solution to ch04Word格式.docx
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solution to ch04Word格式.docx
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4-10No.Thecurrentratiodoesnotgiveanyinformationaboutprofitability.Itisameasureofsolvency.Measuresofprofitabilityincludethegrossprofitpercentage,returnonsales,andreturnonstockholders’equity.
4-11No.Excessworkingcapitalisnotgood.Inthe1990smanycompaniesmadegreateffortstoreducetheircurrentassets,particularlytheirinventories.Thisfreedupcapitaltouseforotherinvestmentactivities.Formerly,manycompaniestriedtokeepapositivelevelofworkingcapital,buttodaymorecompaniesareaimingatzero,orsometimesevenslightlynegative,workingcapital.
4-12Asingle-stepstatement,unlikeamultiple-stepstatement,doesnotclassifyexpensesintovariousgroups.Therefore,itdoesnothavesubtotalssuchasgrossprofitandoperatingincome.
4-13Interestexpenseisacostoffinancingratherthanofoperating.
4-14Yes."
Expenses"
wouldbeanadequatedescriptionbecausethe"
costs"
listedontheincomestatementare"
expiredcosts,"
suchas"
costofsales,"
andthusarereallyexpensesofthecurrentperiod.
4-15Threepopularratiosformeasuringprofitabilityare:
grossprofitpercentage=grossprofit÷
sales,returnonsales=netincome÷
sales,andreturnonstockholders'
equity=netincome÷
averagestockholders'
equity.
4-16No.Whileitistruethatcomputersoftwarecompaniesgenerallyhaveamuchhighergrossprofitpercentagethandogrocerystores,thatdoesnotmakethemmoreprofitableforinvestors.Softwarecompanieshavealargerpercentageoftheircostsinresearchanddevelopmentandsalesandmarketing,whilegrocerystoreshavealargerpercentageincostofgoodssold.Bothcategoriesofexpenseaffectprofitability.Grossmarginpercentagemeasuresonlyoneaspectofprofitability,revenueslesscostofgoodssold,andtotalprofitabilitycannotbeassessedwithouttakingintoaccountallexpenses.
4-17GAAPmeansgenerallyacceptedaccountingprinciples.FASBmeansFinancialAccountingStandardsBoard.SECmeanstheSecurities&
ExchangeCommission.APBmeansAccountingPrinciplesBoard.
4-18TheIASBsetsinternationalaccountingstandards.Itseeksharmonizationofaccountingstandardsthroughouttheworld.Itsstandardsarevoluntary,buttheyarehavinganincreasinginfluenceoverfinancialreportingpractices.
4-19Goingconcern,alsocalledcontinuity,istheideaorconceptthatassumesthatthebusinesswillcontinuetooperatelongenoughsothatlong-termassetswillbeusedasintendedandlong-termliabilitieswillbepaidwithfundsgeneratedbyoperations.
4-20Materialityistheideaorconceptthattheomissionormisstatementofanitem,ifrelativelylarge,wouldtendtomisleadtheuserofthefinancialstatements.Thismightresultinthesameamountbeingaccountedfordifferentlybylargeandsmallentities.
4-21Whatperiodisbeingaudited?
Whenitisfirstpaid,the$2,000istechnicallyprepaidrent.IffinancialstatementsarepreparedonDecember1,prepaidrentistoolowby$2,000,ifonDecember31,prepaidrentistoolowby$1,000andifonJanuary31,thebalanceinprepaidrentisproperlyzero.Ifprepaidrentistoolow,rentexpenseistoohigh.
4-22Therevenueontheitemshouldbe$100.Theremaining$900ofunredeemedgiftcertificatesshouldbeshownasaliabilitycalledunearnedrevenueorrevenuereceivedinadvance.Thecompanymightormightnotcalculategrossprofitseparatelyongiftcertificates.Theactualgrossmarginwoulddependonwhatitemsthegiftcertificatewasusedtoacquire.Maybepeoplereceivinggiftcertificateswilltendtoredeemcertaintypesofmerchandise,maybethestore–wideaveragegrossprofitmarginwillbeagoodestimate.Thecompanymightwanttocollectdataonthisissue.Somewouldclaimthegrossprofitmarginongiftcertificatesarehigherthanonothertransactionsbecauseinevitablysomecertificatesareneverredeemed.
