Even though the accounting profession has guiding principles (GAAP), they are not absolute, but subject to human judgment and interpretation and, at times, the lack of compliance leads to fraud (e.g., Enron, WorldCom, and others). The human free will comes into play, as witnessed in the Enron case; principles were NOT applied or complied
What accounting assumptions necessitate the use of adjusting entries? What accounts are subject to adjusting journal entries? What are the advantages and disadvantages of using automated accounting systems to do adjusting entries? What are your thoughts on making adjusting entries; are they really needed or is this just extra work by accountants? Which basis of accounting do most companies use, cash or accrual?
E&Y reasoned this as it creates an exception to the general rule of reserving for expected future product returns at the gross sales price and deferring the recognition of an equal amount of revenue. This justification is invalid. The company’s customers are not “ultimate customers,” but are wholesalers that sold their product to retailers. In addition, Medicis’s returns were not returns of products in exchange for products of “the same kind, quality, and price,” but of unsalable product for
5. The confidentiality agreement did limit the scope of the audit performed on ZZZZ Best. It is the job of the auditor to obtain sufficient and appropriate evidence. When Ernst & Whinney were not allowed to follow-up with anyone involved in the restoration process that limited their ability to gather evidence. The company should have been able to follow up with all venders and customers to attest to the validity of the financial statements and they were not able to do this and not able to gather the “appropriate and sufficient evidence” needed.
He didn’t think he needed to ask Express the moral problem so that everyone will believe that his or her moral concerns have been recognized and included. * This is a moral problem because his actions of using company funds for personal use wasn’t economically efficient productive system, it didn’t produce more of the products that people most want an less use of the resources people least value, which is a definite value to society. In addition to this, his actions wasn’t informed to everyone. * Effective use of resources, What are the economic benefits? * What are the legal requirements?
(b) What are the ethical issues involved in this situation? The ethical issues involved in this situation pertain to following accepted accounting principles. Violating the generally accepted accounting principles to satisfy a short-term personal or company would create misleading financial statements. This situation would therefore be unethical. Robbin Industries is jeopardizing itself by not properly reporting the advertising costs.
WorldCom Case University of Phoenix Opie Prados Wayne Alves Tonia Johnson Amy Dickson May 29, 2012 Brandy Havens Cynthia Cooper and WorldCom The mass majority of companies handle their accounting affairs internally. Accounting practices, such as payroll, billing, asset management, and inventory control can often become overwhelming and demanding. Often controlled be management, accounting practices performed by some companies can become misused. This would be true for the case of WorldCom. Conducting the majority of its practices to the standard of the AICPA, some of them stood out as non-standard practices.
Capital gains and losses are important to understand because it can directly affect and individual or a business adjusted gross income. Being able to understand gross income inclusions and exclusions is also important. This information is important because it is needed to determine the tax payer’s taxable income. Knowing the difference between a cash and accrual methods of accounting is also important when entering the business world because the year the tax payer’s income is taxed depends on the accounting method they use. Before this class, I did not know how to calculate AGI or hoe to determine whether an item was a considered as taxable and able to be claimed as an itemized deduction.
Financial Statements ACC/280 May 01, 2012 Edward Vargas Financial Statements Accounting is extremely important by monitoring the functions of the companies, and allowing them to make appropriate financial transactions and decisions. Some areas of accounting can seem confusing and difficult but in the end the outcome is clear and concise. There are two basic forms of accounting known as; financial and managerial accounting. Financial accounting responsibilities are to follow the General Accepted Accounting Principles (GAAP) that is regulations for investor relations, creditors, and taxation purposes, whereas managerial accounting is for internal evaluation. There are different functions and categories that accounting
In fact, it is often said that “Cash is King” because if a company can’t generate cash, it won’t survive. To aid in the analysis of cash, the statement of cash flow reports the cash effects of a company’s operating activities, investing activities and financing activities. If you knew the source of a company’s was generated from the operations of the business rather than borrowed, a cash flow statement provides that information. Similarly, net income does not tell you how much the company generated from operations. Neither the income statement, nor the balance sheet can directly answer most of the important questions about cash, but the cash flows statement