rinciples Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption
rinciples Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter2: Financial Reporting: Its Conceptual Framework
Section: Chapter Questions
Problem 2E
Related questions
Question
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. |
d. Moss Corporation closes the books each month and prepares monthly financial statements. | |||||||
Violation: (Yes/No) | |||||||
Applicable Assumption/Principle: | |||||||
e. Carroll Corporation, a US company, purchased a machine from Germany for 10,000 Euros and recorded the machine on their books at $12,000 US | |||||||
Violation: (Yes/No) | |||||||
Applicable Assumption/Principle: | |||||||
f. Machine repairs of $6,000 were incurred on June 15. The company recorded the expense on the books in July. | |||||||
Violation: (Yes/No) | |||||||
Applicable Assumption/Principle: | |||||||
g. Buckner Corp is being sued for $1,000,000. There is a probable chance they will lose. The company disclosed this fact in their notes to their financials. | |||||||
Violation: (Yes/No) | |||||||
Applicable Assumption/Principle: | |||||||
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