Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
6th Edition
ISBN: 9780134486840
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Chapter 1, Problem 1.5SE
Applying accounting assumptions and principles
Michael McNamee is the proprietor of a property management company, Apartment Exchange, near the campus of Pensacola State College. The business has cash of $8,000 and furniture that cost $9,000 and has a market value of $13,000. The business debts include accounts payable of $6,000. Michael’s personal home is valued at $400,000, and his personal bank account has a balance of $1,200. Consider the accounting principles and assumptions discussed in the chapter, and identify the principle or assumption that best matches the situation:
- a. Michael’s personal assets are not recorded on the Apartment Exchange’s
balance sheet . - b. The Apartment Exchange records furniture at its cost of $9,000, not its market value of $13,000.
- c. The Apartment Exchange reports its financial statements in U.S. dollars.
- d. Michael expects the Apartment Exchange to remain in operation for the foreseeable future.
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Chapter 1 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
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