Week 5

Question 1

Three types of services as CPAs

Answer 1

Compilations

• Low level of service
• Costs 10k

Reviews

• Mid-level of service
• Costs 40k

Audits

• Highest level of service
• Costs 100k

Question 2

ESG

Answer 2

Environmental Social Governance

Sustainability accounting

Question 3

Sustainability accounting

Answer 3

People

Profits

Planet

Question 4

Principle vs Agent

Answer 4

Principle take ownership and risk

Agent only make a commission on a deal, do not take possession

Question 5

Make a journal entry for Pepsi to buy an ad slot from the super bowl on 10/7/20 (SB will be on 2/5/21)

What happens if the SB is canceled?

Answer 5

Prepaid advertisement*

Question 6

Non-financials

Answer 6

People are less likely to cheat you on non-financials, such as asking a firm how many cars a car will cost

Question 7

Break-even point equation

Answer 7

= Fixed cost / (Selling Price per unit - Variable Cost per unit)

Question 8

John buys a ticket on 9/1/19 to go from NY to London for $1000 (round trip) on Delta. He also earns 100 loyalty points (equivalent to $100) for the trip. He takes the flight on 10/1/19 and returns on 10/5/19. the Loyalty points expire on 12/31/19. John could not avail of the loyalty points and it lapsed.

Prepare a journal entry for American Airlines

Answer 8

9/1/19
Dr. Cash 1000
Cr. Def Rev. 900
Cr. Loyalty 100

10/5/19
Dr. Def Rev. 900
Cr. Rev 900

12/31/19
Dr. Loyalty 100
Cr. Rev. 100

Question 9

Warranty

Answer 9

sep perf obligation if a customer has right to

purchase it separately

Question 10

Bargaining

Answer 10

Make sure you are recognizing your revenue