Question : 201. The current price of a share of common stock reflects : 1245825

Accounting

201. The current price of a share of common stock reflects current economic conditions, not the requirements of authoritative guidance. Market-to-book-value ratios tend to be large for firms that
A. make substantial expenditures on internally developed assets.
B. have a favorable competitive position.
C. have a favorable growth potential.
D. All of the above are correct.
E. None of these answer choices is correct.

202. U.S. GAAP and IFRS aid the investors’ analysis process by requiring firms to classify income transactions in particular ways in the financial statements which include
A. Recurring versus nonrecurring.
B. Central versus peripheral.
C. Unrealized versus realized gains and losses from changes in the fair values of assets and liabilities.
D. Adjustments for errors and changes in accounting principles and accounting estimates.
E. all of the above

203. Young Corporation’s capital stock at December 31 consisted of the following:

(a)

Common stock, $2 par value; 100,000 shares authorized, issued, and outstanding.

(b)

10% noncumulative, nonconvertible preferred stock, $100 par value; 1,000 shares authorized, issued, and outstanding.

Young’s common stock, which is listed on a major stock exchange, was quoted at $4 per share on December 31. Young’s net income for the year ended December 31 was $50,000. The yearly preferred dividend was declared. No capital stock transactions occurred. What was the price earnings ratio on Young’s common stock at December 31?
A. 6 to 1
B. 8 to 1
C. 10 to 1
D. 16 to 1

204. Identifying accounting principles. Indicate the accounting principle or method described in each of the following statements.

a. This inventory cost-flow assumption results in reporting the largest net income during periods of rising acquisition costs and nondecreasing inventory levels.

b. This method of accounting for uncollectible accounts recognizes the implied income reduction in the period of sale.

c. This method of accounting for long-term investments in the common stock of other corporations usually requires an adjustment to net income to calculate cash flow from operations under the indirect method in the statement of cash flows.

d. This method of accounting for long-term leases by the lessee gives rise to a noncurrent liability.

e. This method of recognizing interest expense on bonds provides a uniform annual rate of interest expense over the life of the bond.

f. The accounting for this type of hedging instrument designated as a hedge results in a change in other comprehensive income each period.

g. This method of accounting for intercorporate investments in securities can result in a decrease in the investor’s total shareholders’ equity without affecting the Retained Earnings account.

h. This method of recognizing income from a long-term contract generally results in the least amount of fluctuation in earnings over several periods.

i. When a firm identifies specific customers’ accounts as uncollectible and writes them off, this method of accounting results in no change in working capital.

j. The accounting for this type of hedging instrument designated as a hedge affects net
income each period but not other comprehensive income.

k. This method of accounting for long-term leases of equipment by the lessor shows on the income statement an amount for depreciation expense.

l. This inventory cost-flow assumption results in inventory balance sheet amounts closest to current replacement cost.

m. This method of accounting for long-term investments in common stock results in recognizing revenue for dividends received or receivable.

n. This method of depreciation generally results in the largest amounts for depreciable assets on the balance sheet during the first several years of an asset’s life.

o. This inventory cost-flow assumption results in reporting the smallest net income during
periods of falling acquisition costs.

p. This method of accounting for long-term leases of equipment by the lessee results in
showing an amount for rent expense on the income statement.

q. This inventory cost-flow assumption results in inventory balance sheet amounts that may differ significantly from current replacement cost.

r. This method of accounting for long-term leases of equipment by the lessor results in showing revenue at the time of signing a lease.

s. This inventory cost-flow assumption can result in substantial changes in the relation between cost of goods sold and sales if inventory quantities decrease during a period.

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July 1, 2023

Distinguishing Inductive and Deductive Reasoning

Required Resources
Read/review the following resources for this activity:

· Textbook: Chapter 8, 9, 17 (Introduction)

· Lesson

· Minimum of 1 scholarly source (in addition to the textbook)

Click on the following tabs to review the concepts that will be addressed in this activity:

A valid structure is the way in which an argument is put together that assures it will pass the test of logical strength.

Deductive: In deductive arguments, the speaker asserts that her premises are true and, therefore, her conclusion must be accepted. Remember that in a deductive argument, logical strength does not depend on the literal truth of the premises. When we test for logical strength, we assume the premises are true. Once we determine that the argument is logically valid, we can then look at the actual – not presumed – truth of the premises.

Inductive: In inductive arguments, the speaker presents evidence that she claims support the probable truth of her conclusion – that her conclusion is the most likely true – and so you should accept it.

The Basic Structure of Deductive and Inductive Arguments
Argument examples:

Deductive Argument Example: “Tightening laws restricting the use and possession of firearms does not protect average law-abiding citizens; it only puts them at greater risk. Enforcing licensing restrictions, trigger locks, and waiting periods makes it more difficult for law-abiding citizens to defend themselves, and, as a result, encourages criminal activity. Only criminals benefit when ordinary citizens are deprived of their right to own a firearm and protect themselves, their homes, and their families" (Lott, 2000, p. 169)

Lott, J., (2000). More guns, less crime: Understanding crime and gun-control laws. University of Chicago Press.

The argument boils down to this:

· Laws that are obeyed by ordinary citizens and not obeyed by criminals are laws that put ordinary citizens at risk.

· Tight gun laws are laws that are obeyed only by ordinary citizens.

· Tight gun laws put ordinary citizens at risk.

However, the argument itself is composed of three intertwined syllogisms:

Only ordinary citizens are persons who respect tight gun laws.
Criminal persons are not ordinary citizens.
Therefore, criminals do not respect tight gun laws.

Tight gun laws restrict only ordinary citizens.
No criminal is an ordinary citizen.
No criminal is restricted by tight gun laws.

Laws that disfavor the good are laws that favor the bad.
Tight gun laws favor the bad.
Therefore, tight gun laws disfavor the good.

Notice that you cannot remove any of the “legs” and maintain the claim. Notice, also, that the reasons are closely connected and depend on or follow from each other. Notice, also, that the first premise (called the major premise) must be accepted as true, or the entire argument fails.

Inductive Argument: The United States is too dependent upon foreign oil. According to the U.S. Department of Energy, we rely on imported foreign oil for about 45% of our needs. Of the imported oil, most comes from Canada, but 22% comes from countries in the Middle East. Undeniably, this dependence shapes our foreign policy. We have vast oil reserves that could make us energy independent. Development of these resources would produce much-needed jobs, many of them in areas of the country suffering most from the recession. We should be developing an energy policy that makes us energy independent.

· Reason: We import 45% of our oil.

· Reason: Middle East oil imports shape our foreign policy.

· Reason: Our vast oil reserves could make us energy independent.

· Reason: Development of oil reserves could produce much needed jobs.

· Conclusion: For any or all of the above, independent reasons, we should become energy independent.

Notice that any one of these reasons, standing alone, could support the conclusions; they are not logically related to one another as they would be in a syllogism.

Initial Post Instructions
For the initial post, address the following:

· Find and post examples of deductive and inductive arguments. Do NOT use an argument example which clearly indicates it is an example of an inductive/deductive argument.

· For each example, evaluate its logical strength, using the concepts and ideas presented in the textbook readings, the lesson, and any other source you find that helps you to evaluate the validity (deductive) or strength (inductive) of the argument. You can use examples from the text, or you can find examples elsewhere.

oEditorials and opinion columns are a good source, as are letters to the editor. Blogs will also often be based on arguments.

oUse mapping and evaluative techniques to make sure it is an argument.

· Is it inductive or deductive? Explain why.

· Does it pass the tests of validity and strength? Explain.