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    Short Case Activities

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    Raff Lesiaa
    Mr. Z runs a bakery and hires Mr. P as a baker, agreeing to pay him a monthly salary and 5% profit sharing. This constitutes a partnership that should register as a manufacturing business with relevant agencies like the FDA and Department of Health, with its primary activity being the sale of baked goods. A new CPA exam top scorer is approached for client work but declines as they lack experience to properly advise and assist the client, despite their academic success. While wanting to help, they do not have the abilities required.

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    Short Case Activities

    Uploaded by

    Raff Lesiaa
    129 views2 pages
    Mr. Z runs a bakery and hires Mr. P as a baker, agreeing to pay him a monthly salary and 5% profit sharing. This constitutes a partnership that should register as a manufacturing business with relevant agencies like the FDA and Department of Health, with its primary activity being the sale of baked goods. A new CPA exam top scorer is approached for client work but declines as they lack experience to properly advise and assist the client, despite their academic success. While wanting to help, they do not have the abilities required.

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    Mr. Z runs a bakery and hires Mr. P as a baker, agreeing to pay him a monthly salary and 5% profit sharing. This constitutes a partnership that should register as a manufacturing business with relevant agencies like the FDA and Department of Health, with its primary activity being the sale of baked goods. A new CPA exam top scorer is approached for client work but declines as they lack experience to properly advise and assist the client, despite their academic success. While wanting to help, they do not have the abilities required.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    129 views2 pages

    Short Case Activities

    Uploaded by

    Raff Lesiaa
    Mr. Z runs a bakery and hires Mr. P as a baker, agreeing to pay him a monthly salary and 5% profit sharing. This constitutes a partnership that should register as a manufacturing business with relevant agencies like the FDA and Department of Health, with its primary activity being the sale of baked goods. A new CPA exam top scorer is approached for client work but declines as they lack experience to properly advise and assist the client, despite their academic success. While wanting to help, they do not have the abilities required.

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    © All Rights Reserved
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    You are on page 1of 2

    Gabrielle Pumeg-as

    Part 1. Short Cases


    Case A
    Mr. Z runs a bakery as his business. He asked Mr. P to work for him as a baker. Mr. P proposed that
    if he works for Mr. Z, he should have 5% profit sharing aside from his monthly salary in which Mr. Z
    agreed.

     Is there a partnership in this case?


    - I believe that there is a partnership because Mr. P has a share for the profit which is 5%
    that Mr. Z also agreed.
     What of form of business should be registered and to which government agencies should
    they register?
    - Manufacturing business should be registered because goods produced from raw
    materials will be sold to costumers. The government agencies that they shood register
    would be the Food and Drug Administration, Business permit to get at your towns City
    Hall, and the Department of Health
     What is the primary activity of the business? 
    - The primary activity of the business is to sell breads because his business is a bakery. It
    can also be cakes and pastries as long as it is baked.

    Case B
    You just passed the CPA board exam and ranked as top 1. You don't have any experience in
    accounting practice. A client comes to you for management advisory and tax consultancy, and audit
    engagement purposes. Will you accept the engagement? Why or why not?
     I won’t accept the engagement because even though I am ranked top 1, with no experience, I
    can’t help my client with the abilities that I have at the moment. Even though I want to help my
    client, I do not know what to say and recommend to him.
     
    Part 2. Identify the accounting concepts violated then explain how each violation can be corrected.
    1. The owner of Z Enterprise mixed up his personal expenses with the operating expenses of the
    corporation.
     Accounting entity concept because personal expenses should be separated from the company
    expenses.
    2. Because the enterprise's income is low this year, the owner decided to ignore depreciation incurred
    this year.
     Prudence because the enterprise’s income is at a disadvantage, he ignored the depreciation.
    3. The owner did not report the sales because he is waiting for the customer to pay first.
     Accrual basis and prudence because he can get revenue but the owner is uncertain if he will
    all buy the things that he got.
    Gabrielle Pumeg-as
    4. The owner believes it is foolish to report financial information on a yearly basis. Instead, the owner
    believes that financial information should be disclosed only when significant new information is
    available related to the company's operations.
     Periodicity & full disc
    5. The accountant of Z enterprise included sales of the subsequent period as sales of the current
    period.
     Accrual Basis because it can already get its income for the current period.

    6. The owner of the business purchased a new home computer for personal use using the company
    money, charging miscellaneous expense.
     Accounting entity concept because he used the assets of the company.

    7. Inventories costing P100,000 is reported at its current market value of P140,000.


     Historical cost concept because even though it changed its price, its already recorded as
    assets
    8. Land owned by the company was recorded as resources even if the said land has been covered by
    volcanic mudflow and cannot be used anymore.
     Cost benefit concept because it can still be used but make the cost lower.
    9. After a decision for expansion was made, the financial statements of Z Enterprise were prepared.
     Matching Concept, after the decision was made which was the cause, the financial statements
    were prepared as the effect.
    10. All resources were initially recorded at their acquisition cost.
     Historical cost concept

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