NC STATE UNIVERSITY - DEPARTMENT OF ACCOUNTING ACC 200 LEARNING OBJECTIVES Text: Course Pack Readings Section 1 - Selecting a Form of Business Ownership and The Role of Accounting in Business Students should be able to: 1. Contrast the sole proprietorship, partnership (general and limited) corporate (C-corp and S-corp), and limited liability (LLC and LLP) forms of business ownership. 2. Describe the advantages and disadvantages of the sole proprietorship, partnership, corporate and limited liability (LLP and LLC) forms of business ownership, 3. Contrast the tax treatment of the sole proprietorship, partnership, C-corporation, S-corporation, and LLC forms of business ownership, 4. Describe the three business activities of financing, investing and operating, 5. Define accounting and its role in business, 6. Describe and illustrate the basic financial statements and how they interrelate, 7. Define assets, liabilities, owners’ equity, revenue and expense and understand their relationship to the financial statements, and 8. Describe the basic accounting concepts underlying financial reporting including the monetary unit assumption, time period assumption, going concern assumption, cost principle, and full disclosure principle. Section 2 - The Cash Basis of Accounting Students should be able to: 1. Describe the cash and accrual bases of accounting, 2. Describe the revenue recognition and matching principles. 3. Use the cash basis of accounting to analyze, record and summarize transactions for a business, 4. Use the cash basis of accounting to prepare financial statements (income statement, balance sheet and retained earnings statement) , and 5. Describe the advantages and disadvantages of the cash basis of accounting. Section 3 - The Accrual Basis of Accounting Students should be able to: 1. Describe the accrual basis of accounting, and 2. Use the accrual basis of accounting to analyze, record, and summarize transactions. 11
Cengage Now Assignment 10 Solutions 1. (MC 7-3) Answer: C 2. (MC 7-8) Answer: C 3. (MC 7-11) Answer: C Standard Deluxe CM per unit $ 125 $200 ÷ tuning hours per unit ÷ 2 ÷ 4 CM per tuning hour $62.50 $ 50 4. (MC 7-12) Answer: C 5. (E 7-4) The relevant costs of making the product are the variable costs of $47 per unit. If Switzer buys the units for $50, the company can only avoid the $47 of relevant variable costs. If Switzer accepts the offer and buys the part for $50, income will decrease by $3,000 (1,000 units x $3.00 in additional cost per unit). 6. (E 7-6) If painted rockers are dropped, overall operating profit will not be affected as follows: Decrease in overall CM ($15,000) Decrease in FC * 15,000 Overall decrease in operating income $ 0* A decrease in FC equates to an increase in profit Since the contribution margin lost is exactly equal to the avoidable fixed costs, overall profit will not change.