Question

Presented below are the basic assumptions and principles underlying financial statements. a. Historical cost principle d. Going concern assumption b. Economic entity assumption e. Monetary unit assumption c. Full disclosure principle f. Periodicity assumption Identify the basic assumption or principle that is described below. 1. The economic life of a business can be divided into artificial time periods. select a key letter 2. The business will continue in operation long enough to carry out its existing objectives. select a key letter 3. Assets should be recorded at their acquisition cost. select a key letter 4. Economic events can be identified with a particular unit of accountability. select a key letter 5. Circumstances and events that could make a difference to financial statement users should be disclosed. select a key letter 6. Only transaction data that can be expressed in terms of money should be included in the accounting records.

Answer 1

Answer:

1. Periodicity assumption.

2. Going concern assumption.

3. Historical cost principle.

4. Economic entity assumption.

5. Full disclosure principle.

6. Monetary unit assumption.

Explanation:

1. Periodicity assumption: The economic life of a business can be divided into artificial time periods. It is also known as the Time period assumption.

2. Going concern assumption: The business will continue in operation long enough to carry out its existing objectives.

3. Historical cost principle: Assets should be recorded at their acquisition cost.

4. Economic entity assumption: Economic events can be identified with a particular unit of accountability.

5. Full disclosure principle: Circumstances and events that could make a difference to financial statement users should be disclosed.

6. Monetary unit assumption: Only transaction data that can be expressed in terms of money should be included in the accounting records.