(Assumptions, Principles, and Constraint) P r

(Assumptions, Principles, and Constraint) P r

^{(Assumptions, Principles, and Constraint) P r esented below a r e the assumptions, principles, and}

^{constraint used in this chapte r .}

1 . Economic entity assumption

^{2. Going concern assumption}

^{3. Monetary unit assumption}

4. Periodicity assumption

5. Measurement principle

^{(historica l cost)}

^{6 . Measu r emen t principle}

(fair value)

7 . Expense recognition principle

^{8. Full disclosu r e principle}

^{9. Cost constraint}

10 . Revenue recognition principle

Instructions

Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a number more than once.

(a) Allocates expenses to revenues in the proper period.

^{(b) Indicates that fair value changes subsequent to pu r chase a r e not r eco r ded in the accounts. (Do not}

^{use r evenue r ecognition principle.)}

^{(c) Ensu r es that all r elevant financial information is r eported.}

^{(d) Rational e wh y plan t asset s a r e no t r eporte d a t liquidatio n value . (D o no t us e historica l cos t principle.)}

^{(e) Indicates that personal and business r eco r d keeping should be separately maintained.}

^{(f) Separates financial information into time periods for r eporting purposes.}

^{(g) Assumes that the dollar is the “measuring stick” used to r eport on financial performance.}

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