Listed below are accounting concepts discussed in this chapter. a. Economic enti

Question

Listed below are accounting concepts discussed in this chapter. a. Economic entity assumption b. Going concern assumption c. Periodicity assumption d. Monetary unit assumption e. Historical cost principle f. Conservatism g. Matching h. Full-disclosure principle i. Cost effectiveness j. Materiality Identify by letter the accounting concept that relates to each statement or phrase below. 1. Inflation causes a violation of this assumption. 2. Information that could affect decision making should be reported. 3. Recognizing expenses in the period they were incurred to produce revenue. 4. The basis for measurement of many assets and liabilities. 5. Relates to the qualitative characteristic of timeliness. 6. All economic events can be identified with a particular entity 7. The benefits of providing accounting information should exceed the cost of doing so. 8. A consequence is that GAAP need not be followed in all situations. 9. Not a qualitative characteristic, but a practical justification for some accounting choices. 10. Assumes the entity will continue indefinitely.

Explanation / Answer

Question

1-

D

Monetary Unit assumption

2-

H

full disclosure

3-

G

Matching

4-

E

Historical cost

5-

C

periodicity assumption

6-

A

economic entity assumption

7-

I

cost effectiveness assumption

8-

J

Materiality Assumption

9-

F

Conservatism assumption

10-

B

going concern assumption

Question

1-

D

Monetary Unit assumption

2-

H

full disclosure

3-

G

Matching

4-

E

Historical cost

5-

C

periodicity assumption

6-

A

economic entity assumption

7-

I

cost effectiveness assumption

8-

J

Materiality Assumption

9-

F

Conservatism assumption

10-

B

going concern assumption

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