Question & Answer

What are the problems of relying on automatic fiscal stabilisers to ensure a stable economy at full employment?

What is wave soldering?

What is a partnership interest, and what specific economic rights or entitlements are included with it?

There are 27 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, andeach additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 11.1 Which one of the following casting processes is the most widely used: (a) centrifugal casting, (b) die casting, (c) investment casting, (d) sand casting, or (e) shell casting? 11.2 In sand casting, the volumetric size of the pattern is (a) bigger than, (b) same size as, or (c) smaller than the cast part? 11.3 Silica sand has which one of the following compositions: (a) Al2O3, (b) SiO, (c) SiO2, or (d) SiSO4? 11.4 For which one of the following reasons is a green mold named: (a) green is the color of the mold, (b) moisture is contained in the mold, (c) mold is cured, or (d) mold is dry? 11.5 Given that Wm = weight of the molten metal displaced by a core and Wc = weight of the core, the buoyancy force is which one of the following: (a) downward force = Wm + Wc, (b) downward force = Wm - Wc, (c) upward force = Wm + Wc, or (d) upward force = Wm - Wc? 11.6 Which of the following casting processes are expendable mold operations (four correct answers): (a) centrifugal casting, (b) die casting, (c) investment casting, (d) low pressure casting, (e) sand casting, (f) shell molding, (g) slush casting, and (h) vacuum molding? 11.7 Shell molding is best described by which one of the following: (a) casting operation in which the molten metal has been poured out after a thin shell has been solidified in the mold, (b) casting process in which the mold is a thin shell of sand bonded by a thermosetting resin, (c) sand-casting operation in which the pattern is a shell rather than a solid form, or (d) casting operation used to make artificial sea shells? 11.8 Investment casting is also known by which one of the following names: (a) fast-payback molding, (b) full-mold process, (c) lost-foam process, (d) lost-pattern process, or (e) lost-wax process? 11.9 In plaster mold casting, the mold is made of which one of the following materials: (a) Al2O3, (b) CaSO4-H2O, (c) SiC, or (d) SiO2? 11.10 Which of the following qualifies as a precision-casting process (two correct answers): (a) ingot casting, (b) investment casting, (c) plaster-mold casting, (d) sand casting, and (e) shell molding? 11.11 Which of the following casting processes are permanent mold operations (three correct answers): (a) centrifugal casting, (b) die casting, (c) expanded polystyrene process, (d) sand casting, (e) shell molding, (f) slush casting, and (g) vacuum molding 11.12 Which of the following metals would typically be used in die casting (three best answers): (a) aluminum, (b) cast iron, (c) steel, (d) tin, (e) tungsten, and (f) zinc? 11.13 Which of the following are advantages of die casting over sand casting (four best answers): (a) better surface finish, (b) closer tolerances, (c) higher melting temperature metals, (d) higher production rates, (e) larger parts can be cast, and (f) mold can be reused? 11.14 Cupolas are furnaces used to melt which of the following metals (one best answer): (a) aluminum, (b) cast iron, (c) steel, or (d) zinc? 11.15 A misrun is which one of the following defects in casting: (a) globules of metal becoming entrapped in the casting, (b) metal is not properly poured into the downsprue, (c) metal solidifies before filling the cavity, (d) microporosity, and (e) \"pipe\" formation? 11.16 Which one of the following casting metals is most important commercially: (a) aluminum and its alloys, (b) bronze, (c) cast iron, (d) cast steel, or (e) zinc alloys?

Why is it difficult to test the assumption that firms seek to maximise long-run profits?

The controller for Lafayette Inc. recently commented, “If I have to disclose our segments individually, the only people who will gain are our competitors and the only people that will lose are our present stockholders.” Evaluate this comment.

Tiger Corporation reported taxable income of $500,000 from operations this year.  During the year, the company made a distribution of land to its sole shareholder, Mike Fairway. The land’s fair market value was $75,000 and its tax and E&P basis to Tiger was $125,000. Mike assumed a mortgage attached to the land of $15,000. Tiger had accumulated E&P of $750,000 at the beginning of the year.

Hanson Company (see BE10-2) borrowed $1,000,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 5-year, $2,000,000 note payable and an 11%, 4-year, $3,500,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes.

