E2.7: Identify by the assumption or characteristics of info

Question 1

The reporting of accounting info should be free from personal bias

Answer 1

Faithful representation

Question 2

In a single proprietorship, the owner’s house and car are not recorded in the records of the business

Answer 2

Accounting entity assumption

Question 3

the cost of stationery is not shown separately in the income statement

Answer 3

Materiality

Question 4

services provided by a business entity are recorded before the receipt of cash

Answer 4

Accrual basis assumption

Question 5

Machinery held by the business under a long-term lease arrangement is recorded by the business as its own asset

Answer 5

Relevance

Question 6

An expense is recorded in the year in which an asset or benefit is consumed in the process of carrying on the entity’s business

Answer 6

Period assumption

Question 7

assets are not recorded at liquidation prices

Answer 7

Going concern assumption

Question 8

consistent accounting policies and methods are used in the preparation of financial statements from one year to another

Answer 8

Comparability