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Accounting Information For Business Decisions 2nd Edition Billie Cunningham, Loren A. Nikolai, John Bazley, Marie Kavanagh, Geoff Slaughter, Sharelle Simmons - Solutions
In each of the following situations, the total increase or decrease for one component of the accounting equation is missing.i Assets increased by \(\$ 20800\); liabilities increased by \(\$ 6400\)ii Liabilities decreased by \(\$ 4000\); owner's equity increased by \(\$ 20000\)iii Assets decreased
The total increase or decrease for one component of the accounting equation is missing in each situation.i Assets decreased by \(\$ 30000\); liabilities decreased by \(\$ 19500\)ii Owner's equity decreased by \(\$ 37250\); assets decreased by \(\$ 22500\)iii Liabilities increased by \(\$ 3000\);
Here are the balances of selected accounts of the Ocean Walk Tours at the end of the current year:Required:Prepare the current assets section of the Ocean Walk Tours balance sheet. Equipment Prepaid insurance Notes payable (due in 30 days) Cash Land Accounts receivable (net) Inventory Mortgage
These are the balances of selected accounts of the Reilly Shoes Store at the end of the current year:Required:Prepare the current liabilities section of the Reilly Shoes Store at the end of the current year. Notes receivable (due in 3 years) Accounts payable Bonds payable (due in 5 years) Land $14
A classified balance sheet contains the following sections:Required:This is a list of accounts. Using the letters A to F, indicate in which section each account is shown. A Current assets B Long-term investments C Property and equipment D E FL Current liabilities Non-current liabilities Owner's
Here is an alphabetical list of the accounts of G. Marguerite on 31 December 20X1.Required:Prepare a 31 December 20Xl classified balance sheet (without amounts) for G. Marguerite. Accounts payable Accounts receivable Administrative expenses Bonds payable (due 20X8) Buildings (net) Cash Cost of
The financial statement information of the Luxury Travel Goods Business for 20X1 and 20X2 is as follows.Required:Fill in the letters (a)-(g). All the necessary information is given. (Hint: It is not necessary to find the answers in alphabetical order.) Assets, 31/12 Expenses Net income Liabilities,
The financial statement information of the Marshall Insurance Brokers for 20X1 and 20X2 is shown.Required:Fill in the letters (a)-(g). All the necessary information is given. (Hint: It is not necessary to find the answers in alphabetical order.) Charles, capital, 31/12 Charles, withdrawals Revenues
The balance sheet information at the end of 20X1 and 20X2 for the Wentworth Catering Business is as follows.Required:Fill in the letters (a)-(f). All the necessary information is given. (Hint: It is not necessary to find the answers in alphabetical order.) Current assets Non-current liabilities
The balance sheet information at the end of 20X1 and 20X2 for Western Fire Safety is as follows.Required:Fill in the letters (a)-(h). All the necessary information is given. (Hint: It is not necessary to find the answers in alphabetical order.) Morris, capital Current liabilities Property and
The following items and their corresponding amounts appeared in the accounting records of the Booth Dental Practice on 31 December 20X1.Required:a Prepare a classified balance sheet for the Booth Dental Practice on 31 December 20X2.b The Booth Dental Practice is applying for a short-term loan at a
The following accounts and account balances were listed in the accounting records of the Lawrence Custom Carpenters on 31 December 20X1.Required:a Prepare a classified balance sheet for Lawrence Custom Carpenters on 31 December 20X1.b The Lawrence Custom Carpenters is applying for a \(\$ 3000\)
The No-Worries Lawn Mower Business owned by Fred Rainbird has the following condensed balance sheet on 31 December 20X1.The business' quick assets are 60 per cent of its current assets.Required:Calculate the business' working capital and its current, quick and debt ratios at the end of 20X1.
