Identify which concept (qualitative characteristic, accounting principle, assumption) best applies to or is violated in the following
Question:
Identify which concept (qualitative characteristic, accounting principle, assumption) best applies to or is violated in the following scenarios: & tell me if it is an application or violation.
1. A shareholder analyzes the future undiscounted lease cash outflows disclosed in the not esto the annual financial statements to prepare a 3-year income statement forecast.
2. The reported cash flows from investing activities is 35% lower than what a shareholder had forecasted for this year.
3. The newly hired auditors for a company are unable to substantiate the accounts receivable allowance reported in the prior year’s balance sheet audited by another audit firm.
4. Prepayment for an annual license is allocated equally to expense over the next 12 months.
5. Although the inflation rate for the most recent fiscal year is 6%, no adjustment was made on the year-end financial statements.
6. An incorrect useful life for equipment that had been entered into the depreciation system was discovered after yearend. An adjustment to correct depreciation expense was recorded before the financial statements were issued.
7. A company presents its financial statements, rounded in thousands (000s).
Intermediate Accounting
ISBN: 978-1259548185
8th edition
Authors: David Spiceland, James Sepe, Mark Nelson, Wayne Thomas