Chapter 2 assignments and solutions

Chapter 2 assignments and solutions - 6. Periodicity...

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CHAPTER 2 HOMEWORK - SOLUTIONS Ex. 2-135 —Accounting concepts—identification. State the accounting assumption, principle, information characteristic, or constraint that is most applicable in the following cases. 1. All payments less than $25 are expensed as incurred. (Do not use conservatism.) 2. The company employs the same inventory valuation method from period to period. 3. A patent is capitalized and amortized over the periods benefited. 4. Assuming that dollars today will buy as much as ten years ago. 5. Rent paid in advance is recorded as prepaid rent. 6. Financial statements are prepared each year. 7. All significant post-balance sheet events are reported. 8. Personal transactions of the proprietor are distinguished from business transactions. Solution 2-135 1. Materiality constraint. 2. Consistency characteristic. 3. Matching principle or going concern assumption. 4. Monetary unit assumption. 5. Matching principle or going concern assumption.
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Unformatted text preview: 6. Periodicity assumption. 7. Full disclosure principle. 8. Economic entity assumption. IFRS QUESTIONS True / False 1. The conceptual framework underlying U.S. GAAP is similar to that underlying iGAAP. 2. The FASB conceptual framework specifically identifies accrual basis accounting as one of its fundamental assumptions. 3. One of two assumptions made by the IASB conceptual framework is that the reporting entity is a going concern. 4. One of the challenges in developing a common conceptual framework will be to agree on how the framework should be organized since the FASB and IASB conceptual frameworks are organized in very different ways. 5. One issue that the IASB and FASB must resolve in developing a common conceptual framework is how control should be defined with regard to the definition of an asset. Answers to True / False questions: 1. True 2. False 3. True 4. False 5. True...
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This note was uploaded on 11/17/2010 for the course ACC ACC 305 taught by Professor Rogero during the Spring '10 term at University of Dayton.

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Chapter 2 assignments and solutions - 6. Periodicity...

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