Part111 Listed below are several terms and phrases associated with the FASB\'s c

Question

Part111 Listed below are several terms and phrases associated with the FASB's conceptual framework. In List A, insert the letter of the item from List B that is most appropriately associated with it. List A List B 1.going concern assumption 2.materiality 3. consistency 4. verifiability 5. faithful representation 6, matching principle 7. historical cost principle . revenue recognition principle applying the same accounting practices over time amortization on decisions CD justifies the usage of depreciation and C concerns the relative size of an item and its effect d concerns when revenue is recorded e financial statements accurately reflect the condition of a business the original transaction value upon acquisition g. implies consensus among different measurers makes the current-noncurrent classification of assets and liabilities on the balance sheet usefu

Explanation / Answer

Answer: Answer Reason 1 Going concern assumption justifies the usage of depreciation and amortization As it mean that an entity will remain in business for the foreseeable future. 2 Materiality Concerns the relative size of an item and its effect on decisions This principle states that an accounting standard can be ignored if the net impact of doing so has such a small impact on the financial statement that a reader of the financial statements would not be misled 3 Consistency applying the same accounting practices over time This principle states not to change accounting practice every year. 4 Verifiability implies consensus among different measures 5 Faithful representation financial statements accurately reflect the condition of a business The financial statement are reflected accurately 6 Matching principle makes the current- noncurrent classification of asset and liabilities on the balance sheet useful It states that revenue should match with expenses 7 Historical cost principle The original transaction value upon acquisition It means to record asset at original cost upon acquisition 8 Revenue recognition principle Concerns when revenue is recorded It is related to revenue.

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