Presented below are the assumptions, principles, and constraints used in this chapter.

(1) Economic entity assumption

(b) Going concern assumption

(C) Monetary unit assumption

(di) Time period assumption le) Full disclosure principle

(f) Revenue recognition principle

(g) Matching principle

(h) Cost principle

(i) Materiality

خi) Conservatism Determine the appropriateness of journal entries in terms of generally accepted accounting principles or assumptions.

(SO 4,5)

Identify accounting assumptions, principles, and constraints

(SO 4, 5, 6 Identify by letter the accounting assumption, principle, or constraint that describes each situation below. Do not use a letter more than once.

1. Repair tools are expensed when purchased. (Do not use conservatism)

2. Allocates expenses to revenues in proper period.

3. Assumes that the dollar is the measuring stick used to report financial information.
4. Separates financial information into time periods for reporting purposes.
5. Market value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.)
6. Indicates that personal and business record keeping should be separately maintained.
7. Ensures that all relevant financial information is reported.
8. Lower of cost or market is used to value inventories.