Judgment Case 5-2 (page 291) Revenue earned by a business enterprise is recognized for accounting purposes at different times, according to the circumstances. In some situations revenue is recognized approximately as it is earned in the economic sense. In other situations revenue is recognized at point of delivery. Required: 1. Explain and justify why revenue often is recognized as earned at point of delivery. 2. Explain in what situations it would be useful to recognize revenue as the productive activity takes place. 3. At what times, other than those included in (1) and (2) above, may it be appropriate to recognize revenue?
Judgment Case 4-3 (page 225) Companies often are under pressure to meet or beat Wall Street earnings projections in order to increase stock prices and also to increase the value of stock options. Some resort to earnings management practices to artificially create desired results. Required: Is earnings management always intended to produce higher income? Explain.
Judgment Case 2-1 (page 109) You have recently been hired by Davis & Company, a small public accounting firm. One of the firm’s partners, Alice Davis, has asked you to deal with a disgruntled client, Mr. Sean Pitt, owner of the city’s largest hardware store. Mr. Pitt is applying to a local bank for a substantial loan to remodel his store. The bank requires accrual based financial statements but Mr. Pitt has always kept the company’s records on a cash basis. He does not see the purpose of accrual based statements. His most recent outburst went something like this: “After all, I collect cash from customers, pay my bills in cash, and I am going to pay the bank loan with cash. And, I already show my building and equipment as assets and depreciate them. I just don’t understand the problem.”
Research Case 1-3 (page 45) The purpose of this case is to introduce you to the information available on the website of the Financial Accounting Standards Board (FASB). Required: Access the FASB home page on the Internet. The web address is www.fasb.org. Answer the following questions. 1. Describe the mission of the FASB. 2. Who are the current Board members? Briefly describe their backgrounds. 3. How are topics added to the FASB’s technical agenda?
ACC 305 Week 1 Assignments E 3-18, E 3-20, J Case 3-5 ACC 305 Week 1 DQ 1 FASB and Ethics ACC 305 Week 1 DQ 2 Cash versus Accrual & Financial Disclosures ACC 305 Week 2 DQ 1 Earnings Management Case 4-3 ACC 305 Week 2 DQ 2 Revenue Recognition Case 5-2 ACC 305 Week 2 Problem E4-16 Bluebonnet Bakers ACC 305 Week 2 Problem E4-19 Wainwright Corporation ACC 305 Week 2 Problem E4-22 Tiger Enterprises ACC 305 Week 2 Problem E5-3 Installment sales ACC 305 Week 2 Problem E5-10 Project Contracts ACC 305 Week 2 Problem Integrating Case 5-23 ACC 305 Week 2 Problem Judgment Case 4-9 ACC 305 Week 3 Communication Case 6-3 ACC 305 Week 3 Judgment Case 7-5 ACC 305 Week 3 P7-10, P7-14 ACC 305 Week 3 P7-14 El Gato Painting Company ACC 305 Week 4 Communication Case 8-4 ACC 305 Week 4 Assignment E8-13, E8-14, E8-18, P8-5, E9-19, E9-21, P9-1. ACC 305 Week 4 Ethics Case 9-11 ACC 305 Week 5 Ethics Case 10-12 ACC 305 Week 5 P11-5, P11-7 ACC 305 Week 5 Problem E11-5, E11-10 ACC 305 Week 5 Final Paper (FASB)