Question

Problem 1 Fill in the blanks below with the accounting principle that best applies. A. Cost B. Business Entity C. Going Concern D. Unit of Measurement E. Objective Evidence F. Full Disclosure G. Consistency H. Matching I. Conservatism J. Materiality 1.A lodging company pays a fire insurance premium of $40,000. The policy covers a two-year period. The 2.A guestroom wastebasket costing $20 is expensed when it is purchased. The wastebasket should have a 3.The food inventory is generally valued at its cost at the end of each year. However, this year it is written S40,000 cash disbursement is recorded as insurance expense. This violates the principle. five-year life. This is probably acceptable accounting because of the principle. down at its market value because the market value is less than cost. The valuing of food inventory at the lower of cost or market is according to the principle. 4.A. Dogg, the proprietor of Dogg's Dining, takes a few steaks home from his business. He records the cost of the steaks taken for personal use as "A. Dogg, Drawing" in accordance with the principle. 5. The Yorkshire Hotel, in addition to including its depreciation expense on the income statement, mentions its method of depreciation and the estimated lives of its property and equipment in a footnote. This is based on the principle.

Answer 1

1)Matching Principle

Expenses and revenues recognized when the incurred or occurred rather than cash flows.

2)Materiality Principle

It concern about the relevance , size & nature of information that report in financial statement.

3)Conservative Principle

Report assets or revenue when they are assured to received & liabilities and expense when they are uncertain.

4)Cost Principle

Cost principle states that transactions to be recorded at cost.

5)Full disclosure Principle

It states that Facts and information to be disclosed at the footnote for making decision.