Financial Reporting and Analysis: Using Financial Accounting Information 13th test bank

 
MATCHING
 
Listed below are several accounting principles and assumptions.
 
Required:
Match the letter of each principle or assumption or qualitative characteristic with the appropriate statement.
 
a.
Business entity

b.
Going concern

c.
Time period

d.
Monetary unit

e.
Historical cost

f.
Conservatism

g.
Realization

h.
Consistency

i.
Full disclosure

j.
Verifiability

k.
Materiality

l.
Industry practices

 
 
     1.   Some industry practices lead to accounting reports that do not conform to the general theory that underlies accounting.
 
     2.   Requires the accountant to adhere as closely as possible to verifiable data.
 
     3.   Requires the entity to give the same treatment to comparable transactions.
 
     4.   Directs that the measurement that has the least favorable effect on net income and financial position in the current period be selected.
 
     5.   The decision is made to accept some inaccuracy because of incomplete information about the future in exchange for more timely reporting.
 
     6.   Involves the relative size and importance of an item to a firm.
 
     7.   A reasonable summarization of financial information is required.
 
     8.   Deals with the problem of when to recognize revenue.
 
     9.   The primary value that is used for financial statements.
 
   10.   Standard of measure for financial statements.
 
   11.   The assumption that the entity being accounted for will remain in business for an indefinite period of time.
 
   12.   Assumption that a business's financial statements are separate and distinct from the personal transactions of the owners.
 
     1.   ANS:  L                    PTS:   1                    DIF:    Difficulty: Moderate 
NAT:  BUSPROG: Communication           
STA:   AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP:   Traditional Assumptions of the Accounting Model             KEY:  Bloom's: Comprehension
NOT:  Time: 15 min.          
 
     2.   ANS:  J                     PTS:   1                    DIF:    Difficulty: Moderate 
NAT:  BUSPROG: Communication           
STA:   AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP:   Traditional Assumptions of the Accounting Model             KEY:  Bloom's: Comprehension
NOT:  Time: 15 min.          
 
     3.   ANS:  H                   PTS:   1                    DIF:    Difficulty: Moderate 
NAT:  BUSPROG: Communication           
STA:   AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP:   Traditional Assumptions of the Accounting Model             KEY:  Bloom's: Comprehension
NOT:  Time: 15 min.          
 
     4.   ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate