1. Match each of the following scenarios with the accounting principle or accounting assumption that it...

1. Match each of the following scenarios with the accounting principle or accounting assumption that it best illustrates.

Scenario	Accounting Principle or Assumption
Several years after Thomas Company purchased new office equipment, the company’s accounting records still show the original purchase price.
The home of Rob Elliot, the owner of GGE Enterprises Inc., is not listed among the company’s assets.
Despite several years of falling sales, Thomas Company continues to forecast sales and make strategic plans to raise revenues and cut expenses.
Thomas records expenses incurred to produce the sales for the month.
GGE Enterprises records a deposit received from a customer for work to be performed later in the month. The customer is billed for the remaining amount after the work is complete, and the customer’s payment is recorded.
Thomas Company provides earnings information to investors at the end of every quarter.
The accounting records of Thomas Company are in dollars, not euros, although the Ohio-based company is owned by a German firm.

2. Thomas Company has decided to purchase a company vehicle. The accountant was given all of the purchase details. Which should be used to record the vehicle in the accounting records?

The average selling price of similar vehicles in the area.

The manufacturer’s suggested retail price (MSRP).

The price negotiated with the dealer.

The amount of the loan with the bank.

Solutions

Expert Solution

Scenario	Accounting Principle or Assumption
Several years after Thomas Company purchased new office equipment, the company’s accounting records still show the original purchase price.	Historical cost principle
The home of Rob Elliot, the owner of GGE Enterprises Inc., is not listed among the company’s assets.	Business entity assumption
Despite several years of falling sales, Thomas Company continues to forecast sales and make strategic plans to raise revenues and cut expenses.	Going concern assumption
Thomas records expenses incurred to produce the sales for the month.	Expense recognition principle
GGE Enterprises records a deposit received from a customer for work to be performed later in the month. The customer is billed for the remaining amount after the work is complete, and the customer’s payment is recorded.	Revenue recognition principle
Thomas Company provides earnings information to investors at the end of every quarter.	Time period assumption
The accounting records of Thomas Company are in dollars, not euros, although the Ohio-based company is owned by a German firm.	Monetary unit assumption

The price negotiated with the dealer

ekkarill92 answered 9 months ago

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