University Accounting Assignment: Financial Statement Analysis

This accounting assignment solution addresses several key aspects of financial accounting and reporting. Section I analyzes amendments in an update, focusing on uncertain tax positions and pricing strategies. Section II examines potential auditor failures related to contract identification, performance obligations, and revenue recognition, along with the roles of GAAP, GASB, and AICPA. It also explains grandfathering with an example and the codification system. Additionally, it outlines the role of the Financial Accounting Foundation (FAF) and the ten steps involved in the accounting research process. Section III discusses the impact of updated accounting standards on financial ratios, such as the debt-to-equity ratio, current ratio, and quick ratio, affecting borrowing capacity and debt contracts. The solution utilizes references to support its analysis, providing a comprehensive understanding of the accounting principles and their practical implications.

Running head: ACCOUNTING
Accounting
Name of the student
Name of the university
Student ID
Author note

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ACCOUNTING
Table of Contents
Section I...........................................................................................................................................2
Section II..........................................................................................................................................2
Section III........................................................................................................................................4

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ACCOUNTING
Section I
1. The sentence refers amedments in this update, which amendments are taking about.
2. The sentence says about uncertain tax positions were not useful to users, the problem is
what is the reason to disclose this.
3. The problem is regarding pricing strategy
Section II
1.
If the quoted pragaraph is wrong, then the auditor must fail to identify the contracts with
a customer, fail to address the performance obiligations in the contract, determine the
transaction price, unable to assign the transaction price, fail to recognize revenue while an
organization satisfies a performance obiligation.
2. Two main imposing sources of generally accepted accounting principles (GAAP) are as
follows:
GASB – Governmental Accounting Standards Board.
AICPA – American Institute of Certified Public Accountants.
3. Grandfathering is a provison which an old rule continues to apply the existing situation
and the new rule will apply to the future cases. It is a leagal provisons where it implies
the LTCG till 31st January will not be exaggerated only the gains portion after the date
would be taxed. Let it clarify with an suitable example as follows

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ACCOUNTING
Suppose, I have invested Rs. 4 lakhs in stocks or equity funds in march 2018. On
the 31st jan 2020 the value would be 6 lakhs, I dispose the investment for rs. 7.4 lakhs
after 31st march 2020, then the LTCG will be calculated on the basis of 31st jan 2020 price
so the gains is 1.4 lakh, and on this 1 lakh is tax free so the rest 20000 would be taxed at
10%, it has been grandfathered (PATIL 2017).
4. There is a significance that the codification content with in a box justifies because it
recognize when to consult the system, log into the system, find relevant accounting
guidance by systematically browsing the codification content, log out of the system.
If it is unbox then it could lead a problematic to address the specific system, which may
occure the failure of consultant.
5. Role of Financial Accounting Foundation, FAF
The role of FAF are as follows
The FASB and The GASB are charged the highest quality standards in a manner of
robust, comprehensive and inclusive.
The FAF management is resposnsible for providing stratregic concel and services
The FAF trustee is responsible to provide the oversight and promoting an independent
and effective standard.
6. There are ten steps involved into the Accounting Reseearch process these are:
a. Establish the facts, identify and issues
b. List of keyword and concepts
c. Accounting information center to identify the research tresources
d. The overview of the topic
e. Identify the authoritative pronouncements

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f. Search for the articles
g. Web searching
h. Evaluating the financial statements
i. Investmenst research reports
j. Sum up of all
Section III
Adopting the updated Accounting standard (Grenier, Pomeroy and Stern 2015), the key
financial ratios and the other levearage ratio (Grill, Lang and Smith 2015) supposed to get
adversly affected. On the other hand it affects the borrowing capacity and debt contracts of the
companies. Let it understand by some illustrations are as follows:
Increase of then debt equity ratio (Nurfadillah 2016) implies increase the operating
liability, increase the current liability refers decrease the current ratio, quick is also get affected if
the current liability increased.

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ACCOUNTING
Reference
Grenier, J.H., Pomeroy, B. and Stern, M.T., 2015. The effects of accounting standard precision,
auditor task expertise, and judgment frameworks on audit firm litigation
exposure. Contemporary Accounting Research, 32(1), pp.336-357.
Grill, M., Lang, J.H. and Smith, J., 2015. The impact of the Basel III leverage ratio on risk-
taking and bank stability. Financial Stability Review, 2.
Nurfadillah, M., 2016. ANALISIS PENGARUH EARNING PER SHARE, DEBT TO EQUITY
RATIO DAN RETURN ON EQUITY TERHADAP HARGA SAHAM PT UNILEVER
INDONESIA Tbk. Jurnal Manajemen dan Akuntansi, 12(1).
PATIL, N., 2017. IMPACT OF TAX ON LONG TERM CAPITAL GAINS (LTCG) IN
INDIAN STOCK MARKET. International Journal of Transformation in Accounting, Auditing &
Taxation [ISSN: 2581-7590 (online)], 1(1).