怀尔德会计学原理21版英语题库答案

怀尔德会计学原理21版英语题库答案Chapter 1Accounting in BusinessQUESTIONS1. The purpose of accounting is to provide decision makers with relevant and reliableinformation to help them make better decisions. Examples include information forpeople making investments, loans, and business plans.2. Technology reduces the time, effort, and cost of recordkeeping. There is still ademand for people who can design accounting systems, supervise their operation,analyze complex transactions, and interpret reports. Demand also exists for peoplewho can effectively use computers to prepare and analyze accounting reports.Technology will never substitute for qualified people with abilities to prepare, use,analyze, and interpret accounting information.3. External users and their uses of accounting information include:(a) lenders, tomeasure the risk and return of loans; (b) shareholders, to assess whether to buy,sell, or hold their shares; (c) directors, to oversee theirinterests in the organization;(d) employees and labor unions, to judge the fairness of wages and assess futureemployment opportunities; and (e) regulators, to determine whetherthe organizationis complying with regulations. Other users are voters, legislators, governmentofficials, contributors to nonprofits, suppliers and customers.4. Business owners and managers use accounting information to help answerquestions such as: What resources does an organization own? Whatdebts are owed?How much income is earned? Are expenses reasonable for the level of sales? Arecustomers‘ accounts being promptly collected?5. Service businesses include: Standard and Poor‘s, Dun & Bradstreet, Merrill Lynch,Southwest Airlines, CitiCorp, Humana, Charles Schwab, and Prudential. Businessesoffering products include Nike, Reebok, Gap, Apple Computer, Ford Motor Co.,Philip Morris, Coca-Cola, Best Buy, and Circuit City.6. The internal role of accounting is to serve the organization‘s internal operatingfunctions. It does this by providing useful information for internal users incompleting their tasks more effectively and efficiently. By providing this information,accounting helps the organization reach its overall goals.7. Accounting professionals offer many services including auditing, managementadvice, tax planning, business valuation, and money management.8. Marketing managers are likely interested in information such as sales volume,advertising costs, promotion costs, salaries of sales personnel, and salescommissions.9. Accounting is described as a service activity because it serves decision makers byproviding information to help them make better business decisions.10. Some accounting-related professions include consultant,financial analyst,underwriter, financial planner, appraiser, FBI investigator, market researcher, andsystem designer.11. Ethics rules require that auditors avoid auditing clients in which they have a directinvestment, or if the auditor‘s fee is dependent on the figures in the client‘s reports.This will prev ent others from doubting the quality of the auditor‘s report.12. In addition to preparing tax returns, tax accountants help companies and individualsplan future transactions to minimize the amount of tax to be paid. They are alsoactively involved in estate planning and in helping set up organizations. Some taxaccountants work for regulatory agencies such as the IRS or the various statedepartments of revenue. These tax accountants help to enforce tax laws. 13. The objectivity concept means that financial statement information is supported byindependent, unbiased evidence other than someone‘s opinion or imagination. Thisconcept increases the reliability and verifiability of financial statement information. 14. This treatment is justified by both the cost principle and the going-concernassumption.15. The revenue recognition principle provides guidance for managers and auditors sothey know when to recognize revenue. If revenue is recognized too early, thebusiness looks more profitable than it is. On the other hand, if revenue isrecognized too late the business looks less profitable than it is. This principledemands that revenue be recognized when it is both earned and can be measuredreliably. The amount of revenue should equal the value of the assets received orexpected to be received from the business‘s operating activities covering a specifictime period.16. Business organizations can be organized in one of three basic forms: soleproprietorship, partnership, or corporation. These forms