KEY: 1. Going Concern 7. Objectivity 2. Matching 8. Economic Entity 3. Revenue R

Question

KEY:
1. Going Concern 7. Objectivity
2. Matching 8. Economic Entity
3. Revenue Recognition 9. Conservatism
4. Consistency 10. Full Disclosure
5. Materiality 11. Measurement
6. Monetary Unit

Required: Using the key above, indicate the theoretical basis for the following accounting practices.

_____ a. Why shipping instructions are used to determine whether the seller or the buyer owns
merchandise inventory at the end of an accounting period
_____ b. Why merchandise inventory is reported at lower-of-cost-or-market
_____ c. Why

Explanation / Answer

5 8 7 11 1 4 2

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