Reiner Business reported net income of \(\$ 97750\) for 20X2. Interest expense of \(\$ 6000\) was deducted in the calculation of this net income. The schedule shows other information about the business' capital structure.Required:a Calculate the return on total assets for 20X2.b Calculate the
ABC Optical began 20X1 with accounts receivable of \(\$ 44800\) and inventory of \(\$ 56000\). During \(20 \mathrm{X} 1\) the business made total net sales of \(\$ 840000\), of which 70 per cent were credit sales. The business' cost of goods sold averaged 60 per cent of total net sales during 20X1.
A friend of yours makes this statement: 'Accumulated depreciation and depreciation expense are the same thing, since they both measure the portion of the cost of an asset that has been 'used up' to earn revenues.'Required:Do you agree or disagree with your friend's statement? Support your answer.
Many long-term loans are payable over a period of time. For example, when a business takes out a mortgage to finance a building, it pays off a fraction of that mortgage every month.Required:What criteria would you use to decide whether to classify the mortgage as a current liability or a long-term
In this chapter, we said that the quick ratio is a better measure of liquidity than is the current ratio because the quick ratio includes only those current assets that may be easily converted to cash. Required:What is the quick ratio? Do you think this is the best possible measure of liquidity? If
On 8 March 20X1, Tim Hunt started his own business by depositing \(\$ 20000\) in the Hunt Business cheque account at the local bank. On 14 March 20X1, the Hunt Business cheque book was stolen. During that time the Hunt Business had entered into several transactions but, unfortunately, it had not
The following items appear (in millions) on the 28 June 20X1 financial statements of Global Exports Ltd.On 29 June 20X1 Global Exports had accounts receivable of \(\$ 6082.8\) million and inventory of \(\$ 6460.8\) million. Suppose that in February 20X2, Global Exports wants to arrange with its
Thomas Bradshaw is thinking about starting his own business, Bradshaw Sports. At the beginning of October 20X1, he plans to invest \(\$ 30000\) into the business. During October the business will purchase land, a small building to house the business, office equipment and supplies. Thomas has found
Today is 1 January 20X2. Last night you were at a New Year's Eve party at which you ran into a long-lost friend, Gail Quigley, the owner of Quigley Mechanical. In conversation, Gail mentioned that her business would like to borrow \(\$ 50000\) from you now and repay you \(\$ 60000\) at the end of
Wasim Raine owns and operates a printery service called Raine's Paper and Office. It is the end of the year, and his bookkeeper has resigned. Knowing only a little about accounting, Wasim prepared the following financial statements based on the ending balances in the business' accounts on 31
The following are a condensed 20X1 income statement and a 31 December 20X1 balance sheet for Franklin Business.On 1 January 20X1 the accounts receivable were \(\$ 8470\), the inventory was \(\$ 15330\), the total assets were \(\$ 154000\) and the owner's capital was \(\$ 87640\). The business makes
Outback Retreat Ltd reports GST quarterly using the accrual method. As at the 30 June 20X1 Outback Retreat Ltd has net sales for the June quarter of \(\$ 100100\) which including GST; purchases of \(\$ 42900\) including GST; and PAYG withholding tax of \(\$ 10140\) based on salaries of \(\$
Potts Business reports GST quarterly using the cash method. As at 30 June 20X1 Potts Business has net cash sales for the June quarter of \(\$ 57000\) which includes GST; cash purchases of \(\$ 14850\) including GST; and PAYG withholding tax of \(\$ 1275\) based on salaries of \(\$ 4500\). Capital
What is a cash flow statement, and what types of questions can a user answer by studying a business' cash flow statement?
Write out a cash flow equation that links the beginning and the ending cash balances.
What three types of transactions related to balance sheet items may cause cash inflows? Give an example of each.
What three types of transactions related to balance sheet items may cause cash outflows? Give an example of each.
Identify the three sections of a business' cash flow statement, and briefly explain what is included in each section.
How is the net cash provided by operating activities determined under the direct method?
What are the three categories of operating cash inflows under the direct method?
What are the four categories of operating cash outflows under the direct method?
Describe how to calculate a business' collections from customers during an accounting period, based on an analysis of its income statement and its beginning and ending balance sheets.
