For each situation, select the assumption, principle, or constraint that has bee
ID: 2442946 • Letter: F
Question
For each situation, select the assumption, principle, or constraint that has been violated, if any.
Options:
Materiality, time period assumption, going concern assumption, matching principle, cost principle or conservatism, economic entity assumption, revenue recognition principle, monitary unit assumption, full disclosure principle, no violation
MaterialityTime period assumptionGoing concern assumptionMatching principleCost principle or conservatismEconomic entity assumptionRevenue recognition principleMonetary unit assumptionFull disclosure principleNo violation (a) Hansell Company recognizes revenue at the end of the production cycle but before the sale. The price of the product, as well as the amount that can be sold, is not certain. Matching principleNo violationGoing concern assumptionRevenue recognition principleMonetary unit assumptionFull disclosure principleEconomic entity assumptionCost principle or conservatismTime period assumptionMateriality (b) Falk Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) MaterialityFull disclosure principleTime period assumptionGoing concern assumptionCost principle or conservatismEconomic entity assumptionNo violationMatching principleMonetary unit assumptionRevenue recognition principle (c) Tavarez, Inc. is carrying inventory at its current market value of $100,000. Inventory had an original cost of $110,000. Time period assumptionFull disclosure principleRevenue recognition principleGoing concern assumptionNo violationCost principle or conservatismMatching principleMonetary unit assumptionMaterialityEconomic entity assumption (d) Forgetta Hospital Supply Corporation reports only current assets and current liabilities on its balance sheet. Property, plant, and equipment and bonds payable are reported as current assets and current liabilities, respectively. Liquidation of the company is unlikely. Matching principleRevenue recognition principleTime period assumptionMaterialityEconomic entity assumptionCost principle or conservatismFull disclosure principleMonetary unit assumptionNo violationGoing concern assumption (e) Kile Company has inventory on hand that cost $400,000. Kile reports inventory on its balance sheet at its current market value of $425,000. Going concern assumptionCost principle or conservatismMatching principleTime period assumptionRevenue recognition principleMonetary unit assumptionEconomic entity assumptionMaterialityNo violationFull disclosure principle (f) Kim Farris, president of Classic Music Company, bought a computer for her personal use. She paid for the computer by using company funds and debited the "Computers" account.Explanation / Answer
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