THIS QUESTION REQUIRES AN ESSAY STYLE ANSWER Timing is very important when preparing the end of financial year return. Johnny is a lawyer with a small one (1) man legal firm. A client comes in for an initial consultation about bringing an action for negligence. It is estimated that the total legal fees will be close to $15,000. Required: Explain the general principles that apply when deciding when income has been derived. Your answer should explain the principles used in cash v accruals accounting and advise Johnny on which method is most appropriate for his legal firm. The answer must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law and give reasons.
THIS QUESTION REQUIRES AN ESSAY STYLE ANSWER Timing is very important when preparing the end of financial year return. Johnny is a lawyer with a small one (1) man legal firm. A client comes in for an initial consultation about bringing an action for negligence. It is estimated that the total legal fees will be close to $15,000. Required: Explain the general principles that apply when deciding when income has been derived. Your answer should explain the principles used in cash v accruals accounting and advise Johnny on which method is most appropriate for his legal firm. The answer must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law and give reasons.
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter4: Completing The Accounting Cycle
Section: Chapter Questions
Problem 3CP
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THIS QUESTION REQUIRES AN ESSAY STYLE ANSWER Timing is very important when preparing the end of financial year return. Johnny is a lawyer with a small one (1) man legal firm. A client comes in for an initial consultation about bringing an action for negligence. It is estimated that the total legal fees will be close to $15,000. Required: Explain the general principles that apply when deciding when income has been derived. Your answer should explain the principles used in cash v accruals accounting and advise Johnny on which method is most appropriate for his legal firm. The answer must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law and give reasons.
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