Identify the accounting assumption or principle that is described below. (a) select the accounting assumption or…
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Question “Identify the accounting assumption or principle that is described below. (a) select the accounting assumption or…”
Identify the accounting assumption or principle that is
described below.
Answer
A | Assumption | This is the reason why plant assets are not reported at their liquidation value. (Note: The historical cost principle should not be used. |
b | Economic Entity Assumption | Indicates that business and personal records should be kept separately. |
c | Monetary Unit Assumption | Assume that the dollar is the “measuringstick” used to report financial performance. |
d | Periodicity Assumption | Financial information can be separated into time periods to allow for reporting. |
e | Historical Cost Principle | When a fair value estimate is not reliable, the measurement basis is used. |
F | Full Disclosure Principle | It is important that all events and circumstances that could affect financial statements users be disclosed by companies. |
Conclusion
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