Listed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. d. Moss Corporation closes the books each month and prepares monthly financial statements. Violation: (Yes/No) Applicable Assumption/Principle: e. Carroll Corporation, a US company, purchased a machine from Germany for 10,000 Euros and recorded the machine on their books at $12,000 US Violation: (Yes/No) Applicable Assumption/Principle: f. Machine repairs of $6,000 were incurred on June 15. The company recorded the expense on the books in July. Violation: (Yes/No) Applicable Assumption/Principle: g. Buckner Corp is being sued for $1,000,000. There is a probable chance they will lose. The company disclosed this fact in their notes to their financials. Violation: (Yes/No) Applicable Assumption/Principle:

Accounting Concept/ Principal/ Assumption/ conventions: These are known as Generally Accepted…

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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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Listed below are the current Accounting Assumptions and Principles

Economic Entity Assumption	Monetary Unit Assumption	Historical Cost Principle
Going Concern Assumption	Revenue Recognition Principle	Full Disclosure Principle
Time Period Assumption	Matching Principle

Required:
For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable.

d. Moss Corporation closes the books each month and prepares monthly financial statements.

Violation: (Yes/No)
Applicable Assumption/Principle:

e. Carroll Corporation, a US company, purchased a machine from Germany for 10,000 Euros and recorded the machine on their books at $12,000 US

Violation: (Yes/No)
Applicable Assumption/Principle:

f. Machine repairs of $6,000 were incurred on June 15. The company recorded the expense on the books in July.

Violation: (Yes/No)
Applicable Assumption/Principle:

g. Buckner Corp is being sued for $1,000,000. There is a probable chance they will lose. The company disclosed this fact in their notes to their financials.

Violation: (Yes/No)
Applicable Assumption/Principle:

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