For each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation. a. East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain. choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption b. Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption c. Gomez, Inc. is carrying inventory at its original cost of $100,000. Inventory has a fair value of $110,000. choose one of the assumption, principle or constraint Economic entity assumptionHistorical cost principleRevenue recognition principleNo violationPeriodicity assumptionGoing concern assumption d. Bly Hospital Supply Corporation reports only current assets and current liabilities on its balance sheet. Equipment and bonds payable are reported as current assets and current liabilities, respectively. Liquidation of the company is unlikely. choose one of the assumption, principle or constraint Economic entity assumptionRevenue recognition principlePeriodicity assumptionNo violationHistorical cost principleGoing concern assumption e. Chieu Company has inventory on hand that cost $400,000. Chieu reports inventory on its balance sheet at its current fair value of $425,000. choose one of the assumption, principle or constraint Periodicity assumptionEconomic entity assumptionGoing concern assumptionHistorical cost principleNo violationRevenue recognition principle f. Toxy Syles, president of Classic Music Company, bought a computer for her personal use. She paid for the computer by using company funds and debited the “Computers” account. choose one of the assumption, principle or constraint No violationHistorical cost principleGoing concern assumptionPeriodicity assumptionRevenue recognition principleEconomic entity assumption going concern assumption, periodicity assumption, no violation, historical cost principle, revenue recognition principle, economic entity assumption are the choices for these questions.

For each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation. a. East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain. choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption b. Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption c. Gomez, Inc. is carrying inventory at its original cost of $100,000. Inventory has a fair value of $110,000. choose one of the assumption, principle or constraint Economic entity assumptionHistorical cost principleRevenue recognition principleNo violationPeriodicity assumptionGoing concern assumption d. Bly Hospital Supply Corporation reports only current assets and current liabilities on its balance sheet. Equipment and bonds payable are reported as current assets and current liabilities, respectively. Liquidation of the company is unlikely. choose one of the assumption, principle or constraint Economic entity assumptionRevenue recognition principlePeriodicity assumptionNo violationHistorical cost principleGoing concern assumption e. Chieu Company has inventory on hand that cost $400,000. Chieu reports inventory on its balance sheet at its current fair value of $425,000. choose one of the assumption, principle or constraint Periodicity assumptionEconomic entity assumptionGoing concern assumptionHistorical cost principleNo violationRevenue recognition principle f. Toxy Syles, president of Classic Music Company, bought a computer for her personal use. She paid for the computer by using company funds and debited the “Computers” account. choose one of the assumption, principle or constraint No violationHistorical cost principleGoing concern assumptionPeriodicity assumptionRevenue recognition principleEconomic entity assumption going concern assumption, periodicity assumption, no violation, historical cost principle, revenue recognition principle, economic entity assumption are the choices for these questions.

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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For each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation.

a.	East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain.	choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption
b.	Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.)	choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption
c.	Gomez, Inc. is carrying inventory at its original cost of $100,000. Inventory has a fair value of $110,000.	choose one of the assumption, principle or constraint Economic entity assumptionHistorical cost principleRevenue recognition principleNo violationPeriodicity assumptionGoing concern assumption
d.	Bly Hospital Supply Corporation reports only current assets and current liabilities on its balance sheet. Equipment and bonds payable are reported as current assets and current liabilities, respectively. Liquidation of the company is unlikely.	choose one of the assumption, principle or constraint Economic entity assumptionRevenue recognition principlePeriodicity assumptionNo violationHistorical cost principleGoing concern assumption
e.	Chieu Company has inventory on hand that cost $400,000. Chieu reports inventory on its balance sheet at its current fair value of $425,000.	choose one of the assumption, principle or constraint Periodicity assumptionEconomic entity assumptionGoing concern assumptionHistorical cost principleNo violationRevenue recognition principle
f.	Toxy Syles, president of Classic Music Company, bought a computer for her personal use. She paid for the computer by using company funds and debited the “Computers” account.	choose one of the assumption, principle or constraint No violationHistorical cost principleGoing concern assumptionPeriodicity assumptionRevenue recognition principleEconomic entity assumption

going concern assumption, periodicity assumption, no violation, historical cost principle, revenue recognition principle, economic entity assumption are the choices for these questions.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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