| This time of year we all hear about baseball. For me it is the question of how good or bad will the NY Yankees perform this year. Hopefully your favorite team will do well. One thing we all probably have in common is that we understand the game; how it is played and some of the rules.
What if the topic of discussion was Cricket? Yes you can Google Cricket Rules or go to YouTube for a video about the rules but how comfortable would you be. Probably a struggle to understand.
Bottom line…what if there were no rules for these games? Probably no one would participate or watch let alone spend money for tickets, hats, etc.
How does this apply to business and the generation of Accounting Standards? |
A sound foundation is necessary for success in any task from building a house to putting on make-up. In terms of U.S. Accounting Standards, it is also necessary to have a sound foundation, referred to as the conceptual framework. Let’s discuss it step by step starting with the objective. What is the objective of accounting standards?
2-4 The following transactions occurred during the month of June 2013 for the Stridewell Corporation. The company owns and operates a retail shoe store.
1. Issued 100,000 shares of common stock in exchange for $500,000 cash.
2. Purchased furniture and fixtures at a cost of $100,000. $40,000 was paid in cash and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $200,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $280,000. The cost of the goods sold was $140,000.
5. Paid $6,000 in rent on the store building for the month of June.
6. Paid $3,000 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2013.
7. Paid $120,000 on account for the merchandise purchased in 3.
8. Collected $55,000 from customers on account.
9. Paid shareholders a cash dividend of $5,000.
10. Recorded depreciation expense of $2,000 for the month on the furniture and fixtures.
11. Recorded the amount of prepaid insurance that expired for the month.
Prepare journal entries to record each of the transactions and events listed above.
1-4 Access the FASB’s Codification Research System at the FASB website (www.fasb.org). Determine the specific citation for each of the following items:
1. The topic number for business combinations.
2. The topic number for related party disclosures.
3. The topic, subtopic, and section number for the initial measurement of internal-use software.
4. The topic, subtopic, and section number for the subsequent measurement of asset retirement obligations.
5. The topic, subtopic, and section number for the recognition of stock compensation.
ScholarMatic: Explanation & Answer
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