(a)
Accounting assumptions: These are the conventions which guide FASB (Financial Accounting Standards Board) to develop accounting standards. The basic assumptions are monetary unit assumption, economic entity assumption, periodicity assumption, and going concern assumption.
Accounting principles: These are the rules which guide FASB to prepare guidelines necessary for reporting the accounting formation, in a useful and relevant format which is better understood by the users. Some basic principles are historical cost principle, fair value principle, and full disclosure principle.
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
(b)
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
(c)
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
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