Question

Listed below are several information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application. (Items a through k may be used more than once or not at all.)

      a.   Economic entity assumption                           g.   Expense recognition principle

      b.   Going concern assumption                             h.   Full disclosure principle

      c.   Monetary unit assumption                              i.    Relevance characteristic

      d.   Periodicity assumption                                    j.    Faithful representation characteristic

      e.   Historical cost principle                                  k.   Consistency characteristic

      f.    Revenue recognition principle

___    1.    Stable-dollar assumption (do not use historical cost principle).

____    2.    The performance obligation is satisfied.

____    3.    Numbers and descriptions match what really existed or happened.

___    4.    Yearly financial reports.

___    5.    Accruals and deferrals in adjusting and closing process. (Do not use going concern.)

____    6.    Useful standard measuring unit for business transactions.

___    7.    Notes as part of necessary information to a fair presentation.

___    8.    Affairs of the business distinguished from those of its owners.

___    9.    Company assumed to have a long life.

___ 10.    Valuing assets at amounts originally paid for them.

___ 11.    Application of the same accounting principles as in the preceding year.

____ 12.    Summarizing significant accounting policies.

____ 13.    Presentation of timely information with predictive and confirmatory value.

Answer 1

1. Stable-dollar assumption (do not use historical cost principle).	Monetary Unit Assumption
2. The performance obligation is satisfied.	Revenue recognition principle
3. Numbers and descriptions match what really existed or happened.	Faithful representation characteristic
4. Yearly financial reports.	Periodicity assumption
5. Accruals and deferrals in adjusting and closing process. (Do not use going concern.)	Expense recognition principle
6. Useful standard measuring unit for business transactions.	Monetary Unit Assumption
7. Notes as part of necessary information to a fair presentation.	Full disclosure principle
8. Affairs of the business distinguished from those of its owners.	Economic entity assumption
9. Company assumed to have a long life.	Going concern assumption
10. Valuing assets at amounts originally paid for them.	Historical cost principle
11. Application of the same accounting principles as in the preceding year.	Consistency characteristic
12. Summarizing significant accounting policies.	Full disclosure principle
13. Presentation of timely information with predictive and confirmatory value.	Relevance characteristic