Question
Identify the accounting concept that describes each situation below. Do not use any concept more than once. (a) Is the rationale for why plant assets
Identify the accounting concept that describes each situation below. Do not use any concept more than once.
(a) | Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.) | Periodicity assumptionHistorical cost principleMaterialityMonetary unit assumptionFull disclosure principleGoing concern assumptionRevenue recognition principleExpense recognition principleCost constraintEconomic entity assumption | ||
(b) | Indicates that personal and business recordkeeping should be separately maintained. | MaterialityFull disclosure principleGoing concern assumptionRevenue recognition principleCost constraintEconomic entity assumptionExpense recognition principleMonetary unit assumptionPeriodicity assumptionHistorical cost principle | ||
(c) | Ensures that all relevant financial information is reported. | MaterialityPeriodicity assumptionMonetary unit assumptionCost constraintFull disclosure principleRevenue recognition principleGoing concern assumptionEconomic entity assumptionExpense recognition principleHistorical cost principle | ||
(d) | Assumes that the dollar is the measuring stick used to report on financial performance. | Periodicity assumptionCost constraintMonetary unit assumptionExpense recognition principleEconomic entity assumptionRevenue recognition principleHistorical cost principleMaterialityFull disclosure principleGoing concern assumption | ||
(e) | Requires that accounting standards be followed for all items of significant size. | Monetary unit assumptionGoing concern assumptionRevenue recognition principleCost constraintPeriodicity assumptionExpense recognition principleEconomic entity assumptionHistorical cost principleMaterialityFull disclosure principle | ||
(f) | Separates financial information into time periods for reporting purposes. | Monetary unit assumptionPeriodicity assumptionGoing concern assumptionMaterialityRevenue recognition principleCost constraintHistorical cost principleFull disclosure principleEconomic entity assumptionExpense recognition principle | ||
(g) | Requires recognition of expenses in the same period as related revenues. | Monetary unit assumptionCost constraintPeriodicity assumptionEconomic entity assumptionExpense recognition principleMaterialityHistorical cost principleFull disclosure principleRevenue recognition principleGoing concern assumption | ||
(h) | Indicates that fair value changes subsequent to purchase are not recorded in the accounts. | Monetary unit assumptionRevenue recognition principleHistorical cost principleFull disclosure principleGoing concern assumptionCost constraintEconomic entity assumptionMaterialityExpense recognition principlePeriodicity assumption |
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