Generally Accepted Accounting Principles

Form of organization and name

Betty's Bookkeeping Service posted a sign that stated "Members of the AICPA".The owner, Betty Wilson, has studied to take the CPA exam but has not yet taken it.Which specific rule of conduct did Betty's Bookkeeping violate?

Business Entity Assumption

Donna Jones is the president and primary stockholder of Jones Enterprises. She keeps her personal income and her business income in the same checking account. Which of the following assumptions is she violating?

Conservatism Constraint

During the preparation of the Toys4U Company's financial statement, one of the accountants has to decide between two alternative methods of valuing Inventory. He decides to choose the method that reports the highest amount. Which constraint did the accountant follow?

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles

Balance Sheet

Jerry Attric, a stock holder of XYZ Corporation, has just received a set of financials. While looking at these financials, he sees the words Assets, Liabilities, and Stockholders' Equity on a sheet. Which financial statement is Stan viewing?

Accounting principles

Mary Baker, CPA, is preparing financial statements for The Brookline Company. Mary determines that certain GAAP requirements would be too costly for The Brookline Company. Mary prepares the statements but does not tell the client about not following the GAAP requirements. Which specific rule of conduct did Mary violate?

Relevance

Mary Little, CPA, is preparing the financial statements of ABC Corporation. Mary makes sure that information capable of making a difference in a user's decision-making is included in the financial statements. Which quality of accounting information has been followed?

Professional competence

Nancy Smith, CPA has only prepared financial reports in her business. She has been asked to prepare a federal tax return for Michael Brown. Smith refuses to accept the engagement based on her experiences. Which general standard isbeing followed?

SEC

One of Lucy's clients is a public company whose stock is offered on the New York Stock Exchange. During her audit of the company, Lucy discovers that several of the assets on the financial statements are deliberately misstated. Which governing body should Lucy advise of the finding?

Cost Principle

Petersmith Corporation purchased a used work van for its business for $10,000. After doing some minor body work and repainting, the owner estimated that he could sell the van for $15,000. Therefore, the owner changed the Van amount on the balance from $10,000 to $20,000. Which principle did he violate?

Recognition Concept

When preparing its financial statements, the corporation failed to include the purchase of a new tractor-trailer truck in the general ledger, which was made on December 31st. What concept is Thomason Corporation violating?