2.

Acceunting Assurnptions and Principles The following is a list of accounting assumptions and principles that have had an important impact on the develepment of generally accpted accounting principles and statements descri 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 Required: Select the accounting assumption or prindiple that justifies each accounting practice and select the appropriate letter on each statement. To provide timely information, companies prepare and report financial statements at the end of each year 1. Appropriate recognition when a company consumes economic resources in conducting business operations. Accounting measurements for U.S. companies are reported in dollars. 3. The financial statements represent the business, rather than its owners. 4. In the absence of evidence to the contrary, the business can be reasonably expected to operate long enough to cary out its existing 5 commitments F. Recogaition G. Accrual accounting H. Revemue rengnition L Expense reCognition 3. Conservatism Required Select the accounting assumption or principle that justifies each accounting practice and select the appropriate letter on each statement. To previde timely information, companies prepare and report financial statements at the end of each year 1. Appropriate recognicion when a company consumes economic resources in conducting business operations. 2. Accounting measurements for U.S. companies are reported in dollars. 3 The financial statements represent the business, rather than its owners. 4. In the absence of evidence to the contrary, the business can be reasonably expected to operate long enough to carry out its existing commitments Appropriate recognition when a company creates economic benefits (inflowes of assets or settlements of obligations) by providing goods or services to customers. 6 Transactions and events are recognized initially at the exchange price to provide relevant and reliable information 7 An accounting alternative is selected that is least likely to overstate assets and income. The process of formally recording and reporting an item in the financial statements of a company. 9. 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 dfferent period