ch02 - SOLUTIONS TO B EXERCISES E2-1B(2030...

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SOLUTIONS TO B EXERCISES E2-1B (20–30 minutes) (a) Relevance. (f) Cost/Benefit and materiality. (b) Consistency. (g) Neutrality. (c) Feedback value. (h) Timeliness. (d) Relevance and reliability. (i) Verifiability. (e) Neutrality. (j) Comparability. E2-2B (15–20 minutes) (a) Reliability. (f) Feedback value. (b) Neutrality. (g) Verifiability. (c) Comparability. (h) Comparability and consistency. (d) Relevance. (i) Timeliness. (e) Consistency. (j) Relevance and reliability. 2-1
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E2-3B (15–20 minutes) (a) Revenues, expenses. (b) Distribution to owners (Note: Net effect is to reduce equity and assets). (c) Gains, losses. (d) Assets. (e) Investment by owners, comprehensive income (or, revenues and gains). (f) Liabilities. (g) Comprehensive income (also possible would be revenues and gains). (h) Comprehensive income. (i) Revenues. (j) Equity. (k) Comprehensive income. (l) Equity. 2-2
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E2-4B (15–20 minutes) (a) 10. Industry practices. (b) 2. Going concern assumption. (c) 6. Matching principle. (d) 1. Economic entity assumption. (e) 7. Full disclosure principle. (f) 5. Historical cost principle. (g) 11. Conservatism. (h) 4. Periodicity assumption. (i) 3. Monetary unit assumption. (j) 9. Materiality. E2-5B (20–25 minutes) (a) Full disclosure principle. (j) Revenue recognition principle. (b) Matching principle. (k) Matching principle. (c) Historical cost principle. (l) Matching principle. (d) Industry practices. (m) Conservatism. (e) Full disclosure principle. (n) Periodicity assumption. (f) Conservatism. (o) Historical cost principle. (g) Materiality. (p) Economic entity assumption. (h) Economic entity assumption. (q) Materiality. (i) Full disclosure principle. (r) Matching principle. 2-3
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E2-6B (20 minutes) (a) This event need not be disclosed in the financial statements. The amount of monies involved is relatively small in relation to the net income of the business and should not affect the fairness of the presentation of the financial statements. (b)
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ch02 - SOLUTIONS TO B EXERCISES E2-1B(2030...

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