Homework Answers
1. Answer: an improved and consistently applied framework.
2. Answer: a temporary account.
The Purchases account is a temporary account that is closed at the end of an accounting period.
3. Answer: a revenue account.
The Sales account is classified as a revenue account as the amount of revenue generated through the sale of goods is recorded in the same.
4. Answer: separate economic entity, going concern, monetary unit, and periodicity of income.
5. Answer: using generally accepting accounting principles (GAAP)
Financial statements are required to be prepared in accordance with the GAAP. They are not prepared on a daily basis.
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The SEC's 2003 report to the Congress on "principles-based" accounting observed that the first characteristic of...
accounting principle
What is Accounting principle?Accounting principles are fundamental guidelines that shape the discipline of accounting, providing a structured framework for recording, reporting, and analyzing financial transactions. These principles, integral to maintaining consistency, accuracy, and transparency in financial reporting, include the accrual principle, emphasizing the recording of transactions when they occur rather than when cash changes hands. The consistency principle underscores the importance of applying chosen accounting methods uniformly over time, fostering comparability across financial statements. The materiality principle advocates for the...
Read each of the following statements carefully and indicate whether each is true or false. 2...
Read each of the following statements carefully and indicate whether each is true or false. 2 1. The Sarbanes-Oxley Act places great emphasis on internal controls and fraud prevention The FASB and the IASB are working toward full convergence of U.S. financial reporting standards and those of the International Accounting Standards Board. 3. Because of the Sarbanes-Oxley Act, it is probable that the FASB/IASB conceptual framework will become less important in developing accounting principles and standards 4. The FASB Standards...
Principles of auditing ch3 Under the Sarbanes-Oxley Act, the CEO and CFO certify that they A....
Principles of auditing
ch3
Under the Sarbanes-Oxley Act, the CEO and CFO certify that they A. Are responsible for evaluating the effectiveness of internal control. B. Have overseen the evaluation of the effectiveness of internal control. C. Have identified to the SEC any fraud involving management. D. Have reviewed the monthly financial statements. QUESTION 15 A disclaimer of opinion is appropriate when management is unable to justify a change in accounting principle. O True False QUESTION 16 An unqualified opinion...
-20Accounting,%20Volume%201.12th%20Canadian%20Edition%20.pdf E2.6 (LO 4) videa (Foundational Principles) The foundational principles and assumptions of accounting are as...
-20Accounting,%20Volume%201.12th%20Canadian%20Edition%20.pdf E2.6 (LO 4) videa (Foundational Principles) The foundational principles and assumptions of accounting are as follows: Presentation and Recognition/Derecognition Measurement Disclosure 1. Economic entity 5. Periodicity 10. Full - disclosure 2. Control 6. Monetary 3. Revenue recognition and realization 4. Matching unit 7. Going concern 8. Historical cost 9. Fair value and value in use Instructions For each situation that follows, identify by its number the foundational principle above that is described. a. Allocates expenses to revenues in the...
Match the following situations with the accounting principle that best applies. In some cases, more than...
Match the following situations with the accounting principle that best applies. In some cases, more than one principle may apply. A Unit of Measurement G. Realization B. Historical Cost H. Matching C. Going-Concern I. Materiality D. Conservatism J. Consistency E. Objectivity K. Full Disclosure F. Time Period L. Fair Value 1. A large hotel corporation is preparing its vear-end financial statements. Management has informed the certified public accountant that in two months it will begin closing 15 of its hotel...
1. Consider the following statements: I. Financial statements are based on Generally Accepted Auditing Principles....
1. Consider the following statements: I. Financial statements are based on Generally Accepted Auditing Principles. II. Auditing standards issued by the AICPA’s Auditing Standards Board must be followed on all audits of companies' financial statements in the United States of America. a. I is true; II is true b. I is true; II is false c. I is false; II is true d. I is false; II is false 2. Considering the demand...
LOL. What are the accounting principles and controls that relate to merchandise inventory a) Give a...
LOL. What are the accounting principles and controls that relate to merchandise inventory a) Give a brief definition of the following: Consistency Principle- ii) Disclosure Principle - 1) Materiality Concept - iv) Conservatism - L02. How are merchandise inventory costs determined under a perpetual inventory system Use the following information to answer the next 2 questions: Beginning Inventory January 1st = 100 units x S10 = $1,000 Purchases on January 15th = 100 units x S12 = $1,200 a) Using...
Basic Accounting Questions. If the Balance Sheet columns do not balance, the error is most likely...
Basic Accounting Questions.
