Question

The following are transactions recorded by Bounce Corporation during the current year.
1. Ordinary operating maintenance on equipment was recorded as follows:
2. The company received an advance on a custom order for merchandise that will be shipped during the next accounting year.
3. Bounce Corporation is holding inventory on consignment for Rubber Ltd. Bounce will only pay Rubber when a sale is made to a customer. It has made the following entry for the inventory:
Inventory.............. 15,000
Accounts Payable............ 15,000
4. On the last day of the accounting period, a 12-month insurance policy was purchased. The insurance coverage is for the next accounting year.
Instructions
For each transaction, determine which component of the conceptual framework (i.e., qualitative characteristic, element, or principle) was violated, if any, and give the entry that should have been recorded if there was a violation.


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  • CreatedSeptember 18, 2015
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