The concept that business is assumed to exist for an indefinite period and is not established with the objective of closing down is referred to
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The concept that business is assumed to exist for an indefinite period and is not established with the objective of closing down is referred to as
a.Money Measurement concept
Ob Going Concern concept
C Full Disclosure concept
Od. Dual Aspect concept
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- Which of the following terms is used when assuming a business will continue to operate in the foreseeable future? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumptionIdentify whether each of the following accounts would be considered a permanent account (yes/no) and which financial statement it would be reported on (Balance Sheet, Income Statement, or Retained Earnings Statement). A. Accumulated Depreciation B. Buildings C. Depreciation Expense D. Equipment E. Fees Earned Revenue F. Insurance Expense G. Prepaid Insurance H. Supplies Expense I. DividendsAssume a company has a $350 credit (not cash) sale. How would the transaction appear if the business uses accrual accounting? A. $350 would show up on the balance sheet as a sale. B. $350 would show up on the income statement as a sale. C. $350 would show up on the statement of cash flows as a cash outflow. D. The transaction would not be reported because the cash was not exchanged.
- That a business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally, is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumptionAccounting concepts Match each of the following statements with the appropriate accounting concept. Sonic concepts may he used more than once, while others may not be used at all. Use the notat ions shown to indicate the appropriate accounting concept. Statements 1. Assume that a business will continue forever. 2. Material litigation involving the corporation is described in a note. 3. Monthly utilities costs are reported as expenses along with the monthly revenues. 4. Personal transactions of owners are kept separate from the business. 5. This concept supports relying on an independent actuary (statistician), rather than the chief operating officer of the coq)ration, to estimate a pension liability. 6. Changes in the use of accounting methods from one period to the next are described in the notes to the financial statements. 7. Land worth $800,000 is reported at its original purchase price of $220,000. 8. This concept justifies recording only transactions that are expressed in dollars. 9. If this concept was ignored, the confidence of users in the financial statements could not be maintained. 10. The changes in financial condition are reported at the end of the month.Identify the suitable accounting concept which would best apply to thefollowing scenarios:(i) An amount included in financial statements to represent the amount expected not to be recoverable from a customer.(ii) Rent paid in the current year but relating to the next financial year to be removed from the current year income statement charge.(iii) The preparation of financial statements on the assumption that the business will operate to a foreseeable future.(iv) Cash for the business taken by the owner recorded in the drawings account.(v) Ensuring that the treatment of transactions of same type is done in the same way.
- What assumption states that a business is able to financially continue operations and is not planning to liquidate? A. Going concern B. Periodicity C. Full disclosure D. Monetary unit(a) Define the term ‘accounting concept’.(b) Identify the suitable accounting concept which would best apply to the following scenarios:(i) An amount included in financial statements to represent the amount expected not to be recoverable from a customer.(ii) Rent paid in the current year but relating to the next financial year to be removed from the current year income statement charge.(iii) The preparation of financial statements on the assumption that the business will operate to a foreseeable future.(iv) Cash for the business taken by the owner recorded in the drawings account.(v) Ensuring that the treatment of transactions of same type is done in the same way. (c) A businessman had the following balances at the beginning and the end of a financial year: May 2009 May 2008 K KRent prepaid 16,000 12,000Electricity accruals 11,000…Generally accepted accounting principles (GAPP) require companies to use Select one: a. None of the options b. Deferral basis c. Cash basis of accounting d. Accrual basis of accounting
- 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. 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: h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value.…The “matching” principle in accounting refers to: Group of answer choices d. None of the above a. Aligning General Ledger account titles with business transactions c. Recognizing revenue and related expenses in the same period. b. Financing short term assets with short term financingWhat account will not be found in the trial balance of a company using cash basis of accounting? *A. salesB. accrued expensesC. insurance expenseD. depreciation expenseE. answer not given
