Question & Answer

“A worksheet is a permanent accounting record, and its use is required in the accounting cycle.” Do you agree? Explain.

Do all commercial borrowers receive the same interest rate on loans? (LO5)

What is the difference between external customers and internal customers in TQM?

What are the three basic steps in the glassworking sequence?

An integrated circuit used in a memory module contains 224 memory circuits. Sixteen of these integrated circuits are packaged onto a board to provide a 256 Mbyte memory module. Use Rent's rule, Eq. (34.11), with C = 6.0 and m = 0.12 to determine the approximate number of input/output pins required in each of the integrated circuits.

Balanced scorecard variances A large supermarket has used a balanced scorecard for several years. The store’s vision is to provide customers with low-cost goods and a high-quality shopping experience. The entity’s strategy has been to focus on reducing wait time for help on the floor and at the checkout counter. Information for the last two years follows.       Required (a)     Classify each performance measure according to one of the four balanced scorecard perspectives. (b)     Analyse the change in each performance measure from 2019 to 2024. Give one possible reason for the change. (c)     Which performance measures need further investigation? Explain. (d)     What do the balanced scorecard results suggest about the success of the entity’s strategy to reduce wait time? Explain. (e)     When an organisation focuses on one strategy, problems sometimes arise in other areas. Do the balanced scorecard results provide evidence of possible deterioration in any operational areas? Explain.

List three factors that managers might consider in deciding whether to expend resources to reduce spoilage.

Why does this argument make GNY a better indicator of development than GDP? (See the Appendix to Chapter 15.)

Explain the use of a prospectus developed before an IPO. Why does a firm do a road show before its IPO? What factors influence the offer price of stock at the time of the IPO? (LO3)

Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2014. 1. An aging schedule of the accounts receivable as of December 31, 2014, is as follows. % to Be Applied after Age Net Debit Balance Correction Is Made Under 60 days $172,342 1% 60–90 days 136,490 3% 91–120 days 39,924* 6% Over 120 days 23,644 $3,700 defi nitely uncollectible; $372,400 estimated remainder uncollectible is 25% *The $3,240 write-off of receivables is related to the 91-to-120 day category. 2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2014. 3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November 3, 2014, and a debit to Allowance for Doubtful Accounts because of a bankruptcy. 4. Allowance for Doubtful Accounts is as follows for 2014.   5. A credit balance exists in Accounts Receivable (60–90 days) of $4,840, which represents an advance on a sales contract. Instructions Assuming that the books have not been closed for 2014, make the necessary correcting entries

What are the mechanics whereby the central bank raises the rate of interest?

Cost function and assumptions Express Lunch is a small food van that sells a variety of sandwiches and beverages. Total fixed costs are $20 000 per month. Last month total variable costs were $8000 when total sales were $32 000.   Required (a)          Write out the algebraic expression for the cost function. (b)          What assumptions do we make when we develop this cost function?

Compare the relative merits of targeting (a) the money supply; (b) the exchange rate; (c) the rate of inflation.

What led to the establishment of FDIC insurance? (LO2)

Apple Union (AU), a C corporation with a March 31 year-end, uses the accrual method of accounting.  If AU elects to be taxed as an S corporation, what will its year-end and method of accounting be (assuming no special elections)?

Suppose you asked your favorite AI learning tool “For purposes of §351, what constitutes property?” and the AI tool responded as follows: Is the AI response correct?  Explain.

On what form does an S corporation report its income to the IRS?  When is the tax return due?  What information does the S corporation provide to shareholders to allow them to complete their tax returns?

What is goodwill? What is a bargain purchase?

Summarise this last paragraph using symbols like those in Figure 1.7.

In writing a research memo, what types of facts should be included in the memo?

Direct and indirect costs; fixed, variable, and mixed costs Your sister turned her hobby into a small business called Glazed Over. She is a potter and manufactures and sells bowls that can be used for decoration or for birdbaths. She has one employee who works 40 hours a week no matter how many bowls are made. She has asked your advice in developing a cost function for the bowls so that she can estimate costs for the next period.   Required The following list of costs comes from your sister’s general ledger. Assume the cost object is an individual unit (i.e. bowl). Categorise each cost as direct or indirect (D or I), and as fixed, variable or mixed (F, V or M). (a) Employee wages (b) Clay used to make bowls (c) Depreciation on the kilns (d) Glaze (the finish painted on the bowls) (e) Brushes for the glaze (f) Electricity (g) Business licence (h) Advertising (i) Pottery studio maintenance (cost of weekly cleaning service) (j) Packing materials for the bowls

1. Draw a diagram with the same two countries and with the same production possibilities and exchange ratio as in Figure 24.5. But this time show how much would be imported and exported for each country if, after trade, the LDC consumes 500 million kilos of wheat. Fill the figures in on a table like Table 24.5. 2. If the opportunity cost ratio of wheat for cloth is 1/2 in the LDC, why is the slope of the production possibility curve 2/1? Is the slope of the production possibility curve always the reciprocal of the opportunity cost ratio? 3. Show (graphically) that, if the (pre-trade) opportunity cost ratios of the two countries were the same, there would be no gain from trade – assuming that the production possibility curves were straight lines and did not shift as a result of trade.

Assessing reward systems You are a remuneration consultant employed by a listed company to assess the CEO’s reward plan. The board is concerned that the CEO is overpaid in absolute terms and also when compared to other CEOs of major corporations.   Required How might you determine whether or not the reward plan is appropriate? (LO2, 3 and 5)

Would you expect a bank to charge a higher rate on a term loan or a highly leveraged transaction (HLT) loan? Why? (LO3)

Teri Hatcher Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2013. Book Basis Tax Basis Equipment (net) $400,000 $340,000 Estimated warranty liability $200,000 $ –0– It is estimated that the warranty liability will be settled in 2014. The difference in equipment (net) will result in taxable amounts of $20,000 in 2014, $30,000 in 2015, and $10,000 in 2016. The company has taxable income of $520,000 in 2013. As of the beginning of 2013, the enacted tax rate is 34% for 2013–2015, and 30% for 2016. Hatcher expects to report taxable income through 2016. Instructions (a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013. (b) Indicate how deferred income taxes will be reported on the balance sheet at the end of 2013.