1. Describe topics for three of the notes to financial statement-other than defe
ID: 2340264 • Letter: 1
Question
1. Describe topics for three of the notes to financial statement-other than deferred taxes, depreciation, inventory or commitments and contingencies (6) a. b. 2. Give 2 situations or reasons that would cause a deferred tax liability or asset (4) b. What effect would a tax cut on corporate earnings have on a company's financial statement where there is a deferred tax liability? (2) 3. a. 4. Give two methods of inventory valuation and an example of when each would be used (4) a. b. List one item that would be included in the Other Comprehensive Income statement and tell why that it is included there and not in the operating statement (2) 5. 6. Describe the importance of effective internal controls (2) 7. Provide 2 examples of things to do to establish effective internal controls (4) b. 8. List two items that might be in the Commitments and Contingencies note to financial statement a. b.Explanation / Answer
Answer(2): Deferred tax liability arises when:
Answer(4): Inventory valuation method:
(1)FIFO- It is first in first out, products that have been purchased or manufactured first, will be sold firstly. This method says that first goods purchased will be sold firstly.
Advantage- If goods are sold according to this method then goods do not get staled and wasted.
(2): LIFO- Last is first out says goods that are purchased lastly, will be sold firstly. This system says that the goods that are placed back side on the shelf, will get unsold most of the time. This method is not generally used.
Advantage- LIFO is good for companies and industries that are suffering higher cost.
Answer(6): Importance of effective internal controls- Some points are as following-
Answer(7): Examples of establishing effective internal control-
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