Problem 6-8 Identification (IAA) Identify the principle or concept that is most clearly violated by the accounting practice described. Do not use any answer more than once. 1. An entity charges the cost of new office equipment to expense in the year of purchase although the equipment is expected to help produce revenue for many years. 2. An entity records sales revenue after inventory has been produced but before it is sold. 3. An entity having 150 accounts payable lists each account among the liabilities in the statement of financial position. 4. An entity does not report the major details about the shareholders' equity. 5. An entity follows a policy of recording an item as an asset when the entity is in doubt whether the item is an asset or expense of the current period. 6. The accountant of the entity keeps a detailed depreciation record on every asset no matter how small its value. 7. A construction firm signed a three-year contract to build a skyway connecting Alabang and Tagaytay City. The firm immediately records the full contract price as revenue. 8. Competition has taken away much of the business of an airline. The airline is unwilling to report its plans to sell half of its fleet of aircraft. 9. A department store changes accounting method every year in order to report a higher net income possible under accounting standards. 10: The damaged inventory of a department store is being written down. The manager bases the write down on subjective opinion in order to minimize income tax.
Problem 6-8 Identification (IAA) Identify the principle or concept that is most clearly violated by the accounting practice described. Do not use any answer more than once. 1. An entity charges the cost of new office equipment to expense in the year of purchase although the equipment is expected to help produce revenue for many years. 2. An entity records sales revenue after inventory has been produced but before it is sold. 3. An entity having 150 accounts payable lists each account among the liabilities in the statement of financial position. 4. An entity does not report the major details about the shareholders' equity. 5. An entity follows a policy of recording an item as an asset when the entity is in doubt whether the item is an asset or expense of the current period. 6. The accountant of the entity keeps a detailed depreciation record on every asset no matter how small its value. 7. A construction firm signed a three-year contract to build a skyway connecting Alabang and Tagaytay City. The firm immediately records the full contract price as revenue. 8. Competition has taken away much of the business of an airline. The airline is unwilling to report its plans to sell half of its fleet of aircraft. 9. A department store changes accounting method every year in order to report a higher net income possible under accounting standards. 10: The damaged inventory of a department store is being written down. The manager bases the write down on subjective opinion in order to minimize income tax.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kindly answer numbers 1-10.
Transcribed Image Text:Problem 6-8 Identification (IAA)
Identify the principle or concept that is most clearly violated
by the accounting practice described. Do not use any answer
more than once.
1. An entity charges the cost of new office equipment to
expense in the year of purchase although the equipment
is expected to help produce revenue for many years.
2. An entity records sales revenue after inventory has been
produced but before it is sold.
3. An entity having 150 accounts payable lists each account
among the liabilities in the statement of financial position.
4. An entity does not report the major details about the
shareholders' equity.
5: An entity follows a policy of recording an item as an asset
when the entity is in doubt whether the item is an asset
or expense of the current period.
6. The accountant of the entity keeps a detailed depreciation
record on every asset no matter how small its value.
7. A construction firm signed a three-year contract to build
a skyway connecting Alabang and Tagaytay City. The firm
immediately records the full contract price as revenue.
8. Competition has taken away much of the business of an
airline. The airline is unwilling to report its plans to sell
half of its fleet of aircraft.
9. A department store changes accounting method every
year in order to report a higher net income possible under
accounting standards.
10: The damaged inventory of a department store is being
written down. The manager bases the write down on
subjective opinion in order to minimize income tax.
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