Question

Practice 1(select one of the letters from above for each of the following situations): L A Relevance 8. Faithful representation C. Comparability D. Consistency E. Monetary unit assumption F. Economic entity assumption G. Periodicity assumption H. Going concern assumption istorical cost principle 3. Pl disclosure principle K. Materiality Cost Constraint L 1. Finandal statements are prepared at regular intervals. 2. Belief that a company will continue to operate for the foreseeable future. The desire to minimize errors and beas in financial statements. All items for U.S. companies must be converted to U.S. dollars for reporting purposes Ability to easily evaluate one company's results relative to another's. Weighing the cost of providing the information against the benefit to the users of the financial statements. 7. The quality of Information that indicates the Information makes a difference in a decision. A belief that items should be reported on the balance sheet at the price that was paid to acquire the item. 9. A company's use of the same accounting principles and methods from year to year. 10. A transaction, such as a mortgage payment, belongs to the owner and not to her company. 11. The auditor discovered a very small dollar item (less than $100) that was recorded incorrectly and decided not to fix it. 12. The reporting of all information that would make a difference to financial statement users.

Answer 1

Financial statements are prepared at regular intervals: Periodicity Assumption
Belief that a company will continue to operate for the foreseeable future: Going Concern Assumption
The desire to minimize errors and bias in financial statements: Faithful Representation
All items for U.S. companies must be converted to U.S. dollars for reporting purposes: Monetary Unit Assumption
Ability to easily evaluate one company’s results relative to another’s: Comparability
Weighting the cost of providing the information against the benefit to the users of the financial statements: Cost Constraint
The quality of information that indicates the information makes a difference in a decision: Relevance
A belief that items should be reported on the balance sheet at the price that was paid to acquire the item: Historical Cost Principal
A company’s use of the same accounting principles and methods from year to year: Consistency
A transaction, such as a mortgage payment, belongs to the owner and not to her company: Economic Entity Assumption
The auditor discovered a very small dollar item (less than $100) that was recorded incorrectly and decided not to fix it: Materiality
The reporting of all information that would make a difference to financial statement users: Full Disclosure Principle