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AccountingCornerstones of Financial Accounting4th Edition

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Chapter 2, Problem 28BE
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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 11DQ
Problem 12DQ
Problem 13DQ
Problem 14DQ
Problem 15DQ
Problem 16DQ
Problem 17DQ
Problem 18DQ
Problem 19DQ
Problem 20DQ
Problem 21DQ
Problem 22DQ
Problem 1MCQ
Problem 2MCQ
Problem 3MCQ
Problem 4MCQ
Problem 5MCQ
Problem 6MCQ
Problem 7MCQ
Problem 8MCQ
Problem 9MCQ
Problem 10MCQ
Problem 11MCQ
Problem 12MCQ
Problem 13MCQ
Problem 14MCQ
Problem 15MCQ
Problem 16CE
Problem 17CE
Problem 18CE
Problem 19CE
Problem 20CE
Problem 21CE
Problem 22CE
Problem 23CE
Problem 24CE
Problem 25CE
Problem 26CE
Problem 27BE
Problem 28BE
Problem 29BE
Problem 30BE
Problem 31BE
Problem 32BE
Problem 33BE
Problem 34BE
Problem 35E
Problem 36E
Problem 37E
Problem 38E
Problem 39E
Problem 40E
Problem 41E
Problem 42E
Problem 43E
Problem 44E
Problem 45E
Problem 46E
Problem 47E
Problem 48E
Problem 49E
Problem 50E
Problem 51E
Problem 52E
Problem 53E
Problem 54E
Problem 55APSA
Problem 56APSA
Problem 57APSA
Problem 58APSA
Problem 59APSA
Problem 60APSA
Problem 61APSA
Problem 62APSA
Problem 55BPSB
Problem 56BPSB
Problem 57BPSB
Problem 58BPSB
Problem 59BPSB
Problem 60BPSB
Problem 61BPSB
Problem 62BPSB
Problem 63.1C
Problem 63.2C
Problem 63.3C
Problem 64.1C
Problem 64.2C
Problem 64.3C
Problem 64.4C
Problem 65.1C
Problem 65.2C
Problem 66.1C
Problem 66.2C
Problem 66.3C
Problem 67.1C
Problem 67.2C
Problem 67.3C
Problem 68.1C
Problem 68.2C
Problem 69.1C
Problem 69.2C
Problem 69.3C
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
127 views

Brief Exercise 2-28 Assumptions and Principles

Five common accounting practices are listed below:

  1. A customer pays $20 to mail a package on December 30. The delivery company recognizes revenue when the package is delivered in January.
  2. Jim Trotter owns C&S Heating Company. In preparing the financial statements, Trotter makes sure that the purchase of a new truck for personal use is not included in C&S’s financial statements.
  3. Moseley Inc. recorded land at its purchase price of $50,000. In future periods, the land is reflected in the financial statements at $50,000.
  4. Mack Company purchases inventory in March. However, it does not expense that inventory until it is sold in April.
  5. Mueller Inc. prepares quarterly and annual financial statements.

Required:

Identify the amounting principle or assumption that best describes each practice

To determine

Introduction:

Revenue Recognition: The principle of revenue recognition emphasizes that all the incomes and revenues should be recorded when it is earned during the accounting period.

Economic Entity: The concept of economic entity assumes that the owner and its business should be treated as two different entities.

Historical Cost: The principle of historical cost is concerned with the assets being recorded at its purchasing price in the books of accounts. It means that all the assets will be shown at it purchasing price till the time it is sold.

Matching: According to this principle all the expenses should be recorded in same accounting period in which its revenue is recognized. The primary purpose behind this principle is to show an accurate net income or loss during an accounting period.

Time-Period: All the financial information and statements are prepared based on predetermined accounting period. It signifies that all the accounting records should be concluded at the end of each accounting period to evaluate the ultimate financial performance of a business enterprise.

To identify:

Identify the accounting principle or assumption that best describes each practice.

Explanation

A.

Although the delivery company receives the cash of $20 from the customer on December 30 but the revenue is recognized when package is delivered which the company did in January. When the company receives the cash, it is recorded as liabilities (Unearned Revenue) but when the package is delivered, it becomes revenue for that accounting period. Hence it is revenue recognition principle.

B.

Jim Trotter, the owner of C&S Heating Company making sure to not include the new truck in the financial statements represents the economic entity assumption of accounting. The economic entity concept separates the personal property of the owner from the assets of the company...

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Ch-2 P-1DQCh-2 P-2DQCh-2 P-3DQCh-2 P-4DQCh-2 P-5DQCh-2 P-6DQCh-2 P-7DQCh-2 P-8DQCh-2 P-9DQCh-2 P-10DQ
Ch-2 P-11DQCh-2 P-12DQCh-2 P-13DQCh-2 P-14DQCh-2 P-15DQCh-2 P-16DQCh-2 P-17DQCh-2 P-18DQCh-2 P-19DQCh-2 P-20DQCh-2 P-21DQCh-2 P-22DQCh-2 P-1MCQCh-2 P-2MCQCh-2 P-3MCQCh-2 P-4MCQCh-2 P-5MCQCh-2 P-6MCQCh-2 P-7MCQCh-2 P-8MCQCh-2 P-9MCQCh-2 P-10MCQCh-2 P-11MCQCh-2 P-12MCQCh-2 P-13MCQCh-2 P-14MCQCh-2 P-15MCQCh-2 P-16CECh-2 P-17CECh-2 P-18CECh-2 P-19CECh-2 P-20CECh-2 P-21CECh-2 P-22CECh-2 P-23CECh-2 P-24CECh-2 P-25CECh-2 P-26CECh-2 P-27BECh-2 P-28BECh-2 P-29BECh-2 P-30BECh-2 P-31BECh-2 P-32BECh-2 P-33BECh-2 P-34BECh-2 P-35ECh-2 P-36ECh-2 P-37ECh-2 P-38ECh-2 P-39ECh-2 P-40ECh-2 P-41ECh-2 P-42ECh-2 P-43ECh-2 P-44ECh-2 P-45ECh-2 P-46ECh-2 P-47ECh-2 P-48ECh-2 P-49ECh-2 P-50ECh-2 P-51ECh-2 P-52ECh-2 P-53ECh-2 P-54ECh-2 P-55APSACh-2 P-56APSACh-2 P-57APSACh-2 P-58APSACh-2 P-59APSACh-2 P-60APSACh-2 P-61APSACh-2 P-62APSACh-2 P-55BPSBCh-2 P-56BPSBCh-2 P-57BPSBCh-2 P-58BPSBCh-2 P-59BPSBCh-2 P-60BPSBCh-2 P-61BPSBCh-2 P-62BPSBCh-2 P-63.1CCh-2 P-63.2CCh-2 P-63.3CCh-2 P-64.1CCh-2 P-64.2CCh-2 P-64.3CCh-2 P-64.4CCh-2 P-65.1CCh-2 P-65.2CCh-2 P-66.1CCh-2 P-66.2CCh-2 P-66.3CCh-2 P-67.1CCh-2 P-67.2CCh-2 P-67.3CCh-2 P-68.1CCh-2 P-68.2CCh-2 P-69.1CCh-2 P-69.2CCh-2 P-69.3C

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