1. QA_Ori: See the text or the glossary at the end of the book.
2. QA_Ori: Revenues measure the inflow of net assets from operating activities, and
3. QA_Ori: Cost is the economic sacrifice made to acquire goods or services. When the
4. QA_Ori: Current accounting practice takes the viewpoint of shareholders by
5. QA_Ori: The assets and income from operations that a firm has decided to
6. QA_Ori: The revenues must be earned (the firm must have achieved substantial
7. QA_Ori: At the time the firm receives the cash, the firm has not yet earned the
8. Q A _ O r i : Revenues are part of the ongoing central operations of the firm, so they are
9. Q A _ O r i : It is not straightforward to compare the operating profits of two firms, even
10. QA_Ori: Firms do not necessarily recognize revenues when they receive cash or
recognize expenses when they disburse cash. Thus, net income will not necessarily
equal cash flow from operations each period. Furthermore, firms disburse cash to
acquire property, plant and equipment, repay debt, and pay dividends. Thus, net
income and cash flows usually differ. A profitable firm will likely borrow funds in
order to remain in business, but eventually operations must generate cash to repay the
borrowing.
11.
QA_ Ori: (Neiman Marcus; revenue recognition.) (amounts in US$)
12. QA_Ori:
(Fonterra Cooperative Group Limited; revenue recognition.) (amounts in
New Zealand dollars [NZ$])
a. No. Fonterra has not yet delivered the milk and, therefore, has not achieved
b. No. Fonterra would recognize NZ$5,000 as an Advance from Customer, a current
13. QA_Ori: (Sun Microsystems; expense recognition.) (amounts in US$)
14. QA_Ori: (Tesco Plc.; expense recognition.) (amounts in pounds sterling)
a. None (this is a September expense).
15. QA_Ori: (Bondier Corporation; relating net income to balance sheet changes.)
(amounts in millions of US$)
a. Net Income = [($1,040 -$765) + $30 -$12] = $293 million.
16. QA_Ori: (Magtelkom; relating net income to balance sheet changes.) (amounts in
millions of HUF)
a. Assets = Liabilities + Shareholders’ Equity.
b.
17. QA_Ori: (Novo Limited; income statement relations.) (amounts in thousands
of US$)
18. QA_Ori: (SwissTek; income statement relations.) (amounts in millions of US$)
19. QA_Ori: (James John Corporation; income and equity relations.) (amounts in
millions of US$)
20. QA_Ori: (Palmgate Company; income and equity relations.) (amounts in millions
of
US$)
The missing items appear in boldface below:
aNo new shares issued, so common stock stays the same.
bRetained Earnings, End of Year 8 = Retained Earnings, End of Year 7 + Net
21. QA_Ori: (MosTechi Corporation; accumulated
22. QA_Ori: (Solaronx Company; accumulated other comprehensive income
relations.) (amounts in millions of US$)
Calculations
:
eAccumulated Other Comprehensive Income, End of Year 12 = Accumulated Other
Comprehensive Income, End of Year 11 + Other Comprehensive Income, Year 12 +
gTotal Shareholders’ Equity, End of Year 12 = $5 -$2,514 + $4,329 -$816
+ $10,097 = $11,101.
11.
QA_ Ori: (Neiman Marcus; revenue recognition.) (amounts in US$)
12. QA_Ori:
(Fonterra Cooperative Group Limited; revenue recognition.) (amounts in
New Zealand dollars [NZ$])
a. No. Fonterra has not yet delivered the milk and, therefore, has not achieved
b. No. Fonterra would recognize NZ$5,000 as an Advance from Customer, a current
13. QA_Ori: (Sun Microsystems; expense recognition.) (amounts in US$)
14. QA_Ori: (Tesco Plc.; expense recognition.) (amounts in pounds sterling)
a. None (this is a September expense).
15. QA_Ori: (Bondier Corporation; relating net income to balance sheet changes.)
(amounts in millions of US$)
a. Net Income = [($1,040 -$765) + $30 -$12] = $293 million.
16. QA_Ori: (Magtelkom; relating net income to balance sheet changes.) (amounts in
millions of HUF)
a. Assets = Liabilities + Shareholders’ Equity.
b.
17. QA_Ori: (Novo Limited; income statement relations.) (amounts in thousands
of US$)
18. QA_Ori: (SwissTek; income statement relations.) (amounts in millions of US$)
19. QA_Ori: (James John Corporation; income and equity relations.) (amounts in
millions of US$)
20. QA_Ori: (Palmgate Company; income and equity relations.) (amounts in millions
of
US$)
The missing items appear in boldface below:
aNo new shares issued, so common stock stays the same.
bRetained Earnings, End of Year 8 = Retained Earnings, End of Year 7 + Net
21. QA_Ori: (MosTechi Corporation; accumulated
22. QA_Ori: (Solaronx Company; accumulated other comprehensive income
relations.) (amounts in millions of US$)
Calculations
:
eAccumulated Other Comprehensive Income, End of Year 12 = Accumulated Other
Comprehensive Income, End of Year 11 + Other Comprehensive Income, Year 12 +
gTotal Shareholders’ Equity, End of Year 12 = $5 -$2,514 + $4,329 -$816
+ $10,097 = $11,101.