Chase_6615ch1&8

Chase_6615ch1&8 - standard setting is the American...

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Andrew Chase Intermediate Accounting Chapter 1 Financial Reporting Problem a) The key organizations involved in accounting standards setting are the American Institute of Certified Public Accountants (AICPA), Securities and Exchange Commission (SEC), Financial Accounting Standards Board (FASB), and the Government Accounting Standards Board (GASB). b) What is meant by authoritative support is that the accounting practices are supported by authoritative bodies that require specific accounting, reporting, and disclosure policies. c) Accounting standard setting has evolved from SEC, which was created to help develop and standardize financial information presented to stockholders, then came the AICPA who appointed the Committee on Accounting Procedure (CAP). After that the FASB and GASB were created followed by the International Accounting Standards Board (IASB). d) The authority for compliance with GAAP that has existed throughout the period of
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Unformatted text preview: standard setting is the American Institute of Certified Public Accountants (AICPA). Chapter 8 Financial Statement Case a) Partial LIFO method Cost of goods sold: $475,476,000 LIFO difference = ($5,263,000 3,993,000) = (1,270,000) New Cost of goods sold: 474,206,000 New Income before taxes: $16,576,000 + 1,270,000 = $17,846,000 b) Income tax: $17,846,000 * .466 = $8,316,236 Net Income: $17,846,000 8,316,236 = $9,529,764 In my opinion, I feel that the difference in net income between the two methods is material because there is a difference of $681,764, which is almost 10%. That difference is worth the time and effort of changing the costing system. c) I do not feel that the use of different costing systems for different types of inventory means that there is a different physical flow of goods among the different types of inventory. The systems are used to determine costs and not the actual flow....
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