Week 5 Complete

Chapter 7

Questions 1 and 2

1.(a) What are generally accepted accounting principles (GAAP)? (b)What bodies provide authoritative support for GAAP?

A-The generally accepted accounting principles (GAAP) are a combination of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. (Investopedia.com)

B-The bodies that provide authoritative support for the GAAP would consist of the Securities and Exchange Commission (SEC and the Financial Accounting Standards Board (FASB).

2. What elements comprise the FASB’s conceptual framework?

a- Objectives of financial reporting.

b-Qualitative characteristics of accounting information.

c- Elements of financial statements.

d- Operating guidelines (assumptions, principles, and constraints)

Chapter 8

Exercise E8-5

Listed below are five procedures followed by The Beat Company.

1. Several individuals operate the cash register using the dame register drawer.

2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.

3. Ellen May writes checks and also records cash payment journal entries.

4. One individual orders inventory, while a different individual authorizes payments.

5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.

Instructions

Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below.

Procedure IC | Good | Weak | Related Internal Control Principle |

1. Several individuals operate...