For Each of the Following Situations Discuss Whether the Accounting

question 42

Essay

For each of the following situations discuss whether the accounting treatment is proper and,if not proper,what accounting principle is violated.Discuss the ethical and financial statement implications of each of the improper treatments.
A.A service company records revenue when cash is collected in advance of performing the service.
B.The owner used the cash received from a company bank loan to buy a car for his own personal use.The car was recorded as a company asset.
C.A company records revenue when earned even when the cash has not yet been received.
D.Land purchased ten years ago for $20,000 is reported on the balance sheet at its current value of $30,000.The company follows U.S.GAAP in preparing financial statements.
E.Inventory purchased last month and sold this month was deducted as an expense on this month's income statement.

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Definitions:

Partnership

A cooperative relationship between two or more parties, often businesses, where each party contributes to and benefits from joint activities.

Competitors

companies or entities that operate in the same industry and vie for the same customer base, offering similar products or services.

Adversarial

Pertains to actions or situations involving opposition or conflict, often used in contexts like legal disputes, competitions, or security scenarios.

Shadow IT

Information technology projects managed outside, and without the knowledge of, the IT department.