E13.12 Apply definition and recognition criteria for revenues. LO7

The Conceptual Framework defines revenues and outlines a number of criteria for their recognition. Surfin’ Magazines Ltd identifies the following independent transactions and events:

(a) Received $24 000 in subscriptions for magazines to be delivered once per month for the next 12 months.

(b) Received dividends from IAG for shares owned by the business.

(c) Paid interest on a loan to purchase a delivery vehicle.

(d) Received a discount for early payment of a supplier’s invoice.

(e) Delivered magazines for the month for customers who had paid in advance.

(f) Delivered magazines and invoices to customers who had not prepaid their

subscriptions.

Required

For each of the items listed above, explain whether you would recognise it as revenue in the statement of profit or loss. Refer to the definition and recognition criteria outlined in the Conceptual Framework to support your answer.

Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December:

Prepare the company's flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or "None".

Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December: Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 Actual Results Planning Budget Variances Customers served 34,000 29,500 Revenue ($4.8q) $ 164,000 $ 141,600 $ 22,400 F Expenses: Wages and salaries ($37,100 + $1.6q) 94,600 84,300 10,300 U Supplies ($0.6q) 20,000 17,700 2,300 U Insurance ($14,100) 14,350 14,100 250 U Miscellaneous expense ($7,100 + $0.4q) 22,450 18,900 3,550 U Total expense 151,400 135,000 16,400 U Net operating income $ 12,600 $ 6,600 $ 6,000 F

Prepare the company's flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or "None".

The data from data217.dat contains information on 78 seventh-grade students. We want to know how well each of IQ score and self-concept score predicts GPA using least-squares regression. We also want to know which of these explanatory variables predicts GPA better. Give numerical measures that answer these questions. (Round your answers to three decimal places.)
(Regressor: IQ) R ^{2 ANSWER 1}


(Regressor: Self-Concept) R ^{2 : ANSWER 2}

Which variable is the better predictor?

IQSelf Concept Answer 3

obs     gpa     iq      gender  concept
1       7.94    118     2       66
2       8.292   104     2       60
3       4.643   83      2       47
4       7.47    120     2       55
5       8.882   90      1       67
6       7.585   104     2       59
7       7.65    104     2       75
8       2.412   107     2       58
9       6       114     1       55
10      8.833   107     2       101
11      7.47    116     1       59
12      5.528   91      1       73
13      7.167   120     2       38
14      7.571   114     1       57
15      4.7     117     1       35
16      8.167   114     1       58
17      7.822   123     1       53
18      7.598   132     1       56
19      4       90      2       49
20      6.231   111     1       68
21      7.643   125     2       92
22      1.76    74      2       35
24      6.419   118     1       48
26      9.648   123     2       74
27      10.7    118     1       103
28      10.58   112     2       67
29      9.429   103     2       64
30      8       123     2       82
31      9.585   125     2       59
32      9.571   121     1       50
33      8.998   117     1       60
34      8.333   122     1       70
35      8.175   108     2       63
36      8       111     2       77
37      9.333   118     1       55
38      9.5     125     2       61
39      9.167   127     2       45
40      10.14   129     1       83
41      9.999   140     1       46
43      10.76   126     2       74
44      9.763   124     2       56
45      9.41    127     2       51
46      9.167   122     2       69
47      9.348   107     2       71
48      8.167   124     2       84
50      3.647   97      2       43
51      3.408   125     1       22
52      3.936   88      2       25
53      7.167   118     2       70
54      7.647   123     2       50
55      .53     80      2       37
56      6.173   95      2       64
57      7.295   105     2       57
58      7.295   99      1       58
59      8.938   124     1       80
60      7.882   103     1       50
61      8.353   101     2       36
62      5.062   92      2       69
63      8.175   117     2       75
64      8.235   118     2       67
65      7.588   114     2       39
68      7.647   113     2       43
69      5.237   109     1       53
71      7.825   97      2       61
72      7.333   99      1       61
74      9.167   129     2       70
76      7.996   120     2       63
77      8.714   103     1       45
78      7.833   111     1       41
79      4.885   108     2       67
80      7.998   98      1       65
83      3.82    102     2       56
84      5.936   101     1       48
85      9       118     1       37
86      9.5     115     1       50
87      6.057   108     2       32
88      6.057   105     1       63
89      6.938   107     2       49

Question 2 Qui Limited was incorporated in Nova Scotia on May 21, 1936. The corporation has never carried on business in Canada, but held its annual directors' meeting in Nova Scotia each year from 1936 through 1966. Which one of the following best describes Qui Limited's residency status for Canadian income tax purposes for 2018? Question 2 options:

1) A full-time resident

2) A part-time resident

3) A deemed resident (sojourner)

4) A non-resident

Question 3 Which of the following statements about the ITA and related procedures is correct? Question 3 options:

1) There is no statutory definition of the word "income" in the ITA.

2) Courts always make decisions based on GAAP.

3) In tax matters, CRA always has the burden of proving that an assessment is incorrect.

4) An appeal in the Federal Court of Appeal must be made within 60 days from the date of the Tax Court of Canada decision.

Question 4 An overloaded external auditor takes home the audit work related to a client's taxation. Due to time pressure, the auditor asks her husband, who is an accountant too but working for another company, to help her in completing the working papers. Which of the following best describes your assessment of the auditor's action? Question 4 options:

1) This is acceptable because her husband is not working for her client.

