The correct option. Accounting Principle: Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company. Cost Principle: As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.

Conclusion

Thus, the correct option is c.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 2

Question

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.

Conclusion

Thus, the correct option is c.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.

Conclusion

Thus, the correct option is c.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.

Conclusion

Thus, the correct option is c.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.

Conclusion

Thus, the correct option is c.

Answer 6

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.

Conclusion

Thus, the correct option is c.

Answer 7

Chapter 1, Problem 1MCQ

To determine

To identify:

The correct option.

Accounting Principle:

Accounting principle are the special guidelines that should be followed by the company for recording the financial transactions of the company.

Cost Principle:

As per cost principle, a new asset purchased by a company it should be recorded at its actual cost instead of its current market value.

Answer 8

Expert Solution & Answer

Answer to Problem 1MCQ

Option c-$450,000' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option c:

As per GAAP guidelines the new asset purchased by a company will always recorded at its actual cost based on cost principle of GAAP.
In the given case, a building is offered for sale at $500,000 but the current value of building is $ 400,000, the purchaser of building think the worth of building is of $475,000, but actually pay to supplier $450,000 so the correct option is c, $450,000
So, the current market value does not matter for accounting purpose of a fixed asset.

Option a:

As buyer does not pay $50,000 for machinery, so it is incorrect option.

Option b.

Current value of machinery plays no role in accounting. Only actual value will be recorded in books of accounts, so option b $400,000 is incorrect.

Option d:

Accounting is not done as per the thinking of the buyer so, option d $475,000 is incorrect option.

Option e:

Accounting is not done as per the thinking of the seller, so option e $500,000 is incorrect option.