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3 years ago

Identify the basic assumption or broad accounting principle that was violated in each of the following situations.

Business

1 answer:

andrezito [222]3 years ago

6 0

Answer:

1) expense recognition principle: expenses are recognized when they are consumed.

2) historical cost principle: a company must record its assets, liabilities, and equity investments at their original costs.

3) economic entity principle: the company's transactions should be kept separate from those of its owners or upper management.

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Culler Construction Company agreed with the City of Orange Key to build a road. The project was to begin on December 1. One week

KonstantinChe [14]

Answer: D. Enforceable because Culler encountered unforeseen difficulties.

Explanation:

Contractual obligations can be changed if one or both parties encounter unforeseen circumstances that would significantly alter their ability to fulfil their part of the contract.

In this scenario, Culler Construction would incur a significantly higher cost to carry out their side of the contract than what was agreed. The contract can therefore be changed and this change would be enforceable by law. The higher offer by Orange Key is therefore legal and enforceable.

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3 years ago

Suppose that an initial $20 billion increase in investment spending expands GDP by $20 billion in the first round of the multipl

frez [133]

Answer: 0.9

Explanation:

The marginal propensity to consume (MPC) is calculated by using the formula:

= Change in consumption / Change in income

where,

Change in consumption = $18 billion

Change in income = $20 billion

MPC = Change in consumption / Change in income

= $18 billion / $20 billion

= 0.9

Therefore, MPC is 0.9.

6 0

4 years ago

Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,430; Inventory $14,340; Operating Ex

puteri [66]

Explanation:

The adjusting entry for physical count is shown below:

Cost of goods sold A/c Dr $1,290

To Inventory A/c $1,290

(Being the adjusting entry for physical count is recorded)

The computation is given below:

= Year end balance of inventory account - physical inventory on hand

= $14,340 - $13,050

= $1,290

The closing entries for the following accounts are shown below:

1. Sales Revenue A/c Dr $124,430

To Income Summary $124,430

(Being revenue account closed)

2. Income summary A/c Dr $94,230

To Cost of goods sold $61,720 ($60,430 + $1,290)

To Sales Discounts $1,120

To Operating Expenses $29,560

To Sales Returns and Allowances $1,830

(Being expenses accounts are closed)

3. Income summary A/c Dr $30,200 ($124,430 - $94,230)

To Retained earning $30,200

(Being the difference is credited to retained earning)

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3 years ago

natural disasters can happen at any time and have unknown or incalculable effects. based on information from subject matter expe

Ksivusya [100]

0.013 is the annualized rate of occurrence (ARO) for a natural disaster affecting an organization.

Annualised Rate of Occurrence (ARO): An expected frequency of the hazard occurring over the course of a year is known as the Annualised Rate of Occurrence (ARO). ALE is computed using ARO (annualized loss expectancy).

The annualised rate is applicable for a specific amount of time (less than 12 months). It is a mathematical extrapolation of an estimated yearly returns rate. In order to determine it, multiply the monthly change in returns rate by 12 to obtain the annual rate.

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1 year ago

Under the accrual basis of accounting, many of the account balance in the ledger at the end of the accounting period are reporte

Helen [10]

Answer: 4. The expenses incurred during a period are matched with the revenues that those expenses generated.

Explanation:

The accrual basis of accounting works by matching accounting transactions to the period that they occur in. For instance, if revenue is sold in year 1 but the cash for it is only received in year 2, the revenue will be recorded for year 1.

The matching principle falls under the accrual basis and matches the expenses in a period to the revenue that the expenses generated in that same period. This is why the expenses in the income statement are only those that occurred in the current period and expenses for future periods are put in the balance sheet.

4 0

3 years ago