AC 501 - Unit 1 - E2-7 A Recognizes expenses based on contribution to revenues in the proper period 6 Matching principle B Indicates that market value

AC 501 - Unit 1 - E2-7 A Recognizes expenses based on...

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E2-7 A Recognizes expenses based on contribution to revenues in the proper period 6 Matching principle B Indicates that market value changes subsequent to purchase are not recorded in the accounts (Do not sue revenue recognition principle) 5 Historical cost principle C Ensures that all relevant financial information is reported 7 Full disclosure Principle D Rationale why plant assets are not reported at liquidation value (Do not use historical cost principle) 2 Going concern assumption E Anticipates all losses, but reports no gains 11 Conservatism F Indicates that personal and business record keeping should be separately maintained 1 Economic entity assumption G Separates financial information into time periods for reporting purposed 4 Periiodicty assumption H Permits the use of market value valuation in certain specific situations 10 Industry practices I Requires that information significant enough to affect the decision of reasonably informed users should be disclosed (Do not use full disclosure principle) 9 Materiality J Assumes that the dollar is the "measuring stick" used to report on financial performance 3 Monetary unit assumption
E2-8 A Market value changes are not recognized in the accounting records Historical cost principle B Lower-of-cost-or-market is used to value inventories Conservatism C Financial information is presented so that investors will not be misled Full disclosure principle

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