These accounting concepts were discussed in this and previous chapters. 1. Economic entity assumption. 2. Expense recognition
Question:
These accounting concepts were discussed in this and previous chapters.
1. Economic entity assumption.
2. Expense recognition principle.
3. Monetary unit assumption.
4. Periodicity assumption.
5. Historical cost principle.
6. Materiality.
7. Full disclosure principle.
8. Going concern assumption.
9. Revenue recognition principle.
10. Cost constraint.
Instructions Identify by number the accounting concept that describes each situation below. Do not use a number more than once.
____ a. Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.)
____ b. Indicates that personal and business recordkeeping should be separately maintained.
____ c. Ensures that all relevant fi nancial information is reported.
____ d. Assumes that the dollar is the “measuring stick” used to report on financial performance.
____ e. Requires that accounting standards be followed for all items of significant size.
____ f. Separates financial information into time periods for reporting purposes.
____ g. Requires recognition of expenses in the same period as related revenues.
____ h. Indicates that fair value changes subsequent to purchase are not recorded in the accounts.
LiquidationLiquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
Step by Step Answer:
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119493631
9th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso