For each of the following, identify which GAAP, if any, has been violated. 1. A customer called and made arrangements
For each of the following, identify which GAAP, if any, has been violated.
1. A customer called and made arrangements for Jay's Plumbing to provide $6,000 of services next month. Jay, the owner, recorded revenue of $6,000 this month. No cash was exchanged.
2. Land was purchased for $50,000. The bank appraised it for loan purposes at $68,000. Therefore, the owner of the land recorded it on the balance sheet at $68,000.
3. The owner of Dallas Pizza and Don's Deli combines all transactions by keeping only one set of accounting records for both businesses.
4. The owner of Pella's Junk Removal has become ill suddenly and is unable to continue the business. Pella's spouse, in need of cash to finance growing personal expenses, took the business's most recent financial statements to the bank and was granted a loan. She did not inform the bank of her husband's inability to work.
5. Dale's Consulting Services completed a contract with an organization located overseas. Dale included the revenue on the income statement without converting the foreign currency to Canadian dollars.Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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