Question

Presented below are the assumptions made and characteristics of information used in this chapter.

1. Accounting entity assumption

2. Going concern assumption

3. Accrual basis assumption

4. Period assumption

5. Relevance

6. Faithful representation

7. Comparability

8. Verifiability

9. Materiality

10. Timeliness

11. Understandability

Instructions

Identify the accounting assumption or characteristic that describes each situation below. Do not use an item more than once.

(a)

All information given is complete.

(b)

Information that can influence the decisions of users.

(c)

Is the rationale for why PPE assets are not reported at liquidation value.

(d)

Indicates that personal and business record keeping should be separately maintained.

(e)

Enables similarities and differences in two reports to be spotted.

(f)

All transactions are shown when they occur.

(g)

Requires that the operational guidelines be followed for all significant items.

(h)

Separates financial information into time periods for reporting purposes.

(i)

The meaning is clear to a person with reasonable knowledge.

(j)

Independent people can reach the same figures.

(k)

Issuing reports quickly.