ACCT.PRINCIPLES (LL)
14th Edition
ISBN: 9781119707110
Author: Weygandt
Publisher: WILEY
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Students have asked these similar questions
Identify the accounting concept that describes each situation below. Do not use any concept more than once.
(a)
Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.)
choose the accounting concept
Periodicity assumptionMaterialityFull disclosure principleGoing concern assumptionRevenue recognition principleHistorical cost principleCost constraintEconomic entity assumptionExpense recognition principleMonetary unit assumption
(b)
Indicates that personal and business recordkeeping should be separately maintained.
choose the accounting concept
Monetary unit assumptionRevenue recognition principleFull disclosure principleMaterialityGoing concern assumptionCost constraintPeriodicity assumptionEconomic entity assumptionExpense recognition principleHistorical cost principle
(c)
Ensures that all relevant financial information is reported.
choose the accounting concept
Expense recognition…
Listed below are the current Accounting Assumptions and Principles
Economic Entity Assumption
Monetary Unit Assumption
Historical Cost Principle
Going Concern Assumption
Revenue Recognition Principle
Full Disclosure Principle
Time Period Assumption
Matching Principle
Required:
For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable.
h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value.
Violation: (Yes/No)
Applicable Assumption/Principle:
i. Wages of $4,000 related to the last two days of July, were recorded as expense in July even though they were paid in August.
Violation: (Yes/No)
Applicable…
How is the valuation of cuIrent assets affected if the company follows IFRS? (
OValuation is based on historical cost.
OValuation is based on market adjustments.
OValuation is based on LCM accounting.
O Assets are expensed immediately.
Aliability created for receiving cash for future services to be provided is termed
O service revenue.
O estimated warranty payable.
Ounearned revenue.
Oaccrued liability.
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- Listed below are several information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application. (Items a through k may be used more than once or not at all.) Economic entity assumption g. Matching principle Going concern assumption h. Full disclosure principle Monetary unit assumption i. Relevance characteristic Periodicity assumption j. Reliability characteristic Historical cost principle k. Consistency characteristic Revenue recognition principle ____ 1. Stable-dollar assumption (do not use historical cost principle). ____ 2. Earning process completed and realized or realizable. ____ 3. Presentation of error-free information with representational faithfulness. ____ 4. Yearly financial reports. ____ 5. Accruals and deferrals in the adjusting and closing process. (Do not use going concern.) ____ 6. Useful standard measuring unit for business…arrow_forward1.How can exit value accounting be used to assess the financial risk of a balance sheet. 2.Evaluate the argument that a mixed or piecemeal approach to standard setting is required in order to ‘better’ measure profit and financial position. 3.Explain how both exit price and current entry price accounting systems can be used to make decisions about retaining or selling assets.arrow_forward6. Application of the full disclosure principle a. Is theoretically desirable but not practical. b. Is violated when important financial information je buried in the notes to financial statements. c. Is demonstrated by the use of supplementary information presenting the effects of changing prices.. d. Requires that the financial statements should be consistent and comparable. 7. Accounting policies disclosed in the notes to financial statements typically include all of the following, except a. The cost flow assumption b. The depreciation method c. Significant estimates d. Significant inventory purchasing policies 8. Significant accounting policies may not be a. Selected on the basis of judgment. b. Selected from existing acceptable alternatives. c. Unusual ór innovative in application. d. Omitted from financial statement disclosure. 9. An inventory accounting policy that should be disclosed in a summary of significant accounting policies is a. Composition of inventory into raw…arrow_forward
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