the one best answer. 1. The primary accounting standard-setting body in the United States is the a. Securities and Exchange Commission. b. Internal Revenue Service. c. Financial Accounting Standards Board. d. Corporate Board of Directors. 2. An increase in an expense a. increases revenues. b. increases assets. c. decreases liabilities. d. decreases capital. 3. A corporation with total owners’ equity of $85,000 paid a $5,000
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CHAPTER 4 Accrual Accounting Concepts Study Objectives 1. Explain the revenue recognition principle and the matching principle. 2. Differentiate between the cash basis and the accrual basis of accounting. 3. Explain why adjusting entries are needed, and identify the major types of adjusting entries. 4. Prepare adjusting entries for deferrals. 5. Prepare adjusting entries for accruals. 6. Describe the nature and purpose of the adjusted trial balance. 7. Explain the purpose
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Certified Public Accountants & Consultants LLP TABLE OF CONTENTS Page No. Independent Auditors' Report 1 Consolidated Statement of Financial Position 2 Consolidated Statement of Activities 3 Consolidated Statement of Functional Expenses 4 Consolidated Statement of Cash Flows 5 Notes to Consolidated Financial Statements 6 - 13 ARMANINO McKENNA LLP Certified Public Accountants & Consultants 12667 Alcosta Blvd., Suite 500 San Ramon, CA 94583-4427 ph: 925
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Topic No. 605-50 (Revenue Recognition/Customer Payments and Incentives) provides guidance pertaining to sales incentives including discounts on future purchases. The general rule of accounting for coupons and discounts indicates sales incentives that are offered voluntarily, without charge by a company, may be used by a customer as a result of a single transaction, and will not result in loss on the sale are recognized at the later of: a) The date at which the related revenue is recorded by the
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a. The following points should be considered: Revenue is the “lifeblood” of a business. Consequently, revenue growth suggests future profitability, particularly in the presence of fixed costs—once revenue rises to the point where fixed costs are met, profitability can rise very quickly. This suggests that revenue growth has potential as a predictor of future earning power. However, since net income includes both revenues and expenses, net income or loss has at least as much potential
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publics because they usually use financial statement to measure company’s performance. There are two possibilities that could be done with revenues. First, increasing the revenues by recording the revenue earlier so it could increase. Second, decreasing the revenues by recording the revenue later so the numbers in financial report could decrease. Costs and expenses could be increased and decreased by relying on discretionary costs (Roychowdury, 2006). In order to make financial report, accrual accounting
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the software industry—software capitalization and revenue recognition • Discuss various incentives that motivate managers to select one accounting method over another • Learn how to use accounting analysis method to better reflect economic reality Microsoft’s Financial Reporting Strategy Introduction • Phenomenal financial success over the past years Founded in 1975 by Bill Gates and Paul Allen Went public in 1986 at $25.75 per share. Revenue and operating income grew an average of 43% and 49%
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Table of Contents 1.1 Accounting Concepts Definition............................................................................................... 2 1.1.1 Business Entity Concept ........................................................................................................ 5 1.1.2 Money Measurement Concept ............................................................................................... 6 1.1.3 Going Concern Concept ....................................................
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effects of accuracy and reliability of accrued expenses for financial information provided to users based on academic information. I will evaluate several key factors that are involved in accruing for expenses and how accruals affect a company’s financial statements. Included will be GAAP’s matching principle and FASB guidance on accruals. Other sources examined will from several academic articles. The results indicate that accruing for expenses maintain the matching concept. Accruals help avoid
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|FRAMEWORK | | |U.S. GAAP |IFRS |Similarities | |Purpose of Framework |The FASB framework resides lower in hierarchy. |Management is explicitly required to |Both the frameworks are similar in | | |Management
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