Little Corporation Uses the Accrual Method of Accounting

question 97

Essay

Little Corporation uses the accrual method of accounting. Little's sole shareholder, Renee, uses the cash method of accounting. Both taxpayers use the calendar year as their tax year. The corporation accrues a $25,000 interest payment to Renee on December 25, 2011 and makes the payment on March 10, 2012. What are the tax consequences of the transactions to both taxpayers in 2011 and 2012?

Compute direct materials price and quantity variances.

Understand the principle of standard costing and variance analysis.

Prepare journal entries for variances and standard costing adjustments.

Calculate total direct labor cost variances and identify variances as favorable or unfavorable.

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Definitions:

Disjuncts

Components of a disjunction (an "or" statement) that represent alternative statements or clauses, where if one is true, the others do not have to be.

Antecedents

Factors or events that precede and potentially influence the outcome of a subsequent event or condition.

Consequents

The outcomes or results that logically follow from a given condition or premise.

Biconditional

A logical statement that is true if both of its component statements (the conditions) are either both true or both false.