McGrew, MBA 733 Assingment 1-2

McGrew, MBA 733 Assingment 1-2 - position Plus anyone who...

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Trish McGrew MBA 733, Prof. Bowsher, Jan. 5, 2011 1a. Assets Property, Plant, & Equipment Goodwill Prepaid expenses Liabilities Long-term debt Treasury stock Lease obligations Owner’s Equity Common Stock Treasury Stock Paid-in Capital Revenue Passengers Freight Alcohol sales Expenses Wages expense Utility expense Fuel expense 1b. Although Mike Rebel’s business is large and complex it would be wise to follow the GAAP since it widely used and common. Although it is not law that one follow the GAAP. Accounting
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Trish McGrew MBA 733, Prof. Bowsher, Jan. 5, 2011 reports only have to follow GAAP when they are to be viewed by the public or government. It is an acceptable way to keep books that makes sense. Every business that expects anyone outside the company to look at its financial data should use GAAP. Compliance with GAAP helps maintain creditability with creditors and stockholders because it reassures outsiders that a company's financial reports accurately portray its financial
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Unformatted text preview: position. Plus, anyone who reads your financial statements - stockholders, creditors, security analysts or outside companies - will assume that the reports comply with GAAP. 1c. Under the cash method, sales are not recorded until paid with cash and costs are not considered until paid with a cash disbursement. 1d. Do you agree with Fareed’s statement about not needing to understand accounting? No, I do not agree with Fareed’s statement for the simple reason that by understanding accounting one can make better sound decisions, can explain and understand the cash flow. If one does not understand accounting how do they know that the numbers they are entering are applied to the right accounts? If the wrong accounts are being used then managers will have the wrong information presented to them and this will keep them from making sound judgments....
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