FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Buddy Dupree is the
Questions:
- Is Buddy behaving ethically? Why or why not?
- Who is affected by Buddy’s decision?
- How should Buddy have handled this situation?
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- Do you agree to the student answer to this question Buddy Dupree is the accounting manager for On-Time Geeks, a tech support company for individuals and small businesses. As part of his job, Buddy is responsible for preparing the company’s trial balance. His supervisor placed a “hard deadline” of Friday at 5p.m. for the completion of the trial balance. Unfortunately, Buddy was unable to get the trial balance to balance by the due date. The credit side of the trial balance exceeded the debit side by $3,000. To make the deadline, Buddy decided to add $3,000 debit to the vehicles account balance. He selected the vehicles account because it will not be significantly affected by the additional $3,000. Questions: Is Buddy behaving ethically? Why or why not? Who is affected by Buddy’s decision? How should Buddy have handled this situation? Businesses, proprietors, and or individuals, are entrusting that when someone is put into a position such as an accounting manager they are going…arrow_forwardSanjuarrow_forwardYesterday, Extensive Enterprise Inc. released its 2018 annual report on the company’s website. While reading the report for his boss, Rafael came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Asha, for help. RAFAEL: Asha, do you have a second to help me with my reading of Extensive’s annual report? I’ve come across several unfamiliar terms, and I want to make sure that I’m interpreting the data and management’s comments correctly. For example, one of the footnotes to the financial statements uses “the book value of Extensive’s shares,” and then in another place, it uses “Economic Value Added.” I’ve never encountered those terms before. Do you know what they’re talking about? ASHA: Yes, I do. Let’s see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole.…arrow_forward
- During the monthly internal audit in the end of March, Cheung’s senior accounting manager Sherry discovered three suspicious journal entries. She would like to further investigate whether theaccountants made those mistakes intentionally. The three journal entries were summarized as follows. Luckily, there were notes recorded by the accountants together with those entries. 1. Manufacturing Overhead $2,000Salary Payable $2,000 Notes: This is for salary expenses incurred but not yet paid to staff in the advertising department. As I am not able to find any “Non-factory Overhead” account to record it, I decided to put it under “Manufacturing Overhead”. 2. Factory Labor 160,000Cash 160,000 Notes: This is to record factory labor costs for the month. The total amount of $160,000 includes the payroll taxes of $24,000. The remaining amount won’t be paid till April 15th.But because the payroll taxes will be paid in cash sooner or later, I credited Cash for the total amount. 3. Work in Process…arrow_forwardBrian Marlow recently was hired to prepare Louise Michenor Consulting’s year-end financial statements. Brain just entered his CPA certificate, and Louise Michneor was one of his first clients. Louise employs a bookkeeper, Martha Hailing, who does the daily journal entries and prepares a year-to-date trial balance at the end of the of each month. Martha gives the December 31 trial to a CPA to make adjustments and generate the financial statements. As Brian was looking through Louise Michenor’s books, he noticed two things. First, in each of the last three years, a different COA had prepared the financial statements. Second, the amount shown on the December 31 trial balance for miscellaneous expense was quite high this year compared to prior years. Brian called Martha to find out is she new why miscellaneous expense had such a high balance. Martha’s response was “ I just do what Louise tells me to do. If she wants to charge personal expenses to the company, it’s none of my business “.…arrow_forwardYou are the staff accountant working at a local tutoring center. The monthly financial statements (Income Statement, Statement of Retained Earnings, and Balance Sheet) were just finalized and released to the employees of the tutoring center. You hear some of the other employees talking about the financial statements. In most cases, the employees do not understand the purpose of the statements. You have been asked by your supervisor to create a MEMO to be sent to the employees of the tutoring center that includes the following: Explain how accounting became a “norm” (what made a system of accounting necessary) and reflect on why YOU think it is beneficial for society as a whole to have a standard method of accounting.arrow_forward
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