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1. A. Separate-entity assumption G. Matching B. Continuity assumption H. Historical cost C. Materiality I. Unit-of-measure assumption D. Time-period assumption J. Faithful representation E. Cost/benefit
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Any accounting method is acceptable for small items that will not change users decisions. | |||||||||||||||||||||||||
2. | Assumes that all financial statement elements can be meaningfully described in dollar terms. | |||||||||||||||||||||||||
3. | Long-term assets that increase in value are not normally written up in the financial statements. | |||||||||||||||||||||||||
4. | Assets and earnings should be neither understated nor overstated. | |||||||||||||||||||||||||
5. | The estimated future cost of fulfilling warranties that may not arise until two years into the future are accrued in the period of the sale. | |||||||||||||||||||||||||
6. | It is not necessary to use a complex accounting method for minor items that are highly unlikely to improve the decisions of financial statement users. | |||||||||||||||||||||||||
7. | It must be possible to numerically confirm all amounts reported in the body of the financial statements. | |||||||||||||||||||||||||
8. | The various costs associated with a revenue transaction may be deferred until the revenue is earned. | |||||||||||||||||||||||||
9. | The personal transactions of owners should be kept separate from transactions of the business. | |||||||||||||||||||||||||
10. | Significant recognized and many nonrecognized items should be fully described in the notes to the financial statements. | |||||||||||||||||||||||||
11. | Enables historical cost, rather than liquidation values, to be used. | |||||||||||||||||||||||||
12. | Enables measurement of the income and financial position of entities at regular intervals. |
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