Julesther O.

Caada
Bridging Course Accounting for Executives and Non-Accountant
January 14, 2015

Part 1: Discussion Questions (Depreciation Method, Accounting Policies...)

1.) The choice of depreciation method affects balance sheet valuation and on
income determination because it has an impact on earnings. The choice of
depreciation method may improve or degrade the balance sheet valuation and
income determination of a company. Comparing the two commonly used
depreciation method (straight-line and accelerated) will give different values.
Accelerated method will most likely give a higher value of depreciation expense
compared to the straight-line method. The value on depreciation expense will be
reflected in the balance sheet and it will lessen the asset of the company.
2.) The creation of financial statement is covered accounting policies and
accounting estimates. Therefore, there will also be changes in financial statement
once accounting policies and estimates change.

Part 1: Discussion Questions (LIFO, FIFO, Uncollectible Accts., Internal controls...)

1.) LIFO and FIFO are systematic methods of inventory valuation. When
goods are perishable, it is appropriate to use FIFO system. If the goods are not
perishable it is appropriate to use LIFO. Change in price affects FIFO and LIFO. The
prices of the remaining goods will be reflected in the inventory. Moreover, when
prices of the remaining goods are high, FIFO matches low costs with current sale,
inventory is valued at approximate replacement cost, and it will result to a higher
taxable income. While in LIFO, when prices are high, it matches high costs with
current sales, inventory is valued based on low cost basis, and result in lower
taxable income.
2.) The rationale behind the provision for uncollectible accounts is that the
company will incur more expenses for the effort in continuing to recover the debts
which they believed, after a series of collection attempts, to be impossible collect.
The company will rather reflect it in their book as losses.
3.) Internal control of cash and cash equivalents minimizes errors and theft
because there are many people involved in checking the records for cash. There are
also different persons responsible for handling cash, recording cash transactions,

and reconciling cash balances. Internal control of cash and cash equivalents
enhances the reliability and accuracy of accounting data because cash transactions
passes different stages of check and balances before it becomes cash.
4.) The accountant will reflect it as cash equivalent when the Treasury note
matures in less than 3 months. The accountant will reflect T-note as marketable
securities when the company uses its T-note as capital and to acquire something for
the company. And lastly, the accountant will reflect T-note in the book if they are only
after of the interest of the T-note.