Identify the accounting concept that describes each situation below. Do not use any concept more than once. (a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.) choose the accounting concept Periodicity assumptionMaterialityFull disclosure principleGoing concern assumptionRevenue recognition principleHistorical cost principleCost constraintEconomic entity assumptionExpense recognition principleMonetary unit assumption (b) Indicates that personal and business recordkeeping should be separately maintained. choose the accounting concept Monetary unit assumptionRevenue recognition principleFull disclosure principleMaterialityGoing concern assumptionCost constraintPeriodicity assumptionEconomic entity assumptionExpense recognition principleHistorical cost principle (c) Ensures that all relevant financial information is reported. choose the accounting concept Expense recognition principleMonetary unit assumptionRevenue recognition principlePeriodicity assumptionCost constraintHistorical cost principleGoing concern assumptionFull disclosure principleMaterialityEconomic entity assumption (d) Assumes that the dollar is the “measuring stick” used to report on financial performance. choose the accounting concept Full disclosure principleCost constraintMaterialityHistorical cost principleGoing concern assumptionRevenue recognition principleEconomic entity assumptionPeriodicity assumptionExpense recognition principleMonetary unit assumption (e) Requires that accounting standards be followed for all items of significant size. choose the accounting concept Going concern assumptionRevenue recognition principleCost constraintHistorical cost principleExpense recognition principleEconomic entity assumptionMonetary unit assumptionPeriodicity assumptionMaterialityFull disclosure principle (f) Separates financial information into time periods for reporting purposes. choose the accounting concept Monetary unit assumptionFull disclosure principleCost constraintEconomic entity assumptionGoing concern assumptionMaterialityExpense recognition principleRevenue recognition principlePeriodicity assumptionHistorical cost principle (g) Requires recognition of expenses in the same period as related revenues. choose the accounting concept Periodicity assumptionEconomic entity assumptionCost constraintHistorical cost principleExpense recognition principleFull disclosure principleMonetary unit assumptionGoing concern assumptionMaterialityRevenue recognition principle (h) Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

Identify the accounting concept that describes each situation below. Do not use any concept more than once. (a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.) choose the accounting concept Periodicity assumptionMaterialityFull disclosure principleGoing concern assumptionRevenue recognition principleHistorical cost principleCost constraintEconomic entity assumptionExpense recognition principleMonetary unit assumption (b) Indicates that personal and business recordkeeping should be separately maintained. choose the accounting concept Monetary unit assumptionRevenue recognition principleFull disclosure principleMaterialityGoing concern assumptionCost constraintPeriodicity assumptionEconomic entity assumptionExpense recognition principleHistorical cost principle (c) Ensures that all relevant financial information is reported. choose the accounting concept Expense recognition principleMonetary unit assumptionRevenue recognition principlePeriodicity assumptionCost constraintHistorical cost principleGoing concern assumptionFull disclosure principleMaterialityEconomic entity assumption (d) Assumes that the dollar is the “measuring stick” used to report on financial performance. choose the accounting concept Full disclosure principleCost constraintMaterialityHistorical cost principleGoing concern assumptionRevenue recognition principleEconomic entity assumptionPeriodicity assumptionExpense recognition principleMonetary unit assumption (e) Requires that accounting standards be followed for all items of significant size. choose the accounting concept Going concern assumptionRevenue recognition principleCost constraintHistorical cost principleExpense recognition principleEconomic entity assumptionMonetary unit assumptionPeriodicity assumptionMaterialityFull disclosure principle (f) Separates financial information into time periods for reporting purposes. choose the accounting concept Monetary unit assumptionFull disclosure principleCost constraintEconomic entity assumptionGoing concern assumptionMaterialityExpense recognition principleRevenue recognition principlePeriodicity assumptionHistorical cost principle (g) Requires recognition of expenses in the same period as related revenues. choose the accounting concept Periodicity assumptionEconomic entity assumptionCost constraintHistorical cost principleExpense recognition principleFull disclosure principleMonetary unit assumptionGoing concern assumptionMaterialityRevenue recognition principle (h) Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

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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Identify the accounting concept that describes each situation below. Do not use any concept more than once.

(a)	Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.)	choose the accounting concept Periodicity assumptionMaterialityFull disclosure principleGoing concern assumptionRevenue recognition principleHistorical cost principleCost constraintEconomic entity assumptionExpense recognition principleMonetary unit assumption
(b)	Indicates that personal and business recordkeeping should be separately maintained.	choose the accounting concept Monetary unit assumptionRevenue recognition principleFull disclosure principleMaterialityGoing concern assumptionCost constraintPeriodicity assumptionEconomic entity assumptionExpense recognition principleHistorical cost principle
(c)	Ensures that all relevant financial information is reported.	choose the accounting concept Expense recognition principleMonetary unit assumptionRevenue recognition principlePeriodicity assumptionCost constraintHistorical cost principleGoing concern assumptionFull disclosure principleMaterialityEconomic entity assumption
(d)	Assumes that the dollar is the “measuring stick” used to report on financial performance.	choose the accounting concept Full disclosure principleCost constraintMaterialityHistorical cost principleGoing concern assumptionRevenue recognition principleEconomic entity assumptionPeriodicity assumptionExpense recognition principleMonetary unit assumption
(e)	Requires that accounting standards be followed for all items of significant size.	choose the accounting concept Going concern assumptionRevenue recognition principleCost constraintHistorical cost principleExpense recognition principleEconomic entity assumptionMonetary unit assumptionPeriodicity assumptionMaterialityFull disclosure principle
(f)	Separates financial information into time periods for reporting purposes.	choose the accounting concept Monetary unit assumptionFull disclosure principleCost constraintEconomic entity assumptionGoing concern assumptionMaterialityExpense recognition principleRevenue recognition principlePeriodicity assumptionHistorical cost principle
(g)	Requires recognition of expenses in the same period as related revenues.	choose the accounting concept Periodicity assumptionEconomic entity assumptionCost constraintHistorical cost principleExpense recognition principleFull disclosure principleMonetary unit assumptionGoing concern assumptionMaterialityRevenue recognition principle
(h)	Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

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