2) She has most likely violated Canadian Auditing Standards (CAS) only.

3) She has most likely violated the CPA-Alberta Rules of Professional Conduct only.

4) She has most likely violated both CPA-Alberta Rules of Professional Conduct and CAS.

Question 5 Individuals must file their income tax returns: Question 5 options:

1) On a quarterly basis if self employed or spouse is self-employed.

2) June 15 if self-employed or spouse is self-employed.

3) If an individual's date of death is December 15, by April 30 of the following calendar year.

4) If an individual's date of death is November 15, by April 30 of the following calendar year.

Question 6 In citing the general restriction on expenses against business or property income, you would refer to: Question 6 options:

1) Subsection 18(1)a)

2) Subparagraph 18(1)a)

3) Paragraph 18(1)a)

4) Clause 18(1)a)

Question 7 Ontario Manufacturing Company is a company incorporated in the United States. It employs salespeople who live in Canada but does not have an office or any establishment bearing the company name in Canada. The salespeople visit Canadian customers, who then order from Ontario Manufacturing Company and receive goods directly from the United States. Which of the following best describes the tax status in Canada of Ontario Manufacturing Company? Question 7 options:

1) Ontario Manufacturing Company is not taxable in Canada, because it does not have a permanent establishment in Canada.

2) Ontario Manufacturing Company is subject to a withholding tax under Part XIII of the Income Tax Act on its gross revenue in Canada.

3) Ontario Manufacturing Company is subject to tax only on its Canadian sales because the location of company employees in Canada implies that there is a permanent establishment.

4) Ontario Manufacturing Company is subject to a withholding tax under Part XIII of the Income Tax Act on its net income earned in Canada.

Question 8 Amy lives in Detroit, Michigan, USA. She commutes daily to Windsor, Ontario, Canada, where she is employed by Ford Motor Company of Canada Limited. She works 9 am to 5 pm, Monday through Friday. Which one of the following best indicates Amy's residency status for Canadian income tax purposes for 2018? Question 8 options:

1) A full-time resident

2) A part-year resident

3) A deemed resident (sojourner)

4) A non-resident

Question 9 An auditor reviewing ABC Corporation discovered that $100,000 of corporate revenue was being deliberately recorded in the books as a debit to Bank and a credit to shareholders loan. Which of the following statements is true? Question 9 options:

1) This transaction is an example of tax avoidance.

2) This transaction is an example of tax planning.

3) This transaction does not fit any the above categories.

4) This transaction is an example of tax evasion.

Question 10 ABC Inc. is a private corporation incorporated in Canada in 1991. All of its income is derived from sources originating in New Zealand. All the ABC shareholders reside permanently in the United States, where they make all the major decisions for the company. Which of the following accurately describes ABC's tax status in Canada? Question 10 options: 1) ABC is not a resident of Canada and is taxed in Canada only on income earned from its permanent establishment in Canada.

2) ABC is a resident of Canada and taxed in Canada on its world income.

3) ABC is not a resident of Canada and is not subject to tax in Canada.

4) ABC is not a resident of Canada but is subject to a withholding tax on dividends paid to its shareholders in the United States.

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,150. Fragmental collected the entire $9,200 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

Multiple Choice

• A debit to Rent Revenue and a credit to Cash for $3,450.

• A debit to Rent Revenue and a credit to Unearned Rent for $3,450.

• A debit to Cash and a credit to Rent Revenue for $9,200.

• A debit to Unearned Rent and a credit to Rent Revenue for $3,450.

• A debit to Unearned Rent and a credit to Rent Revenue for $5,750

Assignment 2

Accounting Information Systems

Selected accounts from the chart of accounts of Salah Company are shown below.

112 Accounts Receivable

201 Accounts Payable

120 Merchandise Inventory

401 Sales Revenue

157 Equipment

505 Cost of Goods Sold

Salah Company uses special journals and a general journal. The following transaction occurred during September 2017.

Sept. 2 Sold merchandise on account to Ali, invoice no. 101, $620, terms n/30. The cost of the merchandise sold was $420.

10 Purchased merchandise on account from Tarek $650, terms 2/10, n/30.

21 Sold merchandise on account to Salim, invoice no. 102 for $800, terms 2/10, n/30. The cost of the merchandise sold was $480.

25 Purchased merchandise on account from Meriem $860, terms n/30.

26 Sold merchandise on account to Ali, invoice no. 103, $310, terms n/30. The cost of the merchandise sold was $210.

27 Sold merchandise to Ahmed for $700 cash. The cost of the merchandise sold was $400.

29 Purchased office equipment on account from Meriem $6,500.

Instructions:

(a) Record the transaction(s) for September that should be journalized in the sales journal , the purchases journal and the general journal.

(b) Post to both the general and Subsidiary ledger accounts (assume that all accounts have zero beginning balance).

(c) Prove the equality of the posting from the special journals.

We are a consulting company. Our customer is the BEST COMPUTER STORE which is targeted to begin operation next year. The store will need an information system to help store customer/sales & inventory information. Our system will be able to add/edit customers/sales & inventory and creates necessary output transactions such as packing slip & invoice.

We did Statement of Work, Team & Clear Objectives & Scope, Timeline (PERT and Gantt charts), Assumption and Budget following requirements.

1. What I should do for Detailed Security/ Backup Plans?