Listed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. g. Buckner Corp is being sued for $1,000,000. There is a probable chance they will lose. The company disclosed this fact in their notes to their financials. Violation: (Yes/No) Applicable Assumption/Principle: h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value. Violation: (Yes/No) Applicable Assumption/Principle: i. Wages of $4,000 related to the last two days of July, were recorded as expense in July even though they were paid in August. Violation: (Yes/No) Applicable Assumption/Principle: j. Revenues are recorded when they are earned and realizable, regardless of when cash it received. Violation: (Yes/No) Applicable Assumption/Principle:

Accounting Assumption / Principles : These are the accounting rule which are applicable to prepare…

Answered: Economic Entity Assumption Monetary…

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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Listed below are the current Accounting Assumptions and Principles

Economic Entity Assumption	Monetary Unit Assumption	Historical Cost Principle
Going Concern Assumption	Revenue Recognition Principle	Full Disclosure Principle
Time Period Assumption	Matching Principle

Required:
For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable.

g. Buckner Corp is being sued for $1,000,000. There is a probable chance they will lose. The company disclosed this fact in their notes to their financials.

Violation: (Yes/No)
Applicable Assumption/Principle:

h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value.

Violation: (Yes/No)
Applicable Assumption/Principle:

i. Wages of $4,000 related to the last two days of July, were recorded as expense in July even though they were paid in August.

Violation: (Yes/No)
Applicable Assumption/Principle:

j. Revenues are recorded when they are earned and realizable, regardless of when cash it received.

Violation: (Yes/No)
Applicable Assumption/Principle:

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