Chapter 4

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CHAPTER 4 THE ACCOUNTING CYCLE: ACCRUALS AND DEFERRALS
OVERVIEW OF BRIEF EXERCISES, EXERCISES, PROBLEMS, AND CRITICAL THINKING CASES Brief Exercises B. Ex. 4.1 B. Ex. 4.2 B. Ex. 4.3 B. Ex. 4.4 B. Ex. 4.5 B. Ex. 4.6 B. Ex. 4.7 B. Ex. 4.8 B. Ex. 4.9 B. Ex. 4.10 Learning Objectives 3, 4 3, 4 3 3 6 4 5 5 5 8

Topic Deferred expenses and revenue Deferred expenses and revenue Accounting for supplies Accounting for depreciation Accrued revenue Unearned revenue Accrued salaries Accrued interest Accrued taxes Concept of materiality

Skills Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Judgment, communication, analysis

Exercises 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15

Topic Accounting terminology Effects of adjusting entries Deferred expenses and revenue Deferred expenses and revenue Accrued revenue Real World: American Airlines Deferred revenue Accruals and deferrals Notes payable and interest Interpreting business transactions Adjustments and the balance sheet Real World: Various firms Deferred revenue Analyzing the adjusted trial balance Effects of adjusting entries Accounting principles Real World: Home Depot an annual report Using

Learning Objectives 1–9 1–6, 9 1-7 1-7 1-7 1, 2, 4 1-6, 9 1, 2, 5 1–7, 9 1, 3–5, 7 1, 4, 7 1–7, 9 1–6 1–8 1, 2

Skills Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis, judgment Communication, analysis Analysis, judgment Analysis Analysis Communication, analysis, judgment Communication, analysis

© The McGraw-Hill Companies, Inc., 2012 Overview

Problems Sets A, B 4.1 A,B 4.2 A,B 4.3 A,B 4.4 A,B 4.5 A,B 4.6 A,B 4.7 A,B 4.8 A,B

Topic Preparing and analyzing adjusting entries Preparing and analyzing adjusting entries Analysis of adjusted data Preparing and analyzing adjusting entries Preparing and analyzing adjusting entries Preparing and analyzing adjusting entries Preparing and analyzing adjusting entries Analyzing the effects of errors

Learning Objectives 1-7 1–6, 9 1–7, 9 1–7, 9 1–7, 9 1–7, 9 1–7, 9 1–7, 9

Skills Analysis, communication Analysis, communication Analysis Analysis, communication Analysis, communication Analysis, communication Analysis, communication Analysis

Critical Thinking Cases Determining whether adjusting 4.1 entries are required 4.2 Real World: Avis The concept of materiality Expense Manipulation (Ethics, 4.3 fraud & corporate governance) 4.4 Real World: Hershey Identifying accounts involved in adjusting process (Internet)

1–7 8 3, 7, 8

1–6

Analysis, judgment, communication Communication, judgment, analysis Analysis, judgment, communication Communication, technology, judgment, research

© The McGraw-Hill Companies, Inc., 2012 Overview

DESCRIPTIONS OF PROBLEMS AND CRITICAL THINKING CASES
Below are brief descriptions of each problem and case. These descriptions are accompanied by the estimated time (in minutes) required for completion and by a difficulty rating. The time estimates assume use of the partially filled-in working papers.

Problems (Sets A and B)
4.1 A,B Florida Palms Country Club/Georgia Gun Club Requires students to prepare adjusting entries, classify them as accruals or deferrals, and discuss the difference between the book value of an asset and its fair market value. 4.2 A,B Enchanted Forest/Big Oaks Requires students to prepare adjusting entries, classify them as accruals or deferrals, analyze their effects on the financial statements, and report assets at book value in the balance sheet. 20 Easy

40 Medium

4.3 A,B Gunflint Adventures/River Rat Requires students to prepare adjusting entries and interpret financial information. 4.4 A,B Campus Theater/Off-Campus Playhouse Requires students to prepare adjusting entries, analyze financial information, and interpret differences between income taxes expense and income taxes payable. 4.5 A,B Terrific Temps/Marvelous Music Requires students to prepare adjusting entries and...
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