Going concern company to last long enough to fulfill

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Going Concern - company to last long enough to fulfill objectives and commitments. Monetary Unit - money is the common denominator. Periodicity - company can divide its economic activities into time periods. Third Level: Basic Assumptions LO 6 Describe the basic assumptions of accounting.
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Measurement Principle – The most commonly used measurements are based on historical cost and fair value . Issues: u Historical cost provides a reliable benchmark for measuring historical trends. u Fair value information may be more useful. u Recently the FASB has taken the step of giving companies the option to use fair value as the basis for measurement of financial assets and financial liabilities. u Reporting of fair value information is increasing. Third Level: Basic Principles LO 7 Explain the application of the basic principles of accounting.
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Third Level: Basic Principles LO 7 Explain the application of the basic principles of accounting. Illustration 2-5 Timing of Revenue Recognition Revenue Recognition - generally occurs (1) when realized or realizable and (2) when earned. Exceptions:
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Expense Recognition - “Let the expense follow the revenues.” Third Level: Basic Principles LO 7 Explain the application of the basic principles of accounting. Illustration 2-6 Expense Recognition
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Third Level: Basic Principles LO 7 Explain the application of the basic principles of accounting. Full Disclosure – providing information that is of sufficient importance to influence the judgment and decisions of an informed user. Provided through: u Financial Statements u Notes to the Financial Statements u Supplementary information
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Cost Constraint – cost of providing information must be weighed against the benefits that can be derived from using it. Industry Practice - the peculiar nature of some industries and business concerns sometimes requires departure from basic accounting theory. Third Level: Constraints LO 8 Describe the impact that constraints have on reporting accounting information.
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Conceptual Framework Review Question (true or false) : A conceptual framework underlying financial accounting is important because it can lead to consistent standards and it prescribes the nature, function, and limits of financial accounting and financial statements. LO 1 Describe the usefulness of a conceptual framework.
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Conceptual Framework Review Question (true or false) : A conceptual framework underlying financial accounting is necessary because future accounting practice problems can be solved by reference to the conceptual framework and a formal standard-setting body will not be necessary. LO 1 Describe the usefulness of a conceptual framework.
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Conceptual Framework What are the Statements of Financial Accounting Concepts intended to establish? a. Generally accepted accounting principles in financial reporting by business enterprises.
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