Question 1 The adjustment of accounting entries is first and foremost necessary in accrual accounting. True...

Question 1

The adjustment of accounting entries is first and foremost necessary in accrual accounting.

True

False

Question 2

What is the FASB code for business combinations?

a*830

b*901

c*805

d*1020

Question 3

How does GAAP define fair value?

Solutions

Expert Solution

Solution :

Ans Que 1. Adjusting entries are made at the end of the accounting period after a Trial Balance is prepared to adjust the revenues and expenses to the accounting period in which they are actually occurred or they belong to. This entries are initially made in accounting journal and than posted to the relevant general ledgers. In accrual concept of accounting system events and transactions are recorded in the period in which they occur despite of the fact whether cash is received or paid or not. These is the reason why adjusting entry is needed to be passed at the time of closing of accounts at the year end to get a real time effect of the financial results. Therefore answer is True.

Ans Que 2.

C – 805 – FASB ASC ( Accounting Standards Codification ) 805 belongs to Business Combinations.

Ans Que 3. Generally Accepted Accounitng Principle’s i.e GAAP defines Fair value as the price that is received after selling an asset or price paid on transfer of a Liability on orderly transactions between the participants from a market at a specified or measurement date. This concept is used for those assets whose carrying value is based on market valuations, whereas in case of assets at historical cost , fair value concept is not used.

ekkarill92 answered 1 year ago

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