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Mar 19 2017 10:07pm
A company "paid out $10,000 in cash dividends, and at year end had $3000 on dividends payable."

Assume this is for all one year, and nothing carried forward from the previous year.

I am assuming this can only be interpreted in one way: $10,000 cash dividends were paid, and $3000 cash dividends remained payable. That would mean $13,000 in dividends were declared for the year, if that was the only dividend activity. Correct?

I am trying to make sure I fully understand the meaning of "paid out" and "cash dividends", so that I interpret a question correctly. A "cash dividend" is a type of dividend, and "paid out" means that the dividend has run its course through the books?
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Mar 20 2017 08:51pm
Additional question:

Why are Accounting course questions worded so oddly? They omit so many details that it's easy to make an error. Like they refer to "Insurance" in one year, and "Insurance" in another year, and assume you know that both insurance costs are under the same pre-paid expense account and should not overlap as they are concurrent and not utilized at the same time (no reference to the nature of the business in the question). Or a cash-basis accounting question is presented with omitted details, requiring us to correct and adjust for the year to fix the books as accrual-based... but so many details are left out, that the gaps are beyond ridiculous (assumptions must be made that are open to interpretation, that could easily have been clarified with slight context about the nature of the business).

This post was edited by Canadian_Man on Mar 20 2017 08:52pm
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Mar 20 2017 11:34pm
Quote (Canadian_Man @ Mar 19 2017 10:07pm)
A company "paid out $10,000 in cash dividends, and at year end had $3000 on dividends payable."

Assume this is for all one year, and nothing carried forward from the previous year.

I am assuming this can only be interpreted in one way: $10,000 cash dividends were paid, and $3000 cash dividends remained payable. That would mean $13,000 in dividends were declared for the year, if that was the only dividend activity. Correct?

I am trying to make sure I fully understand the meaning of "paid out" and "cash dividends", so that I interpret a question correctly. A "cash dividend" is a type of dividend, and "paid out" means that the dividend has run its course through the books?


Thats how I would read it

Quote (Canadian_Man @ Mar 20 2017 08:51pm)
Additional question:

Why are Accounting course questions worded so oddly? They omit so many details that it's easy to make an error. Like they refer to "Insurance" in one year, and "Insurance" in another year, and assume you know that both insurance costs are under the same pre-paid expense account and should not overlap as they are concurrent and not utilized at the same time (no reference to the nature of the business in the question). Or a cash-basis accounting question is presented with omitted details, requiring us to correct and adjust for the year to fix the books as accrual-based... but so many details are left out, that the gaps are beyond ridiculous (assumptions must be made that are open to interpretation, that could easily have been clarified with slight context about the nature of the business).


GAAP
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Mar 20 2017 11:58pm
Quote (ChronFather420 @ Mar 20 2017 10:34pm)
Thats how I would read it



GAAP


Good to first part.

GAAP tho? I know what that is, but I'm saying some questions are worded so poorly (intentionally leaving out info to try to get students to think critically), but worded so poorly that there are multiple possible correct answers... but they accept only one as right, because it's on a "best answer" basis. Really frustrates me.
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Mar 21 2017 09:54am
Quote (Canadian_Man @ Mar 20 2017 11:58pm)
Good to first part.

GAAP tho? I know what that is, but I'm saying some questions are worded so poorly (intentionally leaving out info to try to get students to think critically), but worded so poorly that there are multiple possible correct answers... but they accept only one as right, because it's on a "best answer" basis. Really frustrates me.


I think they word it so that even though it seems like there are multiple answers, if you refer to GAAP principles, it leaves only one answer. Get you thinking like an accountant.
Or maybe it was just written by an imbecile.

Both are equally plausible in my mind.
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Mar 21 2017 09:13pm
Quote (ChronFather420 @ Mar 21 2017 08:54am)
I think they word it so that even though it seems like there are multiple answers, if you refer to GAAP principles, it leaves only one answer. Get you thinking like an accountant.
Or maybe it was just written by an imbecile.

Both are equally plausible in my mind.


Nah the questions are just worded really really poorly. They do try to word them so ambiguously to require a lot of critical thinking, and application of GAAP, but they don't specify things.

There are some really bad examples, but I can't think of them off the top of my head. The most recent (not-so-bad one) is: A company does like 16 different transactions. In 2015 they prepaid for insurance, in 2016 they prepaid for insurance. This company does a range of activities. The prepaid costs of insurance were quite a bit different. It was expected that 2015's prepaid insurance not overlap with 2016's prepaid insurance (application of accrual expensing rules). However, it would've been easy to interpret the prepaid insurance costs as being separate and overlapping. It was easy to figure out what they wanted, but it would've been easy to specify in the question. But that wasn't even that bad.

I'd just prefer if questions were just a tad bit more specific, not in giving away details that I need to apply GAAP and IFRS standards to, but in just providing context about the business that I'm fixing the simplified question-based books for.

Another question referred to the company having "unpaid invoices". It was supposed to be assumed by students that meant the company didn't pay for their own invoices from a supplier. But the company themselves were suppliers, so I thought "unpaid invoices" meant that they had accounts receivable that were outstanding (not accounts payable).

This post was edited by Canadian_Man on Mar 21 2017 09:14pm
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Mar 21 2017 10:37pm
Quote (Canadian_Man @ Mar 21 2017 09:13pm)
Nah the questions are just worded really really poorly. They do try to word them so ambiguously to require a lot of critical thinking, and application of GAAP, but they don't specify things.

There are some really bad examples, but I can't think of them off the top of my head. The most recent (not-so-bad one) is: A company does like 16 different transactions. In 2015 they prepaid for insurance, in 2016 they prepaid for insurance. This company does a range of activities. The prepaid costs of insurance were quite a bit different. It was expected that 2015's prepaid insurance not overlap with 2016's prepaid insurance (application of accrual expensing rules). However, it would've been easy to interpret the prepaid insurance costs as being separate and overlapping. It was easy to figure out what they wanted, but it would've been easy to specify in the question. But that wasn't even that bad.

I'd just prefer if questions were just a tad bit more specific, not in giving away details that I need to apply GAAP and IFRS standards to, but in just providing context about the business that I'm fixing the simplified question-based books for.

Another question referred to the company having "unpaid invoices". It was supposed to be assumed by students that meant the company didn't pay for their own invoices from a supplier. But the company themselves were suppliers, so I thought "unpaid invoices" meant that they had accounts receivable that were outstanding (not accounts payable).


Yeah thats pretty ambiguous. At first glance when I read unpaid invoice I took it as an invoice my company hasnt paid, so our AP. I definitely see how that can be misinterpreted lol
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