What is the difference between favorable and unfavorable book-tax differences?

On January 1, 2014, Acker Inc. had the following balance sheet. ACKER INC. BALANCE SHEET AS OF JANUARY 1, 2014 Assets Equity Cash $ 50,000 Common stock $260,000 Equity investments (available-for-sale) 240,000 Accumulated other comprehensive income 30,000 Total $290,000 Total $290,000 The accumulated other comprehensive income related to unrealized holding gains on available-for-sale securities. The fair value of Acker Inc.’s available-for-sale securities at December 31, 2014, was $190,000; its cost was $140,000. No securities were purchased during the year. Acker Inc.’s income statement for 2014 was as follows. (Ignore income taxes.) ACKER INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 Dividend revenue $ 5,000 Gain on sale of investments 30,000 Net income $35,000 Instructions (Assume all transactions during the year were for cash.) (a) Prepare the journal entry to record the sale of the available-for-sale securities in 2014. (b) Prepare a statement of comprehensive income for 2014. (c) Prepare a balance sheet as of December 31, 2014.

Explain how the conversion of a securities firm to a bank holding company (BHC) structure might reduce its risk. (LO2)

1.       : In response to security threats in today’s world, the U.S. government has federalized airport security workers. Many argued that simply making screeners federal workers would not solve the root problem: Bored, low-paid, and poorly trained security workers have little motivation to be vigilant. How might these employees be motivated to provide the security that travel threats now demand?

The following letter was sent to the SEC and the FASB by leaders of the business community. Dear Sirs: The FASB has been struggling with accounting for derivatives and hedging for many years. The FASB has now developed, over the last few weeks, a new approach that it proposes to adopt as a final standard. We understand that the Board intends to adopt this new approach as a final standard without exposing it for public comment and debate, despite the evident complexity of the new approach, the speed with which it has been developed and the significant changes to the exposure draft since it was released more than one year ago. Instead, the Board plans to allow only a brief review by selected parties, limited to issues of operationality and clarity, and would exclude questions as to the merits of the proposed approach. As the FASB itself has said throughout this process, its mission does not permit it to consider matters that go beyond accounting and reporting considerations. Accordingly, the FASB may not have adequately considered the wide range of concerns that have been expressed about the derivatives and hedging proposal, including concerns related to the potential impact on the capital markets, the weakening of companies’ ability to manage risk, and the adverse control implications of implementing costly and complex new rules imposed at the same time as other major initiatives, including the Year 2000 issues and a single European currency. We believe that these crucial issues must be considered, if not by the FASB, then by the Securities and Exchange Commission, other regulatory agencies, or Congress. We believe it is essential that the FASB solicit all comments in order to identify and address all material issues that may exist before issuing a final standard. We understand the desire to bring this process to a prompt conclusion, but the underlying issues are so important to this nation’s businesses, the customers they serve and the economy as a whole that expediency cannot be the dominant consideration. As a result, we urge the FASB to expose its new proposal for public comment, following the established due process procedures that are essential to acceptance of its standards, and providing sufficient time to affected parties to understand and assess the new approach. We also urge the SEC to study the comments received in order to assess the impact that these proposed rules may have on the capital markets, on companies’ risk management practices, and on management and financial controls. These vital public policy matters deserve consideration as part of the Commission’s oversight responsibilities. We believe that these steps are essential if the FASB is to produce the best possible accounting standard while minimizing adverse economic effects and maintaining the competitiveness of U.S. businesses in nthe international marketplace. Very truly yours, (This letter was signed by the chairs of 22 of the largest U.S. companies.) Instructions Answer the following questions. (a) Explain the “due process” procedures followed by the FASB in developing a financial reporting standard. (b) What is meant by the term “economic consequences” in accounting standard-setting? (c) What economic consequences arguments are used in this letter? (d) What do you believe is the main point of the letter? (e) Why do you believe a copy of this letter was sent by the business community to influential members of the U.S. Congress?

