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November 27, 2014

Homework Help: accounting

Posted by Thara on Friday, March 4, 2011 at 10:22am.

For each of the following, indicate the accounting concept or constraint that has been violated, if any:

1) The company currently records its accounting transactions and prepares
its financial reports manually. The cost of using a new computerized
accounting system to do these tasks is estimated at $25,000.
Annual savings are expected to be $10,000.

2)Inventory is reported at cost when market value is higher.

3)Paper clips expense appears on the income statement, at $10.

4)Bad debt expense is recorded in the period when the account receivable is written off.

5)Small tools are recorded as long-lived assets and depreciated.


ANS:
1)Materiality constraint
2)cost benefit constraint
3)expense recognition criteria
4)matching principle
5)neutral

are these correct?

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