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Under US GAAP, management has choices
about how to value current inventory and also the cost of goods sold.
For example, they can choose LIFO or FIFO to value their inventory.)
However, under International Financial Reporting Standards (IFRS), LIFO
is not an option. To be in compliance with IFRS, international companies
cannot use LIFO. Therefore, the majority of companies use FIFO to value
their inventory and thus calculate cost of goods.
Explain what LIFO means. Then, state whether you believe that IFRS is
correct in disallowing LIFO to value inventory and provide your
reasoning.
ACCT 212 Week 4 Midterm 1 (Explanatory)
ACCT 212 Week 4 Midterm 2 (Graded)
1. (TCO 1)The
Accounting Equation is used to develop the organizations financial
reports. (1) Describe what owners’ equity is (10 points) and (2) provide
an example of an owners’ equity account. (10 points) (Points : 20)
2. (TCO 1)The
financial statements present a company to the public in financial terms.
(1) Which financial statement identifies how well the company performed
during the year (10 points) and (2) explain what information this
financial statement provides. (10 points) (Points : 20)
3. (TCO 1) The
accounting profession follows a set of guidelines for measurement and
disclosure of financial information called the Generally Accepted
Accounting Principles (GAAP). (1) Explain what the Entity Assumption is
(10 points) and (2) provide an example of its application. (10
points) (Points : 20)
4. (TCO 2)Transaction
analysis results in the development of a journal entry. Supplies are
purchased on account agreeing to pay $2,500 within 30 days. (1) Name the
accounts impacted and how using the format account name/debit or
credit/dollar amount (10 points) and (2) explain how the Accounting
Equation is impacted. (10 points) (Points : 20)
5. (TCO 3) Adjusting
Entries are required at the end of the period to ensure that accrual
accounting principles are applied. At the beginning of the month $350 of
office supplies were purchased. There was not a beginning balance and
the one purchase was the only one for the month. At the end of the month
$100 of supplies remained. Develop the adjusting entry.(1) Name the
accounts impacted and how using the format account name/debit or
credit/dollar amount (10 points) and (2) explain how the Accounting
Equation is impacted. (10 points) (Points : 20)
6. (TCO 5) Internal
Controls are required to safeguard assets and to ensure ethical business
practices.(1) Identify and explain the reason for any two of the seven
internal control procedures (10 points) and (2) provide examples of how
your two selected internal control procedures will meet the goal of
safeguarding assets and promoting ethical business practices. (15
points)(Points : 25)
7. (TCO 5) The bank
account as a control device that helps to protect cash. One of the
requirements is to conduct periodic bank statement reconciliations.
Using the following data, complete the bank statement reconciliation for
Acorn Plumbing, Inc. (Use the format shown on page 255 of your
textbook) (25 points)
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