At a recent meeting of the accounting staff in your company, the controller raised the issue of using present value techniques to conduct impairment tests for some of the company’s fixed assets. Some of the more senior members of the staff admitted having little knowledge of present value concepts in this context, but they had heard about a FASB Concepts Statement that may be relevant. As the junior staff in the department, you have been asked to conduct some research of the authoritative literature on this topic and report back at the staff meeting next week. Instructions If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and access the FASB Statements of Financial Accounting Concepts. When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following items. (Provide paragraph citations.) (a) Identify the recent concept statement that addresses present value measurement in accounting. (b) What are some of the contexts in which present value concepts are applied in accounting measurement? (c) Provide definitions for the following terms: (1) Best estimate. (2) Estimated cash flow (contrasted to expected cash flow). (3) Fresh-start measurement. (4) Interest methods of allocation.

Seles Corporation’s charter authorized issuance of 100,000 shares of $10 par value common stock and 50,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of stock were completed. Each transaction is independent of the others. 1. Issued a $10,000, 9% bond payable at par and gave as a bonus one share of preferred stock, which at that time was selling for $106 a share. 2. Issued 500 shares of common stock for equipment. The equipment had been appraised at $7,100; the seller’s book value was $6,200. The most recent market price of the common stock is $16 a share. 3. Issued 375 shares of common and 100 shares of preferred for a lump sum amounting to $10,800. The common had been selling at $14 and the preferred at $65. 4. Issued 200 shares of common and 50 shares of preferred for equipment. The common had a fair value of $16 per share; the equipment has a fair value of $6,500. Instructions Record the transactions listed above in journal entry form.

Two positions have normally been taken with respect to the recording of fixed manufacturing overhead as an element of the cost of plant assets constructed by a company for its own use: (a) It should be excluded completely. (b) It should be included at the same rate as is charged to normal operations. What are the circumstances or rationale that support or deny the application of these methods?

In blanking of a circular sheet-metal part, is the clearance applied to the punch diameter or the die diameter?

If the central bank targets real national income rather than inflation, what will be the shape of the MP curve?

Is the assumption of rational expectations on its own sufficient for anticipated demand shocks to have no impact on economic activity even in the short run?

The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2014 and 2015. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2014, and that the initial LIFO base would have been the inventory value on December 31, 2013. Presented below are the company’s financial statements and other data for the years 2014 and 2015 when the FIFO method was employed. Financial Position as of 12/31/13 12/31/14 12/31/15 Cash $ 90,000 $130,000 $154,000 Accounts receivable 80,000 100,000 120,000 Inventory 120,000 140,000 176,000 Other assets 160,000 170,000 200,000 Total assets $450,000 $540,000 $650,000 Accounts payable $ 40,000 $ 60,000 $ 80,000 Other liabilities 70,000 80,000 110,000 Common stock 200,000 200,000 200,000 Retained earnings 140,000 200,000 260,000 Total liabilities and equity $450,000 $540,000 $650,000 Income for Years Ended 12/31/14 12/31/15 Sales revenue $900,000 $1,350,000 Less: Cost of goods sold 505,000 756,000 Other expenses 205,000 304,000 710,000 1,060,000 Income before income taxes 190,000 290,000 Income taxes (40%) 76,000 116,000 Net income $114,000 $ 174,000 Other data: 1. Inventory on hand at December 31, 2013, consisted of 40,000 units valued at $3.00 each. 2. Sales (all units sold at the same price in a given year): 2014—150,000 units @ $6.00 each 2015—180,000 units @ $7.50 each 3. Purchases (all units purchased at the same price in given year): 2014—150,000 units @ $3.50 each 2015—180,000 units @ $4.40 each 4. Income taxes at the effective rate of 40% are paid on December 31 each year. Instructions Name the account(s) presented in the financial statements that would have different amounts for 2015 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. Show computations.

Name the four forming processes listed in the video clip on sheet-metal stamping dies and processes

How many times is income from a C corporation taxed if a retirement fund is the owner of the corporation’s stock? Explain.

What are the accounting problems related to the presentation of interim data?

Use the information from BE7-2, assuming Restin Co. uses the net method to account for cash discounts. Prepare the required journal entries for Restin Co.

Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,600,000, or it can make annual payments of $300,000 for 15 years, each payment due on the last day of the year. Instructions Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period?