Question

Match each item characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards with a description below.

*****Select option

1.		select an option Monetary Unit AssumptionComparabilityEconomic Entity AssumptionMaterialityConsistencyPeriodicity AssumptionGoing Concern AssumptionHistorical Cost PrincipleRelevanceFull Disclosure PrincipleCost ConstraintFaithful Representation		Items not easily quantified in dollar terms are not reported in the financial statements.
2.		select an option Going Concern AssumptionFaithful RepresentationHistorical Cost PrincipleConsistencyMaterialityCost ConstraintFull Disclosure PrincipleMonetary Unit AssumptionPeriodicity AssumptionRelevanceComparabilityEconomic Entity Assumption		Accounting information must be complete, neutral, and free from error.
3.		select an option Historical Cost PrincipleGoing Concern AssumptionRelevanceFaithful RepresentationFull Disclosure PrincipleMaterialityComparabilityConsistencyMonetary Unit AssumptionEconomic Entity AssumptionPeriodicity AssumptionCost Constraint		Personal transactions are not mixed with the company’s transactions.
4.		select an option Monetary Unit AssumptionFaithful RepresentationEconomic Entity AssumptionComparabilityFull Disclosure PrincipleConsistencyPeriodicity AssumptionRelevanceGoing Concern AssumptionHistorical Cost PrincipleMaterialityCost Constraint		The cost to provide information should be weighed against the benefit that users will gain from having the information available.
5.		select an option Full Disclosure PrincipleHistorical Cost PrinciplePeriodicity AssumptionGoing Concern AssumptionMaterialityEconomic Entity AssumptionConsistencyComparabilityMonetary Unit AssumptionCost ConstraintRelevanceFaithful Representation		A company’s use of the same accounting principles from year to year.
6.		select an option Faithful RepresentationHistorical Cost PrincipleRelevanceGoing Concern AssumptionMaterialityComparabilityCost ConstraintFull Disclosure PrincipleConsistencyMonetary Unit AssumptionEconomic Entity AssumptionPeriodicity Assumption		Assets are recorded and reported at original purchase price.
7.		select an option Economic Entity AssumptionPeriodicity AssumptionConsistencyMaterialityGoing Concern AssumptionComparabilityFull Disclosure PrincipleHistorical Cost PrincipleCost ConstraintRelevanceFaithful RepresentationMonetary Unit Assumption		Accounting information should help users predict future events, and should confirm or correct prior expectations.
8.		select an option RelevanceHistorical Cost PrincipleComparabilityConsistencyFaithful RepresentationMonetary Unit AssumptionPeriodicity AssumptionEconomic Entity AssumptionGoing Concern AssumptionFull Disclosure PrincipleMaterialityCost Constraint		The life of a business can be divided into artificial segments of time.
9.		select an option MaterialityConsistencyGoing Concern AssumptionFaithful RepresentationFull Disclosure PrincipleComparabilityMonetary Unit AssumptionCost ConstraintRelevanceEconomic Entity AssumptionPeriodicity AssumptionHistorical Cost Principle		The reporting of all information that would make a difference to financial statement users.
10.		select an option Periodicity AssumptionEconomic Entity AssumptionHistorical Cost PrincipleGoing Concern AssumptionComparabilityMonetary Unit AssumptionFaithful RepresentationFull Disclosure PrincipleMaterialityCost ConstraintRelevanceConsistency		The judgment concerning whether an item’s size makes it likely to influence a decision-maker.
11.		select an option Monetary Unit AssumptionComparabilityHistorical Cost PrincipleConsistencyEconomic Entity AssumptionMaterialityCost ConstraintFaithful RepresentationPeriodicity AssumptionGoing Concern AssumptionFull Disclosure PrincipleRelevance		Assumes a business will remain in operation for the foreseeable future.
12.		select an option Historical Cost PrincipleFaithful RepresentationCost ConstraintRelevanceFull Disclosure PrincipleEconomic Entity AssumptionMonetary Unit AssumptionComparabilityMaterialityConsistencyPeriodicity AssumptionGoing Concern Assumption		Different companies use the same accounting principles.

Answer 1

Each item characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards with a description are given below:-  

  

1. Monetary Unit Assumption- Items not easily quantified in dollar terms are not reported in the financial statements.
2. Faithful Representation- Accounting information must be complete, neutral, and free from error.
3. Economic Entity Assumption- Personal transactions are not mixed with the company’s transactions.
4. Cost Constraint-   The cost to provide information should be weighed against the benefit that users will gain from having the information available.
5. ConsistencyComparability- A company’s use of the same accounting principles from year to year.
6. Historical Cost Principle-Assets are recorded and reported at original purchase price.
7. Relevance- Accounting information should help users predict future events, and should confirm or correct prior expectations.
8. Periodicity Assumption-The life of a business can be divided into artificial segments of time.
9. Full Disclosure Principle-The reporting of all information that would make a difference to financial statement users.
10. Materiality-The judgment concerning whether an item’s size makes it likely to influence a decision maker.
11. Going Concern Assumption-Assumes a business will remain in operation for the foreseeable future.
12. Comparability-Different companies use the same accounting principles.