Generally Accepted Accounting Principles and Fasb Asc Paragraph Essay

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Exam #1 Research Memo
Question #2
Facts:
Defined of Recognition in accounting.
Issues:
What is the recognition in accounting always depends on?
Analysis:
FASB ASC paragraph 605-10-25-1 (Revenue Recognition Topic). “Revenue should not be recognized until it is realized or realizable and earned.”
Conclusion:
Based on these guidelines, recognition in accounting always depends on the accounting standard being used (b).
Question #3
Facts:
Defined of asymmetric information and capital market.
Issues:
Which of the following best illustrates the concept of asymmetric information in a capital market?
Analysis:
Accounting 381 Course Discussion Packet, Financial Accounting and the Public interest, page 18 of 94. “What is asymmetric information?”
"Asymmetric Information Definition | Investopedia." Investopedia. N.p., 19 Nov. 2003. Web. 01 Feb. 2015.
"Capital Markets Definition | Investopedia." Investopedia. N.p., 18 Nov. 2003. Web. 01 Feb. 2015.
Asymmetry information deals with the study of decisions in transactions where one party has more or better information than the other.
Capital markets are financial markets for the buying and selling of long-term debt or equity-backed securities.
The answer (b) that Mark buys the stock because he knows the company is about to report a significant increase from his brother. And his brother is an accountant for that company. However, Sue knows nothing except the public information. She does not know the company actually situation. So, the transactions were happened under unfair situation.
Conclusion:
The answer should be (b), Mark knows more information than Sues.
Question #4
Facts:
The concept of Revenue and accrual accounting.
Issues:
When the revenue is recorded under accrual accounting?
Analysis:
FASB ASC paragraph 605-10-25-1 (Revenue Recognition Topic). “Revenue should not be recognized until it is realized or realizable and earned.”
Chaper2 of the textbook of Revenue Recognition Principle. “When a company agrees to perform a service or sell a product to a customer. It has a performance obligation. When the company satisfies this performance obligations, it recognizes revenue.”
Conclusion:
From the FASB’s codification, revenue should be recorded under accrual accounting when the revenue is earned (d).
Question #13
Facts:
Record transactions in journals. The HAP Inc. received payment of $15,000 for services, but it hasn’t yet performed as of the end of the fiscal year. The payment was recorded as revenue for the fiscal year, but it should not be like this. So the fact is we should correct it.
Issues:
How to correct the financial statement for HAP Inc.?
Analysis:
Chapter 3 of the textbook. “Debits and Credits.” Page 86.
"What Is Unearned revenue? - Questions & Answers - AccountingTools." What is unearned revenue? - Questions & Answers - AccountingTools. N.p., n.d. Web. 01 Feb. 2015.
HAP Inc. received payment of $15,000 in the year, but it hasn’t performed at the end of the fiscal year. So we shouldn’t record it as revenue, it should be unearned revenue. Unearned revenue belongs to Liability. When it increase, it should be go to left side (or credit side). And the balance side should be right side (or debit side), it should record as sales.
Conclusion:
Based on the analysis, the correctly record should be DR Sales $15,000, CR Unearned Revenue $15,000.
Question #14
Facts:
The context of GAAP.
Issues:

Question #15
Facts:
The context of GAAP. Defined the financial statements under US GAAP?
Issues:
Which of the following are considered a complete set of financial statements under US GAAP?
Analysis:
FASB ASC paragraph 220-10-05-1 (Comprehensive Income).
Accounting 381 Course Discussion Packet, FASB’s Conceptual Framework, Page 28 of 94. “What is the full disclosure principle?”
The answer is Balance Sheet, Income statement, Statement of Cash Flow, Statement of Owner’s Equity, and Statement of Comprehensive Income.
Chapter 2 of the textbook. "As
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