Chapter 4 - P1

Chapter 4 - P1 - Chapter 4 P1 1. Consevatism this is in...

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Chapter 4 – P1 1. Consevatism – this is in accordance with the convention and GAAP because Hastings Manufacturing Company used the more conservative figure because the market value is below the original cost. 2. Materiality – Gormanus Company followed their company policy and did not record the chairs as long –term assets even though they knew the chairs would last longer than one year, and recorded them as an expense. They followed the GAAP rule that when an item is worth 5% or more of the net income then accountants should treat it as material and not an expense. 3. Full disclosure - Nogel Company was misleading in their financial statement reporting for 20x7 because it did not note the significant event that arose on November 3, 20x7 which will affect business performances in 20x8 because although the insurance will cover the loss, the plant will need to go through rebuilding and construction thus limiting business performance and reduced profit potential in 20x8 and users of the financial statements will need to know this in
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This note was uploaded on 07/27/2011 for the course ACCT 101 taught by Professor Ronbell during the Spring '11 term at UCSD.

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