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Exercise 2-12
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Your answer is incorrect. Try again. |
Identify the accounting assumption or principle that is described below.
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Question & Answer: onomic entity assumption.Historical cost principle.Going concern assumption.Full dis…..
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| (a) | Economic entity assumption.Historical cost principle.Going concern assumption.Full disclosure principlePeriodicity assumptionMonetary unit assumption. |
Is the rationale for why plant assets are not reported at liquidation value. (Note: Do not use the historical cost principle.) | ||
| (b) | Historical cost principle.Going concern assumption.Economic entity assumption.Monetary unit assumption.Periodicity assumption fully disclosure principle |
Indicates that personal and business record-keeping should be separately maintained. | ||
| (c) | Monetary unit assumption.Economic entity assumption.Going concern assumption.Periodicity assumptionFull disclosure principle historical cost principle. |
Assumes that the dollar is the “measuring stick” used to report on financial performance. | ||
| (d) | Monetary unit assumption.Periodicity assumption.Going concern assumption.Historical cost principle.Economic entity assumption.Full disclosure principle. |
Separates financial information into time periods for reporting purposes. | ||
| (e) | Economic entity assumption.Monetary unit assumption.Full disclosure principle.Going concern assumption.Periodicity assumption.Historical cost principle. |
Measurement basis used when a reliable estimate of fair value is not available. | ||
| (f) | Full disclosure principleGoing concern assumption.Monetary unit assumption.Periodicity assumption.Historical cost principle.Economic entity assumption. |
Dictates that companies should disclose all circumstances and events that make a difference to financial statement users. |
Expert Answer
| a. | Going concern assumption | Is the rationale for why plant assets are not reported at liquidation value. |
| b. | Economic entity assumption | Indicates that personal and business record-keeping should be separately maintained. |
| c. | Monetary unit assumption | Assumes that the dollar is the “measuring stick” used to report on financial performance |
| d. | Periodicity assumption | Separates financial information into time periods for reporting purposes. |
| e. | Historical cost principle | Measurement basis used when a reliable estimate of fair value is not available. |
| f. | Full disclosure principle | Dictates that companies should disclose all circumstances and events that make a difference to financial statement users. |
