財務會計英語版課后答案

Chapter1

Page8

1.Classifyfollowingitemsaseitheranexpense(E),a

revenue(R),anasset(A),oraliability(L);Cash,buildings,

salariesofthesalesforce,$5owedtoacompanyforwork

performed,Mortgagetoabank,sales.

Answer：Cash-ABuildings-ASalariesof

thesalesforce-E

$5owed-LMortgagetoabank-LSales一R

2.Classifyeachofthefollowingasnoperating(O),bank(I),or

financing(F)inastatementofcashflows;Wagepaidto

workers,Cashreceivedformabankintheformofamortgage,

cashdividendspaidtoasupplierofinventory,Cashpaidto

purchaseanewmachine.

Answer：Wagepaid一OCashofmortgage—FCash

dividendspaid―F

Cashpaidtosupplierofinventory-OCashpaidto

purchaseamachine-I

Pagel1

1.Listseveraleconomicdecisionsthatrelyonaccounting

information.

Answer：

?Whethertograntaloan

?Howmuchtopayforashareofcommonstock.

?Whethertograntarateincreasetoanelectricutility

?Howmuchindamagestheloserofalawsuitmustpay

?Howmuchofabonustopayaplantmanager

?Whethertoenteranewmarket

2.Whydofinancialstatementshavefootnotes,andwhatkinds

ofinformationmightyoufindinthem?

Answer：

Financialstatementshavefootnotesbecausefinancial

disclosureisacomplexbusiness.Thenotestellussomeofthe

specificsaboutthecompanyenvironment,whataccounting

methodsthecompanyhasused,whattheaccountingnumbers

mightbeifalternativemethodshadbeenused,andsomeofthe

majorcontingenciesthatarenotformallyincludedinthe

statementproper.

Page20

1.Describetheprocessofsettingaccountingstandards.What

aretherolesofallthepartiesyoumention?

Answer：

TheFASB,aprivate,not-for-profitorganization.setsGAAPin

theU.S.Itpubliclydeclaresanagenda,promulgates"Exposure

Drafts"ofproposedstandards,holdsopenmeetings,andinvites

inputfrominterestedparties.TheFASBhasbeendelegatedthis

authoritybytheSEC,agovernmentagencywithlegalauthority

todetermineGAAP.

2.Thinkofanexample,liketheexecutivecompensation

exampleinthechapter,whereincentivesmightexisttobias

accountingnumbersonewayoranother.

Answer.

Thereareotherexamples,buthereisonethatisdifferent.A

taxpayerhasincentivestobiasreportedincomedownwardin

ordertominimizeincometaxpayments.However,itis

importanttounderstandthattaxaccountingrulesaredifferent

fromGAAP,andthisbookisaboutGAAP.Chapter14covers

GAAPfortaxesinmoredetail.

Otherexamplesinclude：

?Anentrepreneurseekingaloanfromabankorfundingfrom

aventurecapitalistmighthaveincentivestobiasaccounting

numberstolookfavorable.

?Afirmthatissubjecttoscrutinyforearningexcess

profits(e.g.,anoilcompany)mighthaveincentivestobias

accountingnumberstolooklessfavorable.

?Autilitysubjecttorateregulationmighthaveanincentiveto

biasaccountingnumberstolooklessfavorableinorderto

gainmoregenerousincreasesinitsrates.(Atthiswriting,

thereisaratherseverecontroversyaboutwhetherelectric

utilitiesinCaliforniaaregenuinelyinfinancialdifficulty

andshouldbeallowedtocontinuetoimposelargerate

increase.)

Chapter2

Page38

1Defineassets,liabilities,andequities.Gaveanexampleof

each.Howareassetsvalued?Howareliabilitiesvalued?

Answer.

Anassetisaprobablefutureeconomicbenefitobtainedor

controlledbyanentityasaresultofapasttransaction.Cash

marketablesecurities,accountsreceivable,inventories,prepaid

expenses,patents,copyrights,trademarks,andproperty,

plantandequipmentareallexamplesofassets.Aliabilityis

aprobablefuturesacrificeofeconomicbenefitsarising

frompresentobligationsofanentitytotransferassetsor

provideservicesasaresultofapasttransactionorevent.

