Question 1Which concepts are being ignored in each of the following scenarios?a. Inventory is valued at selling price given that the business has never failed to sell its inventory.b. A sole trader decides to include the petrol costs in full as business expenses despite some of themileage being for personal use.c. A similar business has recently been sold for $80,000 more than the book value of the net assets.As a result, the owner of a business wishes to include goodwill in the non-current assets at asimilar value to reflect the belief that the business is worth more than its net assets.d. Including a sale to a regular customer before the order is received.

(1)Prudence Concept:Under the prudence concept, we do not overestimate the amount of revenues…

Question 1 Which concepts are being ignored in each of the following scenarios? a. Inventory is valued at selling price given that the business has never failed to sell its inventory. b. A sole trader decides to include the petrol costs in full as business expenses despite some of the mileage being for personal use. e. A similar business has recently been sold for $80,000 more than the book value of the net assets. As a result, the owner of a business wishes to include goodwill in the non-current assets at a similar value to reflect the belief that the business is worth more than its net assets. d. Including a sale to a regular customer before the order is received.

Question 1 Which concepts are being ignored in each of the following scenarios? a. Inventory is valued at selling price given that the business has never failed to sell its inventory. b. A sole trader decides to include the petrol costs in full as business expenses despite some of the mileage being for personal use. e. A similar business has recently been sold for $80,000 more than the book value of the net assets. As a result, the owner of a business wishes to include goodwill in the non-current assets at a similar value to reflect the belief that the business is worth more than its net assets. d. Including a sale to a regular customer before the order is received.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Required information [The following information applies to the questions displayed below.] Grandpa Clocks, Incorporated (GCI), is a retailer of wall, mantle, and grandfather clocks. Assume GCI sells a grandfather clock for $11,000 cash plus 4 percent sales tax. The clock had originally cost GCI $7,000. Assume GCI uses a perpetual inventory system. Saved 1. Indicate the effects of the amounts for the above transactions. (Enter any decreases to assets, liabilities, or stockholders equity with a minus sign.) Assets Liabilities ++ Stockholders' Equity
Fill in the missing amounts. Assume that there are no nonoperating activites. Sales revenue Sales returns and allowances Net sales Cost of goods sold Gross profit Operating expenses Net income Wildhorse Company $96,090 87,000 50,895 18,980 (a) (b) (c) Novak Company $6,690 105,000 48,300 15,300 (d) (e) (f)
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
If an investor sells merchandise to an investee and the investee resells all of the items to outside parties in the same period, what equity method entry is required?\\nSelect one:\\nA. No equity method entry is required, since the gross profit is realized.\\nB. The entire gross profit is deferred with a credit to Equity Income and Debit to Equity Investment\\nC. The entire gross profit is deferred with a debit to Equity Income and credit to Equity Investment.\\nD. The investor's percentage of the gross profit is deferred with a debit to Equity Income.
Purchasing inventory on credit will result in the following changes to the business accounts: A.Increase one asset account and decrease another asset account B.decrease assets and decrease liabilities C.incease assets and decrease liabilities D.decrease assets amd decrease onwer's equity E.increase assets and increase onwer's equity
Assume that the expected value method determines a transaction price of $60,000 and most likely amount method determines a transaction price of $50,000. What effect will recording revenue based on the expected value method have relative to the most likely amount method? A.)Revenue will be higher and expenses will be higher B.) Revenue will be higher and expenses are unaffected C.) Revenue will be lower and expenses will be lower D.) Revenue will be lower and expenses are unaffected E.) Revenue and expenses will be the same
Assume a company purchased inventory for $15 cash and then sold it to a costumer for $14 on account. Assuming no other changes, what is the change in the company’s Retained Earnings? (If the RE’s decrease, use a negative sign “-”)