The file ACC 349 E2 4.1 contains solutions to the following task:
E2-4. Presented below are the assumptions, principles, and constraints used in this chapter.
1. Economic entity assumption 5. Historical cost principle 9. Materiality
2. Going concern assumption 6. Matching principle 10. Industry practices
3. Monetary unit assumption 7. Full disclosure principle 11. Conservatism
4. Periodicity assumption 8. Cost-benefit relationship
Identify by number the accounting assumption, principle, or constraint that describes each situation below.
Do not use a letter more than once.
Business - Accounting
E2-4 (Assumptions, Principles, and Constraints)
Presented below are the assumptions, principles, and constraints used in this chapter.
1. Economic entity assumption 2. Going concern assumption
3. Monetary unit assumption
4. Periodicity assumption
5. Historical cost principle
6. Fair value principle
7. Expense recognition principle
8. Full disclosure principle
9. Cost-benefit relationship
11. Industry practices
Identify by number the accounting assumption, principle, or constraint that describes each situation on the next page. 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) Anticipates all losses, but reports no gains. (f) Indicates that personal and business record keeping should be separately maintained. (g) Separates financial inform...
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