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. Understandability characteristic k. Verifiability characteristic f. Revenue recognition principle ____ 1. Current dollar values are used in financial reporting. ____ 2. The performance obligation is satisfied. ____ 3. Numbers and descriptions match what really existed or happened. ____ 4. Yearly financial reports. ____ 5. Cost are recognized when they are incurred. ____ 6. Notes as part of necessary information to a fair presentation. ____ 7. Affairs of the business distinguished from those of its owners. ____ 8. Company assumed to have a long life. ____ 9. Financial statements are prepared in a way that enables users to make sense of the data. ____ 10. Other trained accountants would calculate similar net income. ____ 11. Summarizing significant accounting policies. ____ 12. Presentation of timely information with predictive and confirmatory value.

Answer 1

1. Current dollar values are used in financial reporting 2. The performance obligation is satisfied 3. Numbers and descriptions match what really existed or happened 4. Yearly financial reports 5. Cost are recognized when they are incurred 6. Notes as part of necessary information to a fair presentation 7. Affairs of the business distinguished from those of its owners 8. Company assumed to have a long life 9. Financial statements are prepared in a way that enables users to make sense of the data 10. Other trained accountants would calculate similar net income 11. Summarizing significant accounting policies 12. Presentation of timely information with predictive and confirmatory value c Monetary unit assumption f Revenue recognition principle į Faithful representation characteristic d Periodicity assumption g Expense recognition principle h Full disclosure principle a Economic entity assumption b Going concern assumption e Understandability characteristic k Verifiability characteristic h Full disclosure principle i Relevance characteristic