ACCT.PRINCIPLES-WILEYPLUS NEXTGEN
14th Edition
ISBN: 9781119709954
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…
Presented below are the assumptions, principles, and constraint used in this chapter.
1. Economic entity assumption
2. Going concern assumption
3. Monetary unit assumption
4. Periodicity assumption
5. Measurement principle (historical cost)
6. Measurement principle (fair value)
7. Expense recognition principle
8. Full disclosure principle
9. Cost constraint
10. Revenue recognition principle
Instructions
Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a number more than once.
a. Allocates expenses to revenues in the proper period.
b. Indicates that fair value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.)
c. Ensures that all relevant financial information is reported.
d. Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.)
e. Indicates that personal and…
Lugi Ka Na Company has been forced into bankruptcy as of April 30 because of its inability to pay its debts.
The statement of financial position on that date shows:
ASSETS
LIABILITIES & EQUITY
Cash
Accounts Receivable
Note Receivable
Inventory
Prepaid Expenses
Land and Building
Equipment, net
P5,400
78,700
37,000
175,700
1,900
122,500
97,600
Accounts Payable
Notes Payable – PNB
Notes Payable - suppliers
Accruedwages
Accruedtaxes
P105,000
30,000
102,500
3,700
9,300
180,000
150,000
(61,700)
P518,800
Mortgage Bonds Payable
Common stock-P100 par
Retained Earnings
Total Liabilities & Equity
Total Assets
P518,800
Additional information:
a. Accounts receivable of P32,220 and notes receivable of P25,000 are expected to be collectible. The good
notes are pledged to PhilippineNational Bank.
b. Inventories are expectedto bring in P90,200when soldunder bankruptcyconditions.
Landand buildingshave an appraised value of P190,000. They serveas security on the bonds.
d. The currentvalue of the…
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- Match the statements below with the accounting assumption, characteristic, or principle to which the statement relates. Assumptions/characteristics/principles may be used once, more than once, or not at all. Recorded when the performance obligation is satisfied. a. Revenue recognition principle V The reason for recording accruals and deferrals in adjusting entries. b. Matching principle Valuing assets at amounts originally paid for them. C. Historical cost principle Entity assumed to have a long life d. Going concern assumption Description of significant accounting policies and unusual events. e. Full disclosure principle v Information has predictive and confirmatory value. T. Relevance characteristic 8. Consistency characteristicarrow_forwardListed 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_forwardIf the going concern assumption is not made in accounting, discuss the differences in the amounts shown in the financial statements for the following items. a. Land. b. Unamortized bond premium. c. Depreciation expense on equipment. d. Inventory. e. Prepaid insurance.arrow_forward
- 7. How is the valuation of current assets affected if the company follows IFRS? Valuation is based on historical cost. OValuation is based on market adjustments. OValuation is based on LCM accounting. O Assets are expensed immediately.arrow_forward30. MC.03.035 Bright Services pays wages of a part-time employee. The transaction would involve a a. debit to Cash. b. debit to Wages Expense. c. credit to Prepaid Expenses. d. credit to Wages Payable. 31. MC.03.036 Patrick Services paid the office rent for the current month. The transaction would involve a a. credit to Prepaid Rent. b. debit to Rent Expense. c. debit to Cash. d. credit to Rent Payable. 32. MC.03.037 Homer Services pays the monthly rent, $5,000. The transaction would involve a a. debit to Rent Expense. b. credit to Rent Payable. c. debit to Cash. d. debit to Prepaid Rent. 33. MC.03.038 P. Baker deposits $10,000 in a bank account, in the name of his business, to be used to purchase equipment. The journal entry to record the transaction would involve a: a. credit to P. Baker, Capital. b. credit to P. Baker, Drawing. c. credit to Cash. d. credit to Equipment.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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