Pillsbury Case Analysis
Ivan Gullien is the marketing manager for General Mills Canada
Corporation and has been with the company for more than four years. He is in
charged of marketing and promotions for the refrig
Problem 3-4, p. 128, Internal Control and Fraud
A) What controls weakness allowed John to perpetrate these frauds?
The first weakness that allowed John to work at the company was the lack of
security clearance and background check. J
The demand for audit and other assurance services
Sarbanes oxley act
Enron /tyco the act established the public company accounting oversight board
It also requires auditors to report on the effectiveness of internal control over financial repo
Notes Accounting 1 THE JOURNAL
Transactions are initially recorded in chronological order in a journal before being
transferred to the accounts.
Every company has a general journal which contains
1. spaces for dates,
2. account titles and ex
Notes Accounting 1 Building Blocks
A business owned by one person is generally a proprietorship (owners
A business owned by two or more persons associated as partners is a
partnership (partners equity).
A business organize
Notes Accounting 1 ADJUSTING THE ACCOUNTS
TIME PERIOD ASSUMPTION
The time period (or periodicity) assumption assumes that the economic life
of a business can be divided into artificial time periods
Periods of less than one y
Notes Accounting 1 Accounting Principles
An account is an individual accounting record of increases and decreases
in a specific
owners equity item.
A company will have separate accounts for such items as
Notes Accounting 1 ADJUSTING ENTRIES
Adjusting entries make the revenue recognition and matching principles
Adjusting entries are required each time financial statements are prepared.
Adjusting entries can be classif
Notes Accounting 1 ACCRUALS
A different type of adjusting entry is accruals.
Adjusting entries for accruals are required to
record revenues earned and expenses incurred in the current period.
The adjusting entry for accruals will increase
Notes Accounting 1 AMORTIZATION
In recording amortization
Amortization Expense is debited
A contra asset account
Accumulated Amortization is credited.
The difference between the cost of the asset and its related
Notes Accounting 1 Revenue
REVENUES AS A BUILDING BLOCK
Revenues are the gross increases in owners equity resulting from
business activities entered into for the purpose of earning income.
Revenues may result from sale of merchandise, performance of ser
Notes Accounting 1 PREPAYMENTS
Adjusting entries for prepayments are required to record the portion of the
prepayment that represents
1. The expense incurred or
2. The revenue earned in the current accounting period.
Notes Accounting 1 Introduction
BOOKKEEPING DISTINGUISHED FROM ACCOUNTING
1. Includes bookkeeping
2. Also includes much more
1. Involves only the recording of economic events
2. Is just one part of accounting
THE ACCOUNTING PROFESSI