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Gillespie MBAA 603 Week 1 - Tim Gillespie MBAA 603 Regis...

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Tim Gillespie MBAA 603 Regis University Week 1 Homework E2-7 A. This journal entry is against GAAP. The reason this is not in accordance with GAAP is because it violates the Separate Entity Assumption. A vehicle that is for personal use only should not be recorded on the company’s books for miscellaneous expense but should be taken from the presidents personal account. B. This journal entry should not be recorded on the books because it is a violation of the Realization Principle of GAAP. The revenue cannot be recorded without an actual sale to record the revenue. C. The loss from lawsuit should not be recorded on the company’s books until the court case is over because the liability should be recorded at the time it is valid. Until then the company should remove this journal entry. D. Depreciation is determined when a company purchases equipment and is recorded in the books. Just because the price levels rise does not mean that the company can decide to depreciate the equipment faster.
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