ESSAY

1/ FILL IN THE BLANKS

AUSTIN COMPANY

Units in beginning inventory 33,000

Cost of each unit $ 17

Purchases: Units Cost

Mar. 7 38,000 $ 19

May 25 34,000 22

Aug. 1 26,000 26

Nov. 10 22,000 30

Ending inventory, Dec. 31 40,000

??? è FILL IN THE BLANKS

(1) Cost of goods sold: FIFO 656,000 ……………

(2) Cost of goods sold: LIFO 209,000 ……………

(3) Cost of goods sold: Weighted 2,363,395

average ……………..

AUSTIN COMPANY

Inventory

Number and total cost of units available for sale:

Unit Total

Units Cost Cost

Beginning inventory: 33,000 $17 561,000…

722,000……
Purchased Mar. 7: 38,000 $19 ………

748,000……
Purchased May 25: 34,000 $22 ………

676,000……
Purchased Aug. 1: 26,000 $26 ………

660,000……
Purchased Nov. 10: 22,000 $30 ………

…
153,00…… 3,367,000…
Units for sale: …. …………..
(a) FIFO periodic:

Unit Total

Units Cost Cost

Total cost of units for 153,000… 3,367,000…

sale ………… …………

22,000…… 30………… 660,000……

……… … ………
Less ending inventory

18,000…… 26………… 468,000……

1,128,000…
……… … ………
…………

2,239,000…
Cost of units sold …………

(b) LIFO periodic:

Unit Total

Units Cost Cost

153,000…
Total cost of units for 3,367,000…
…………
sale …………

Less ending inventory 33,000…… 17………… 561,000……

 ……… … ………

7,000…… 19………… 133,000…… 694,000…

……… … ……… …………

2,673,000…
…………
Cost of units sold

(c) Weighted-average cost periodic:

Unit Total

Units Cost Cost

153,000… 3,367,000…
Total cost of units for
………… …………
sale

40,000…… 880,280…
22,007……
……… …………
Less ending inventory: ………

2,486,720…
…………
Cost of units sold

2/ Essay

What does Generally accepted accounting principles (GAAP) mean? Give an

example?
Generally Accepted Accounting Principles is what GAAP stands for. It alludes to a
collection of uniform accounting rules, regulations, and techniques that are applied
during the financial statement preparation and presentation process. In addition to
ensuring consistency and openness in financial reporting, GAAP gives stakeholders
accurate and pertinent information.

What is GAAP used for? Give an example?

Financial statements are prepared and presented using a standard framework known as

GAAP. It guarantees financial reporting across many enterprises and industries is

transparent, comparable, and consistent. With the aid of GAAP, which offers

principles for documenting, calculating, and reporting financial events and

transactions, businesses can more correctly portray their cash flows, performance, and

financial status. Additionally, it gives the public, creditors, investors, regulators, and

creditors pertinent and trustworthy financial information.

Why is GAAP important? Give an example?

A uniform foundation for financial reporting is provided by GAAP, guaranteeing the

consistency of financial statement preparation and presentation. This makes it possible

for stakeholders to evaluate the standing and financial results of various businesses

within or between industries.. GAAP encourages openness by mandating that

businesses publish accurate and pertinent financial data. This aids stakeholders in

evaluating an organization's performance and financial health and in making well-

informed decisions.

Companies that adhere to GAAP are better able to fulfill the legal and regulatory

obligations surrounding financial reporting. The financial stability and repayment

capacity of borrowers are assessed by lenders and financial institutions using the
information provided in these statements. Businesses are more likely to obtain funding

and advantageous financing terms if they follow GAAP. International financial

reporting standards are built on top of GAAP, despite the fact that it may differ from

nation to nation. Businesses can improve the global comparability of their financial

statements by adhering to GAAP or comparable standards.

What is an example of GAAP? Give an example?

Revenue recognition is one instance of a GAAP principle. GAAP states that revenue

should typically be recognized when it is earned, realized, or realizable, as well as

when there is clear proof of an agreement, a determinable price, and a reasonable

expectation of collection. This means that when products are delivered to clients or

services are rendered, revenue should be noted in the financial records and the

business should be able to anticipate payment for those products or services. By

adhering to this rule, revenue recognition procedures across businesses are guaranteed

to be uniform and comparable.

