These are the assumptions, principles, and constraints discussed in this and previous chapters.
1. Economic entity assumption.
2. Matching principle.
3. Monetary unit assumption.
4. Time period assumption.
5. Cost principle.
6. Materiality.
7. Full disclosure principle.
8. Going concern assumption.
9. Revenue recognition principle.
10. Conservatism.
Instructions
Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a number more than once.
(a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use the cost principle.)
(b) Indicates that personal and business record keeping should be separately maintained.
(c) Ensures that all relevant financial information is reported.
(d) Assumes that the dollar is the “measuring stick” used to report on financial performance.
(e) Requires that accounting standards be followed for all significantitems.
(f) Separates financial information into time periods for reporting purposes.
(g) Requires recognition of expenses in the same period as related revenues.
(h) Indicates that market value changes subsequent to purchase are not recorded in the accounts.