Question

Exercises 35 C. Henry James, a real estate investorsidering building apartments in the Seattle area d. Boeing's management. e. International Association of Machinists and Aerospace Workers, a labor union represe ing many Boeing employees. LO1-3 EXERCISE 1.3 What Is Financial Reporting? A major focus of this course is the process of financial reporting. a. What is meant by the term financial reporting? b. What are the principal accounting reports involved in the financial reporting process? In general terms, what is the purpose of these reports? C. Do all business entities engage in financial reporting? Explain. d. How does society benefit from the financial reporting process? L01-5 EXERCISE 1.4 Generally Accepted Accounting Principles Generally accepted accounting principles play an important role in financial reporting. a. What is meant by the phrase generally accepted accounting principles? b. What are the major sources of these principles? e. Is there a single comprehensive list of generally accepted accounting principles? Explain. d. What types of accounting reports are prepared in conformity with generally accepted account ing principles? Describe the roles of the following organizations in establishing generally accepted accounting principles: a. FASB b. AICPA c. SEC From which of these organizations can you most easily obtain financial information about publicly owned companies? L01-6 EXERCISE 1.5 Accounting Organizations L01-3 EXERCISE 1.6 Investment Return You recently invested $18,000 of your savings in a security issued by a large company. The secu rity agreement pays you 6 percent per year and has a maturity three years from the day you pur chased it. What is the total cash flow you expect to receive from this investment, separated into the return on your investment and the return of your investment? Match the terms on the left with the descriptions on the right. Each description should be used only once. L01-3, L01-4, L01-5, L01-7 EVERAL
exercise 1.4 need all 4 answered A,B,C,D

Answer 1

Exercise 1.4

Answers:

a. Generally accepted accounting principles is how information that will be sent to external parties is prepared. It must be prepared in a way where both the individuals preparing the information and the external parties understand this information. These rules provide the guidelines to what information to include in financial statements.

b. There are three major sources, the securities and exchange commission, the Financial Accounting Standards Board and the International Accounting Standards Board. They all assist in establishing accounting principles in the US.

c. No because they are general accounting principles and these principles vary from each source.

d. Financial statements are recognized by all three major sources being prepared in conformity with the GAAP.