Week Five Accounting

570 Words3 Pages
1. (a) What are generally accepted accounting principles (GAAP)? (b)What bodies provide authoritative support for GAAP? Generally accepted means that these principles have “substantial authoritative support.” Such support usually comes from two standard-setting bodies: the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission 2. What elements comprise the FASB’s conceptual framework? The FASB’s conceptual framework consists of the following four items: 1. Objectives of financial reporting. 2. Qualitative characteristics of accounting information. 3. Elements of financial statements. 4. Operating guidelines (assumptions, principles, and constraints). E8-5 Listed below are five procedures followed by The Beat Company. 1. Several individuals operate the cash register using the same register drawer. 2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities. 3. Ellen May writes checks and also records cash payment journal entries. 4. One individual orders inventory, while a different individual authorizes payments. 5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording. Instructions Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below. Procedure IC Good or Weak? Related Internal Control Principle 1. weak establishment of responsibility 2. good independent internal verification 3. good physical, mechanical, and electronic
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