1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
DedPeter [7]
3 years ago
6

The four underlying assumptions of generally accepted accounting principles are economic entity, monetary unit, periodicity, and

going concern. Consider the four independent situations below.
1. Jumbo's is a local restaurant. Due to a bad shipment of potatoes, several of the company's customers become ill, and the company receives considerable bad publicity. Revenues are way down, several of its bills are past due, and the company is making plans to close the restaurant at the end of the month. The company continues to report its assets in the balance sheet at historical (original) cost.

2. Gorloks Tax Services is owned and operated by Sam Martin. The company has the usual business assets: land, building, cash, equipment, and supplies. In addition, Sam decides to buy a boat for him and his family to enjoy on the weekends. Sam includes the boat as an asset on the balance sheet of Gorloks Tax Services.

3. Claim Jumpers International, a U.S.-based company, has operations in the United States and in Europe. For the current year, the company purchased two trucks in the United States for $10,000 and three trucks in Europe for €20,000 (euros). Because of the differences in currencies, the company reported "Five Trucks" with no corresponding amount in the balance sheet.

4. Cobbers Etc. sells specialty music equipment ranging from African bongo drums to grand pianos. Because of the fluctuating nature of the business, management decides to publish financial statements only when a substantial amount of activity has taken place. Its last set of financial statements covered a period of 14 months, and the set of financial statements before that covered a period of 18 months.

Required:

For each situation, select which of the underlying assumptions of GAAP is violated.
Business
1 answer:
DerKrebs [107]3 years ago
6 0

Answer:

1. Going concern

2. Economic entity

3. Monetary unit

4. Periodicitys

Explanation:

1. Since Jumbo's Restaurant is planning to close, the assumption of continuity (going concern) is no more applicable. This should be disclosed. Instead asset was still recorded at historical price which is misleading.

2. Gorloks Tax Services is an economic entity, and the property and assets of owners are not considered to be for the business. In this case the boat Sam bought was wrongly reported as an asset of the company.

3. Claim Jumpers when reporting the 5 trucks purchased must include a monetary value for them. The assumption of monetary unit states that all items reported on the balance sheet must be expressed in monetary terms.

4. Cobbler's Etc violated the assumption of periodicity which states the financial position of the business must be declared in a particular accounting period. Accounting period can monthly, quarterly, biannually, and yearly. The business should choose and accounting period and ensure financial position is reported for each of them. In this case financial reporting is not consistent with reporting happening after 14 months and before that 18 months.

You might be interested in
The Commerce Department reported receiving the following applications for the Malcolm Baldrige National Quality Award: from larg
nlexa [21]

Answer:

Categorical variable

Explanation:

Categorical variable are variables that are not numerical, take on values that are names or labels.It places the individual into a category, categorical variable is also called qualitative variable.

While quantitative variable is a numerical variable, they represent a measurable quantity i.e variables whose values result from counting or measuring something(measurement)

Therefore, the type of variable used here is categorical because the type of business will not be numerical.

4 0
3 years ago
Do the results of the experiment support the camouflage hypothesis? do the results of the experiment support the camouflage hypo
Bond [772]

I guess the last option is the best answer.

Yes; mouse models with camouflage coloration were preyed on less often than non-camouflaged mouse models.

3 0
4 years ago
Indicate whether a change in the value of each of the following determinants of demand leads to a movement along the demand curv
Marizza181 [45]

Answer:

movement along the demand curve: i

shift in the demand curve: ii, iii, iv, vi

no effect: v

Explanation:

A change in the price of the product causes quantity demanded to change. It will be indicated by a movement on the same demand curve.  

A change in other factors will cause the demand for the product to change. It is indicated by a shift in the demand curve.  

i. Change in the market price: movement along the demand curve

ii. Change in income: shift in the demand curve

iii. Change in consumer expectations: shift in the demand curve

iv. Change in the price of a related good: shift in the demand curve

v. Change in the price of an unrelated good: no effect

vi. Change in preferences for this good: a shift in the demand curve

3 0
3 years ago
A partnership has the following capital balances: Comprix (40% of gains and losses) $ 180,000 Heflin (30%) 280,000 Kaplan (30%)
MrRissso [65]

Answer:

$210,000 is the capital balance of Heflin after acquisition by Mahar

Explanation:

In this question we are asked to calculate the capital balance of Heflin given the data in the above question.

Firstly, we identify the capital account of Heflin before the acquisition. From the question, this is equivalent to a value of $280,000

Now, we calculate the proportionate capital transferred. That is same as 25% of the total; 25/100 * 280,000 = $70,000

The ending capital of Heflin after acquisition would be mathematically = Capital account of Heflin before admission - Ending capital of Heflin after admission= $280,000 - $70,000 = $210,000

8 0
3 years ago
The price elasticity of demand for a particular cancer drug is zero and the price elasticity of supply is 0.50. If a $1 excise t
Ede4ka [16]

Answer:

$1 or 100% of the tax

Explanation:

When the price elasticity of demand is 0, it means that the good or service will be purchased regardless of its cost. Very few things have such a low price elasticity, and the fact that this is drug for treating cancer is the reason why that happens. Anyone that can purchase a drug that will keep you alive, will do so as long as you have enough money to do so. Another good with a very low price elasticity, but not 0, is gasoline with a 0.02 to 0.04, and gasoline is a basic necessity also.

The curve for a perfectly inelastic good is vertical. So any increase in taxes will be paid by the customers.

7 0
3 years ago
Other questions:
  • When a firm takes existing products and attempts to sell them to new markets, this growth strategy is considered: A. Market deve
    8·1 answer
  • Sara is an administrator at a bank. sara eats plenty of fruits, vegetables, whole grains, legumes, and lean meats. she is of nor
    5·1 answer
  • Brian holds a meeting with all the managers in the company to identify a strategy for business growth. He tells the managers tha
    9·1 answer
  • Naomi and Matt received the following amounts from a tenant who is renting their condominium during the current year (rent is $1
    8·1 answer
  • The main difference between companies following a broad low-cost strategy and those following a focus low-cost strategy is in th
    6·1 answer
  • Liabilities are amounts you _____. (1 point) owe consider assets avoid add to your assets
    5·2 answers
  • Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for
    14·1 answer
  • Helena is looking for an advisor who can help guide her as she invests. She also wants to reduce transaction and trading costs.
    11·1 answer
  • A hotel provides room service for its guests. The process for room service begins with a room service manager who takes orders b
    8·1 answer
  • dina and charles are married, under the age of 65, and have two children under the age of 18. charles works full time and earns
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!