Listed below are the basic assumptions, broad accounting principles, and constraints discussed in this chapter.
a. Economic entity assumption
b. Going concern assumption
c. Periodicity assumption
d. Monetary unit assumption
e. Historical cost principle
f. Realization principle
g. Matching principle
h. Full-disclosure principle
i. Cost effectiveness
j. Materiality
k. Conservation
Indentify by letter the assumption, principle, or constraint that relates to each statement or phrase below.
_____ 1. Revenue is recognized only after certain criteria are satisfied.
_____ 2. Information that could affect decision making should be reported.
_____ 3. Cause-and-effect relationship between revenues and expenses.
_____ 4. The basis for measurement of many assets and liabilities.
_____ 5. Relates to the qualitative characteristic of timeliness.
_____ 6. All economic events can be identified with a particular entity.
_____ 7. The benefits of providing accounting information should exceed the cost of doing so.
_____ 8. A consequence is that GAAP need not be followed in all situations.
_____ 9. Not a qualitative characteristic, but a practical justification for some accounting choices.
_____10. Assumes the entity will continue indefinitely.
_____11. Inflation causes a violation of this assumption.