Various accounting assumptions, principles, constraints, and characteristics are listed below. Select those which best justify the following accounting procedures and indicate the corresponding letter(s) in the space(s) provided. A letter may be used more than once or not at all.
a. Historical cost f. Economic entity k. Revenue recognition
b. Relevance g. Materiality l. Full disclosure
c. Monetary unit h. Conservatism m. Cost constraint
d. Going concern i. Periodicity n. Industry practices
e. Consistency j. Expense recognition o. Faithful representation
_____ 1. Chose the solution that will be least likely to overstate assets or income.
_____ 2. Describing the depreciation methods used in the financial statements.
_____ 3. Applying the same accounting treatment to similar accounting events.
_____ 4. The quality which helps users make predictions about present, past, and future events.
_____ 5. Recording a transaction when goods or services are exchanged for cash or claims to cash.
_____ 6. Preparing consolidated statements.
_____ 7. Information must make a difference or a company need not disclose it.
_____ 8. Provides the figure at which to record a liability.
_____ 9. The preparation of timely reports on continuing operations.
_____ 10. Accrual accounting (do not use "going concern").
_____ 11. Reporting those items which are significant enough to affect decisions. Select two (11 and 12).
_____ 12. See item 11 above.
_____ 13. Ignoring the phenomenon of price-level changes (do not use "historical cost").
_____ 14. Not reporting assets at liquidation prices (do not use "historical cost").
_____ 15. Characterized by completeness, neutrality, and being free from error.
_____ 16. Establishment of an allowance for doubtful accounts.
_____ 17. Additivity of financial statement figures relating to different time periods.
_____ 18. Carrying inventories at sales price less distribution costs.
_____ 19. Use of estimating procedures for amortization policies. Select two (do not use "periodicity") (19 and 20).