Question 2: Accounting assumptions and principles: Match the correct term with the description below and explain why the concept is important.

Full disclosure principle

Historical cost principle

Going concern assumption

Monetary unit assumption

Time Period assumption

Economic entity assumption

Materiality Conservatism

a. The expertise of a companys employees is not recorded in the financial statements

b. The accountant received two estimates for the amount of uncollectible accounts receivable. He chose the larger estimate.

c. Service revenue should be recorded in the period that the work was done regardless of when the cash was received

d. The company bought calculators for $100. They recorded them as an expense even though they will last for 5 years and could be considered as an asset.

e. The fact that a company is in negotiations to close down a factory should be mentioned in the annual report

f. For accounting purposes, it is assumed that a company will continue to operate in the future

g. Equipment is recorded at the amount that the company paid for it, even if it is currently worth more. h. An owner should not record his personal car on the balance sheet of his company