Identify which basic assumption of accounting is best described in each/some ite

Question

Identify which basic assumption of accounting is best described in each/some item(s) presented below:

a) The economic activities of FedEx Corporation are divided into 12-month periods for the purpose of issuing annual reports.
b) Solectron Corporation, Inc. does not adjust amounts in its financial statements for the effect of inflation.
c) Walgreen Co. reports current and non-current classifications in its balance sheet.
d) The economic activities of General Electric and its subsidiaries are merged for accounting and reporting purposes.

Explanation / Answer

1. The economic activities of FedEx Corporation are divided into 12-month periods for the purpose of issuing annual reports Time Period Assumption 2. Solectron Corporation, Inc. does not adjust amounts in its financial statements for the effects of inflation Cost Principle 3. Walgreen Co. reports current and noncurrent classifications in its balance sheet Full Disclosure Principle 4. The economic activities of General Electric and its subsidiaries are merged for accounting and reporting purposes Economic Entity Assumption

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