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Saturday, 10 August 2013

When a company makes expenditure; it can either capitalize or expense the cost, depending on the nature of the expenditure. What does it mean to capitalize expenditure? What determines whether expenditure can be capitalized?

When a company makes expenditure; it can either capitalize or expense the cost, depending on the nature of the expenditure. What does it mean to capitalize expenditure? What determines whether expenditure can be capitalized?
Answer
The expenditures made by the company in a given period of time can either be expense out or capitalized in that period. Capitalization of the expenditures means that the company is deferring the charging of the amount of the expense over a period of time. The main reason behind the capitalization of the expenditure is that the benefits associated with that expenditure is expected to be obtain over a certain period of time and on the basis of the matching principle, the expenses are charged to the period over which the revenue is generated by using that asset. The most famous example of the capitalization of the expenses is fixed assets and research & development expenses

The accrual basis of accounting recognizes expenses only when they are paid. True False

The accrual basis of accounting recognizes expenses only when they are paid.

True
False
Answer
False

The matching principle refers to the relationship between revenues and expenses. True False

The matching principle refers to the relationship between revenues and expenses.
True

False
Answer
True

The left-hand side of an account is used for recording debits and the right-hand side for recording credits. True False

The left-hand side of an account is used for recording debits and the right-hand side for recording credits.
True

False
Answer
True

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits recorded, but the number of debit and credit entries may differ. True False

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits recorded, but the number of debit and credit entries may differ.
True

False
Answer
True

Oct. 1 The clinic issued 4,000 additional shares of capital stock to Doctor Soges at $50 per share. Oct. 4 The clinic purchased diagnostic equipment. The equipment cost $75,000, of which $25,000 was paid in cash; a note payable was issued for the balance. Oct. 12 Issued a check for $9,000 in full payment of an account payable to Zeller Laboratories. Oct. 19 Purchased surgical supplies for $2,600. Payment is not due until November 28. Oct. 25 Collected a $24,000 account receivable from Health One Insurance Company. Oct. 30 Declared and paid a $300,000 cash dividend to stockholders. Record the above selected transactions in general journal form for Sun Orthopedic Clinic, Inc. (Omit the "$" sign in your response.) Date General Journal Debit Credit Oct. 1 Cash 200,000 Capital stock 200,000 4 Diagnostic equipment 75,000 Cash Notes payable 12 Accounts payable 9,000 Cash 9,000 19 Surgical supplies 2,600 Accounts payable 2,600 25 Cash 24,000 Accounts receivable 24,000 30 Dividends 300,000 Cash 300,000 ________________________________________ eBook Links (3)


Oct.   1
The clinic issued 4,000 additional shares of capital stock to Doctor Soges at $50 per share.
Oct.   4
The clinic purchased diagnostic equipment. The equipment cost $75,000, of which $25,000 was paid in cash; a note payable was issued for the balance.
Oct. 12
Issued a check for $9,000 in full payment of an account payable to Zeller Laboratories.
Oct. 19
Purchased surgical supplies for $2,600. Payment is not due until November 28.
Oct. 25
Collected a $24,000 account receivable from Health One Insurance Company.
Oct. 30
Declared and paid a $300,000 cash dividend to stockholders.

  
Record the above selected transactions in general journal form for Sun Orthopedic Clinic, Inc. (Omit the "$" sign in your response.)
   
Date
General Journal
Debit
Credit
Oct. 1   
  Cash correct
200,000 correct   


       Capital stock correct

200,000 correct   




4   
  Diagnostic equipment correct
75,000 correct   


       Cash correct

 correct   

       Notes payable correct

 correct   




12   
  Accounts payable correct
9,000 correct   


       Cash correct

9,000 correct   




19   
  Surgical supplies correct
2,600 correct   


       Accounts payable correct

 2,600 correct   




25   
  Cash correct
24,000 correct   


       Accounts receivable correct

24,000 correct   




30   
  Dividends correct
300,000 correct   


       Cash correct

300,000 correct   


Identify the ways in which the information produced through the accounting cycle is used by a company's management and employees. (Select all that apply.) Evaluate the efficiency of operations. Establish accountability for assets and transactions. Preparation of financial statements. Help make business decisions. Maintain a documentary record of business activities. Make end-of-period adjustments. The Answer I highlight with Yellow. Thank YOU!