Accountspayable,accruedliabilities,unearnedrevenues,

warranties,andbondspayableareallexamplesof

liabilities.Accountingvaluationofassetsusesseveral

differentmethods,includingmarketvalue,expected

realizablevalue,lowerofcostormarket,presentvalueof

futurecashflows,andhistoricalcost.Accountingvaluation

ofliabilitiesistheexpectedamountthatwillbepaid,

perhapsadjustedforthetimevalueofmoney.

2.Explainwhatismeantbytheentityconcept.

Answer.

Theentityisthepersonororganizationaboutwhich

accounting'sfinancialhistoryisbeingwritten.

3.Acompanysignsaten-yearemployeecontractwithavice

president.Thesalaryis$500000peryear,guaranteed.Is

thiscontractanasset?Woulditappearonthebalance

sheet?Explain.

Answer.

Therightsconveyedbythecontratmaybeanassetfroman

economicpointofview,buttheyarenotanassetunderGAAP.

Thecontractwouldnotappearonthebalancesheetasanasset,

becauseGAAPdoesnotrecordexecutorycontracts,whichare

contractsthatrequirefutureperformanceformbothparties.

Thatis.GAAPviewsthecontractasdeterminingwhatservices

willbeprovided,noassetisrecognizedunderGAAP.(Neitheris

aliabilityforpaymentrecognizeduntilserviceshavebeen

performed.)

4.Acompanypurchasedaparcelofland10yearsagoatacost

of$300000.Thelandhasrecentlybeenappraisedat$900000.

Atwhatvalueisthelandcarriedinthebalancesheet?How

doestheappraisalaffectthecarryingvalueinthebalance

sheet?

Answer.

Thelandisonthebalancesheetatitshistoricalcostof

$300000.Thecarryingvalueofthelandisunaffectedbythe

appraisal.

Page42

1、Definedebitandcredit.Whatkindofbalancedebitor

credit.wouldyouexpecttofindintheinventoryT-account?

IntheCommonStockT-account?

Answer.

AdebitisanentryontheleftsideofaT-account.Acreditisan

entryontherightsideofaT-account.Wewouldexcepttofind

adebitbalanceinInventory,andcreditbalancesinBonds

PayableandCommonStock.Thereasonistheconventionthat

increasesinassetsaredebitsandincreasesinliabilitiesand

equitiesarecredits.

2、Ifthetrialbalances,itmeansthatyouhaveanalyzedallthe

effectsoftransactionscorrectly.Trueorfalse?Explain.

Answer.

False.Abalancedmeansthatthetrialbalanceisconsistent,

notnecessarilycorrect.Forexample.Ifanarbitraryentryis

madethatdebitsCashandcreditsCommonStockforanequal

amount,thetrialbalancewillbalancebutitwillbewrong.An

accountingcanreceiptofcashandtheissuanceofcommon

stock,butitalonecannotmakecashoradditionalcommon

shares.

3、SupposeWebsellleasesaportionofitsspacetoanother

company.Websell'saccountsaredebitedandcreditedto

recordthistransaction?

Answer,

WebsellwoulddebitCashandaliability,RentReceivedin

Advance,fortheprepayment.

Chapter3

Page57

1.Definerevenueandexpense.Howdoesonedecidetolistan

itemasrevenueinanincomestatement?Whatismatching?

Answer.

Revenuesareincreasesinnetassetsresultingfromoperations

overaperiodoftime.Expensearedecreasesinnetassets

resultingfromoperationsoveraperiodoftime.Revenueis

recognizedtheearningsprocessissubstantiallycomplete,a

transaction

2.Giveanexamplenotfoundinthetext,ofanexpensethatis

paidforincashinaprioraccountingperiod.Inasubsequent

accountingperiod.

Answer,

Therearemanyallowableresponses.Anexampleisapatent

thatispurchasedandpaidforinoneyearandusedinnext.

3.Giveanexample,notfoundinthetext,ofarevenuethatis

receivedincashinaprioraccountingperiod.Inasubsequent

accountingperiod.

Answer,

Anexampleisahousepaintingcontractorthatreceives

paymentforone-thirdofthecontractpricebeforebeginning

thepainting.

