Exam 11: Quality of Earnings, corporate Governance, and Ifrs

This year Beta Business tried calculating its bad debts expense two different ways.Using a percentage of credit sales,bad debts expense would be $2,500.Based on an aging of accounts receivable,however,bad debts expense would be $2,750.If Beta Business decides to report $2,750 of bad debts expense,this accounting choice would be considered ________.

Analysts focus on "the number" which is the company's ________.

What are some of the new responsibilities of the external auditors required by the Sarbanes-Oxley Act of 2002?

Quality of earnings is considered higher if management depreciates its long-term assets over a longer period than the industry average.

Tim's Tams donated 100 baseball caps to the local homeless shelter.The company will record the donation as an operating expense.The caps cost Tim's Tams $2.00 each and the company usually sells them for $8.50.If Tim's Tams reports a charity expense of $200,this accounting choice would be considered ________.

Alpha,Inc.bought land and a new warehouse for $100,000.Because Alpha needs to separate the cost of the land (which will not be depreciated)from the cost of the building (which will be depreciated),Alpha got two independent appraisals.The first appraiser said the land was worth $10,000.The second appraiser said the land was worth $15,000.If Alpha records the land at $10,000 and the building at $90,000,this accounting choice would be considered ________.

Corporate governance describes how a firm governs itself and is executed by the board of directors.

Put an X in the appropriate box to identify each of the following as overstating,understating or not affecting earnings per share.

A lower than usual allowance for uncollectible accounts may indicate a company is manipulating earnings using big bath charges.

Tastee Bakery just bought a new delivery truck,which the bakery plans to use for four or five years before replacing it.If the company calculates straight-line depreciation using an estimated useful life of five years,this accounting choice would be considered ________.

Most investors focus primarily on a company's ________.

Wall Street refers to sales as "the number" because of the importance analysts give it in assessing the financial health of a company.

A higher than usual estimated warranty liability may indicate a company is manipulating earnings using a cookie jar reserve.

W Company just bought ten new cars for its salespeople to use.The company expects to use these cars for two or three years and then replace them.If W Company calculates straight-line depreciation using an estimated useful life of three years,this accounting choice would be considered ________.

All accounting firms that audit publicly traded companies must register with the ________ and follow its rules.

Which of the following is considered aggressive accounting?

If a company's earnings do not meet financial analysts' forecasts ________.

The town of Columbia gave a piece of land to Wind Energy,Inc.so that the company would build its new factory in Columbia and create many local jobs.One appraiser said the land was worth $200,000,while a second appraiser said the land was worth $220,000.If Wind Energy,Inc.records the land at $200,000,this accounting choice would be considered ________.

During the year,Core,Rupt,and Baroque,Inc.had sales revenue of $13,200.For each of the following ranges of estimates provided,indicate which percent is the more conservative choice. a.Estimated sales returns range from 1 to 2% of total sales b.Bad debts are expected to be between 1 and 2% of net sales c.Estimated warranty costs are 1 to 2% of net sales d.Straight-line depreciation rate could be 10% or 20% for its buildings

The management of Krupt,Inc.decided to buy back 30% of the shares of stock outstanding.What effect would this have on the company's earnings per share? Why would management want to do this? Is this ethical?