E 1-9 Basic assumptions, principles, and constraints L017 through 1019 Listed below are several terms and phrases associated with the accounting concepts. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it. List A List B 1. Expense recognition a. The enterprise is separate from its owners and other entities. 2. Periodicity assumption b. A common denominator is the dollar. 3. Historical cost principle c. The entity will continue indefinitely. 4. Materiality d. Record expenses in the period the related revenue is recognized. e. The original transaction value upon acquisition. 5. Revenue recognition 6. Going concern assumption f. All information that could affect decisions should be reported. 7. Monetary unit assumption g. The life of an enterprise can be divided into artificial time periods. 8. Economic entity assumption h. Criteria usually satisfied for products at point of sale. 9. Full-disclosure principle i. Concerns the relative size of an item and its effect on decisions. E 111 Basic assumptions and principles 1018, 1019 Identify the accounting concept that was violated in each of the following situations. 1. Pastel Paint Company purchased land two years ago at a price of $250,000. Because the value of the land has appreciated to $400,000, the company has valued the land at $400,000 in its most recent balance sheet. 2. Atwell Corporation has not prepared financial statements for external users for over three years. 3. The Klingon Company sells farm machinery. Revenue from a large order of machinery from a new buyer was recorded the day the order was received 4. Don Smith is the sole owner of a company called Hardware City. The company recently paid a $150 utility bill for Smith's personal residence and recorded a $150 expense. 5. Golden Book Company purchased a large printing machine for $1,000,000 (a material amount) and recorded the purchase as an expense. 6. Ace Appliance Company is involved in a major lawsuit involving injuries sustained by some of its employees in the manufacturing Page 39 plant. The company is being sued for $2,000,000, a material amount, and is not insured. The suit was not disclosed in the most recent financial statements because no settlement had been reached