Presented below are the assumptions and principles. 1. Full disclosure principle

Question

Presented below are the assumptions and principles. 1. Full disclosure principle. 2. Going concern assumption. 3. Monetary unit assumption. 4. Time period assumption. 5. Historical cost principle. 6. Economic entity assumption. Identify by number the accounting assumption or principle that is described below. Do not use a number more than once. (a) Is the rationale for why plant assets are not reported at liquidation value. (b) Indicates that personal and business record-keeping should be separately maintained. (c) Assumes that the monetary unit is the "measuring stick" used to report on financial performance. (d) Separates financial information into time periods for reporting purposes. (e) Measurement basis used when a reliable estimate of fair value is not available. (f) Dictates that companies should disclose all circumstances and events that make a difference to financial statement users.

Explanation / Answer

1. Is the rationale for why plant assets are not reported at liquidation value. (Do not use historical cost principle) - 2. Going Concern Assumption

2. Indicates that personal and business record keeping should be separately maintained – 6. Economic Entity Assumption

3. Assumes that the monetary unit is the “measuring stick” used to report on financial performance - 3. Monetary Unit Assumption

4. Separates financial information into time periods for reporting purposes - 4. Time Period Assumption

5. Measurement basis used when a reliable estimate of fair value is not available - 5. Historical Cost Principle

6. Dictates that companies should disclose all circumstances and events that make a difference to financial statement users 1. - Full Disclosure Principle

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