ACC 206 Week 2
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Description
ACC 206 Week 2
ACC 206 Week 2 Quiz
Assignments
E14-13 Classifying items on the indirect statement of cash flows [510 min]
The cash flow statement categorizes like transactions for optimal reporting.
Requirement
1.Identify each of the following transactions as one of the following:
Operating activity (O)
Investing activity (I)
Financing activity (F)
Noncash investing and financing activity (NIF)
Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases () cash. The indirect method is used to report cash flows from operating activities.
Fraud Case 14-1
Frank Lou had recently been promoted to construction manager at a development firm. He was responsible for dealing with contractors who were bidding on a multi-million dollar excavation job for the new high-rise. Times were tough, several contractors had gone under recently, and the ones left standing were viciously competitive. That morning, four bids were sitting on Frank's desk. The deadline was midnight, and the bids would be opened the next morning. The first bidder, Bo Freely, was a tough but personable character that Frank had known for years. Frank had lunch with him today, and after a few beers, Bo hinted that if Frank inadvertently mentioned the amount of the lowest bid, hed receive a birthday card with a gift of cash. After lunch, Frank carefully unsealed the bids and noticed that another firm had underbid Bo's company by a small margin. Frank took Bo's bid envelope, wrote the low bid amount in pencil on it, and carried it downstairs where Bo's son William was waiting. Later that afternoon, a new bid came in from Bo's company. The next day, Bo's company got the job, and Frank got a birthday card in his mailbox.
Requirements
1.Was Frank's company hurt in any way by this fraudulent action?
2.How could this action hurt Frank?
3.How can a business protect against this kind of fraud?
P14-25APreparing the statement of cash flowsindirect method [3545 min]
Accountants for Johnson, Inc., have assembled the following data for the year ended December 31, 2012:
Requirement
1.Prepare Johnson's statement of cash flows using the indirect method. Include an accompanying schedule of noncash investing and financing activities.
Chapter 15, E 15-18
Discussion Questions
Financial Statement Analysis. Discuss what high current ratios indicate and why are businesses with extremely high current ratios (example: 25.0) at risk? Explain what a high accounts receivable turnover indicates to a business?
Discuss what high current ratios indicate and why are businesses with extremely high current ratios (example: 25.0) at risk?
Explain what a high accounts receivable turnover indicates to a business?