ANS:
| 1. | l, m |
| 2. | c |
| 3. | a, b |
| 4. | h, i, j |
| 5. | k |
| 6. | c, d |
| 7. | d |
| 8. | e, f, g |
PTS: 1 DIF: Difficulty: Moderate NAT: BUSPROG: Communication
STA: AICPA: FN: Measurement | ACBSP: GAAP | IMA: Financial Statement Analysis
TOP: Development of Generally Accepted Accounting Principles (GAAP) in the United States
KEY: Bloom's: Comprehension NOT: Time: 10 min.
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.