4-23
Generallyacceptedaccountingprinciples(GAPP)arethosethatreceivedbroadagreementamongpreparersoffinancialstatements,usersoffinancialstatements,andregulators.Theyarenotsimplymandated.Abroadinclusiveprocessisusedtodecidewhatissuestoconsiderandtosolicitinputfromthosewhowillbeaffected.Thecost-benefitcriterionsaysthatoneshouldonlyintroduceorchangestandardswhenthebenefittotheusers,intermsofbetterinformationanddecisions,willexceedthecosts.Andwhatarethecosts?
Theyincludenotonlythedirectcostsofcollecting,preparing,anddisclosinginformation,butalsothecostoftrainingaffectedpartiestodosoandtraininguserstounderstandthenewinformation.TheprocessbywhichGAAPiscreatedleadstoanaturalinputofcostsandbenefitssothecost-benefitcriterionislikelytobemetwhennewelementsofGAAPareadopted.
4-24Thesuppliesaccountmightbeanassetaccount,oritmightbeanexpenseaccount.Eitherway,theimportantquestionishowmuchofthesuppliesremainunusedatyear-end.Theeasywaytofindoutistocounttheremainingitemsandcalculatetheircostfromtheoriginalpurchaseprice.Thatamountshouldbereportedinthebalancesheetasanassetandtheremaindershouldbereportedasanexpenseontheincomestatement.Inmanycompaniestheseareimmaterialandare,therefore,expensedimmediately.
4-25(5-10min.)
1.F2.F3.T4.F5.F6.T
4-26(10-15min.)
Trucano,TenantResing,Landlord
A=L+SEA=L+SE
Unearned
PrepaidRentRentRent
CashRentExpenseCashRevenueRevenue
1.–15,000+15,000=+15,000=+15,000
2.–5,000=–5,000=–5,000+5,000
3.–5,000=–5,000=–5,000+5,000
4.–5,000=–5,000=–5,000+5,000
Trucano:
Rentexpense5,000
Prepaidrent5,000
Resing:
Unearnedrentrevenue5,000
Rentrevenue5,000
4-27(10min.)
Kimberly-ClarkUnitedAirlines
A=L+SEA=L+SE
PrepaidUnearned
TravelTravelSalesSales
CashExpenseExpenseCashRevenueRevenue
1.Dec.–80,000+80,000=+80,000=+80,000
2.Feb.–80,000=–80,000=–80,000+80,000
Kimberly-Clark:
Travelexpense80,000
Prepaidtravelexpense80,000
UnitedAirlines:
Unearnedsalesrevenue80,000
Salesrevenue80,000
4-28(10-15min.)
1.and2.
Assets=Liabilities+Stockholders'
Equity
Accrued
WagesWages
CashPayableExpense
Sept.8–30,000=–30,000(increaseexpense)
Sept.15–36,000=–36,000(increaseexpense)
Sept.22–36,000=–36,000(increaseexpense)
Sept.29–36,000=–36,000(increaseexpense)
Sept.30=+18,000–18,000(increaseexpense)
Totals–138,000=+18,000–156,000*
*Asacheck,26daysx$6,000=$156,000wagesearnedbyemployeesduringSeptember.
2.September30Wagesexpense18,000
Accruedwagespayable18,000
4-29(10min.)
1.Wageexpense(orvacationpayexpense)32
Accruedvacationpay32
Torecordaccrualofvacationpay.
2.Accruedvacationpay1,600
Cash1,600
Torecordpaymentofvacationpay.
4-30(10-15min.)
JupiterCompanymadelessnetincome.Eachcompanymadethesameoperatingincome:
Company
JupiterSaturn
Sales$550,000$550,000
OperatingExpenses500,000500,000
Operatingincome$50,000$50,000
Interestexpense12,0000
Netincome$38,000$50,000
Eachcompanyusedthesameamountofassetsandincurredidenticalrevenuesandexpensesexceptforinterest.Theiroperatingmanagementproducedidenticaloperatingresults.However,theirfinancialmanagementemployeddifferentstrategies.Placinginterestbelowtheoperatingincomelineandnotmixingitwithotherexpenseshighlightsthedifferencebetweenthetwocompanies.
Optional:
Notethattherateofreturnonstockholders'
equityisbetterforJupiterCompanythanforSaturnCompany:
$38,000÷
$100,000=38%versus$50,000÷
$200,00
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