Describe how to calculate a business' payments to employees during an accounting period, based on an analysis of its income statement and its beginning and ending balance sheets.
Describe how to calculate a business' payments to suppliers during an accounting period, based on an analysis of its income statement and its beginning and ending balance sheets.
How is the operating cash flow margin of a business computed, and what does it describe?
How is the cash return on total assets of a business computed, and what does it measure?
How is the cash return on owner's equity of a business computed, and what does it measure?
(Appendix) How does a business determine its net cash provided by operating activities under the indirect method?
(Appendix) Identify the steps a business completes under the indirect method to calculate its net cash provided by operating activities.
These are transactions and activities of a business:a Receipt from sale of building b Withdrawal by owner c Decrease in accounts receivable d Payment for purchase of investment e Receipt from issuance of long-term note payable f Payment for purchase of inventory.Required:Indicate in which section
The following are transactions and activities of a business:a Cash sales b Decrease in accounts payable c Payment for purchase of equipment d Investment by owner e Payment of long-term note payable f Receipt from selling investment.Required:Indicate in which section of the business' cash flow
The following is selected information taken from the Cash account of Steven Steel Business for June:a Cash sales, \(\$ 20000\)b Payment of interest, \(\$ 1200\)c Payment for inventory, \(\$ 2000\)d Collection of accounts receivable, \(\$ 4000\)e Payments to employees, \(\$ 10000\)f Collection of
Water Ski Business has the following information in its Cash account for July:a Paid employees \(\$ 9000\)b Paid suppliers \(\$ 4000\)c Made cash sales of \(\$ 22000\)d Collected \(\$ 1600\) interest e Paid \(\$ 1000\) interest f Collected \(\$ 10000\) of accounts receivable.Required:Using the
This list of items is to be included in the cash flow statement of the Brockman Lawn Sprinklers Business for the current year:a Payment for purchase of trenching equipment, \(\$ 6000\)b Payments to suppliers, \(\$ 3200\)c Receipt from sale of land, \(\$ 1000\)d Collections from customers, \(\$
The items to be included in the Nadine's Giftware Business' cash flow statement for the current year are:a Investment by owner, \(\$ 6000\)b Payments to employees, \(\$ 16200\)c Receipt from sale of investments, \(\$ 2600\)d Ending cash balance, \(\$ 14600\)e Payments for inventory, \(\$ 12000\)f
An analysis of the Toney Business' Cash account for September shows these entries:a Beginning cash balance, \(\$ 800\)b Collections from customers, \(\$ 21500\)c Payment for purchase of storage shed, \(\$ 9500\)d Investment by owner, \(\$ 5000\)e Payment to suppliers, \(\$ 12800\)f Collection of
The Fredette Business' Cash account shows the following entries for April:a Beginning cash balance, \(\$ 800\)b Receipt from issuance of note, \(\$ 20000\)c Payment of interest on loan, \(\$ 1800\)d Payment for purchase of sales fixtures, \(\$ 3600\)e Collections from customers, \(\$ 66800\)f Owner
Among other items, the Andy's Business' income statement for the year shows sales revenue of \(\$ 156000\), cost of goods sold of \(\$ 92600\) and salaries expense of \(\$ 24400\). An analysis of its beginning and ending balance sheets for the year shows an increase in accounts receivable of \(\$
While reviewing the Taber Business' income statement for the year, you find that it had sales of \(\$ 81500\), cost of goods sold of \(\$ 50000\) and wages expense of \(\$ 30200\). A review of its beginning and ending balance sheets shows a decrease in accounts receivable of \(\$ 3400\), an
Thorpe Business' 20Xl cash flow statement as developed by its bookkeeper is given.You determine that the amounts of the items listed on the statement are correct but are incorrectly classified.Required:Prepare a correct 20Xl cash flow statement for Thorpe Business. Cash Inflows: Receipt from sale
The cash flow statement information of the Fairview Flowers Shop for 20X1 is below.Required:Fill in the letters (a)-(e). All the necessary information is given. (Hint: It is not necessary to find the answers in alphabetical order.) Net cash provided by operating activities Cash, 1 January 20X1
The cash flow statement information of the Bray Tyre Company for 20X1 is below.Required:Fill in the letters (a)-(e). All the necessary information is given. (Hint: It is not necessary to find the answers in alphabetical order.) Net increase in cash Cash received from customers Receipt from sale of
Border Collie Business has asked for your assistance in preparing its cash flow statement for 20X3. Among other items, its 20X3 income statement shows sales revenue (net) of \(\$ 135000\), cost of goods sold of \(\$ 72000\) and salaries expense of \(\$ 36800\). You analyse its \(20 \mathrm{X} 3\)
