Question

Qualitative Characteristics	Foundational Principles
Relevance (Feedback & Predictive)	Economic entity
Representational Faithfulness: complete, neutral, free from bias	Control
Comparability (consistency)	Revenue recognition and realization
Verifiability	Matching
Timeliness	Periodicity
Understandability	Monetary Unit
	Going Concern
	Historical Cost
	Fair Value
	Full Disclosure

ONLY ONE ANSWER FOR EACH.

A company applies the same accounting principles as the previous year.
A company reports asset at the amount originally paid for them
A large invoice for repair services provided before year end is omitted from the financial statement to ensure there will not be a large variance in the statements from prior periods.
A company uses accruals and deferrals in adjusting the accounts.
A company recognized a large sale that occurred on January 2, 2021 as revenue in the December 31, 2020 financial statements.

Answer 1

Answer:

1.Application of accounting principles as the previous year refers to the concept of consistency, as per this concept accounting policies and principles are to be applied consistently from year on year unless the change is mandated by statue or it results in better presentation of financial statements.

2.A company reporting the asset at the amount originally paid for them refers to the concept of Historical cost, as per this concept Non current assets are shown in the balance sheet at their historical cost I e, the cost at which they are purchased and every year depreciation relating to such asset is accumulated and shown as accumulated depreciation under the liabilities side or as a negative figure on the assets side.

3.A large invoice for repairs service provided before the year end is omitted from financial statements to ensure there will not be a large variance in the statements from prior periods leads to failure to follow the concept of periodicity and matching, as per periodicity concept an expense should be recognised in the income statement in the period in which it is incurred.

4.A company using accruals and deferrals in adjusting the accounts indicates that it will receive the amounts due to it from its customers and it will pay the amounts due from it to its suppliers that means it is intending to continue its operations in the future which relates to the concept of going concern, this concept says that books of accounts are to be maintained by keeping going concern that is continuity of its operations.

5.Recognising revenue of a sale transaction occured on 2 nd January 2021 for the year ended 31st December 2020 doesnot meet the criteria of timeliness as it has to be shown as revenue of the year ended 31st December 2021 and not of 31st December 2020.