Unformatted text preview: e business? Which
concept or principle governs this decision?
Hunter is violating the going-concern concept.
Hunter should account for assets at their actual cost, as determined by the cost principle. E1-1 Deciding on an investment (Obj. 1)
Suppose you have saved some money and you are considering an investment in
Qantas. What accounting information will you use to decide whether or not to invest
in Qantas? Explain your answer.
To decide on an investment, you should use Qantas’ financial statements. You will use
Qantas’ profit (or loss) information. And you hope Qantas’ accountants follow the reliability
principle because you must rely on the company’s data to make your investment decision.
Student responses may vary....
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