Following are the concepts of accounting covered in Chapters 2 through 5. Match each transaction or definition with its related concept by entering the appropriate letter in the space provided. Use one letter for each blank.
Concepts Transactions/Definitions
(1) Users of financial statements
(2) Objective of financial statements
Qualitative Characteristics
(3) Relevance
(4) Reliability
Assumptions
(5) Separate entity
(6) Continuity
(7) Unit of measure
(8) Time period
Elements of Financial Statements
(9) Revenues
(10) Expenses
(11) Gain's
(12) Losses
(13) Assets
(14) Liabilities
(15) Stockholders' equity
Principles
(16) Cost
(17) Revenue
(18) Matching
(19) Full disclosure
Constraints of Accounting
(20) Materiality threshold
(21) Cost-effectiveness
(22) Conservatism constraint
(23) Special industry practices
A. Recorded a $2,000 sale of merchandise on credit.
B. Counted (inventoried) the unsold items at the end of the period and valued them in dollars.
C. Acquired a vehicle for use in operating the business.
D. Reported the amount of depreciation expense because it likely will affect statement users' decision making.
E. The investors, creditors, and others interested in the business.
F. Used special accounting approaches because of the uniqueness of the industry.
G. Sold and issued bonds payable of $3 million.
H. Used services from outsiders; paid cash for some and put the remainder on credit.
I. Engaged an outside independent CPA to audit the financial statements.
J. Sold an asset at a loss that was a peripheral or incidental transaction.
K. Established an accounting policy that sales revenue shall be recognized only when ownership to the goods sold passes to the customer.
L. To design and prepare the financial statements to assist the users in making decisions.
M. Established a policy not to include in the financial statements the personal financial affairs of the owners of the business.
N. Sold merchandise and services for cash and on credit during the year; then determined the cost of those goods sold and the cost of rendering those services.
O. The user value of a special financial report exceeds the cost of preparing it.
P. Valued an asset, such as inventory, at less than its purchase cost because the replacement cost is less.
Q. Dated the income statement "For the Year Ended December 31, 2017."
R. Paid a contractor for an addition to the building with $ 15,000 cash and $20,000 market value of the stock of the company ($35,000 was deemed to be the cash-equivalent price).
S. Acquired an asset (a pencil sharpener that will have a useful life of five years) and recorded it as an expense when purchased for $1.99.
T. Disclosed in the financial statements all relevant financial information about the business; necessitated the use of notes to the financial statements.
U. Sold an asset at a gain that was a peripheral or incidental transaction.
V. Assets of $600,000 - Liabilities of $400,000 = ?
W. Accounting and reporting assume a "going concern."