Mere Co. had three major business transactions during 2007. Identify the assumption or

(a) Reported at its market value of $260,000 merchandise inventory with a cost of principle that has been

$208,000.

violated.

(b) The president of Mere Co., Issam Mere, purchased a truck for personal use and (SO 7)

charged it to his expense account.

(c) Mere Co. wanted to make its 2007 income look better, so it added 2 more weeks to the year (a 54-week year). Previous years were 52 weeks.

Instructions In each situation, identify the assumption or principle that has been violated, if any, and discuss what the company should have done.