Generally Accepted Accounting Principles, or GAAP, is a set of accounti procedures, standards, and procedures that companies use to compile t financial statements. Select THREE of the following items that demonst GAAP is important for accounting and finance professionals. it allows CPAs to make a good salary the consistent use of methods and procedures allows for fair comparisons betwee companies it allows persons reading the financial statements to rely on them it ensures that audits are completed in a standard manner

Generally Accepted Accounting Principles, or GAAP, is a set of accounti procedures, standards, and procedures that companies use to compile t financial statements. Select THREE of the following items that demonst GAAP is important for accounting and finance professionals. it allows CPAs to make a good salary the consistent use of methods and procedures allows for fair comparisons betwee companies it allows persons reading the financial statements to rely on them it ensures that audits are completed in a standard manner

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 6MC: The standards, procedures, and principles companies must follow when preparing their financial...

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Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.
Indicate whether each statement describes financial accounting or managerial accounting. The information is directed at external users who are making decisions pertaining to investing, extending credit, and other decisions. The principal users are the organizations managers. The key focus is on the entity as a whole. The rules and principles are very flexible. The information gathered is usually available after an independent audit has been completed.
The standards, procedures, and principles companies must follow when preparing their financial statements are known as which of the following? A. Financial Accounting Standards Board (FASB) B. generally accepted accounting principles (GAAP) C. Securities and Exchange Commission (SEC) D. conceptual framework
An important task ¡n the audit of the revenue cycle is determining whether a client has appropriately recognized revenue. a. What is the five-step process that companies should use in recognizing revenue? Why might the auditor need to do additional research and consider additional criteria on revenue recognition? b. The following are situations in which the auditor will make decisions about the amount of revenue to be recognized. For each of the following scenarios, labeled (1) through (6): . Identify the key issues to address in determining whether or not revenue should he recognized. . Identify additional information the auditor may want to gather in making a decision on revenue recognition. . Based only on the information presented, develop a rationale for either the recognition or nonrecognition of revenue. 1. AOL sells software that is unique as a provider of Internet services. The software contract includes a service fee of $19.95 for up to 500 hours of Internet service each month. The minimum requirement is a one-year contract. The company proposes to immediately recognize 30% of the first-year’s contract as revenue from the sale of software and 70% as Internet services on a monthly basis as fees are collected from the customer. 2. Modis Manufacturing builds specialty packaging machinery for other manufacturers. All of the products are high end and range in sales price from $5 million to $25 million. A major customer is rebuilding one of its factories and has ordered three machines with total revenue for Modis of $45 million. The contracted date to complete the production was November, and the company met the contract dare. The customer acknowledges the contract and confirms the amount. However, because the factory is not yet complete, it has asked Modis to hold the products in the ware house as a courtesy until its building is complete. 3. Standish Stoneware has developed a new low-end line of baking products that will be sold directly to consumers and to low-end discount retailers. The company had previously sold high-end silverware products to specialty stores and has a track record of returned items for the high-end stores. The new products tend to have more defects, but the defects are not necessarily recognizable ¡n production. For example, they are more likely to crack when first used in baking. The company does not have a history of returns from these products, but because the products are new, it grants each customer the right to return the merchandise for a full refund or replacement within one year of purchase. 4. Omer Technologies is a high-growth company that sells electronic products to the custom copying business. It is an industry with high innovation, but Omer’s technology is basic. In order to achieve growth, management has empowered the sales staff to make special deals to increase sales in the fourth quarter of the year. The sales deals include a price break and an increased salesperson commission but not an extension of either the product warranty or the customer’s right to return the product. 5. Electric City is a new company that has the exclusive right to a new technology that saves municipalities a substantial amount of energy for large-scale lighting purposes (e.g., for ball fields, parking lots, and shop ping centers). The technology has been shown to be very cost effective in Europe. In order to get new customers to try the product, the sales force allows customers to try the product for up to six months to prove the amount of energy savings they will realize. The company is so confident that customers will buy the product that it allows this pilot-testing period. Revenue is recognized at the time the product is installed at the customer location, with a small provision made for potential returns. 6. Jackson Products decided to quit manufacturing a line of its products and outsourced the production. However, much of its manufacturing equipment could be used by other companies. In addition, it had over $5 million of new manufacturing equipment on order in a noncancelable deal. The company decided to become a sales representative to sell the new equipment ordered and its existing equipment. All of the sales were recorded as revenue.
One of an accounting firm’s basic objectives is to provide professional services that conform to professional standards. Reasonable assurance of achieving this objective can be obtained by followinga. Generally accepted auditing standards.b. Standards within a system of quality control.c. Generally accepted accounting principles.d. International auditing standards.
True or false the audit committee is responsible for overseeing the entire financial reporting process. * NASDAQ listing standards require the audit committee to review major issues regarding accounting principles and the presentation of the financial statements. * External auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
**Objective Question:** In the context of accounting practices, what term refers to the mandatory periodic rotation of audit firms tasked with auditing a company's financial statements to enhance independence and objectivity? a) Financial disclosure b) Audit rotation c) Tax planning d) Cost accounting
Financial accounting follows Generally Accepted Acccounting Principles (GAAP), while managerial accounting Select one: O a. develops financial statements for external users O b. often has the financial information audited O c. is concerned with collecting data of historical nature O d. develops reports primarily prepared for internal use and help management make informed operational decisions.
Accounting conventions play a pivotal role in the world of financial reporting, providing a set of guidelines and standards that ensure consistency, comparability, and reliability in financial statements. These conventions, also known as accounting principles or norms, are essential for accountants, financial analysts, and organizations to accurately convey financial information to stakeholders. Two widely recognized and utilized accounting conventions are the "Conservatism Convention" and the "Consistency Convention." The Conservatism Convention dictates that when faced with uncertainties or alternative accounting methods, accountants should lean towards methods that are less likely to overstate assets or income. This principle ensures a prudent approach to financial reporting, reflecting a more cautious and realistic picture of a company's financial health. On the other hand, the Consistency Convention emphasizes the importance of uniformity in accounting methods over time. This…
. Indicate whether each statement describes financial accounting or managerial accounting. The information is directed at external users who are making decisions pertaining to investing, extending credit, and other decisions. The principal users are the organization’s managers. The key focus is on the entity as a whole. The rules and principles are very flexible. The information gathered is usually available after an independent audit has been completed. 2. Identify the following as True or False: Managerial accounting reports must comply with the rules set in place by the FASB. Financial accounting reports are typically general-purpose reports. Financial accounting reports pertain to the entity as a whole, whereas managerial accounting focuses more on subunits of the organization. The main users of the financial accounting information are the internal users. Managerial reports are prepared on an as-needed basis. Financial accounting reports often must be audited at least annually…
An auditors’ report by independent accountants…… Select one: a. is ultimately the responsibility of the management of the client company. b. ensures that the financial statements are error-free. c. gives investors assurance that the company’s stock is a safe investment. d. gives investors assurance that the company’s financial statements conform to GAAP
What are the main procedures used by an auditor or an accountant when performing a review or moderate assurance level engagement on financial statements of a company? (Hint: There are 3 main procedures, list the 3) _______________ _______________ _______________