Question

Match each item characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards with a description below.

1.		select an option                                                          Going Concern AssumptionPeriodicity AssumptionMaterialityEconomic Entity AssumptionMonetary Unit AssumptionRelevanceCost ConstraintComparabilityFull Disclosure PrincipleHistorical Cost PrincipleConsistencyFaithful Representation		Items not easily quantified in dollar terms are not reported in the financial statements.
2.		select an option                                                          Periodicity AssumptionHistorical Cost PrincipleComparabilityMonetary Unit AssumptionEconomic Entity AssumptionConsistencyRelevanceFull Disclosure PrincipleFaithful RepresentationCost ConstraintMaterialityGoing Concern Assumption		Accounting information must be complete, neutral, and free from error.
3.		select an option                                                          ComparabilityMonetary Unit AssumptionMaterialityEconomic Entity AssumptionFull Disclosure PrincipleRelevancePeriodicity AssumptionConsistencyCost ConstraintFaithful RepresentationHistorical Cost PrincipleGoing Concern Assumption		Personal transactions are not mixed with the company’s transactions.
4.		select an option                                                          Cost ConstraintGoing Concern AssumptionMonetary Unit AssumptionConsistencyEconomic Entity AssumptionRelevanceFaithful RepresentationComparabilityPeriodicity AssumptionHistorical Cost PrincipleFull Disclosure PrincipleMateriality		The cost to provide information should be weighed against the benefit that users will gain from having the information available.
5.		select an option                                                          RelevanceCost ConstraintFaithful RepresentationComparabilityGoing Concern AssumptionConsistencyPeriodicity AssumptionFull Disclosure PrincipleMaterialityMonetary Unit AssumptionEconomic Entity AssumptionHistorical Cost Principle		A company’s use of the same accounting principles from year to year.
6.		select an option                                                          ConsistencyPeriodicity AssumptionCost ConstraintHistorical Cost PrincipleMaterialityFull Disclosure PrincipleGoing Concern AssumptionFaithful RepresentationEconomic Entity AssumptionRelevanceMonetary Unit AssumptionComparability		Assets are recorded and reported at original purchase price.
7.		select an option                                                          Full Disclosure PrincipleMonetary Unit AssumptionHistorical Cost PrincipleMaterialityConsistencyPeriodicity AssumptionRelevanceGoing Concern AssumptionEconomic Entity AssumptionComparabilityFaithful RepresentationCost Constraint		Accounting information should help users predict future events, and should confirm or correct prior expectations.
8.		select an option                                                          ConsistencyComparabilityMaterialityFull Disclosure PrincipleGoing Concern AssumptionFaithful RepresentationRelevanceEconomic Entity AssumptionHistorical Cost PrincipleMonetary Unit AssumptionCost ConstraintPeriodicity Assumption		The life of a business can be divided into artificial segments of time.
9.		select an option                                                          ComparabilityMonetary Unit AssumptionEconomic Entity AssumptionPeriodicity AssumptionRelevanceFull Disclosure PrincipleGoing Concern AssumptionCost ConstraintConsistencyHistorical Cost PrincipleMaterialityFaithful Representation		The reporting of all information that would make a difference to financial statement users.
10.		select an option                                                          RelevanceGoing Concern AssumptionConsistencyMonetary Unit AssumptionPeriodicity AssumptionHistorical Cost PrincipleFaithful RepresentationComparabilityMaterialityFull Disclosure PrincipleEconomic Entity AssumptionCost Constraint		The judgment concerning whether an item’s size makes it likely to influence a decision-maker.
11.		select an option                                                          Monetary Unit AssumptionComparabilityRelevanceFull Disclosure PrincipleMaterialityCost ConstraintHistorical Cost PrinciplePeriodicity AssumptionConsistencyGoing Concern AssumptionEconomic Entity AssumptionFaithful Representation		Assumes a business will remain in operation for the foreseeable future.
12.		select an option                                                          Cost ConstraintGoing Concern AssumptionConsistencyHistorical Cost PrincipleEconomic Entity AssumptionMonetary Unit AssumptionRelevancePeriodicity AssumptionMaterialityComparabilityFaithful RepresentationFull Disclosure Principle		Different companies use the same accounting principles.

Answer 1

1	Items not easily quantified in dollar terms are not reported in the financial statements.	Monetary Unit Assumption
2	Accounting information must be complete, neutral, and free from error.	Faithful Representation
3	Personal transactions are not mixed with the company’s transactions.	Economic Entity Assumption
4	The cost to provide information should be weighed against the benefit that users will gain from having the information available.	Cost Constraint
5	A company’s use of the same accounting principles from year to year.	Consistency
6	Assets are recorded and reported at original purchase price.	Historical Cost Principle
7	Accounting information should help users predict future events, and should confirm or correct prior expectations.	Relevance
8	The life of a business can be divided into artificial segments of time.	Periodicity Assumption
9	The reporting of all information that would make a difference to financial statement users.	Full Disclosure Principle
10	The judgment concerning whether an item’s size makes it likely to influence a decision-maker.	Materiality
11	Assumes a business will remain in operation for the foreseeable future.	Going Concern Assumption
12	Different companies use the same accounting principles.	Comparability