4.Explainwhyitisrighttothinkofanassetasacostandan

expenseasanexpiredcost.

Answer,

Anassetisafuturebenefit.Andthereisanopportunitycost

associatedwithnotsellingitforcashorexchangingittosettle

Chapter6

Page120:

1.ThefollowingtableliststheadjustmentsandhasanXinthe

columnindicatingtheapproach:

AdjustmentEstimateexpense,Estimateending

Plugendingbalancebalance

Plugexpense

BX

CX

DX

EX

FX

GX

HX

IX

JX

KX

M

2.Wefirsttakeadjustmentforprepaidinsuranceandinsurance

expense.Itwouldbeeasytothinkofthisadjustmentasfocusing

onhowmuchoftheinsurancecoverageremained,asopposedto

howmuchwasused.Infact,thesametypeoflogiccouldbe

used—computingamonthlyrateforthecoverageandapplying

thattothemonthsreminding,insteadofthemonthsused.

Nowtakeadjustmentfordepreciationexpenseand

accumulateddepreciation.Estimatingthevalueofthe

equipmentatyearendmightbeeasy,forexample,ifthereisa

marketforusedequipment,orverydifficult,forexample,ifthe

equipmentwasspeciallydesignedforWebsell.Onceavalue

estimatefortheequipmentatyearendisobtained,depreciation

expensewouldbethechangeinvalueovertheyear.

Page123

A

l.$5000X(1+0.06)10=$5000XL79085二$8954.24

2.$5000X(1+0.06/2)A(10X2)=$5000X(l+0.03)A20

=$5000X1.80611二$9030.56

3.$1000X(1.05)A3+$1000X(1.05)A2+$1000X

(1.05)Al=$3310.13

4.($1000X0.05/5)A13+$1000X(l+0.05/5)A10+$1000X

(l+0.05/5)A5

=($1000X(1.01)A15)+($1000X(1.01)Al0)+($1000X(1.01)A5)

=$1160.97+$1104.62+$1051.01

=$3316.6

Page124

l.xX.(1.07)A3=$3000x=$3000/(1.07)A3=$2448.89

2.Calculatethepresentvalueat10%of$1300receivedtwo

yearsfromnow.Ifthatisgreaterthan$1000,youarebetteroff

withthe$1300tobereceivedintwoyears.Ifitspresentvalueis

lessthat$1000,youbetteroffwith$1000now.

$1300/(1.10)A2=$1074.38

Therefore,youarebetteroffreceiving$1300twoyearsfrom

now.

Anotherwaytodothisproblemistotakethefuturevalueat

10%of$1000.Attheendoftwoyears,the$1000would

compoundupto:

$1000X(1.10)A2=$1210,

Whichislessthanyouwouldhaveatthatpointifyoutookthe

$1300.

3.ThemostIwouldbewillingtopayisthepresentvalueat8%

ofthestreamof$1000payment:

$1000/(1.08)Al+$l000/(1,08)A2+$1000/(l,08)A3

=$925,926+857.339+793.832

=$2577.1(rounded)

Chapter8

Page168

1.Agingtakesthebalanceinaccountsreceivableattheendof

theyear,andsortsitbyhowlongagothetransactionoccurred

thatgaverisetothatreceivable.Experiencehasshownthat

“older“accountshavelesslikelihoodofeverbeingcollected.

Percentagesoflikelyuncollectiblesforeachcategoryare

appliedtothetotalsinthatcategory,andtheresultsaddedto

obtainanestimateoftheallowanceforuncollectiblesrequired

tovalueproperlytheestimatedamountthatwillbecollected

fromtheaccountsreceivable.Thebaddebtsexpensethenfalls

outasa“plug"intheallowanceforuncollectibles.

Thepercentage-of-salesmethodjustestimatesbaddebt

expenseasapercentofsales,andplugthebalanceinthe

allowanceaccount.