have implications for legalliability, taxation, continuity, number of owners, and legal status as follows:Proprietorship Partnership CorporationBusiness entity yes yes yesLegal entity no no yesLimited liability no* no* yesUnlimited life no no yesBusiness taxed no no yesOne owner allowed yes no yes*Proprietorships and partnerships that are set up as LLCs provide limited liability.17. (a) Assets are resources owned or controlled by a company that are expected toyield future benef its. (b) Liabilities are creditors‘ claims on assets that reflectobligations to provide assets, products or services to others. (c) Equity is theowner‘s claim on assets and is equal to assets minus liabilities.(d) Net assets referto equity.18. Equity is increased by investments from the owner and by net income. It isdecreased by withdrawals by the owner and by a net loss (which is the excess ofexpenses over revenues).19. Accounting principles consist of (a) general and (b) specific principles. Generalprinciples are the basic assumptions, concepts, and guidelines for preparingfinancial statements. They stem from long-used accounting practices. Specificprinciples are detailed rules used in reporting on business transactions and events.They usually arise from the rulings of authoritative and regulatory groups such asthe Financial Accounting Standards Board or the Securities and ExchangeCommission.20. Revenue (or sales) is the amount received from selling products and services. 21. Net income (also called income, profit or earnings) equals revenues minus expenses(if revenues exceed expenses). Net income increases equity. If expenses exceedrevenues, the company has a Net Loss. Net loss decreases equity.22. The four basic financial statements are: income statement, statement of owner‘sequity, balance sheet, and statement of cash flows.23. An income statement reports a company‘s revenues and expenses along with theresulting net income or loss over a period of time.24. Rent expense, utilities expense, administrative expenses, advertising and promotionexpenses, maintenance expense, and salaries and wages expenses are someexamples of business expenses.25. The statement of owner‘s equity explains the changes in equity from net income orloss, and from any owner contributions and withdrawals over a period of time. 26. The balance sheet describes a company‘s financial position (types and amounts ofassets, liabilities, and equity) at a point in time.27. The statement of cash flows reports on the cash inflows and outflows from acompany‘s operating, investing, and financing activities.28. Return on assets, also called return on investment, is a profitability measure that isuseful in evaluating management, analyzing and forecasting profits, and planningactivities. It is computed as net income divided by the averagetotal assets. Forexample, if we have an average annual balance of $100 in a bank account and itearns interest of $5 for the year, then our return on assets is $5 / $100 or 5%. Thereturn on assets is a popular measure for analysis because it allows us to comparecompanies of different sizes and in different industries.A 29. Return refers to income, and risk is the uncertainty about the return we expect tomake. The lower the risk of an investment, the lower the expected return. Forexample, savings accounts pay a low return because of the low riskof a bank notreturning the principal with interest. Higher risk implies higher,but riskier, expectedreturns.B30. Organizations carry out three major activities: financing, investing, and operating.Financing provides the means used to pay for resources. Investing refers to theacquisition and disposing of resources necessary to carry out the organizat ion‘splans. Operating activities are the actual carrying out of these plans. (Planning is theglue that connects these activities, including the organization’s ideas, goals andstrategies.)B31. An organization‘s financing activities (liabilities and equity) pay for investingactivities (assets). An organization cannot have more or less assets than itsliabilities and equity combined and, similarly, it cannot have more or less liabilitiesand equity than its total assets. This means: assets = liabilities + equity. Thisrelation is called the accounting equation (also called the balance sheet equation),and it applies to organizations at all times.32. The dollar amounts in Best Buy‘s financial statements are rounded to the nearest$1,000,000. Bes t Buy‘s consolidated statement of earnings (or income statement)covers the fiscal year (consisting of 53 weeks) ended March 3, 2007. Best Buy alsoreports comparative income statements for the previous two years (consisting of 52weeks).33. In thousa nds, Circuit City‘s accounting equation is:Assets = Liabilities + Equity$4,007,283 = $2,216,039 + $1,791,24434. At December 31, 2006, RadioShack had (in millions) assets of $2,070.0, liabilities of$1,416.2, and equity of $653.8.35. The independent auditor for Apple, Inc., is KPMG LLP. The auditor expressly statesthat ―our responsibility is to express an opinion on these consolidated financialstatements based on our audits.