Instructions: Please, respond to the below two cases and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.) CASE 1‐4...

Please, respond to the two cases attached and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.)

See file attached for more instructions and cases. Thank you

Instructions: Please, respond to the below two cases and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.) 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.” Required: 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 support. 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. CASE 8-1 Accounting for Investments FASB ASC 320 (generally effective until 2018) requires companies to assign their portfolio of investment securities into 1. Trading securities 2. Securities available for sale 3. Held‐to‐maturity securities Required: a. Describe the fundamental cost‐flow assumptions of the average cost, FIFO, and LIFO inventory cost‐flow methods. b. Discuss the reasons for using LIFO in an inflationary economy. c. Where there is evidence that the utility of goods, in their disposal in the ordinary course of business, will be less than cost, what is the proper accounting treatment, and under what concept is that treatment justified?