Gaap Cases

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  • Topic: Accounts receivable, Business, Money
  • Pages : 2 (373 words )
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  • Published : April 18, 2013
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Charlotte Stevens 02/13/13 GAAP Cases

A) The amount shouldn’t be included on the balance sheet of the business because there isn’t even half a chance that the debt will be paid. The generally accepted accounting principle that affects this situation is the going concern concept because there is a good chance that the debt won’t be paid.

B) The amount that should be recognized under the accounts receivable is the $400, 000 because that’s how much money you will be getting in total when they pay you, even though the amount was originally $500, 000. The generally accepted accounting principle that affects this situation is the going concern concept because you know that $100,000 of the money won’t be paid.

C) The balance sheet, as is, shouldn’t be accepted by the buyer and her accountant because she asked for a current balance sheet, and six months ago isn’t recent enough to be considered current. The generally accepted accounting principle that affects this situation is the principle of conservatism because you need to be reasonable when asked to give a current balance sheet (need to be as recent as possible).

D) The balance sheet, as is, shouldn’t be accepted by the banker because the car is Benny’s personal possession and is not company owned; therefore it shouldn’t be on the business balance sheet. The generally accepted principle that affects this situation is the business entity concept because he is trying to use the value from a personal item onto the company’s balance sheet.

E) Moustafa isn’t correct on his claim because he needs to value everything as accurately as he can so that it’s fair and reasonable. The generally accepted principle that affects this situation is the principle of conservatism because you to be fair and accurate when calculating the value...
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