ACT_3391_Chp_2_Homework_Solutions

ACT_3391_Chp_2_Homework_Solutions - Intermediate Accounting...

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Intermediate Accounting I Amanda N. Paul, CPA, MBA Troy University
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Chapter 2 Exercise 2-4 (a) 6.Matching principle (b) 5.Historical cost principle (c) 7.Full disclosure principle (d) 2.Going concern assumption (e) 11.Conservatism (f) 1.Economic entity assumption (g) 4.Periodicity assumption (h) 10.Industry practices (i) 9.Materiality (j) 3.Monetary unit assumption.
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EXERCISE 2-8 (a)Depreciation is an allocation of cost, not an attempt to value assets. As a consequence, even if the value of the building is increasing, costs related to this building should be matched with revenues on the income statement, not as a charge against retained earnings. (a)A gain should not be recognized until the inventory is sold. Accountants follow the historical cost approach and write-ups of assets are not permitted. It should also be noted that the revenue recognition principle states that revenue should not be recognized until it is realized or realizable and is earned. (a)Assets should be recorded at the fair market value of what is
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This note was uploaded on 03/30/2011 for the course ACT 4495 taught by Professor Burks during the Fall '10 term at Troy.

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ACT_3391_Chp_2_Homework_Solutions - Intermediate Accounting...

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