BASIC CONCEPTS AND PRINCIPLES 1-1 HO For each of the circumstances enumerated below, give the letter item indicating the accounting objective attained or the principle applied: a. Understandability b. Verifiability c. Timeliness d. Comparability e. Completeness f. Conservatism g. Continuity of life h. Economic entity i. Historical Cost j. Income Determination k. Quantifiability 1. Materiality i. Goodwill is only recorded in the accounts when it arises from the purchase of another entity at a price higher than the fair market value of the purchased entity's tangible assets 2, A note describing the company's possible liability in a lawsuit is included with the financial statement even though no formal liability exists at the balance sheet date. 3. All payments out of petty cash are debited to Miscellaneous Expense 4. Fixed Assets are classified separately as Land and Buildings with an Accumulated Depreciation for Buildings 5. A retail store uses estimates rather than a complete physical count of its inventory for purposes of preparing monthly financial statements p. 2 6. Securities Available for Sale are valued at the lower of Cost or Market. 7. Securities Available for Sale are valued at cost. 8. An advance payment of insurance premiums is reported as an Asset. 9. A system of vouchers is used to account for cash 10. Small tools used by a large manufacturing firm are 11. Periodic payments of $1,000 per month for services of J. disbursements recorded as an expense when purchased. Roy, who owns all of the stock of the company are reported as salary; additional amounts paid to Roy are reported as dividends