(Identifying accounting assumptions, qualitative characteristics, and measurement conventions, LO 2, 3, 4) Identify the accounting assumption, characteristic, or convention that best suits each of the situations below. Explain your choice.

a. Financial statements should include all relevant ‘information about the economic activity of an entity.

b. The financial statements of a proprietorship should exclude the personal assets, liabilities, revenues, and expenses of the proprietor.

. Capital assets are reported at their historical cost.

d. Shareholders receive an annual report from the corporation each year.

e. A company uses the percentage-of-completion method for recognizing revenue on long-term projects. The company determines that one of the projects is gen- erating a loss and so recognizes the full amount of the loss immediately, rather than spreading the loss over the life of the contract.

f. Financial statement analysis is easier if similar entities use similar accounting methods.

g. The financial statements of most Canadian companies are presented in Canadian dollars.
h. The financial statements of many entities round amounts to the nearest thousand or even the nearest million.
i. A business that is ceasing operations values its assets and liabilities on a liquida- tion basis.
j. The cost of inventory sold is reported in the income statement in the same period in which the revenue that the inventory helped earn is recognized.
k. The cost of some low-cost assets is expensed when they are purchased, even though they have useful lives of more than one year.