2.Cash118

Accountsreceivable118

12/31/2003(torecognizecollectionofcashfromcompanies

owingserviceco.from2002sales)

Allowancefordoubtfulaccounts7

Accountsreceivable7

12/31/2003(towriteoffaccountsweknowwillnotbecollected)

Accountsreceivable125

Salesrevenue125

12/31/2003(torecognizerevenueandtoanticipatecollectionof

thereceivable)

Ifwefocusonrecordingthebaddebtsexpensethatisassociated

withbillingsfor2003,wewouldrecord.06X$125000=$7500in

baddebtsexpense.

Baddebtsexpense7.5

Allowancefordoubtfulaccounts7.5

12/31/2003(torecordbaddebtexpenseinanticipationofnot

collecting100%ofreceivables)

Methodone:focusonthepercentageofsalesexpectednottobe

collected.

Allowancefordoubtfulaccounts

1012/31/02

12/31/0377.512/31/03

Endingbalance

10.5at12/31/03

(10.5isthe"plug",i.e.,thenumberthatdropsout)

Nowwemoveto2004,whereeventsnowproceedasexpected.

Collectionsare$117.5thousand.

Cash117.5

Accountsreceivable117.5

12/31/2004(torecognizecollectionofcashformcompanies

owingserviceco.from2003sales)

Allowancefordoubtfulaccounts7.5

Accountsreceivable7.5

12/31/2004(towriteoffaccountsweknowwillnotbecollected)

Accounts

receivable125

Salesrevenue125

12/31/2004(torecognizerevenueandtoanticipatecollectionof

thereceivable)

Ifwefocusonrecordingthebaddebtsexpensethatisassociated

withbillingsfor2004,wewouldrecord.06X$125000=$7500in

baddebtsexpense.

Baddebtsexpense7.5

Allowancefbrdoubtfulaccounts7.5

12/31/2003(torecordbaddebtexpenseinanticipationofnot

collecting100%ofreceivables)

Theallowancefordoubtfulaccountsusingthepeentage-of-sales

methodlookslikethis:

Methodone:focusonthepercentageofsalesexpectednottobe

collected.

Allowancefordoubtfulaccounts

1012/31/02

12/31/0377.512/31/03expense

10.512/31/03balance

Write-off12/31/047.57.512/31/04expense

Balanceat

10.512/31/04

Onlytheentriesrecordingbaddebtexpensearedifferentusing

theagingmethod.Insteadoftheaboveentriesrecordingbad

debtexpense,wewouldhavethefollowinganalysis:

Eachyear,wewouldadjustthebalanceintheallowancefor

doubtfulaccountssothatthenetreceivableendsupat$117500.

Thatis,wewouldsolve$125000-X=$117500,andfindthatthe

endingbalanceintheallowancefordoubtfulaccountsmustbe

$7500.

Analyzingtheaccount,wewoulddeterminethatat12/31/2003

wemustadd$4500totheallowancefordoubtfulaccounts:

Baddebtsexpense4.5

Allowancefbrdoubtfulaccounts4.5

12/31/2004(torecordbaddebtexpenseinanticipationofnot

collecting100%ofreceivables)

At12/31/2004,wemustadd$7500totheallowancefor

doubtfulaccounts:

Baddebtsexpense7.5

Allowancefordoubtfulaccounts7.5

12/31/2004(torecordbaddebtexpenseinanticipationofnot

collecting100%ofreceivables)

Usingaging,theallowancefordoubtfulaccountsT-account

lookslikethis:

Methodtwo:focusontheendingbalanceintheallowancefor

doubtfulaccounts.

Allowancefordoubtfulaccounts

1012/31/02

12/31/0374.512/31/03expense

7.512/31/03balance

Write-off12/31/047.57.512/31/04expense

Balanceat

7.512/31/04

Chapter9

Page183

1.LIFOislast-infirst-out.Itmeansthatincomputingendinginventory

andcostofgoodssold,thecostofitemssoldisassignedinreverse

chronologicalorderoftheirpurchase,beginningfromthemostregent

itemspurchasedinaperiod.FIFOisfirst-in,first-out.Itmeansthatin

computingendinginventoryandcostofgoodssold,thecostofitems

soldisassignedinchronologicalorderoftheirpurchase,beginning

fromthegoodsonhandatthebeginningoftheperiod.Averagecost

meansthatincomputingendinginventoryandcostofgoodssold,the

averageunitcostofthebeginninginventoryanditemspurchasedina

periodisusedtodeterminethecostofgoodssoldandremaining

inventory.

