Case 1-4 Generally Accepted Accounting Principles - 76433

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  • From: Business, Accounting
  • Due on: Wed 25 Feb, 2015 (09:00am)
  • Asked on: Tue 24 Feb, 2015
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Case 1-4 Generally Accepted Accounting Principles
At the completion of the Darby Department Store audit, the president asks about 
the meaning of the phrase “in conformity with generally accepted accounting 
principles,” which appears in your audit report on the management’s financial 
statements. He observes that the meaning of the phrase must include more than 
what he thinks of as “principles.”
 a. Explain the meaning of the term accounting principles as used in the audit 
report. (Do not in this part discuss the significance of “generally accepted.”)
 b. The president wants to know how you determine whether or not an 
accounting principle is generally accepted. Discuss the sources of evidence for 
determining whether an accounting principle has substantial authoritative 
 c. The president believes that diversity in accounting practice will always exist 
among independent entities despite continual improvements in comparability. 
Discuss the arguments that support his belief.

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