accounting records only transaction data that can be expressed in terms of money.
3. Caleb Borke, president of Caleb’s Cantina, records his personal living costs as expenses of the Cantina.
Instructions: For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.
E1-5 Meredith Cleaners has the following balance sheet items.
Instructions: Classify each item as an asset, liability, or stockholders’ equity.