For each of the following independent situations, describe the accounting assumptions, characteristics, or conventions that have been violated.

a. Hilary Wong is the sole proprietor of Wong Jewelry Imports. During March, the following items were recorded as expenses on the firm’s books:

 

b. Weiss Corporation spent $2 on paper clips during the current year. This amount was listed in the asset section of the balance sheet, labeled Office Supplies.
c. Over the past few years, the president of Federal Company has purchased a number of paintings to decorate her office. Recently, one of the artists died, and his paintings have increased in value by over 200 percent. The president has therefore instructed the accounting department to increase the recorded cost of the paintings to reflect this change.
d. Carol Inman, the accountant for Borsting Company, was preparing the firm’s financial statements. During her analysis she noticed that the firm had five acres of land in the heart of downtown that it had purchased a couple of years ago for $700,000. Because of a rather severe economic recession that began last year, the market value of real estate has fallen. A similar plot of land recently sold for $600,000, but Carol has decided not to reduce the recorded value of the land.

Transcribed Image Text:

Rent on office $500 Employees' wages Supplies for personal use Advertising Pleasure travel 700 100 250 800 Rent on office $500 Employees' wages Supplies for personal use Advertising Pleasure travel 700 100 250 800

Answer rating: 100% (QA)

Hilary is the sole proprietor of Hilary Co During March the following items were recorded As expenses on the firms books Rent on office 500 Supplies f... View the full answer