‖ The auditor also states that―these consolidatedfinancial statements are the responsibility of the Company‘s management.‖Chapter 21EXERCISESExercise 21-1 (25 minutes)1. Allocation of Indirect Expenses to Four Operating DepartmentsSupervision expensesDepartment Employees % of Total CostMaterials ................................ 40 20% $16,000Personnel .............................. 22 11 8,800Manufacturing ....................... 104 52 41,600Packaging .............................. 34 17 13,600Totals ..................................... 200 100% $80,000 Utilities expensesDepartment Square Feet % of Total CostMaterials ................................ 27,000 27% $16,470 Personnel .............................. 5,000 5 3,050 Manufacturing ....................... 45,000 45 27,450Packaging .............................. 23,000 23 14,030Totals ..................................... 100,000 100% $61,000 Insurance expensesDepartment Asset Value % of Total CostMaterials ................................ $ 60,000 50% $ 8,350 Personnel .............................. 1,200 1 167Manufacturing ....................... 42,000 35 5,845Packaging .............................. 16,800 14 2,338Totals .....................................$120,000 100% $16,7002. Report of Indirect Expenses Assigned to Four Operating DepartmentsSupervision Utilities Insurance TotalMaterials ................................$16,000 $16,470 $ 8,350 $ 40,820 Personnel ..............................8,800 3,050 167 $ 12,017 Manufacturing .......................41,600 27,450 5,845 $ 74,895 Packaging .............................. 13,600 14,030 2,338 $ 29,968 Totals ................................$80,000..... $61,000 $16,700 $157,700Exercise 21-2 (30 minutes)Calculation of predetermined overhead rates to apply ABCOverhead Cost TotalCategory (Activity Total Amount ofCost Pool) Cost Cost Driver Predetermined Overhead RateSupervision ........................$ 5,400 $36,000 15% of direct labor costDepreciation .......................56,600 2,000 MH $28.30 per machine hourLine preparation ................46,000 250 setups $184.00 per setup1. Assignment of overhead costs to the two products using ABCRounded edgeCost Cost per AssignedDriver Driver Unit CostSupervision ........................... $12,200 15% $ 1,830Machinery depreciation ........ 500 hours $ 28.30 14,150Line preparation.................... 40 setups $184.00 7,360Total overhead assigned ...... $23,340Squared edgeCost Cost per AssignedDriver Driver Unit CostSupervision ........................... $23,800 15% $ 3,570Machinery depreciation ........ 1,500 hour$ 28.30 42,450sLine preparation....................210 setups $184.00 38,640Total overhead assigned ...... $84,6602. Average cost per foot of the two productsRounded edge Squared edgeDirect materials .......................... $19,000 $ 43,200Direct labor ................................. 12,200 23,800Overhead (using ABC) ............... 23,340 84,660Total cost ................................... $54,540 $151,660Quantity produced ..................... 10,500 ft. 14,100 ft.Average cost per foot (ABC) ...... $5.19 $10.763. The average cost of rounded edge shelves declines and the average cost of squared edge shelves increases. Under the current allocation method, the rounded edge shelving was allocated 34% of all of the overhead cost ($12,200 direct labor/$36,000 total direct labor). However, it does not use 34% of all of the overhead resources. Specifically, it uses only 25% of machine hours (500 MH/2,000 MH), and 16% of the setups (40/250). Activity based costing allocated the individual overhead components in proportion to the resources used.Exercise 21-7 (15 minutes)(1) Items included in performance reportThe following items definitely should be included in the performance report for the auto service department manager because they