Suppose you are the independent CPA for small city. The city manager asks you for guidance...

Suppose you are the independent CPA for small city. The city manager asks you for guidance to determine the geminally accepted accounting principles requirements for the city-owned housing projects to be accounted for in the enterprise fund. what would be your response to the city manager?

Expert Solution

Whether the organisation has any type of nature of bussiness has to comply with the Generally accepted accounting principles

in the given case we are given with the city owned housing projects.

it means the nature of bussiness is constuction of housing.

1. Revenue recognition policies.

2. Valuation of construction which are in progress

3. Calculation of profit margins in each construction contract.

4. Classification of contracts based on the policies of valuation. Like some contracts are valued using job costing and some are under process costing.

5. Valuation of fixed assets and classification of fixed and current assets.

6. Proper classification of current and long term liabilities.

7. Proper disclosure of contingent assets and liabilities

These are all the generally accepted accounting principles regarding to the organisation which has nature of bussiness of construction.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.

ekkarill92 answered 2 years ago

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