E1-1 Urlacher Company performs the following accounting tasks during the year.
Communicates-Analyzing and interpreting information.
Identifies-Classifying economic events.
Communicates-Explaining uses, meaning, and limitations of data.
Records-Keeping a systematic chronological diary of events.
Records-Measuring events in dollars and cents.
Communicates-Preparing accounting reports. …show more content…
External-Did the company earn a satisfactory income?
Internal-Do we need to borrow in the near future?
External-How does the company’s profitability compare to other companies?
Internal-What does it cost us to manufacture each unit produced?
Internal-Which product should we emphasize?
External-Will the company be able to pay its short-term debts?
E1-3 Larry Smith, president of Smith Company, has instructed Ron Rivera, the head of the
Accounting department for Smith Company, to report the company’s land in the company’s accounting
Reports at its market value of $170,000 instead of its cost of $100,000. Smith says,
“Showing the land at $170,000 will make our company look like a better investment when we try to attract new investors next month.”
The Ethical situation of this scenario is that according to the Generally Accepted Accounting Principles {GAAP}, the cost principle of a company will not change. So because the cost of the company land was only $100k, if the company then changes their cost to $170k it would be against the {GAAP.}
E1-4 The following situations involve accounting principles and