Question

CALCULATOR FULL SCREEN PRINTER Exercise 2-12 Identify the accounting assumption or priniple that is described below. Is the rationale for why plant assets are not reported at liquidation value. (Note: Do not use the historical cost principle. Indicates that personal and business record-keeping should be separately maintained. Assumes that the dollar is the "measuring stick" used to report on financial performance. Separates financial information into time periods for reporting purposes. Measurement basis used when a reliable estimate of fair value is not available. Dictates that companies should disclose all drcumstances and events that make a difference to financial statement users. LINK TO TEXT VIDEO: APPLIED SKILLS Question Attempts: 0 of 3 used SAVE FOR LATER

Answer 1

a) Going concern assumption

It is the assumption of business that entity will remain in business for long time period.Entity will not liquidate its asset in short term

b) Economic entity assumption

This assumption states that transaction of entity are to be kept separate from transaction of owners.

c)Monetary unit assumption

This assumption provides that business transactions and events are expressed in terms of monetary unit .

d)Periodicity assumption

As per this assumption business activities are divided into time period .It can be month,quarter or year.

e)Historical cost principle

It states that assets are shown at historical cost (value at which assets are acquired)

f)Full disclosure Principle

As per this assumption company is required to disclose all necessary information and facts so that users of financial statements can make decision.