arecontrolled or strongly influenced by the manager‘s decisions and activities:, Sales of parts, Sales of services, Cost of parts sold, Supplies, Wages (hourly)(2) Items excluded from performance reportThe following items definitely should be excluded from the performance report because the department manager cannot control or strongly influence them:, Building depreciation, Income taxes allocated to the department, Interest on long-term debt, Manager‘s salary(3) Items that may or may not be included in performance report The following items cannot be definitely included or definitely excluded from the performance report because they may or may not be completely under the manager‘s control or strong influence:, Payroll taxes Some portion of this expense relates to themanager‘s salary and is not controllable by themanager. The portion that relates to hourly wagesshould be treated as a controllable expense., Utilities Whether this expense is controllable depends on the design of the auto dealership. If the auto servicedepartment is in a separate building or has separateutility meters, these expenses are subject to themanager‘s control. Otherwise, th e expense probablyis not controllable by the manager of the auto servicedepartment.Exercise 21-9 (20 minutes)(1)Investment Center Net Income Average Assets Return on AssetsElectronics ................... $750,000 $3,750,000 20%Sporting Goods ............ 800,000 5,000,000 16%Comment: Its Electronics division is the superior investment center on the basis of the investment center return on assets.Exercise 21-9 (continued)(2)Investment Center Electronics Sporting GoodsNet income ................... $750,000 $800,000Target net income$3,750,000 x 12% ....... (450,000)5,000,000 x 12% ........ (600,000)Residual income……. $300,000 $200,000Comment: Its Electronics division is the superior investment center on the basis of investment center residual income.(3) The Electronics division should accept the new opportunity, since it will generate residual income of 3% (15% - 12%) of the investment‘s investedassets.Exercise 21-10 (15 minutes)Investment Center Net Income Sales Profit MarginElectronics ................... $750,000 $10,000,000 7.50%Sporting Goods ............ 800,000 8,000,000 10.0%InvestmentInvestment Center Sales Average Assets TurnoverElectronics ...................$10,000,000 $3,750,000 2.67Sporting Goods ............ 8,000,000 5,000,000 1.6Comments: Its Sporting goods division generates the most net income per dollar of sales, as shown by its higher profit margin. The Electronics division however is more efficient at generating sales from invested assets, based on its higher investment turnover.PROBLEM SET AProblem 21-1A (60 minutes)Part 1Average occupancy cost = $111,800 / 10,000 sq. ft. = $11.18 per sq. ft.Occupancy costs are assigned to the two departments as follows Department Square Footage Rate TotalLanya‘s Dept. ............... 1,000 $11.18 $11,180Jimez‘s Dept. ................ 1,700 $11.18 $19,006**A total of $30,186 ($11,180 + $19,006) in occupancy costs is charged to these departments. The company would follow a similar approach in allocating the remaining occupancy costs ($81,614, computed as $111,800 - $30,186) to its other departments (not shown in this problem).Part 2Market rates are used to allocate occupancy costs for depreciation, interest, and taxes. Heating, lighting, and maintenance costs are allocated to the departments on both floors at the average rate per square foot. These costs are separately assigned to each class as follows:Total Value-Based Usage-BasedCosts Costs CostsDepreciation—Building...................$ 31,500 $31,500Interest—Building mortgage .......... 47,000 47,000Taxes—Building and land............... 14,000 14,000Gas (heating) expense .................... 4,425 $ 4,425Lighting expense ............................ 5,250 5,250Maintenance expense ..................... 9,625 ______ 9,625Total .................................................$111,800 $92,500 $19,300Problem 21-1A (Continued)Value-based costs are allocated to departments in two steps(i) Compute market value of each floorSquare Value perFloor Footage Sq. Ft. TotalFirst floor ...............................5,000 $40 $200,000Second floor ..........................5,000 10 50,000Total market value................. $250,000(ii) Allocate $92,500 to each floor based on its percent of market valueMarket % of Allocated Cost perFloor Value Total Cost Sq. Ft.First floor ...............................$200,000 80% $74,000$14.80Second floor .......................... 50,000 20 18,500 3.70Totals ................................$250,000..... 100% $92,500 Usage-based costs allocation rate = $19,300 / 10,000 sq. ft.= $1.93 per sq. ft.We can then compute total allocation rates for the floors FloorValue Usage TotalFirst floor ............................... $14.80 $1.93 $16.73Second floor .......................... 3.70 1.93 $ 5.63These rates are applied to allocate occupancy costs to departments SquareDepartment Footage Rate TotalLanya‘s Department ........................ 1,000 $16.73 $16,730Jim ez‘s Department ........................ 1,700 5.63 $ 9,571Part 3A second-floor manager would prefer allocation based on market value. This is a reasonable and logical approach to allocation of occupancy costs. The current method assumes all square footage has equal value. This is not logical for this type of occupancy. It also means thesecond-floor space would be allocated a larger portion of costs under the current method, but less using an allocation based on market value.Problem 21-2A (45 minutes)Part 1Determination of cost per driver unitCost Center Cost Driver Cost per DriverProfessional salaries ......................$1,600,000 10,000 hours $160 per hourPatient services & supplies ............ $ 27,000 600 patients $45 per patientBuilding cost ................................$ 150,000... 1,500 sq. ft. $100 per sq. ft.Total costs ......................................$1,777,000Part 2Allocation of cost to the surgical departments using ABCGENERAL SURGERYCost Cost per AllocatedDriver Driver Unit CostProfessional salaries ............ 2,500 hours $160 per hr. $400,000 Patient services & supplies........ 400 patients $45 per patient18,000Building cost ......................... 600 sq. ft. $100 per sq. ft. 60,000Total .............................................................. ............................... $478,000Average cost perpatient ................................................................ $ 1,195ORTHOPEDIC SURGERYCost Cost per AllocatedDriver Driver Unit CostProfessional salaries ............ 7,500 hours $160 per hr.$1,200,000Patient services & supplies........ 200 patients $45 per patient9,000Building cost ......................... 900 sq. ft. $100 per sq. ft 90,000Total............................................................... ..............................$1,299,000Average cost perpatient ................................................................ $ 6,495[Note that the sum of the amounts allocated to General Surgery and Orthopedic Surgery ($478,000 + $1,299,000) equals the total amount of indirect costs ($1,777,000).]Part 3If all center costs were allocated on the number of patients, the average cost of general surgery would increase. Since general surgery sees 2/3 of all patients (400/600), it would get allocated 2/3 of all center costs. Orthopedic surgery is currently consuming more professional salaries and building space than general surgery, but has fewer patients.Problem 21-3A (70 minutes)Warton CompanyForecasted Departmental Income StatementsFor Year Ended December 31, 2010Combined Clock Mirror Paintings(1) Sales ..................................................... $183,600 $102,600 $50,000 $336,200(2) Cost of goods sold............................ 89,964 63,612 27,500 181,076Gross profit ......................................... 93,636 38,988 22,500 155,124Direct expensesSales salaries ................................... 21,000 7,1008,500 36,600Advertising........................................ 2,100 700 1,100 3,900(3) Store supplies used........................ 594 378 400 1,372Depreciation of equipment ........... 2,300 900 1,000 4,200Total direct expenses..................... 25,994 9,078 11,00046,072Allocated expenses(4) Rent expense.................................... 5,632 2,8352,353 10,820(4) Utilities expense .............................. 2,292 1,153 955 4,400(5) Share of office dept. expenses .... 15,288 8,540 4,172 28,000Total allocated expenses .............. 23,212 12,528 7,480 43,220 Total expenses ................................... 49,206 21,60618,480 89,292Net income .......................................... $ 44,430$17,382 $ 4,020 $ 65,832Supporting Computations—coded (1) through (5) in statement above Note 1 (Sales)Clock Mirror Paintings 2009 sales............................................ $170,000 $ 95,000 Growth rate (8% increase)................. x 108% x 108% 2010 sales............................................ $183,600 $102,600 $ 50,000Note 2 (Cost of Goods Sold)Clock Mirror Paintings 2009 cost of goods sold .................... $ 83,300 $ 58,900 $ 50,000 Growth rate (8% increase).. (x)108% x 108% x 55%* 2010 cost of goods sold .................... $ 89,964$ 63,612 $ 27,500 ALTERNATIVELY 2009 cost of goodssold .................... $ 83,300 $ 58,900 2009 sales............................................ $170,000 $ 95,000 2009 cost as % of sales ..................... 49% 62% 2010sales .......................................... $183,600 $102,600 $ 50,000 2010 cost as % of sales .................... x 49% x 62% x 55%* 2010 cost of goods sold .................... $ 89,964 $ 63,612 $ 27,500 * The 55% cost of goods sold percent is computed as 100% minus the predicted 45% gross profit margin.Problem 21-3A (Continued)Note 3 (Store Supplies Used)Clock Mirror Paintings 2009 store suppliesused ...................... $ 550 $ 350 Growth rate (8% increase)...................... x 108% x 108% 2010 storesupplies ................................. $ 594 $ 378 $ 400 Note 4 (Rent and Utilities)Clock Mirror Paintings 2009rent .................................................... $ 7,040 $3,780 One-fifth from clock to paintings (1,408) $ 1,408 One-fourth from mirror to paintings ______ (945) 945 2010 allocation of $10,820rent ............. $ 5,632 $ 2,835 $ 2,353 Percent of total* ...................................... 52.1% 26.2% 21.7% 2010 allocation of $4,400total utilities ............................................ $ 2,292 $ 1,153 $ 955Note 5 (Office Department Expenses)Clock Mirror Paintings 2010sales .................................................. $183,600 $102,600 $ 50,000 Percent of total sales * ............................54.6% 30.5% 14.9% 2010 allocation of $28,000total office departmentexpenses ($20,000 in 2009plus $8,000 increase) ............................ $ 15,288 $ 8,540 $ 4,172* Instructor note: If students round to something other than one-tenth of a percent, theirnumbers will slightly vary.Problem 21-4A (50 minutes)Part 1a.Responsibility Accounting Performance ReportManager, Camper DepartmentFor the YearBudgeted Actual Over (Under)Amount Amount Budget Controllable Costs Raw materials..................................$195,900 $194,800 $ (1,100) Employee wages ............................. 104,200 107,200 3,000Supplies used ................................. 34,000 32,900 (1,100) Depreciation—Equipment............... 63,000 63,000 0Totals ...............................................$397,100 $397,900 $ 800b.Responsibility Accounting Performance ReportManager, Trailer DepartmentFor the YearBudgeted Actual Over (Under)Amount Amount Budget Controllable Costs Raw materials................................ $276,200 $273,600 $ (2,600) Employee wages ........................... 205,200 208,000 2,800 Supplies used ............................... 92,200 91,300 (900) Depreciation—Equipment............. 127,000 127,000 0Totals ............................................. $700,600 $699,900 $ (700)Problem 21-4A (Continued)c.Responsibility Accounting Performance ReportManager, Ohio PlantFor the YearBudgeted Actual Over (Under)Amount Amount BudgetControllable CostsDept. manager salaries ................$ 97,000 $ 98,700 $ 1,700 Utilities ......................................... 8,800 9,200 400 Building rent................................. 15,700 15,500 (200) Other office salaries..................... 46,500 30,100 (16,400) Other office costs......................... 22,000 21,000 (1,000) Camper department ..................... 397,100 397,900 800Trailer department........................ 700,600 699,900 (700) Total ..............................................$1,287,700$1,272,300 $(15,400)Part 2The plant manager did a good job of controlling costs and meetingthe budget. He came in under budget for the plant even though he paid the department managers more than budgeted and had to absorb the amounts over budget in their departments. This is because he spent less than the budget amount on building rent, other office salaries, and other office costs. The Trailer Department manager also came in under budget. The Camper Department manager came in over budget, and thus performed the worse of the three managers.PROBLEM SET BProblem 21-1B (60 minutes)Part 1Average occupancy cost = $372,000 / 20,000 sq. ft. = $18.60 per sq. ft.Occupancy costs are assigned to Miller‘s department as follows。