Question

1. The standards, procedures, and principles companies must follow when preparing their financial statements are known as which of the following?

a. generally accepted accounting principles (GAAP)

b. Financial Accounting Standards Board (FASB)

c. Securities and Exchange Commission (SEC)

d. conceptual framework

2. Which of these events will not be recognized?

a. A copy machine is ordered. It will be delivered in two weeks.

b. A service is performed, but the payment is not collected on the same day.

c. Supplies are purchased. They are not paid for; the company will be billed.

d. Electricity has been used but has not been paid for.

Answer 1

Question 1

Correct answer----(a) generally accepted accounting principles.

. Generally accepted accounting principles or GAAP are followed in preparing financial accounting records and books.

Financial standard account board is a body which is responsible for setting standard. Securities and exchange commission is responsible for applicability of standards in US.

.

Question 2

Correct answer----(a) a machine had been ordered. It will be delivered in 2 weeks.

.

The machine had not yet arrived hence it cannot be recorded in books because the ownership of machine is not yet transferred.

Service will be recorded whether payment is received or not.

Supplies will be recorded since billing is done.

Electricity expense will be recorded on accrual basis no matter whether bill is paid now or in future.