If the Balance Sheet columns do not balance, the error is most likely to exist in the Select one or more a Last six columns of the work sheet Ob First six columns of the work sheet Dc General ledger d. General journal Modifying conventions include all of the following except Select one or more a. Cost-benefit b. Conservatism c Materiality d. Periodicity The concept that requires companies to use the same accounting practices and reporting practices...
1. How does the conceptual framework differ from an accounting standard? a. The principles in the...
1. How does the conceptual framework differ from an accounting standard? a. The principles in the conceptual framework are specific in nature while accounting standards provide more general requirements for financial reporting. b. The principles in the conceptual framework are general concepts while accounting standards provide specific requirements for a particular area of financial reporting. c. The principles in the conceptual framework are designed to provide guidance and apply to a limited range of decisions relating to the preparation of...
BASIC CONCEPTS AND PRINCIPLES 1-1 HO For each of the circumstances enumerated below, give the letter...
BASIC CONCEPTS AND PRINCIPLES 1-1 HO For each of the circumstances enumerated below, give the letter item indicating the accounting objective attained or the principle applied: a. Understandability b. Verifiability c. Timeliness d. Comparability e. Completeness f. Conservatism g. Continuity of life h. Economic entity i. Historical Cost j. Income Determination k. Quantifiability 1. Materiality ーi. Goodwill is only recorded in the accounts when it arises from the purchase of another entity at a price higher than the fair market...
Read each of the following statements carefully and indicate whether each is true or false. 2 1. The Sarbanes-Oxley Act places great emphasis on internal controls and fraud prevention The FASB and the IASB are working toward full convergence of U.S. financial reporting standards and those of the International Accounting Standards Board. 3. Because of the Sarbanes-Oxley Act, it is probable that the FASB/IASB conceptual framework will become less important in developing accounting principles and standards 4. The FASB Standards...
Principles of auditing
ch3
Under the Sarbanes-Oxley Act, the CEO and CFO certify that they A. Are responsible for evaluating the effectiveness of internal control. B. Have overseen the evaluation of the effectiveness of internal control. C. Have identified to the SEC any fraud involving management. D. Have reviewed the monthly financial statements. QUESTION 15 A disclaimer of opinion is appropriate when management is unable to justify a change in accounting principle. O True False QUESTION 16 An unqualified opinion...
-20Accounting,%20Volume%201.12th%20Canadian%20Edition%20.pdf E2.6 (LO 4) videa (Foundational Principles) The foundational principles and assumptions of accounting are as follows: Presentation and Recognition/Derecognition Measurement Disclosure 1. Economic entity 5. Periodicity 10. Full - disclosure 2. Control 6. Monetary 3. Revenue recognition and realization 4. Matching unit 7. Going concern 8. Historical cost 9. Fair value and value in use Instructions For each situation that follows, identify by its number the foundational principle above that is described. a. Allocates expenses to revenues in the...
Match the following situations with the accounting principle that best applies. In some cases, more than one principle may apply. A Unit of Measurement G. Realization B. Historical Cost H. Matching C. Going-Concern I. Materiality D. Conservatism J. Consistency E. Objectivity K. Full Disclosure F. Time Period L. Fair Value 1. A large hotel corporation is preparing its vear-end financial statements. Management has informed the certified public accountant that in two months it will begin closing 15 of its hotel...
LOL. What are the accounting principles and controls that relate to merchandise inventory a) Give a brief definition of the following: Consistency Principle- ii) Disclosure Principle - 1) Materiality Concept - iv) Conservatism - L02. How are merchandise inventory costs determined under a perpetual inventory system Use the following information to answer the next 2 questions: Beginning Inventory January 1st = 100 units x S10 = $1,000 Purchases on January 15th = 100 units x S12 = $1,200 a) Using...
Basic Accounting Questions.
If the Balance Sheet columns do not balance, the error is most likely to exist in the Select one or more a Last six columns of the work sheet Ob First six columns of the work sheet Dc General ledger d. General journal Modifying conventions include all of the following except Select one or more a. Cost-benefit b. Conservatism c Materiality d. Periodicity The concept that requires companies to use the same accounting practices and reporting practices...
BASIC CONCEPTS AND PRINCIPLES 1-1 HO For each of the circumstances enumerated below, give the letter item indicating the accounting objective attained or the principle applied: a. Understandability b. Verifiability c. Timeliness d. Comparability e. Completeness f. Conservatism g. Continuity of life h. Economic entity i. Historical Cost j. Income Determination k. Quantifiability 1. Materiality ーi. Goodwill is only recorded in the accounts when it arises from the purchase of another entity at a price higher than the fair market...
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