Difference in accrual accounting and cash-basis accounting

Assignment Help Financial Accounting

Reference no: EM131253566

a) Describe the difference between accrual accounting and cash-basis accounting. Include in your discussion which approach is required by GAAP and why.

b) There are two principles pertaining to recognition contained in the Conceptual Framework that form the basis for accrual account. Identify these two principles; describe them and their relationship to accrual accounting.

c) Why might managers be tempted to violate the principles identified in part b?

Reference no: EM131253566

Questions Cloud

Consistent with internal revenue service circular : How might charitable giving impact the income, gift, or estate tax outcome for your client? Is there an optimal strategy? Recommend an ethical compliance strategy based on the client’s comments about a valuation discount on the family limited partner..

What are the variable expenses per unit : Lindon Company is the exclusive distributor for an automotive product that sells for $33.00 per unit and has a CM ratio of 34%. The company’s fixed expenses are $157,080 per year. The company plans to sell 15,000 units this year. What are the variabl..

First year on both notes using effective-interest method : On January 1, 2014, Ellen Greene Company makes the two following acquisitions. Purchases land having a fair value of $299,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $453,903. Record the interest at the end of..

What is martinas basis for each of the shares received : Martina owns 100 shares of Bangor Corporation common stock at the beginning of the year, with a basis of $16,500. During the year, Bangor declares and pays a 10% nontaxable stock dividend. What is Martina's basis for each of the shares received?

Difference in accrual accounting and cash-basis accounting : Describe the difference between accrual accounting and cash-basis accounting. Include in your discussion which approach is required by GAAP and why. There are two principles pertaining to recognition contained in the Conceptual Framework that form th..

Will there ever be one set of global accounting standards : In your opinion, will there ever be one set of global accounting standards? Why or why not? Do you think that the U.S. will completely convert its standards to IFRS? If so, when? If not, why not? In the U.S., the IASB and IFRS have been working toget..

Prepare the journal entry to record the initial transaction : On January 1, 2014, Margaret Avery Co. borrowed and received $496,000 from a major customer evidenced by a zero-interest-bearing note due in 4 years. Prepare the journal entry to record the initial transaction on January 1, 2014. Prepare the journal ..

What was alicias recognized gain or loss on her sale : Clyde purchased 300 shares Silo stock for $30,000, 20 years ago. On May 23 of the current year, Clyde sold all of the stock to his daughter Alicia for $20,000, its then fair market value. Clyde realized no other gain or losses during the year. On Jul..

Business equipment with a fair market value : Before any debt cancellation, KuhnCo holds business equipment with a fair market value of $1,000,000 and related liabilities of $1,250,000. The lender agrees to cancel $400,000 of the liabilities. How much gross income does KuhnCo report as a result ..

User Account

All Pages