The Undertaker
ADM 2342N Winter 2013
QUIZ NO. 1 [marked out of 28 marks for convenience: worth 5% of the course mark)
Intermediate Financial Accounting I
Student Name: _______________________ Question No. 1 (5.5 marks) Required For each of the 11 statements listed below, indicate the name of the underlying assumption, measurement convention or accounting constraint that is most closely associated with the statement involved. Each answer is worth 0.5 mark. Underlying assumption, measurement convention or accounting constraint Student ID: ____________________
Statements
Example: Continuity Assumption is the appropriate answer for the below statement. Continuity Assumption Presumes stability, and existence of the entity sufficiently long to carry out contemplated operations and commitments. 1. Provides that an asset with a four-year estimated life and a cost of $15 can be expensed when it is acquired. 2. Acquisition cost is the proper starting point for asset valuation. 3. Distinguishes personal transactions of the owners from transactions of the business. 4. Earnings per common share must be reported.
Materiality
Historical Cost Principle
Separate Entity Assumption
Full Disclosure
Cost/Benefit
5. Cost of collecting and reporting information on cash flow per share exceeds the estimated value to users. 6. Relates costs of earning revenue with the revenue recognized in a particular period.
Matching Principle
Revenue Recognition Principle 7. Determines the timing of recognition of sales and service revenues. Conservatism 8. Means adopting the less optimistic of two possible reasonable assumptions about the future. 9. Establishes the rationale of accounting on a non-liquidation basis.
Continuity Assumption
Conservatism
10. Is the basis for use of lower-of-cost-or-market valuation of inventory. 11. Requires measurement of the income and financial position of entities at regular intervals.
1/4
Time Period Assumption
ADM2342-QuizNo-1-Sol.doc
QUIZ NO. 1 [marked out of 28 marks for convenience: worth 5% of the course mark)
Intermediate Financial Accounting I
Student Name: _______________________ Question No. 1 (5.5 marks) Required For each of the 11 statements listed below, indicate the name of the underlying assumption, measurement convention or accounting constraint that is most closely associated with the statement involved. Each answer is worth 0.5 mark. Underlying assumption, measurement convention or accounting constraint Student ID: ____________________
Statements
Example: Continuity Assumption is the appropriate answer for the below statement. Continuity Assumption Presumes stability, and existence of the entity sufficiently long to carry out contemplated operations and commitments. 1. Provides that an asset with a four-year estimated life and a cost of $15 can be expensed when it is acquired. 2. Acquisition cost is the proper starting point for asset valuation. 3. Distinguishes personal transactions of the owners from transactions of the business. 4. Earnings per common share must be reported.
Materiality
Historical Cost Principle
Separate Entity Assumption
Full Disclosure
Cost/Benefit
5. Cost of collecting and reporting information on cash flow per share exceeds the estimated value to users. 6. Relates costs of earning revenue with the revenue recognized in a particular period.
Matching Principle
Revenue Recognition Principle 7. Determines the timing of recognition of sales and service revenues. Conservatism 8. Means adopting the less optimistic of two possible reasonable assumptions about the future. 9. Establishes the rationale of accounting on a non-liquidation basis.
Continuity Assumption
Conservatism
10. Is the basis for use of lower-of-cost-or-market valuation of inventory. 11. Requires measurement of the income and financial position of entities at regular intervals.
1/4
Time Period Assumption
ADM2342-QuizNo-1-Sol.doc