Question

QUESTION 6 There are some liabilities, such as income taxes payable and the estimated warranty liability, for which the amounts must be estimated so they can be recorded in the same period as the related revenues. Failure to record these amounts in the same period as the related revenues is a violation of the 1. expense recognition principle. 2. limitation of materiality. 3. going concern assumption. 4. concept of historical cost. QUESTION 7 Generally accepted accounting principles (GAAP) require that research and development costs to develop a new product be 1. amortized over the expected economic life of the new product. 2. expensed in the period incurred 3. capitalized in the patents account 4.canitalized in the research and develonment costs account.

Answer 1

1) Solution: expense recognition principle

Explanation: Matching principle states that an expense should be reported on its income statement in the period in which the related revenues had been earned

　

2) Solution: Expensed in the period incurred

Explanation: GAAP states that research and development costs for developing a new product need to be expensed when these are incurred

　

3) Solution: Loss of $1,500

Explanation: Loss= 11,000 - 4,500 - 5,000 = $1,500

　

4) Solution: $10,000

Explanation: The remaining liability amounts to $10,000

I have answered first four parts