Intermediate Accounting, Student Value Edition (2nd Edition)
2nd Edition
ISBN: 9780134732145
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 1, Problem 1.7E
Rules-versus Principles-Based Accounting. Review the following statements and indicate if the statement is referring to a principles-based or a rules-based accounting standard.
| Statement. An accountant will use a particular accounting standard only if ... | Principles-Based or Rules-Based Accounting Standard |
| a. ... the length of a contract covers substantially all of the useful life of a plant asset. | a. ____________________ |
| b. ... the number of new common shares a firm issues is equal to 20% of the previously outstanding shares. | b. ____________________ |
| c. ... a corporation owns over 50% of the voting shares of an affiliate company. | c. ____________________ |
| d ... a corporation has the ability to control the operating and financing activities of an affiliate company. | d. ____________________ |
| e. ... it is more likely than not that a company’s tax position will be sustained upon examination by the Internal Revenue Service. | e. ____________________ |
| f. . .. the sum of the undiscounted future |
f. ____________________ |
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The following is a list of accounting assumptions and principles that have had an important impact on the development of generally accepted accounting principles and statements describing certain accounting practices.
A. Reporting entity
B. Going concern
C. Period of time
D. Historical cost
E. Monetary unit
F. Recognition
G. Accrual accounting
H. Revenue recognition
I. Expense recognition
J. Conservatism
Required:
Select the accounting assumption or principle that justifies each accounting practice and select the appropriate letter on each statement.
1.
To provide timely information, companies prepare and report financial statements at the end of each year.
2.
Appropriate recognition when a company consumes economic resources in conducting business operations.
3.
Accounting measurements for U.S. companies are reported in dollars.
4.
The financial statements represent the business, rather than its owners.
5.
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Chapter 1 Solutions
Intermediate Accounting, Student Value Edition (2nd Edition)
Ch. 1 - Prob. 1.1QCh. 1 - Prob. 1.2QCh. 1 - How is the allocation of capital linked to the...Ch. 1 - Prob. 1.4QCh. 1 - What is the function of the accounting standard...Ch. 1 - Can U.S. companies listen on U.S. stock exchanges...Ch. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.1BECh. 1 - Prob. 1.2BECh. 1 - Financial Statement Users and Other Parties...Ch. 1 - Prob. 1.4BECh. 1 - Prob. 1.5BECh. 1 - Economic Entity. What is an economic entity?Ch. 1 - Prob. 1.7BECh. 1 - Prob. 1.8BECh. 1 - Prob. 1.9BECh. 1 - Prob. 1.10BECh. 1 - Prob. 1.11BECh. 1 - Prob. 1.12BECh. 1 - Financial Accounting. Define financial accounting...Ch. 1 - Prob. 1.2ECh. 1 - Convergence of Accounting Standards, IFRS Vikram...Ch. 1 - History of Standard Setting in the United States....Ch. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Rules-versus Principles-Based Accounting. Review...
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