For each of the following transactions, state the accounting principle/concept that has been applied or violated...

 

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For each of the following transactions, state the accounting principle/concept that has been applied or violated and provide an explanation. (a) Johnson owns three independent firms that trade computer accessories, magazines and groceries. As Johnson is only interested in the overall performance of his investment instead of the performance of individual firms, he just keeps one single set of books to record all the transactions of the three firms. (5 marks) (i) Name of Principle/Concept. (ii) Indicate whether the Principle/Concept has been APPLIED or VIOLATED. (iii) Explanation. (b) Victory Co. has just bought a hammer costing $50 which can be used for 10 years. The accountant puts the whole cost of the hammer to the Income Statement as sundry expense in this year. (5 marks) (i) Name of Principle/Concept. (ii) Indicate whether the Principle/Concept has been APPLIED or VIOLATED. (iii) Explanation. For each of the following situations, state the accounting principle or concept has been applied or violated AND provide an explanation. (b) ABC company signed a 2-year rental contract with a tenant starting from 1 January 2020. Monthly rent income was $10,000. The tenant was required to pay the rent on the first day of every month. During the financial year ended December 31, 2020, the company received a total of $110,000 rent income. The bookkeeper of ABC company recorded this $110,000 as the rental revenue for the year ended December 31, 2020. (i) (ii) Accounting Principle / Concept (ii) Explanation: The company bought a calculator costing $40. After taking a course in accounting. the bookkeeper thought that it would be correct to spread the cost of the calculator over its 4 years of useful life. (i) Accounting Principle / Concept Applied OR Violated Explanation: Applied OR Violated For each of the following transactions, state the accounting principle/concept that has been applied or violated and provide an explanation. (a) Johnson owns three independent firms that trade computer accessories, magazines and groceries. As Johnson is only interested in the overall performance of his investment instead of the performance of individual firms, he just keeps one single set of books to record all the transactions of the three firms. (5 marks) (i) Name of Principle/Concept. (ii) Indicate whether the Principle/Concept has been APPLIED or VIOLATED. (iii) Explanation. (b) Victory Co. has just bought a hammer costing $50 which can be used for 10 years. The accountant puts the whole cost of the hammer to the Income Statement as sundry expense in this year. (5 marks) (i) Name of Principle/Concept. (ii) Indicate whether the Principle/Concept has been APPLIED or VIOLATED. (iii) Explanation. For each of the following situations, state the accounting principle or concept has been applied or violated AND provide an explanation. (b) ABC company signed a 2-year rental contract with a tenant starting from 1 January 2020. Monthly rent income was $10,000. The tenant was required to pay the rent on the first day of every month. During the financial year ended December 31, 2020, the company received a total of $110,000 rent income. The bookkeeper of ABC company recorded this $110,000 as the rental revenue for the year ended December 31, 2020. (i) (ii) Accounting Principle / Concept (ii) Explanation: The company bought a calculator costing $40. After taking a course in accounting. the bookkeeper thought that it would be correct to spread the cost of the calculator over its 4 years of useful life. (i) Accounting Principle / Concept Applied OR Violated Explanation: Applied OR Violated