Textbook Problem

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