PREPARE ACCOUNTING REPORTS FOR USERS.ADD QUESTION HEREESSAY 0 POINT...

5. Prepare accounting reports for users.

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Question What is the major difference between the objective of financial accounting and the objective of managerial accounting?

Answer

The objective of financial accounting is to provide information for the decision-making needs of external users. The objective of

managerial accounting is to provide information for internal users.

Question Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions.

Answer

Accounting reports would become unstable and unreliable.

Question On May 7, Carpet Barn Company offered to pay $95,000 for land that had a selling price of $110,000. On May 15, Carpet Barn accepted

a counteroffer of $103,000. On June 5, the land was assessed at a value of $120,000 for property tax purposes. On December 10, Carpet Barn

Company was offered $145,000 for the land by another company. At what value should the land be recorded in Carpet Barn Company’s records?

Answer

$103,000

Question Donner Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be

$120,000. The Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the

same day, another piece of land on the same block sold for $122,000. Under the cost concept, what is the amount that will be used to record this

transaction in the accounting records?

Answer

$115,000

Question Explain the meaning of the business entity concept.

Answer

The business entity concept limits the economic data in an accounting system to

data related directly to the activities of the business. In other words, the business

is viewed as an entity separate from its owners, creditors, or other businesses

Question Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using

cash that had been obtained from the initial investment by Donnie Darnell.

Which entity or entities (Darnell Company, Joseph Company, Donnie Darnell) should record the transaction involving the computer equipment on

their accounting records?

Answer

Darnell Company and Joseph Company

Question Explain the meaning of:

(a) the objectivity concept and

(b) the unit of measure concept

Answer

(a) The objectivity concept requires that the amounts recorded in the accounting records

be based on objective evidence. In exchanges between a buyer and a seller, both try to get the best price. Only the final agreed-upon

amount is objective enough to be recorded in the accounting records.

.

(b) The unit of measure concept requires that economic data be recorded in dollars. Money is a common unit of measurement for

reporting financial data and reports.

Question Doug Miller is the owner and operator of Miller’s Arcade. At the end of its accounting period, December 31, 2010, Miller’s Arcade has

assets of $450,000 and liabilities of $125,000. Using the accounting equation, determine the following amounts:

a)

Owner’s Equity as of December 31, 2010.

b)

Owner’s Equity as of December 31, 2011, assuming that assets increased by $65,000 and liabilities increased by $35,000 during