Question

Listed below are several information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application. (items a through k may be used more than once or not at all.) a. Economic entity assumption g. Expense recognition principle b. Going concern assumption h. Full disclosure principle C. Monetary unit assumption i. Relevance characteristic d. Periodicity assumption j. Faithful representation characteristic e. Historical cost principle k. Consistency characteristic f. Revenue recognition principle 1. Deferrals and accruals and in adjusting and closing process. Assets valued at amounts originally paid for them. Company assumed to have a long life. 4. The performance obligation is satisfied. 5. Business transactions use a standard measuring unit. 6. Financial statements supported with notes necessary for fair presentation. 7. Numbers and descriptions match what really existed or happened. Continues on next page => Part B continued. 8. Annual financial reports. 9. Business transactions are distinguished from those of its owners. 10. The same accounting principles applied as in the preceding year. 11. Significant accounting policies are summarized. 12. Assumption of a stable-dollar. 13. Timely information is presented with predictive and confirmatory value.

Answer 1

S no.	Correct Option	Reason
1	g-Expense recognition principle f-revenue recognition principle	At the end of period ,accrued expense and deferred revenue should be recognized
2	e-Historical cost principle	Asset should be recorded at its original cost
3	B-Going concern assumption	company should have infinite useful life
4	f-revenue recognition principle	When performance obligation is satisfied ,revenue must be recognized.
5	c-Monetary unit assumption	All financial data should be disclosed in same monetary terms .
6	h-Full disclosure principle	Notes to accounts is to be provided so as to provide full explanation to financial statement
7	J-Faithful representation characteristic	Information provided in financial statement must be true and faithful
8	d-Periodicity assumption	Financial statement should be prepared at regular intervals /period
9	a-Economic entity assumption	Business and owners are considered to be two separate entity
10	K-consistency characteristic	accounting principles and policies should be applied consistently from year to year
11	h-full disclosure principle	Significant accounting policies is a part of financial statement and must be disclosed
12	c-Monetary unit assumption	All financial data should be disclosed in same monetary terms .
13	J-Faithful representation characteristic	Information provided in financial statement must be true and faithful