Sol_Suggested Problems_7 Edition - ACCT Intermediate 3000 1 Chapter 1 Problems Exercise 19 List A d 1 other g 2 e 3 i 4 is h 5 c 6 be b 7 artificial a 8

Sol_Suggested Problems_7 Edition - ACCT Intermediate 3000 1...

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ACCT 3000 Intermediate Financial Accounting I Solution to Suggested Problems 7 th  Edition  1
C hapter 1 Problems: Exercise 1–9 List A List B d 1.Matching principle a. The enterprise is separate from its owners and other entities. g 2. Periodicity b. A common denominator is the dollar. e 3. Historical cost principle c. The entity will continue indefinitely. i 4. Materiality d. Record expenses in the period the related revenue is recognized. h 5. Realization principle e. The original transaction value upon acquisition. c 6. Going concern assumption f. All information that could affect decisions should be reported. b 7. Monetary unit assumption g. The life of an enterprise can be divided into artificial time periods. a 8. Economic entity assumption h. Criteria usually satisfied at point of sale. f 9. Full-disclosure principle i. Concerns the relative size of an item and its effect on decisions. Exercise 1–11 1. The historical cost (original transaction value) principle 2. The periodicity assumption 3. The realization (revenue recognition) principle 4. The economic entity assumption 5. The matching principle; materiality 6. The full disclosure principle Exercise 1–12 1. Disagree Monetary unit assumption 2. Disagree Full disclosure principle 3. Agree The matching principle 4. Disagree Historical cost (original transaction value) principle 5. Agree Realization (revenue recognition) principle 6. Agree Materiality 2
7. Disagree Periodicity assumption Supplement : Exercise 1–7 List A List B o 1. Predictive value a. Decreases in equity resulting from transfers to owners. h 2. Relevance b. Requires consideration of the costs and value of information. g 3. Timeliness c. Important for making interfirm comparisons. a 4. Distribution to owners d. Applying the same accounting practices over time. j 5. Confirmatory value e. Users understand the information in the context of the decision being made. e 6. Understandability f. Agreement between a measure and the phenomenon it purports to represent. n 7. Gain g. Information is available prior to the decision. f 8. Faithful representation h. Pertinent to the decision at hand. k 9. Comprehensive income i. Implies consensus among different measurers. p 10. Materiality j. Information confirms expectations. c 11. Comparability k. The change in equity from nonowner transactions. m 12. Neutrality l. The process of admitting information into financial statements. l 13. Recognition m. The absence of bias. d 14. Consistency n. Results if an asset is sold for more than its book value. b 15. Cost effectiveness o. Information is useful in predicting the future. i 16. Verifiability p. Concerns the relative size of an item and its effect on decisions. Exercise 1–13 1. Disagree This is a violation of the historical cost (original transaction value) principle. 2. Disagree This is a violation of the economic entity assumption. 3. Disagree This is a violation of the realization (revenue recognition) principle. 3
4. Agree The company is conforming to the matching principle. 5. Agree The company is conforming to the full disclosure principle. 6.

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