2.Yes,itisstillapositivenetpresentvalueproject.Infact,itsnet

presentvalueishigherthanwhenthepurchasewasmadeat$1.05per

unit,sincethecashoutflowisreducedbutthecashinflowremainsthe

same.Thecashoutflowon12/31/01whenpurchasesareat$0.95per

unitis$114.Thismeansthenetcashflowat12/31/01is($4)insteadof

($16),andtheNPVforWidgetCompanyis:

NPV=-100-$4/l.l+$10/(l.lA2)+$144/(1.1A3)=$12.82

First,weredothecaseofFIFO.TheinventoryT-accountis:

WidgetCo.InventoryAccountunderFIFOFlowAssumption

Inventory(FIFO)

1/1/01Beginningbalance0

1/1/01Purchase(100@$l)100

12/31/01Purchase(120@$0.95)114100TransfertoCGS(100@$l)

1/1/02Balance(120@$0.95)114

12/31/02Balance(100@$1.10)11095TransfertoCGS(100@$0.95)

1/1/03Balance(20@$0.95+129TransfertoCGS(100@$0.95+

100@$1.10)129100@$1.10)

1/1/04Balance0

EndinginventoryvaluescanbereadfromtheaboveT-account.Net

incomesare:

WidgetCo.NetIncomesusingFIFO

200120012003

Revenues$110$120$114

CostofGoodsSold(100)(95)(129)

NetIncome(pretax)MQ525$15

NowweredothecaseofFJFO.First,theinventoryT-accountis:

WidgetCo.InventoryAccountunderFIFOFlowAssumption

Inventory(FIFO)

1/1/01Beginningbalance0

1/1/01Purchase(100@$l)100

12/31/01Purchase(120@$0.95)11495TransfertoCGS(100@$0.95)

1/1/02Balance(20@$0.95+

100@$1.00)119100TransfertoCGS(100@$1.10)

12/31/02Balance(100@$1.00)110

1/I/03Balance(20@$0.95+119TransfertoCGS(20@$0.95+

100@$1.00)119100@$1.00)

1/1/04Balance0

EndinginventoryvaluescanbereadfromtheaboveT-account.Net

incomesare:

200120012003

Revenues$110$120$114

CostofGoodsSold95(95)(129)

NetIncome(pretax)$15$10$25

Page186

Tocalculatethemarket-to-bookratiosandaccountingreturnsonequity:

Market-to-bookRatiosunderAverageCost

20012002

MarketValueofInventory$126.00$132.00

BookValueInventory$123.27$127.24

MarketValue/BookValue1.0221.037

AccountingRatesofReturnunderAverageCost

200120022003

BeginningBookValueofInventory$100.00$123.27$127.24

NetIncome$7.27$13.97$16.76

NetIncome/BeginningBookValue0.07270.11330.1317

CollectingtheresultsforFIFOfromthechapterandtheseresultsfor

averagecost,wehave:

Market-to-bookRatiosunderVariousCostFlowAssumption

20012002

FIFO1.04109.

Averagecost1.0221.037

LIFO1.01.008

AccountingRatesofReturnunderVariousCostFlowAssumption

200120022003

FIFO0.050.830.19.

Averagecost0.07270.11330.1317

LIFO0.100.1190.099

Asisapparent,themarket-to-bookratiosandaccountingratesofreturn

foraveragecostarebetweenforLIFOandFIFO.

2.Becauseithasmorerecentcostsonthebalancesheetintheinventory

account,FIFOhasmarket-to-bookratioscloserto1regardlessofwhether

pricesriseorfall.

Ch叩ter10

Page196

1.Thetotalprofitonthetransactionisthesalespriceof$880.00

lesstheoriginalcostof$734.03:

Salespriceofsecurities$880.00

Less:originalcost($735.03)

Profitontransaction$144.97

Thecashflowswere:$735.03outonJanuary1,2001,and

$880.00inonJanuary3,2003.

Therewereprofitin2001,2002,and2003.In2001,there

wasaprofitof$81.17.In2003,therewasaprofitof$5.00.

