Question
Identify the accounting principle or concept that has been violated in each of the following scenarios. Look at each scenario as a unique scenario. a)
Identify the accounting principle or concept that has been violated in each of the following scenarios. Look at each scenario as a unique scenario.
a) | Bill Co. purchased a two-year insurance policy and expensed the entire amount in the period of purchase. | Conservatism(Relevance) Consistency Disclosure Expense Recognition Measurement Revenue Recognition |
b) | Charlie Co. listed inventory at its market value of $31,000 on the balance sheet, even though it was purchased for $20,000. | Conservatism (Relevance) Consistency Expense Recognition Measurement Revenue Recognition |
c) | Percy Co. did not include the details of its property, plant, and equipment, even though this information is relevant to users. | Conservatism (Relevance) Consistency Disclosure Expense Recognition Measurement Revenue Recognition |
d) | Fred. Co made a sale on the last day of the accounting period. The customer paid for the item in the following month, so this sale was included in the next period's financial statements. | Conservatism (Relevance) Consistency Disclosure Expense Recognition Revenue Recognition |
e) | George Co. has plans to restructure its operations next year and will sell off about half of the business. This information was not included in the notes to the financial statements because it does not affect the current financial information. | Conservatism (Relevance) Consistency Disclosure Expense Recognition Measurement Revenue Recognition |
f) | Ron Co. applied a certain accounting policy which allowed the company to report higher assets and net income. A different accounting policy was available which would have resulted in a lower balance of assets and net income. | Conservatism (Relevance) Consistency Disclosure Expense Recognition Measurement Revenue Recognition |
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