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Supposed you are the independent CPA for small city. The city manager asks you for guidance...

Supposed you are the independent CPA for small city. The city manager asks you for guidance to determine the generally accepted accounting principles requirements for the city-owned housing project to be accounted for in the enterprise fund.what would be your response to the city manager?

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Answer #1

Generally accepted accounting principles (GAAP) refer to a common set of accepted accounting principles, standards, and procedures that companies and their accountants must follow when they compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information. GAAP improves the clarity of the communication of financial information.

Accounting principles for a city-owned housing project should be mainly related to-

1.Financing Arrangements (Existence of a Contract)

2.Identifying Performance Obligations

3.Determining the Transaction Price

4.Recognizing Revenue When (or as) Performance Obligations Are Satisfied

5.Contract Modifications and Claims

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