2.TheunadjustedbookvalueofthesecurityonDecember

31,2002was$793.83.Ifthemarketvalueofthesecurityonthat

datewas$790.00,anadjustmentreducingitscarryingvalueby

$3.83isrequiredtowriteitdowntoitsmarketvalue:

Unrealizedlossonmarketvaluesecurities-trading3.83

Marketablesecurities-trading3.83

Ifthesecurityweresoldfor$810.00onJanuary3,2003,the

entrywouldbe:

Cash810.00

Marketablesecurities-trading790.00

Gainonmarketablesecurities-trading20.00

1/03/2003(TorecordthesaleoftheMarketablesecurities一

trading)

Page198

1.Whenasecuritiesisclassifiedastradingsecurity,profitsor

lossesshowupontheincomestatementineveryperiodfrom

whenthesecurityispurchaseduntilwhenitissold,whena

securityisclassifiedasavailable-for-sale,profitsorlossesonly

showupontheincomestatementintheperiodinwhichthe

securityissold.

2.theunadjustedbookvalueofthesecurityonDecember

31,2002was$793.83.Ifthemarketvalueofthesecurityonthat

datewas$790.00,anadjustmentreducingit'scarryingvalueby

$3.83isrequiredtowriteitdowntoit'smarketvalue,however

unlikethetradingsecuritycase,theunrealizedlossisanequity

account,notatemporaryaccount:

Unrealizedlossonmarketablesecurities-available-for-sale3.38

Marketablesecurities-trading3.83

Torecordthesaleofthesecurityfor$810.00onJanuary3,2003:

Cash810.00

Unrealizedgainonmarketablesecurities-available-

for-sale(58.80-3.83)54.97

Marketablesecurities-trading790.00

Realizedgainonmarketablesecurities-

available-for-sale74.97

12/31/2002(Tomark-to-markettheMarketablesecurities一

available-for-sale)

Held-to-maturityAvai1able-for-saletrading

DebitInterestrevenueThebalancesheetThebalancesheet

securityisaccruedusingreflectsthemaketreflectsthemaket

thepurchasevalueofthevalueofthe

priceofthedebtsecurityatthesecurityatthe

security.thebalancesheetbalancesheetdate.

balancesheetdate.thebalanceTheothersideof

reflectsthesheetalsohasantheentrytoadjust

historicalcostofequityaccountthesecurityto

thesecurity,thatreflectsthemarketvalueisan

adjustedforthecumulativerealizedgainor

effectofaccrueddifferenceloss,whichis

interest.betweenthereflectedinthe

Thatis,thehistoricalcostincomestatement,

balancesheetandthecurrentitisreflectedin

reflectsthemarketvalueofretainedearnings

amortizedcostofthesecurity.thethroughthe

thesecurity,incomestatementprocessofclosing

notitsmarketisonlyaffectedinthetemporary

value.theperiodtheaccounts.

securityissold,

atwhichtimethe

security'sbook

valueand

realizedgainsor

lossesmustbe

adjustedtozero.

EquityThiscaseisnotSameasaboveSameasabove

securitypossible.an

equitysecurity

cannotbeheldto

maturity.

Chapter11

1.a.Understraight-linedepreciation,thedepreciationexpense

eachyearis

$600-$100/5years=$100peryear.

b.Underdouble-decliningbalancedepreciation,the

depreciationexpenseeachyearisgiveninthefollowingtable:

yearRemainiDecliningDecliningStraight-lineonDepreciation

ngbookbalanceratebalanceremainingexpense

valuedepreciatidepreciable

onbalance

16002X20%=40%2405004-5-100240.0

236040%144260+4=65144.0

321640%86.41164-3=38.6786,4

4129.64o%or29.629.6+2=14.829.6

amounttoget

bookvalueto

salvagevalue

of$100

5100.000

sum500.0

c.Undersum-of-year^digitsdepreciation,thedepreciation

expenseeachyearisgiveninthefollowingtable:

Sum-ofyears5-digitsdepreciation

yeardigitDepreciationDepreciationcostDepreciation

rateexpense

115/15%600-$100=$500$166.67

224/15$500$133.33

333/15$500$100,00

lect442/15$500$66.67

551/15$500$33.33

sum15