Identify the accounting assumption, principles or concept for each
Not what you're looking for?
Can someone please help me state the accounting assumption, principle, information characteristic, or constraint that is most applicable in the following cases.
1. All payments less than $25 are expensed as incurred. (Do not use conservatism.)
2. The company employs the same inventory valuation method from period to period.
3. A patent is capitalized and amortized over the periods benefited.
4. Assuming that dollars today will buy as much as ten years ago.
5. Rent paid in advance is recorded as prepaid rent.
6. Financial statements are prepared each year.
7. All significant post-balance sheet events are reported.
8. Personal transactions of the proprietor are distinguished from business transactions.
Purchase this Solution
Solution Summary
One or two sentences explain each assumption or concept for financial statements.
Solution Preview
1. All payments less than $25 are expensed as incurred. (Do not use conservatism.)
This is a case of "materiality." That is, the items are small and so worrying about whether they are used up yet, such as with small tools, office supplies and such, is not worth the time involved to capitalize and then later count to see what should be expensed. Too small.
2. The company employs the same inventory valuation method from period to period.
This is "consistency." That is, using the same method to account ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Introduction to Finance
This quiz test introductory finance topics.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.