Identify the ways in which the information produced through the accounting cycle is used by a company's management and employees. (Select all that apply.)


correct
  
Evaluate the efficiency of operations.
correct
  
Establish accountability for assets and transactions.
  
  
Preparation of financial statements.
correct
  
Help make business decisions.
correct
  
Maintain a documentary record of business activities.
  
  
Make end-of-period adjustments.

The Answer I highlight with Yellow.


Thank YOU!

According to the Sarbanes-Oxley Act of 2002, internal controls must be audited by the same accounting firm that audits the financial statements. True False

According to the Sarbanes-Oxley Act of 2002, internal controls must be audited by the same accounting firm that audits the financial statements.
True

False
Answer
True

Two positive point charges are held in place, 0.92 m apart. They are then moved so that their electric potential energy doubles. What is the new separation between the charges?

0.46 m

The electric potential energy of the system is given by

U = k*q1*q2/r

k, q1 and q2 are fixed, so we can only change r, and as U is inversely proportional to r we need to halve r to double U.

The two ways that a corporation can be classified by ownership are a. publicly held and privately held. b. stock and non-stock. c. inside and outside. d. majority and minority

The two ways that a corporation can be classified by ownership are



a. publicly held and privately held.

b. stock and non-stock.

c. inside and outside.

d. majority and minority
Answer
a. publicly held and privately held.

A dividend is equal to assets minus stockholders' equity. equal to revenues less expenses. a distribution of the company's earnings to its stockholders. equal to liabilities minus stockholders' equity.

A dividend is
  equal to assets minus stockholders' equity.

  equal to revenues less expenses.

  a distribution of the company's earnings to its stockholders.

  equal to liabilities minus stockholders' equity.
Answer
a distribution of the company's earnings to its stockholders.

If services are rendered for credit, then liabilities will increase. liabilities will decrease. assets will decrease. stockholders' equity will increase.

If services are rendered for credit, then
  liabilities will increase.

  liabilities will decrease.

  assets will decrease.

  stockholders' equity will increase
Answer
stockholders' equity will increase.

The origins of accounting are generally attributed to the work of a. Leonardo da Vinci. b. Abner Doubleday. c. Luca Pacioli. d. Christopher Columbus.

The origins of accounting are generally attributed to the work of
a.   Leonardo da Vinci.

 b.  Abner Doubleday.

 c.  Luca Pacioli.

 d.  Christopher Columbus.

Answer
c.
Luca Pacioli.

The statement of cash flows for Apple Inc. contained the following information (in millions) for the year ended September 27, 2008: Operating Activities Net Income $ 4,834 Depreciation 473 Changes in current assets and current liabilities Accounts Receivable (785 ) Inventories (163 ) Accounts Payable 596 Unearned Revenue 5,642 Other adjustments (1,001 ) ________________________________________ ________________________________________ ________________________________________ Net Cash Provided by Operations $ 9,596 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Required: For each of the four current asset and liability accounts listed in the operating activities section of the statement of cash flows, determine whether the account balances increased or decreased during the period. Account Change Accounts Receivable Increase Inventories Increase Accounts Payable Increase Unearned Revenue Increase ________________________________________


The statement of cash flows for Apple Inc. contained the following information (in millions) for the year ended September 27, 2008:

 
Operating Activities



  Net Income
$
4,834

  Depreciation

473

  Changes in current assets and current liabilities



       Accounts Receivable

(785
)
       Inventories

(163
)
       Accounts Payable

596

       Unearned Revenue

5,642

       Other adjustments

(1,001
)




  Net Cash Provided by Operations
$
9,596










Required:
For each of the four current asset and liability accounts listed in the operating activities section of the statement of cash flows, determine whether the account balances increased or decreased during the period.
 
Account
Change
  Accounts Receivable
Increase correct  
  Inventories
Increase correct  
  Accounts Payable
Increase correct  
  Unearned Revenue
Increase correct