Should the U.S. GAAP allow organizations to use the cash basis of accounting?
The cash system of recording transactions is only used by individuals and small businesses that deal exclusively in cash. Cash basis accounting is not acceptable under the generally Acceptable Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS).
GAAP basis requires accruals. Recording receivables and accrued expenses in the period in which they were incurred supports the matching concept (matching revenues and expenses in the same period).
Should the U.S. GAAP allow organizations to use the cash basis of accounting?
U.S. GAAP mandates accrual basis accounting for income recognition. However, the statement of cash flows is a mandatory financial statement as a part of a full set of financial statements. Why, if so much emphasis is placed on accrual basis accounting, must a statement of cash flows be presented? What is its purpose and how is it useful to stakeholders? Presenters of such statement may choose to present using the direct or indirect method. Discuss the similarities and differences between...
What are the implications of the GAAP rule that organizations report their financial position on an accrual basis? Select one: a. Revenues are recorded in the year that the organization is legally entitled to receive payment for goods or services. b. Expenses are recorded in the year that asset are consumed in the process of providing goods and services. c. Use of accrual accounting provides a better accounting of cash flows, showing whether the organization has a healthy positive flow...
Asymmetric U.S. GAAP: Under U.S. GAAP, long-lived assets, such as real estate are reported on the balance sheet at the original purchase price of the asset. In the event that the value of a real estate becomes “impaired”—that is, the current market value of the real estate falls below its original purchase price and is unlikely to recover the lost value in the foreseeable future—the asset’s book value is written down to the lower current value and a loss is...
Explain which method is preferable for the health care organizations- accrual or cash-basis accounting.
Which of the following is true with regard to pension accounting under U.S. GAAP and IFRS? Prior service cost is recognized on the balance sheet under both U.S. GAAP and IFRS. Accounting for defined-benefit pensions is typically a less important issue in the U. S. than in other parts of the world. The accounting for defined-benefit pension plans is the same under U.S. GAAP and IFRS. The accounting for defined contribution p
ompare and contrast the use of historical cost and fair value accounting under both U.S. GAAP and IFRS. What are the challenges associated with establishing fair values? How can management address those challenges?
Which of the following is true of accounting for research and development cost? Under U.S. GAAP accounting for research and development costs violates the conservative principle. OR The current accounting for research and development costs under U.S. GAAP avoids the probability of companies to manipulate their earnings.
True or False publicly traded U.S. companies are able to supplement GAAP figures with additional non-GAAP figures they deem necessary. An accrual always occurs when revenue and expenses are recognized and cash is received. Generally accepted accounting principles (GAAP) require related revenues and expenses to be recognized when cash is exchanged. The Financial Accounting Standard Board (FASB) establishes the rules for General Accepted Account Principles (GAAP). Generally Accepted Accounting Principles (GAAP) are a set of accounting rules, standards and financial...
U.S. GAAP does not allow the revaluation of fixed assets where as it is allowed under IFRS. Revaluation allows the entity to measure fixed assets at fair value. Discuss the advantages and disadvantages of using revaluation for property, plant, and equipment. Provide an example to support your discussion.
U.S. GAAP does not allow the revaluation of fixed assets where as it is allowed under IFRS. Revaluation allows the entity to measure fixed assets at fair value. Discuss the advantages and disadvantages of using revaluation for property, plant, and equipment. Provide an example to support your discussion.