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Accounting Assumptions The following is a list of accounting assumptions that have had an important impact on the development of generally accepted accounting principles and statements describing certain accounting practices. A. Reporting entity B. Going concern C. Period of time D. Historical cost E. Monetary unit F. Recognition G. Accrual accounting H. Revenue recognition I. Expense recognition J. Conservatism ________ 1. To provide timely information, composes prepare and report financial statements at the end of each year. ________ 2. Appropriate recognition when a company consumes economic resources in conducting business operations. ________ 3. Accounting measurements for U.S. companies ore reported in dollars. ________ 4. The financial statements represent the business, rather than its owners. ________ 5. In the absence of evidence to the contrary, the business con be reasonably expected to operate long enough to carry out its existing commitments. ________ 6 Appropriate recognition when a company creates economic benefits (inflows of assets or settlements of obligations] by providing goods or services to customers. ________ 7. Transactions and events are recognized initially at the exchange price to provide relevant and reliable Information. ________ 8. An accounting alternative is selected that is least likely to overstate assets and income. ________ 9. The process of formally recording and reporting an item in the financial statements of a company. ________ 10. The process of measuring and reporting the economic effects of transactions, events, and circumstances in the appropriate period when those effects occur, even though the cash consequences may occur in a different period. Required: Select the accounting assumption that justifies each accounting practice and place the appropriate letter on the line preceding the statement.

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 2, Problem 2E
Textbook Problem

Accounting Assumptions The following is a list of accounting assumptions that have had an important impact on the development of generally accepted accounting principles and statements describing certain accounting practices.

  1. A. Reporting entity
  2. B. Going concern
  3. C. Period of time
  4. D. Historical cost
  5. E. Monetary unit
  6. F. Recognition
  7. G. Accrual accounting
  8. H. Revenue recognition
  9. I. Expense recognition
  10. J. Conservatism

________ 1. To provide timely information, composes prepare and report financial statements at the end of each year.

________ 2. Appropriate recognition when a company consumes economic resources in conducting business operations.

________ 3. Accounting measurements for U.S. companies ore reported in dollars.

________ 4. The financial statements represent the business, rather than its owners.

________ 5. In the absence of evidence to the contrary, the business con be reasonably expected to operate long enough to carry out its existing commitments.

________ 6 Appropriate recognition when a company creates economic benefits (inflows of assets or settlements of obligations] by providing goods or services to customers.

________ 7. Transactions and events are recognized initially at the exchange price to provide relevant and reliable Information.

________ 8. An accounting alternative is selected that is least likely to overstate assets and income.

________ 9. The process of formally recording and reporting an item in the financial statements of a company.

________ 10. The process of measuring and reporting the economic effects of transactions, events, and circumstances in the appropriate period when those effects occur, even though the cash consequences may occur in a different period.

Required:

Select the accounting assumption that justifies each accounting practice and place the appropriate letter on the line preceding the statement.

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Chapter 2 Solutions

Intermediate Accounting: Reporting And Analysis
Show all chapter solutions
Ch. 2 - What are the two primary qualities of useful...Ch. 2 - What is relevant accounting information? Identify...Ch. 2 - What is materiality, and how does it relate to...Ch. 2 - What is faithfully represented accounting...Ch. 2 - Identify the enhancing characteristics of useful...Ch. 2 - Compare and contrast comparability and...Ch. 2 - What is the cost constraint, and how does it...Ch. 2 - What is the reporting entity assumption? How does...Ch. 2 - What is the going-concern assumption, and why is...Ch. 2 - What is the period-of-time assumption, and why is...Ch. 2 - Why does financial reporting utilize a mixed set...Ch. 2 - Discuss the relationship among historical cost,...Ch. 2 - What is recognition in accounting?Ch. 2 - Describe accrual accounting. What are the...Ch. 2 - What drives the timing of revenue recognition?...Ch. 2 - What drives expense recognition? When should...Ch. 2 - What is conservatism? Why do accountants sometimes...Ch. 2 - Describe the financial reporting model within the...Ch. 2 - What are the primary sources of useful information...Ch. 2 - The information provided by financial reporting...Ch. 2 - Which of the following is considered a constraint...Ch. 2 - According to Statement of Financial Accounting...Ch. 2 - Which characteristic states that accounting...Ch. 2 - Under Statement of Financial Accounting Concepts...Ch. 2 - Under Statement of Financial Accounting Concepts...Ch. 2 - Accruing net losses on obsolete inventory is an...Ch. 2 - The valuation of a promise to receive cash in the...Ch. 2 - An accrued expense is an expense: a. incurred but...Ch. 2 - A company purchased a patent 4 years ago, and was...Ch. 2 - Qualitative Characteristics The following is a...Ch. 2 - Accounting Assumptions The following is a list of...Ch. 2 - Objectives of Financial Reporting The FASB has...Ch. 2 - A friend, who is not an accounting major, is not...Ch. 2 - A friend, who is not an accounting major, is...Ch. 2 - Financial accounting and reporting provide...Ch. 2 - An accountant must be familiar with the concepts...Ch. 2 - Relevance versus Faithful Representation You are...Ch. 2 - Conceptual Framework The FASBs Conceptual...Ch. 2 - Objectives, Users, and Stewardship The owners of...Ch. 2 - The concept of the reporting entity is a...Ch. 2 - Accruals and Deferrals Generally accepted...Ch. 2 - The following are brief descriptions of two...Ch. 2 - Violations of Assumptions and Principles The...Ch. 2 - You have been hired as an accounting consultant by...Ch. 2 - Inconsistent Statements on Accounting Principles...

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