You have been hired by Seeser Flappits Business to prepare its 20X2 cash flow statement. The business provides you with its 20X2 income statement.You determine that these numbers are correct. You review the business' 20X2 beginning and ending balance sheets and find that the cash balance was \(\$
In 20X2 Franklin Fibres Business had net cash provided by operating activities of \(\$ 9400\). A review of its \(20 \mathrm{X} 2\) financial statements shows that the business had net income of \(\$ 9000\), average total assets of \(\$ 93800\) and average owner's equity of \(\$ 50000\). Included in
Nibbets Baskets Business had net cash provided by operating activities of \(\$ 4300\) for \(20 \mathrm{X} 3\). The business' income statement showed sales (net) of \(\$ 40000\), interest expense of \(\$ 400\) and net income of \(\$ 4000\). Its \(20 \mathrm{X} 3\) beginning balance sheet listed
(Appendix) The following information is taken from the accounting records of Ward Business for the current year:Required:Using the indirect method, prepare the cash flows from the operating activities section of Ward's cash flow statement for the current year. Net income, $34 000 Increase in
(Appendix) In 20X3 Faldo Business earned net income of \(\$ 61000\). Included in the calculation of net income was \(\$ 12500\) of depreciation expense. During the year the business had these changes in its current assets and current liabilities:Required:a Using the indirect method, prepare the
(Appendix) During the current year, Nash's Business earned net income of \(\$ 56000\). Depreciation expense of \(\$ 11000\) was included in the calculation of net income. Nash's accounting records show the following beginning and ending balances in its current assets and current liabilities for the
The management of Pink Ltd is worried because the bank overdraft has increased by a substantial amount over the financial year ended 30 June 20X4 despite a large profit and the introduction of additional capital. The Balance Sheets as at 30 June 20X3 and 20X4 were as follows:The internal income
Now that you have begun studying accountancy, it seems as though everyone is coming to you for advice. Yesterday, your mother's friend Juanita asked you to explain what she'd read in the notes to recent financial statements of Simmons Department Stores: 'In 20X2, the Business generated \(\$ 199.1\)
The owner of Fine Cuisine (a business that publishes 'kitchen-tested' recipes) has come to your bank for a loan. He states, 'In each of the last two years our cash has gone down. This year we need to increase our cash by \(\$ 8000\) so that we have a \(\$ 20000\) cash balance at year-end. We have
Your friend Basil Nutt has come to you for advice. He says, 'I don't understand it. My business, Nutts and More, had a net income of \(\$ 4300\) in \(20 \mathrm{X} 2\) so I expected the balance in the business' cash account to go up. But the cash went down from \(\$ 8000\) to \(\$ 800\) ! The
These are pairs of ratios related to the income statement, the cash flow statement and the balance sheet.Required:For each of the above pairs of ratios, explain the similarities and the differences. Be sure to include an explanation of the interpretation of each ratio. a Profit Margin b Return on
Suppose, at a party, your friend Queenie mentioned to you, in confidence, that her business was in the middle of a big scandal. It seems that the business needed a loan in order to enter into a top-secret marketing effort. In preparing the financial statements necessary for securing the loan, the
On 1 January 20X3 Paula Randolph opened a boutique called P.R.'s Boutique. At that time she deposited \(\$ 30000\) cash in the business' cheque account. Paula then immediately wrote business cheques to purchase \(\$ 7000\) of inventory and \(\$ 16000\) of shop equipment, and to pay two years' rent
Jay Ryan owns Jay's Skateboard Shop, which he opened on 1 April 20X4. At that time Jay invested \(\$ 20000\) cash into the business. With this money the shop immediately purchased shop equipment for \(\$ 8000\). Jay estimated that this equipment would last ten years and would have no value after
Ava Mendleson operates a small fabric shop. She has been earning a satisfactory profit but is short of cash. Here is an accurate but unclassified balance sheet of the shop on 31 December 20X0.On 2 January 20Xl Ava went to her bank to get a loan for her business. The bank agreed to loan her \(\$
(Appendix) Refer to the information in 9.31 for the Seeser Flappits Business. In addition to this information, you find the following average ratio results in 20XI for similar companies in the same industry:Required:a Using the indirect method for operating cash flows, prepare Seeser Flappits
What is the meaning of the term 'greenwashing'?
