Indicate which accounting principle(assumption) correctly suits the statement given in each item.
Indicate which accounting principle(assumption) correctly suits the statement given in each item.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Indicate which accounting principle(assumption) correctly suits the statement
given in each item.
![| Homework 1.pdfATION, Indicate which accounOpen with
(assumption) correctly suits the statement
given in each item.
1. This concept supports the separation of the business assets and liabilities from
the personal assets and liabilities of the owner.
2. St. Luis University starts its fiscal year June and ends in May. The accountant
received its utilities bill for the month of May from Maynilad. Since this will be
paid on the second week of June, the accountant recorded it as expenses
under the month it was paid.
3.
A logging company was permitted to cut trees in Negros Oriental. The logging
company did not keep any accounting records of its transactions which is the
reason why yearly income/loss cannot be determined. The logging company
stated it will determine its net income/loss after cutting all the trees in the area
which will take more than ten years from now.
Electric bill for the month in the amount of P15,000 was received by Rock Lee
Company on December 30. The accountant did not record this since it will be
paid January 10 next year when the company resumes operations after the
holidays.
4.
5.
An old private school in the community assumes that their school will close
anytime due to stiff competition despite its good name. The accounting
records are maintained based on this assumption.
Mr. Otto Hahn founded Saints Enterprises. He treated his residence and other
personal assets as part of Saints Enterprises.
6.
7. Ste Benjamin's Hospital has been serving the community for twenty years.
However, since new hospitals such as Saint Look's Medical Center and
Metropolitan City Medical Center have opened in the area, St. Benjamin's
Hospital felt the stiff competition. The stockholders are suggesting upgrading
the hospital's equipment and infusing more capital. However, the
management of St. Benjamin's declines the proposal because of the belief
that the hospital will lose the competition and that it is ready to stop
operations anytime to avoid losses. Hence, the accounting department is
operating based on this assumption.
8.
Giselle Ong owns Magnificent Gel's Candle Shop. She proposes to account
for the shopk assets at current market value in order to have realistic amounts
en the books hould she decideo liquidate the business anytime.
Page
9. Niko Ong Developers cot a contract to develop the five-hectare Flora Heights
Subdivision on Januar this vear. At the end of the vear. Niko Ona Developers.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fafd6b2d2-0f2a-4ea4-9290-45de32bc62ee%2Ff38c5c4c-b035-42da-97ef-07e6757421b4%2Fhupdcxu_processed.png&w=3840&q=75)
Transcribed Image Text:| Homework 1.pdfATION, Indicate which accounOpen with
(assumption) correctly suits the statement
given in each item.
1. This concept supports the separation of the business assets and liabilities from
the personal assets and liabilities of the owner.
2. St. Luis University starts its fiscal year June and ends in May. The accountant
received its utilities bill for the month of May from Maynilad. Since this will be
paid on the second week of June, the accountant recorded it as expenses
under the month it was paid.
3.
A logging company was permitted to cut trees in Negros Oriental. The logging
company did not keep any accounting records of its transactions which is the
reason why yearly income/loss cannot be determined. The logging company
stated it will determine its net income/loss after cutting all the trees in the area
which will take more than ten years from now.
Electric bill for the month in the amount of P15,000 was received by Rock Lee
Company on December 30. The accountant did not record this since it will be
paid January 10 next year when the company resumes operations after the
holidays.
4.
5.
An old private school in the community assumes that their school will close
anytime due to stiff competition despite its good name. The accounting
records are maintained based on this assumption.
Mr. Otto Hahn founded Saints Enterprises. He treated his residence and other
personal assets as part of Saints Enterprises.
6.
7. Ste Benjamin's Hospital has been serving the community for twenty years.
However, since new hospitals such as Saint Look's Medical Center and
Metropolitan City Medical Center have opened in the area, St. Benjamin's
Hospital felt the stiff competition. The stockholders are suggesting upgrading
the hospital's equipment and infusing more capital. However, the
management of St. Benjamin's declines the proposal because of the belief
that the hospital will lose the competition and that it is ready to stop
operations anytime to avoid losses. Hence, the accounting department is
operating based on this assumption.
8.
Giselle Ong owns Magnificent Gel's Candle Shop. She proposes to account
for the shopk assets at current market value in order to have realistic amounts
en the books hould she decideo liquidate the business anytime.
Page
9. Niko Ong Developers cot a contract to develop the five-hectare Flora Heights
Subdivision on Januar this vear. At the end of the vear. Niko Ona Developers.
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