Homework: Accounting Theory and Merchandising Organizations
Introduction
A legal firm's operations are different than Ford or GM operations. Lawyers provide a service whereas Ford is a manufacturing business that needs to maintain an inventory of various parts used in their vehicles. Each requires its own accounting approach.
We now delve into accounting theory in greater depth. Now that you have learned some accounting procedures, you are better able to relate these theoretical concepts to accounting practice. Accounting theory is a set of basic concepts, assumptions, and related principles that explain and guide the accountant's actions in identifying, measuring, and communicating financial information.
Your study of accounting began with service companies as examples because they are the least complicated type of business. You are now ready to apply the accounting process to a more complex business type: a merchandising company. This type of company is represented by manufacturers, wholesalers, and retailers.
Overview
This homework focuses on accounting assumptions, concepts, principles, modifying conventions, objectives, qualitative characteristics, accounting policies, and the income statements for service and merchandising organizations. It requires knowledge of the following:
1) The effects of accounting assumptions on the accounting process.
2) The effects of accounting concepts on the accounting process.
3) How generally accepted accounting principles (GAAP) affect financial reporting.
4) The impact of modifying conventions on the accounting process.
5) How accounting objectives, qualitative characteristics, and policies affect financial reporting.
6) The differences and similarities between income statements for service and merchandising organizations.
7) The methods used to determine the amount of merchandise inventory on hand.
8) How to use the gross margin percentage as a tool for financial analysis.
Format your homework according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.