UNIVERSITI TENAGA NASIONAL
COLLEGE OF BUSINESS MANAGEMENT AND ACCOUNTING
DEPARTMENT OF ACCOUNTING
SUBJECT:
ACCOUNTING THEORY AND PRACTICE
PREPARE FOR:
DR.NORHAYATI MAT HUSIN
PREPARE BY:
NUR FADZILAH BT NORIZAN (AC086628)
NUR IZYAN BT MOHD ISHAK (AC086934)
NURUL AQILAH BT ZAMRI (AC085167)
THILAGA SEGARAN (AC086628)
BACHELOR IN ACCOUNTING (HONS)
CASE 1: WASTE MANAGEMENT
a) Define the matching principle and explain why it is important to users of financial statements.
Matching principle requires a company to match expenses with related revenues that they helped to generate in order to report a company's profitability. The matching is based on a cause
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Increases in the useful life of assets have the effect of increasing the value of an asset and reducing expenses. This change can have a material impact on the financial statements. However, even though the management of Waste Management want to have impact on its financial statement, the management should not make any substantial changes to figures reported by the operational unit. These changes must be properly disclosed as required by GAAP under the Full Disclosure Principle which requires management to disclose sufficient information to allow the user to make a judgment about the financial position of Waste Management.
c) According to the current IFRS, is a company allowed to change the useful life and salvage value of its fixed assets? If yes, when and how?
Under GAAP, a company allowed to change the useful life and the salvage value of its fixed assets if the circumstances or events disclose the additional information show that change of useful life and salvage value more accurately and show the current market situation. It’s also stated should have the legitimate basis for do any changes to their variables. Furthermore, according to the SEC, changes to the variables used in estimating depreciation and the resulting impact to investors should be stated in the financial statements.
d) As an auditor, what type of evidence woul you
Fixed assets are assets that will be held or used over a period longer than one year. Companies typically have land, equipment, and buildings as their fixed assets. The account is usually called property, plant, and equipment or PP&E.
In accordance with the ASC 360-10-35-21, several changes should be evaluated in testing for the recoverability of long-lived assets: decline in market value, adverse changes in way asset is used or physical change in asset, adverse changes in legal factors or business climate, accumulated costs in excess of the original expected acquisition or construction price, current period losses with history of operating or cash flow losses associated with asset, and sales or disposal before the end of useful life.
Too many disposals of small groups of assets that are recurring in nature qualify for discontinued operations under prior GAAP. This caused financial statements to be less decision useful for users. Additionally, the guidance on discontinued operations resulted in higher costs for preparers because it can be complex and difficult to apply. The FASB issued ASU 2014-08 to address those problems by changing the criteria for reporting discontinued operations, while simultaneously enhancing convergence with the International Accounting Standard Board’s reporting requirements for discontinued operations.
1) Determining whether amounts are in conformity with generally accepted accounting principles addresses the proper measurement of assets, liabilities, revenues, and expenses, which includes all of the following EXCEPT the
The authoritative guidance for asset impairment is to ensure that impairment is recorded and dealt with as depreciation. The scope of the standard is writing off of assets and depreciation. According to the guidance of 360-10-35, it address how long-lived assets that are intended to be held and used in an entity’s business shall be reviewed for impairment. The impairment loss can only be recognized if the carrying amount of a long-lived assets is not recoverable and
The purpose and goal behind researching the income statements and balance sheets then calculating the ratios is mainly to help creditors and investors make their decisions easier and faster. The way we are presenting our research results helps the investors and creditors make the decision which of the companies is more worthy to invest in or loan money too without taking a risk, and lowering the chances that they will be disappointed by the results of their investment, or in the creditors case they can be almost certain the company they are loaning the money to would be worthy enough of paying the money back without a hassle.
ChaNoel A. Torres Acevedo Intermediate Accounting I Homework: Exercise 3-1: Apr. | 2 | Cash | 30,000 | | | | Equipment | 14,000 | | | | Christine Ewing, Capital | | 44,000 | | | | | | | 2 | No entry—not a transaction. | | | | | | | | | 3 | Supplies | 700 | | | | Accounts Payable | | 700 | | | | | | | 7 | Rent Expense | 600 | | | | Cash | | 600 | | | | | | | 11 | Accounts Receivable | 1,100 | | | | Service Revenue | | 1,100 | | | | | | | 12 | Cash | 3,200 | | | | Unearned Service Revenue | | 3,200 | | | | | | | 17 | Cash | 2,300 | | | | Service Revenue | | 2,300 |
In the course of normal business operations certain transactions require specific treatment in accordance with generally accepted accounting procedures (GAAP). To properly prepare financial statements, the analysis of working papers is imperative to insuring compliance. Clarification of why information is needed about adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment is presented here.
With reference to the measurement of tangible non-current assets, critically evaluate whether financial statements prepared using IFRS’s provide useful information. Use specific examples from the annual reports of FTSE 100 companies to illustrate your points.
Matching principle - the expense, merchandise and other costs, should be matched with the revenue.
To over view the knowledge we learnt from accounting theory and practice, the main thing I can conclude that is the tendency of accounting will shift away from technical way to people’s behaviour way. By understanding what should do, we should ask why and how we could improve and change it into a better way. This essay aims to explain how the theoretical material that we learn in lectures can be developed under a real practical manner.
QuickBooks and Sage 50 Accounting are both great options for small business accounting. These programs help manage business finances which can drastically save time that may have been spent creating Excel spreadsheets and more. However, while both programs are sufficient for small businesses, the programs differ based on what they can offer your company.
4. Matching principle : the business that adopt matching principle can accurately evaluate their pin point financial performance and profitability for a certain time by cancelling the difference in the accounting entry timings.
It’s important to call that under US GAAP, estimates of useful and residual value, and the method of depreciation, are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method are no longer appropriate. Unlike IFRS, the revaluation of property, plant and equipment is not permitted.
ISO 26000 are guidelines available for businesses and organizations on how they can operate responsibly toward people, profits and planet. Effective management is when these three elements are balanced out and used to formulate business strategies that could bring long-term solutions. It’s good news that Waste Management’s mission already promotes practices, services and operations that persuade alternatives to have strong personnel relations that generate profits while reducing the extractions of resources and preserving the environment.