Question

In the blanks provided to the left enter, enter the letters of the underlying assumption,measurement medthod, qualitative criteria, or constraint most closely associated with the statements. Some letters may be used more than once and some may not be used at all.

A, Separate-entry assumption

B. Continuty assumption.

C. Materially.

D.Time-period assumption.

E. Cost/benefit

F. Revenue recognition

G. Matching

H. Historical cost

I. Unit-of-measure assumption

J. Faithful representation

K. Verifiability

L. Full disclosure.

1. Any accounting method is acceptable for small items hat will not change users.

2. Assumes that all financial statement elements can be meaningfully described in dollar terms.

3. Long- term assets that increase in value are not normally written up in the financial statements

4. Assets and earnings should be neither understated nor overstated.

5. The estimated future costs of fulfilling warranties that may not arise until two years into the future are accrued in the period of the sale.

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Answer 1

.2. Assumes that all financial statement elements can be meaningfully described in dollar terms.

• Cost/Benefit says that cost and benefits can be meaningfully described in monetary terms and turns out be the best approach in achieving benefits as well as savings
• Unit of measure assumption says that all accounting terms should be taken as a monetary term

3.Long- term assets that increase in value are not normally written up in the financial statements

• Full disclosure means that the company should provide the complete and correct information so as to take decisions

4. Assets and earnings should be neither understated nor overstated.

• Faithful Representation should represent the accurate position of the entity therefore Assets and Earnings should not be overstated or understated
• Full disclosure means that the company should provide the complete and correct information so as to take decisions

5. The estimated future costs of fulfilling warranties that may not arise until two years into the future are accrued in the period of the sale.

• According to matching concept the assets and liabilities should be recorded in the year in which they arise

Note: There seems to something wrong with part 1. Kindly check.