Question

Identify the accounting assumption, principle, or constraint that describes each situation. Do not use an answer more than once. (a) Allocates expenses to revenues in the proper period. select an option (b) Indicates that fair value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.) select an option (c) Ensures that all relevant financial information is reported. select an option (d) Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.) select an option (e) Indicates that personal and business record keeping should be separately maintained. select an option (f) Separates financial information into time periods for reporting purposes. select an option (g) Assumes that the dollar is the "measuring stick" used to report on financial performance.

Answer 1

Answer and Explanation:

The classification is as follows

a. Expense Recognition Principle

As per this principle it stated that the expenses that should be recognized with the current period so the revenues should also be recorded at the current period only

b. Measurement Principle or Historical cost

As per this principle it stated that assets should be recorded at the purchase cost and involved all the cost that is related to it

c. Full Disclosure Principle

As per this principle it stated that the company should disclose all the relevant information that can change the decisions of the shareholders

d. Going Concern Assumption

 As per this assumption it stated that the company could able to continue its business forever whether the people leave or not. It always carryout the business activities

e.  Economic Entity Assumption

  As per this assumption it stated that the owner transactions should be separated from the business transactions

f.  Periodicity Assumption

   As per this assumption it stated that the information of the financial statement should be divided in the given set of time periods

g. Monetary Unit Assumption

    As per this assumption it stated that all the business transactions should always be expressed in monetary units