Chapter 2 introduces you to the foundational principles and qualitative characteristics of accounting, which are as follows: a) Economic entity assumption b) Going concern assumption c) Monetary unit assumption d) Periodicity assumption e) Historical cost principle f) Revenue recognition principle g) Matching principle h) Full disclosure principle i) Relevance j) Reliability k) Comparability l) Representational faithfulness For each situation that follows, identify the foundational principle of accounting or qualitative characteristics that are most applicable. Hint: Each item may be used more than once or not at all. The earning process is completed and realized or realizable: Quarterly financial reports: The use of accruals and deferrals in adjusting the accounts: Useful standard measuring unit for business transactions: Including explanatory notes as part of the financial statements: The affairs of the business are distinguished from those of its owners: A business enterprise is assumed to have a long life: Valuing assets at amounts originally paid for them: Application of the same accounting principles as in the preceding year: Presentation of timely information with predictive and feedback value: Using the Canadian dollar in the financial statements: Accounting information reflects the economic substance of the event or transaction: .

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Chapter 2 introduces you to the foundational principles and qualitative characteristics of accounting, which are as follows:

a) Economic entity assumption
b) Going concern assumption
c) Monetary unit assumption
d) Periodicity assumption
e) Historical cost principle
f) Revenue recognition principle
g) Matching principle
h) Full disclosure principle
i) Relevance
j) Reliability
k) Comparability
l) Representational faithfulness

For each situation that follows, identify the foundational principle of accounting or qualitative characteristics that are most applicable. Hint: Each item may be used more than once or not at all.

The earning process is completed and realized or realizable: __________
Quarterly financial reports: __________
The use of accruals and deferrals in adjusting the accounts: __________
Useful standard measuring unit for business transactions: __________
Including explanatory notes as part of the financial statements: __________
The affairs of the business are distinguished from those of its owners: __________
A business enterprise is assumed to have a long life: __________
Valuing assets at amounts originally paid for them: __________
Application of the same accounting principles as in the preceding year: __________
Presentation of timely information with predictive and feedback value: __________
Using the Canadian dollar in the financial statements: __________
Accounting information reflects the economic substance of the event or transaction: __________.