Answer to Question #240321 in Accounting for milikovich

Question

2. Discuss the current accounting standards or principles applicable in Ethiopia as a base for

financial statement preparation and presentation.

3. Explain the underlying prescriptions of IFRS

4. Describe five types of business transactions with external parties and another five types of

business transactions from internal sources of a selected form of business company at your

nearby (please indicate the form of company you selected on the answer sheet) and explain

how they are journalized and then reported in the financial statements.

5. Discuss the accounting process as a cycle with a given period by explaining each of the

steps and by giving practical examples.

Answer 1

2.The current accounting standards or principles applicable in Ethiopia: double entry system, cash accounting method, continuous operation, accrual method, modified cash method

3.Two main assumptions are used in the preparation of the financial statements: accrual method and going concern

On the accrual basis: transactions and other events are recognized as they occur, and not as funds are received or paid out.

The principle of business continuity in accounting is the principle that an organizational unit will not cease its activities in the foreseeable future

4.For example, there are 5 types of production companies with external ones: purchasing raw materials from suppliers, selling finished products to buyers, obtaining a loan from a bank, purchasing goods for resale, receiving subsidies from the state. Five internal operations: payroll, disbursement of funds to an accountable person, write-off of materials for production, accrual of income tax, write-off of administrative expenses to the cost price. They are registered in the journal according to the accounts, respectively: a decrease in one account, an increase in the other. For example, issuing to an accountable person: debit to an accountable person credit to a cash register. I.e., an increase in debt for an accountable person and a decrease in cash. Account balances are reflected in the financial statements

5.The cycle consists in the fact that there are incoming account balances, then debit or credit transactions on the accounts (payment or receipt) are recorded for a certain time, and then the balance on the accounts is set at the end of the period. That is, it turns out like a snapshot of the financial position of the organization on a certain date.