Question

py purchased some small tools at a cost of $800. Even though the tools will be used for a number of years, the company recorded the purchase as an expense. E 1-11 Basic assumptions and principles L01-8, LO1-9 Identify the accounting concept that was violated in each of the following situations. 1. Pastel Paint Company purchased land two years ago at a price of $250,000. Because the value of the land has appreciated to $400,000, the company has valued the land at $400,000 in its most recent balance sheet. 2. Atwell Corporation has not prepared financial statements for external users for over three years. 3. The Klingon Company sells farm machinery. Revenue from a large order of machinery from a new buyer was recorded 4. Don Smith is the sole owner of a company called Hardware City. The company recently paid a $150 utility bill for S. Golden Book Company purchased a large printing machine for $1,000,000 a material amount) and recorded the 6. Ace Appliance Company is involved in a major lawsuit involving injuries sustained by some of its employees in the the day the order was received Smith's personal residence and recorded a $150 expense. purchase as an expense. manufacturing plant. The company is being sued for $2.000.000, a material amount, and is not insured. The su not disclosed in the most recent financial statements because no settlement had been reached.

Answer 1