Question
Financial statements are prepared according to a number of accounting principles, some of which are listed below: 1. Business entity 6. Consistency 2. Going concern
Financial statements are prepared according to a number of accounting
principles, some of which are listed below:
1. Business entity 6. Consistency
2. Going concern 7. Full disclosure
3. Stable monetary unit 8.Matching
4. Historical cost 9.Materiality
5. Revenue recognition
Required: Identify the principle that would apply in each of the
following situations. Explain your choice.
___________c. A machine is recorded at its purchase price of $9,000 and is not
revalued at the end of the accounting period to reflect its market
value of $10,000.
___________d. Land purchased in 1985 for $10,000 is not revalued even though it
would take $30,000 in equivalent money to purchase the land
today.
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