Can not wait to start working after this promotion! About time I finally achieved what I wanted to be for all these years. A CPA!
I'll get right on it!
Good Morning Sir, what would you like for me to start off this new position?
Essentially these principles are what create Accounting fair, this is why it stands for 'Generally Accepted Accounting Principles'. From what you did yesterday you did not follow is called the Cost principle. You must record all assets at their historical cost/value and not alter them in any way. From what you did to increase capital yesterday was not ethical and must be adjusted. I will fix it in the adjustments before closing out the accounts.
Good Morning to you as well Jim, I would like for you to review and adjust this fiscal periods' transactions close the accounts and bring me the post-closing trial balance
Jim is reviewing the adjusting entries and making sure they are all coherent and follow the GAAP Principles
Hmm. This is odd, the accounting clerk looks like they added more value to the equipment asset to increase capital in the ledger, I don't recall seeing any equipment purchase transactions this fiscal period.
Sure, I was looking through the prices of the equipment on my break and saw they skyrocketed due to high demand. So since we have the same model, I figured we can increase capital by increasing its value.
Oh Dwight, I have to teach you something very important. You need to follow the GAAP Principles, my friend!
Hey, Dwight, would you care to explain the equipment debit entry without any purchase?
So what exactly are the GAAP Principles ?
No problem Dwight! But sometimes I wonder how you got hired! GAAP principles are essential to carry out fair accounting tasks.
I get it now! I will try my best to prevent this in the next fiscal period and thereon. Thank you, Jim, my apologies about that.