Are all companies required to follow GAAP? Give an example?

Revenue recognition is one instance of a GAAP principle. GAAP states that revenue

should typically be recognized when it is earned, realized, or realizable, as well as

when there is clear proof of an agreement, a determinable price, and a reasonable

expectation of collection. This means that when products are delivered to clients or

services are rendered, revenue should be noted in the financial records and the

business should be able to anticipate payment for those products or services. By

adhering to this rule, revenue recognition procedures across businesses are guaranteed

to be uniform and comparable.

Limitations of GAAP? Give an example?

Revenue recognition is one instance of a GAAP principle. GAAP states that revenue

should typically be recognized when it is earned, realized, or realizable, as well as

when there is clear proof of an agreement, a determinable price, and a reasonable

expectation of collection. This means that when products are delivered to clients or

services are rendered, revenue should be noted in the financial records and the

business should be able to anticipate payment for those products or services. By

adhering to this rule, revenue recognition procedures across businesses are guaranteed

to be uniform and comparable.

Diverse Types of Companies? Give an example?

Revenue recognition is one instance of a GAAP principle. GAAP states that revenue

should typically be recognized when it is earned, realized, or realizable, as well as

when there is clear proof of an agreement, a determinable price, and a reasonable

expectation of collection. This means that when products are delivered to clients or

services are rendered, revenue should be noted in the financial records and the

business should be able to anticipate payment for those products or services. By

adhering to this rule, revenue recognition procedures across businesses are guaranteed

to be uniform and comparable.

Revenue recognition is one instance of a GAAP principle. GAAP states that revenue

should typically be recognized when it is earned, realized, or realizable, as well as

when there is clear proof of an agreement, a determinable price, and a reasonable

expectation of collection. This means that when products are delivered to clients or

services are rendered, revenue should be noted in the financial records and the

business should be able to anticipate payment for those products or services. By

adhering to this rule, revenue recognition procedures across businesses are guaranteed

to be uniform and comparable.

A publicly traded firm is one in which the general public is able to invest and become

a shareholder through the trading of its shares on a public stock exchange.A private

company is one that is not listed on a stock exchange and is held by a single person, a

group of investors, or another organisation.Government-Owned Company: An

organisation that the government owns all or a portion of; these companies are

frequently established to carry out public objectives or supply necessary services.

Timeframe? Give an example?

A company's fiscal year is the twelve-month period it employs for tax and financial

reporting. It can start on any day and is not necessarily related to the calendar year.

For instance, a business may have a fiscal year that begins on July 1st and ends on

June 30th.- Calendar Year: The year runs from January 1st to December 31st, as is

customary. For ease and convenience, a lot of businesses, especially small ones, adopt

the calendar year as their fiscal year.

Interim Periods: Typically lasting three, six, or nine months, interim periods are

shorter timeframes inside a fiscal year. In order to give stakeholders updated

information in between yearly financial statements, interim financial statements are

frequently created and made public.- Reporting Periods: Monthly, quarterly, or semi-

annual financial statements are prepared for specific time periods known as reporting

periods. During these times, a company's financial performance is regularly

summarised, enabling continuous observation and analysis.

Example:

Global: The Olympic Games, held every four years, bring together athletes from
around the world to compete in various sports and showcase their skills on a global
stage.
Domestic: A local town organizes an annual summer fair where residents come
together to enjoy rides, games, and local food vendors for a weekend of community
fun.

Global vs. Domestic? Give an example?

In order to ensure uniformity and comparability of financial information across

nations, global accounting refers to the use of accounting standards and concepts on

an international scale. It entails applying global accounting standards, such the

International Financial Reporting Standards (IFRS), which are embraced by numerous

nations.

Domestic accounting, on the other hand, refers to accounting procedures exclusive to

a given nation or region. Application of national accounting standards is involved,

such as the United States' Generally Accepted Accounting Principles (GAAP) and the

United Kingdom's Generally Accepted Accounting Practises (GAAP).

Example:

Global: A multinational technology company manufactures smartphones in multiple

countries, sources components from various global suppliers, and sells its products in
markets worldwide.

Domestic: A local bakery produces bread using locally sourced ingredients and sells
its products exclusively within the town or city where it is located.