What are the three components of the triple bottom line?
What is life cycle analysis (LCA) and why is it important for sustainable products and processes?
What is the eco-efficiency ratio formula?
Briefly discuss the relationship between product and service value and environmental influence.
Briefly explain what is meant by share percentage using recycling as an example.
How can project appraisal be used to evaluate the social and environmental aspects of investment alternatives?
Briefly outline the role of social accounting and its importance.
What is the GRI? Outline its key components.
What are the legislative requirements relating to sustainability reporting in Australia?
What are the thresholds for reporting under the National Greenhouse Emissions Reporting Legislation?
What does intergenerational equity mean?
Is sustainability in terms of a business all about environmental matters? Why or why not?
What is succession planning?
Why is succession planning important for small businesses?
What are the key benefits of material flow cost accounting and its major constraints?
Why is social cost benefit analysis important?
What is eco-balance and how is related to lifecycle analysis?
What is the difference between eco-efficiency and eco-balance?
Suppose you have \(\$ 100000\) to invest in the share market.a What company would you invest in and why using the triple bottom line to analyse company performance?b Would your decision differ if you only use financial performance to make your investment decision? Why or why not?
Consider the current ecological footprint of the Earth, where we currently need one-and-a-half planets to approach sustainability in terms of resource use. Given that the world's population will increase to an estimated \(9-10\) billion people by 2050 , what role can business play in reducing the
Corporate social responsibility (CSR) is described as the conscience of business. However, there is a vast difference in how businesses view CSR, with some undertaking activities that endanger the health of society and the environment to maximise profit. Why would a business choose profit over the
The triple bottom line encompasses economic, environmental and social sustainability. If we look carefully at each of these components, without the environment the economic and social system cannot function. If it can be argued that the environmental sustainability underpins economic and social
Consider the BP oil spill in the Gulf of Mexico in 2010. By the end of that year the costs associated with clean-up, compensation etc. had reached over US \(\$ 40\) billion dollars. While the financial costs are easy to measure, outline at least six (three for each) of the environmental and social
Explain the importance of life cycle analysis and how it can drive the development of sustainable products and services.
A manufacturing business that makes photocopiers has annual net sales of \(\$ 30\) million from selling 60000 photocopiers per year. As a part of its manufacturing process, it consumes 150000 kilograms of raw material inputs including plastic, aluminium, copper and purchased electronic
A large factory is considering the installation of warm air hand dryers in its toilets in place of paper towel dispensers. The factory has a total of ten sets of toilets and feels that while the hand driers operate on electricity, this will be offset by no longer having to purchase paper towels and
Given the following input and output data, prepare a simple material flow cost table. Pineapple Ltd manufactures a line of \(140 \mathrm{~cm}\) LCD televisions, producing 1000 of these televisions per week. The raw material inputs for each television are given below.Required:a What proportion of
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