FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 2, Problem 2.13E
(a)
To determine
Accounting assumptions: These are the conventions which guide FASB (Financial Accounting Standards Board) to develop accounting standards. The basic assumptions are monetary unit assumption, economic entity assumption, periodicity assumption, and going concern assumption.
Accounting principles: These are the rules which guide FASB to prepare guidelines necessary for reporting the accounting formation, in a useful and relevant format which is better understood by the users. Some basic principles are historical cost principle, fair value principle, and full disclosure principle.
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
(b)
To determine
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
(c)
To determine
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
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Flint Corp. began operations in 2014. During the years 2014-2016, it reported net income and declared dividends as follows.
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During 2017, Flint Corp.:
●
discovered that it had failed, in 2015, to record $50,000 in depreciation on equipment in one of its warehouses.
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changed, on January 1 ,2017, from the average cost to the FIFO method of accounting for its inventory. If Flint Corp. had applied the FIFO method to it inventory in prior years, cumulative net income (before tax) would have been $15,000 lower than originally reported.
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reported income before income tax expense of $480,000.
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declared and paid dividends to common shareholders of $80,000.
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Fairplay had the following information related to the sale of its products during 2009, which was its fi rst year of business: Revenue $1,000,000 Returns of goods sold $ 100,000 Cash collected $ 800,000 Cost of goods sold $ 700,000 Under the accrual basis of accounting, how much net revenue would be reported on Fairplay’s 2009 income statement? A . $200,000.
Chapter 2 Solutions
FINANCIAL ACCOUNTING>IC<
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