1. (TCO A) Listed below are several information characteristics and accounting p

Question

1. (TCO A) Listed below are several information characteristics and accounting principles and assumptions. Each of these items is assigned a number. Match the number of each with the appropriate phrase that states its application. Note: Each answer may be used multiple times. (Points : 30) Potential Matches: 1 : Economic entity assumption 2 : Conservatism 3 : Revenue and expense recognition principles 4 : Expense recognition principle 5 : Economic entity assumption 6 : Industry practices or fair value principle 7 : Materiality 8 : Revenue recognition principle 9 : Materiality 10 : Periodicity assumption 11 : Historical cost principle 12 : Expense recognition principle 13 : Full disclosure principle 14 : Full disclosure principle 15 : Full disclosure principle Answer : Lower of cost or market is used to value inventories : Financial information is presented so that investors will not be misled : Intangible assets are capitalized and amortized over periods benefited : Agricultural companies use fair value for purposes of valuing crops : Each enterprise is kept as a unit distinct from the owner or owners : Fair value changes are not recognized in the accounting records : Revenue is recorded at point of sale : All important aspects of bond indentures are presented in financial statement : Repair tools are expensed when purchased : Rationale for accrual accounting : The use of consolidated statements is justified : Reporting must be done at defined time intervals : An allowance for doubtful accounts is established : All payments out of petty cash are charged to Miscellaneous Expenses (Do not use Conservatism) : All significant post balance sheet events are reported

Explanation / Answer

HISTORICAL COST PRINCIPLE

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Lower of cost or market is used to value inventories.

CONSERVATISM

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FULL DISCLOSURE PRINCIPLE

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MATCHING PRINCIPLE

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MATERIALITY

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INDUSTRY PRACTICES

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ECONOMIC ENTITY ASSUMPTION

FULL DISCOSURE PRINCIPLE

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REVENUE RECOGNITION PRINCIPLE

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FULL DISCLOSURE PRINCPLE

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MATCHING PRINCIPLE

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ECONOMIC ENTITY ASSUMPTION

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PERIODICITY ASSUMPTION

MATCHING PRINCIPLE

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MATERIALITY

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HISTORICAL COST PRINCIPLE

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CONSERVATISM

MATCHING PRINCIPLE

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