Which of the following techniques...

Question: Which of the following techniques consistently gives the best answer when evaluating investment projects that are mutually exclusive?

• The payback method
• The internal rate of return
• Net present value
• The accounting rate of return

Answer: Net Present Value

The net present value consistently provides the best solutions even when considering mutually exclusive projects.

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Keller Company has implemented...

Question: Keller Company has implemented an enterprise risk management system and has responded to a particular risk by adding internal controls. Such a response is characterized by COSO's Enterprise Risk Management Framework as:

• Acceptance
• Avoidance
• Reduction
• Sharing

Answer: Reduction

Reduction involves reducing the likelihood or impact by implementing controls or managing the risk.

Question: Which of the following committees of the board...

• Which of the following committees of the board of directors generally has the responsibility of overseeing CEO succession?

Answer: The nominating/corporate governance committee

• The nominating/corporate governance committee is responsible for overseeing CEO succession.

Accounting Standards Setting Process

The accounting standards setting process are the steps and rules controlled by the Financial Accounting Standards Board. The board engages the users of the financial statements as the investors and the creditors so as to create an understanding of their perspectives in relation to the intended standards. The users are then informed and educated on the proposed standards as their argument on possible effects on the financial reporting is considered. The collaborative involvement of these participants in the due process is mainly to input critiques and diverse opinions in the standard setting process to increase the validity of the standards setting process.

Accounting Standards: True 

Advanced Accounting (11th Edit)

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What tools can be used for financial statement analysis? What do these tools tell you about financial performance? What kinds of business decisions can be made using these tools?

Please use an example from your accounting experiences if possible.

Financial statement analysis is a process of finding a company’s’ strengths and weaknesses by analyzing the company’s’ balance sheet and profit and loss statement. An analysis is used to make investment and credit decisions, asses cash-flow prospects, report enterprise resources, claims to those resources, and changes in them, to report economic resources, obligations, and owners’ equity, to report enterprise performances and earnings, to evaluate liquidity, solvency and flow of funds, to evaluate management stewardship and performance, and to explain and interpret financial information. The tools that can be used for financial statement analysis are financial ratios. Financial ratios evaluate the relationship between financial statement elements and are most useful when compared to previous years’ results, competitor company results, industry averages, or benchmarks. The ROA ratio measures the percentage return on the asset employed by a company, and the ROA can be broken down into two components: the profit margin ratio and the asset turnover ratio. A company can improve its return on assets ration by increasing its PMR and/or ATR. Profitability ratios measure the results of the company’s’ business operations overall performance and the strength of the firm. When analyzing a company’s’ financial rations; it can be determined whether that company has a high or low ROA due to a larger or smaller turnover ratio. Analyzing two companies side by side can determine which come has the higher profit margin ration and can decide which of the two companies to invest in or merge with.

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What is Generally Accepted Accounting Principles (GAAP)? How does GAAP affect financial reporting? How does GAAP need to change to accommodate today’s dynamic business environment?

The Generally Accepted Accounting Principles is a codification of how CPA firms and corporations prepare and present their business income and expense, assets and liabilities on their financial statements. It is a common set of principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards set by policy boards, it is the commonly accepted ways of reporting and recording accounting information (investopedia). GAAP affects financial reporting by setting the standards that accounts must follow when preparing financial statements. GAAP sets the standards for revenue recognition, outstanding share measurements, and balance sheet reporting. GAAP sets the guidelines for companies whether they use either the cash basis accounting or accrual based accounting methods for reporting their financial statements. GAAP determines what transactions are recognized within the assets, liabilities, and equity accounts. GAAP needs to change to accommodate today’s dynamic business environment by allowing international accounting and financial standards to converge with its standards. GAAP is designed solely for the US and the IFRS is a globally accepted set of guidelines. In order for GAAP to keep up with changing business it must become globally accepted. There is a need for globally accepted principles and the FASB Accounting Standards Codification system may be the way to accomplish this goal.

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