Accounting Quiz 3 Laurie Wood

Identify the accounting assumption, principle, or constraint that describes each situation.

(a) Allocates expenses to revenues in the proper period.

(b) Indicates that fair value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.)

(c) Ensures that all relevant financial information is reported.

(d) Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.)

(e) Indicates that personal and business record keeping should be separately maintained.

(f) Separates financial information into time periods for reporting purposes.

(g) Permits the use of fair value valuation in certain industries. (Do not use fair value principle.)

(h) Assumes that the dollar is the "measuring stick" used to report on financial performance. – A. Expense Recongnition Principle
B. Historical Cost Principle
C. Full Disclosure Principle
D. Going Concern Assumption
E. Economic Entity Assumption
F. Periodicity Assumption
G. Industry Practices
H. Monetary Unit Awsumption

establishing petty cash – petty cash debit cash credit
AICPA – American Institute of Certified Public Accountants, originally delegated by SEC to determine GAAP. Wasn't successful.
issues stock to raise capital – debit cash, credit common stock, credit paid in capital common stock
Source documents – Check Stubs, receipts,cash registrar tape, memos of cash registrar totals, sales tickets, sales invoices, purchase invoice from suppliers.
cost of good sold – cost of goods sold, IS, debit
current ratio – total current assets/total current liabilities
common stock – the most universal form of stock
Liability account – Accounts payable is a
Testosterone is a lipid-based hormone; insulin is a ______-based hormone.
Capital Expenditure – Items that will benefit the firm beyond the current year. These are reported in the Statement of Financial Position. Capital expenditure will create a non-current asset.
The things one owns are – Assets
Internal Users – Management and Employees
Stock Options – Options given to key employees to motivate them to focus on company performance, take a long-run perspective, remain with the company
Companies with a greater proportion of fixed costs have a greater risk of loss than companies with a greater proportion of variable costs. – True
Testоsterоne is а lipid-bаsed hоrmone; insulin is а ______-based hormone.
Accounting – planning, recording, analyzing, and interpreting financial information.
time ticket – a document that is used to record the aount of time an emplotee spends on various activities.
Goodwill and formula – Is the excess of the purchase price of a business over the fair value of the business's assets and liabilities.

Goodwill = Purchase Price – Fair value of identifiable assets and liabilities.

straight-line method – (cost- residual value)/ service life in years
COGS – = BI of FG + CGM + EI of FG (Product cost/unit x # of units sold)

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply