Question

4. Match accounting assumption with most appropriate statement. A. Time Period F. Expense Recognition B. Materiality G. Consistency C. Going Concern H. Full Disclosure D. Revenue Recognition 1. Transaction Approach E. Business Entity J. Historical Cost Insert the applicable letter below Land is purchased for $760,000. The current value of the land is $625,000. Which concept is applied to record the correct amount? ii. Wall Street Journal: subscription fees collected in advance are recorded as unearned subscription income and later recognized when earned. All significant relevant information is reported. iv. Discount retailer Target Corporation routinely sends emails announcing sales for preferred customers. No economic impact occurs; therefore, no transaction is recorded. v. vi. Online retailer Amazon, Inc. is financially sound and will continue in business indefinitely. Costs incurred to provide a service or produce a product must be reported in the same period the revenue is recognized. vii. The company uses the same accounting principle from period to period. viii. Financial statements are prepared periodically.

Answer 1

1. Land is purchased for $760,000. The current value of land is $625000. - Historical cost concept

Historical cost concept means the assets and liabilities are recorded at the original price paid or received and not at current market price .

2. Wall street journal : subscription fees collected in advance are recorded as unearned subscription income and later recognized when earned - revenue recognition.

Revenue recognition means revenues should be recorded in the books as soon as it is earned and not when it is received this is also based on the accrual principle of accounting.

3. All significant information are reported. -Full disclosure principle

Full disclosure principle states that an entity should disclose all necessary information in its financial statements and other related signification.

4.Discount retailer target corporation routinely sends emails announcing sales for preferred customers . No economic impact occurs; therefore no transaction is recorded - Materiality

Materiality principle states that an accounting standards can be ignored if the net impact of doing so has a small impact on financial statements and the users are not mislead by such ignorance .

5. Online retailer Amazon is financially sound and will continue in business infinitely - Going concern

Going concern concept states that the business will continue for infinitely long period of time .

6. Costs incurred to provide a service or produce a product must be reported in same period the revenue is recognized - Expense recognition

Expense recognition states that expenses should be recognized in the same period to which the revenue relates.

7. The company uses same accounting principle - consistency

Consistency principle states the once the accounting principle or the method is adopted then one should continue to follow the same in future accounting periods .

8. Financial statements are prepared periodically - time period

Time period enables the ongoing activity to be divided into years , moths , weeks etc. So as to find and evaluate the performance of the entity.

According to the HOMEWORKLIB RULES only first question is to be answered when there are multiple questions so the next two questions are not answered .

If you are benefited from the solution then please LIKE , if disliked please specify the reason.