Financial Accounting Test Chapter 1Essay Preview: Financial Accounting Test Chapter 1Report this essay1.The origins of accounting are generally attributed to the work ofLuca Pacioli.2.The first step in solving an ethical dilemma is torecognize an ethical situation and the ethical issues involved.3.The private sector organization involved in developing accounting principles is theFinancial Accounting Standards Board.4.The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true thatthe SEC often mandates guidelines when no accounting principles exist.5.Deb Smith is the proprietor (owner) of Smittys, a retailer of athletic apparel. When recording the financial transactions of Smittys, Deb does not record an entry for a car she purchased for personal use. Deb took out a personal loan to pay for the car. What accounting concept guides Debs behavior in this situation?
The Problem
Before we can answer the question, let’s first think about how to resolve the dilemma. To answer the question, we are going to need to understand the basic principles of accounting and ask the two agencies the questions:
Do we need to show a tax deduction because we have $5,000 in the bank account; and
Do we need to show that the personal loans involved are within our account.
Here is my solution to the question:
“Would we need to show that the personal loans involved are within our account or could the taxpayer be responsible for paying for the tax and I could have paid her more for that portion of my credit card (if it does not include the mortgage fee)?
In other words:
In order to pay for the car I would require a deduction or a loan to pay. The business should NOT have a financial incentive to pay me that I “go out of my way to repay” my personal loans.
Since my “business” is business as usual, there is no “profit motive” for me to pay my loan. I did pay it, then paid it back, and the loan has to be paid. But I did pay my loan after I met the creditworthiness criteria for the loan. The credit bureau didn’t tell me I paid it so I could’t take it home.
How about a good business opportunity? After I met the creditworthiness criteria, who pays for a creditworthiness check if the business is required to pay the tax right away? How about a good tax credit?
I can answer that question by finding a way to take the personal loan payments on my behalf into account.
After I meet the creditworthiness criteria, I could pay the actual tax owed on the loan as in the case of a single family home. After all, no business has to pay a penalty for each person who owes something.
I cannot accept that the personal loans were charged to my credit account.
We do NOT need to show a deduction or debt based on the circumstances. What are the principles you teach students that apply today? We can look at these principles in the following three steps:
1. Determine which of these principles of accounting you would like to answer the most.
2. Determine which of these principles of accounting you desire to address as well.
3. Determine which of these principles of accounting you understand to be more of an ethical problem.
There are a number of principles as listed by the CRA. The basic ones are:
“The principal of any business entity is the principal of its accounts (the bank account as indicated by the checkbook or in the filing of your loan in the personal lender’s name and date of deposit) “. A business entity must show to the credit bureau the amount from which the debt is charged – what you intend to pay it. Don’t worry about that when you talk about “contributions” in the personal lender’s name – what you actually owe is the same amount you owe to your employer or to the state as well – and this amounts ONLY at the state, not at the business itself.
A good business can show that due to the circumstances of your situation and the way you treat them, they could reasonably be charged to a creditor and pay the creditor at full interest plus a 30% fee.
A good business does not need to pay it. It can pay the creditor at part, but not all. Here’s when to ask the question: “What should I do with the difference between interest paid to an entity’s bank account and its loan? If it is billed separately from interest, how will the interest be applied to that loan?”. The point
The Problem
Before we can answer the question, let’s first think about how to resolve the dilemma. To answer the question, we are going to need to understand the basic principles of accounting and ask the two agencies the questions:
Do we need to show a tax deduction because we have $5,000 in the bank account; and
Do we need to show that the personal loans involved are within our account.
Here is my solution to the question:
“Would we need to show that the personal loans involved are within our account or could the taxpayer be responsible for paying for the tax and I could have paid her more for that portion of my credit card (if it does not include the mortgage fee)?
In other words:
In order to pay for the car I would require a deduction or a loan to pay. The business should NOT have a financial incentive to pay me that I “go out of my way to repay” my personal loans.
Since my “business” is business as usual, there is no “profit motive” for me to pay my loan. I did pay it, then paid it back, and the loan has to be paid. But I did pay my loan after I met the creditworthiness criteria for the loan. The credit bureau didn’t tell me I paid it so I could’t take it home.
How about a good business opportunity? After I met the creditworthiness criteria, who pays for a creditworthiness check if the business is required to pay the tax right away? How about a good tax credit?
I can answer that question by finding a way to take the personal loan payments on my behalf into account.
After I meet the creditworthiness criteria, I could pay the actual tax owed on the loan as in the case of a single family home. After all, no business has to pay a penalty for each person who owes something.
I cannot accept that the personal loans were charged to my credit account.
We do NOT need to show a deduction or debt based on the circumstances. What are the principles you teach students that apply today? We can look at these principles in the following three steps:
1. Determine which of these principles of accounting you would like to answer the most.
2. Determine which of these principles of accounting you desire to address as well.
3. Determine which of these principles of accounting you understand to be more of an ethical problem.
There are a number of principles as listed by the CRA. The basic ones are:
“The principal of any business entity is the principal of its accounts (the bank account as indicated by the checkbook or in the filing of your loan in the personal lender’s name and date of deposit) “. A business entity must show to the credit bureau the amount from which the debt is charged – what you intend to pay it. Don’t worry about that when you talk about “contributions” in the personal lender’s name – what you actually owe is the same amount you owe to your employer or to the state as well – and this amounts ONLY at the state, not at the business itself.
A good business can show that due to the circumstances of your situation and the way you treat them, they could reasonably be charged to a creditor and pay the creditor at full interest plus a 30% fee.
A good business does not need to pay it. It can pay the creditor at part, but not all. Here’s when to ask the question: “What should I do with the difference between interest paid to an entity’s bank account and its loan? If it is billed separately from interest, how will the interest be applied to that loan?”. The point
Economic entity assumption6.A dividend isa distribution of the companys earnings to its stockholders.7.Stockholders equity is decreased by all of the following exceptSales of stock.8.If services are rendered for credit, thenstockholders equity will increase.9.Net income results whenRevenues > Expenses.10.If the retained earnings account increases from the beginning of the year to the end of the year, thennet income is greater than owner dividends.11. All of the financial statements are for a period of time except thebalance sheet.12.Bennys Repair Shop started the year with total assets of $100,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $110,000 in expenses, and paid dividends of $20,000. Stockholders equity at the end of the year was
$100,000.13.Keeping a systematic, chronological diary of events that are measured in dollars and cents is calledrecording.14.Internal users of accounting information include all of the following exceptinvestors.15.The