Financial accounting Research Paper Example | Topics and Well Written Essays - 1500 words

Financial accounting - Research Paper ExamplePractice 3-1Solutiona. The accounts impacted by the transaction ar Cash and Notes Payableb. Both Cash and Notes Payable accounts change magnitude.c. Cash and Notes Payable accounts increased by $5,000.d. Total Assets increased by $5,000, Total Liabilities increased by $5000, Total Equity, however re importanted unchanged.Practice 3-2Solutiona. The accounts impacted by the transaction are Cash and Landb. Cash account decreased while Land account increased.c. Cash decreased by $45,000. Land increased by $45,000.d. Total Assets, Total Liabilities and Total Equity remained unchanged.Practice 3-11 Solution20XX may 1 Cash.. . 125,000Notes Payable.. 125,000Borrowed from Far West Bank signing a 2-yearnote at 14% Practice 3-12 Solution20XXMay 14 Land.. 45000Cash.. 45000Bought land on due west side of Hatu LakePractice 3-16 SolutionRefer to Practice 3-11Notes Payable20XX20XXMay1 Beg. Bal. 0 May1 Cash 125000 May30 End. Bal. 125000 Cash20XX20XXMay1 Beg. Bal. 0 May1 Notes Payable 125,000 May30 End. Bal. $125,000Refer to Practice 3-12Land20XX20XXMay1 Beg. Bal. 0 May14 Cash 45000 May30 End. Bal. $45000 Cash20XX20XXMay1 Beg. Bal. 0 May 14 Land 45000 May30 End. Bal....These are called generally accepted because they are widely accepted by business community. Otherwise, these rules testament have no application in business.In the USA, Financial Accounting Standard Board (FASB) develops generally accepted accounting principles. It is a private body that sets both broad and particular(prenominal) rules (Wild, 2005). Securities and Exchange Commission (SEC) is another government entity that sets reporting requirements for companies that issues stock to general public.In addition to above-mentioned two bodies, there is another board called international Accounting Standards Board (IASB) that establishes International Financial Reporting Standards. This is an attempt to establish a harmonious and consistent system of accounting throu ghout the globe. However, IASB cannot impose these rules to organizations.The main objective of GAAP is to make financial information relevant, reliable and comparable (Wild, 2005). Managers decisions are highly affected by the relevant financial information. Adherence to GAAP offers reliability to financial information and wins the trust of the user. Good understanding of these principles is necessary particularly when you are comparing the performance of two or more companies, especially when the companies belong to different industries or countries.An adjusting entry is necessary to bring assets/ liabilities and revenu