Which principle guideline requires the companys financial statement to have footnotes containing information that is important to users of the financial statements?

ACCOUNTING PRINCIPLESNAME:Casiao, Catherine Faith R.SECTION:1BSBAHRMACCO05BCSUBJECT/SCHEDULE:Fundamentals of Accounting 1 — Monday (6:00-9:00p.m.)SUBMITTED TO:Prof. Jocelyn L. VillarealMODULE/ASSESSMENT TASK #1ACTIVITIES AND ASSESSMENTA.Identify the applicable Accounting Principle1.The personal assets of the owner of a company will not appear on the company’sbalance sheet because of which principle/guideline?

Nội dung chính

• What is the Going Concern Principle?
• Going Concern Evaluation Items
• Going Concern Mitigation
• Which principle or guideline directs accompanied to show all the expenses related to its revenues of a specified period even if the expenses we're not paid in that?
• Which principle guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?
• Which principle is associated with the assumption that the company will continue?
• Which principle guideline requires a company's balance sheet to report?
• Which accounting principle requires that any important information about a company be reported in the financial statements?
• Which of the following principle guidelines states that the personal assets of the owner of a company will not appear on the company's balance sheet *?

Get answer to your question and much more

2.Which principle/guidelines requires a company’s balance sheet to report its land at theamount the company paid to acquire the land, even if the land could be sold today at asignificantly higher amount?_3.Which principle/guideline allows a company to ignore the change in the purchasing

Get answer to your question and much more

power of the peso over time?4.Which principle/guideline requires the company’s financial statements to have footnotes

Get answer to your question and much more

containing information that is important to users of the financial statements?6.Which principle/guideline is associated with the assumption that the company will

Get answer to your question and much more

continue on long enough to carry out its objectives and commitments?7.A very large corporation’s financial statements have the peso amounts rounded to the

Get answer to your question and much more

nearest P1,000. Which accounting principle/guideline justifies not reporting the amountsto the penny?

Get answer to your question and much more

8.Accountants might recognize losses but not gains in certain situations. For example, thecompany might write-down the cost of inventory, but will not write-up the cost ofinventory. Which principle/guideline is associated with this action?__Conservatism__9.Which principle/guideline directs a company to show all the expenses related to itsrevenues of a specified period even if the expenses were not paid in that period?10.When the accountant has to choose between two acceptable alternatives, the

Get answer to your question and much more

accountant should select the alternative that will report less profit, less asset amount, ora greater liability amount. This is based upon which principle/guideline?

Get answer to your question and much more

B.Define or discuss the following:1.Accounting2.Generally Accepted Accounting Principles (GAPP)3.International Accounting Standards (IAS)4.International Financial Reporting Standards (IFRS)5.Evolution of accounting standards in the PhilippinesC.Enumerate and Discuss the following:1.Forms of Business Organization2.Types of Business Activity3.10 Generally Accepted Accounting Principles4.Give some of the important uses of Accounting information5.8 Branches of Accounting

What is the Going Concern Principle?

The going concern principle is the assumption that an entity will remain in business for the foreseeable future. Conversely, this means the entity will not be forced to halt operations and liquidate its assets in the near term at what may be very low fire-sale prices. By making this assumption, the accountant is justified in deferring the recognition of certain expenses until a later period, when the entity will presumably still be in business and using its assets in the most effective manner possible.

An entity is assumed to be a going concern in the absence of significant information to the contrary. An example of such contrary information is an entity’s inability to meet its obligations as they come due without substantial asset sales or debt restructurings. If such were not the case, an entity would essentially be acquiring assets with the intention of closing its operations and reselling the assets to another party.

If the accountant believes that an entity may no longer be a going concern, then this brings up the issue of whether its assets are impaired, which may call for the write-down of their carrying amount to their liquidation value. Thus, the value of an entity that is assumed to be a going concern is higher than its breakup value, since a going concern can potentially continue to earn profits.

The going concern concept is not clearly defined anywhere in generally accepted accounting principles, and so is subject to a considerable amount of interpretation regarding when an entity should report it. However, generally accepted auditing standards (GAAS) do instruct an auditor regarding the consideration of an entity’s ability to continue as a going concern.

Going Concern Evaluation Items

The auditor evaluates an entity’s ability to continue as a going concern for a period not greater than one year following the date of the financial statements being audited. The auditor considers (among other issues) the following items in deciding if there is a substantial doubt about an entity’s ability to continue as a going concern:

• Negative trends in operating results, such as a series of losses

• Loan defaults by the company

• Denial of trade credit to the company by its suppliers

• Uneconomical long-term commitments to which the company is subjected

• Legal proceedings against the company

If there is an issue, the audit firm must qualify its audit report with a statement about the problem.

Going Concern Mitigation

It is possible for a company to mitigate an auditor's view of its going concern status by having a third party guarantee the debts of the business or agree to provide additional funds as needed. By doing so, the auditor is reasonably assured that the business will remain functional during the one-year period stipulated by GAAS. This makes it easy for a parent company to ensure that its subsidiaries are always classified as going concerns.

Which principle or guideline directs accompanied to show all the expenses related to its revenues of a specified period even if the expenses we're not paid in that?

Which principle/guideline directs a company to show all the expenses related to its revenues of a specified period even if the expenses were not paid in that period? The cost principle requires the accountant to show assets and expenses at cost rather than at higher amounts. This is the correct answer.

Which principle guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements?

Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements? The full disclosure principle requires businesses to disclose information that is relevant to the decisions of investors and creditors.

Which principle is associated with the assumption that the company will continue?

What is the Going Concern Principle? The going concern principle is the assumption that an entity will remain in business for the foreseeable future.

Which principle guideline requires a company's balance sheet to report?

Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount? The cost principle requires the accountant to show assets at cost and expenses at cost rather than at higher amounts.

Which accounting principle requires that any important information about a company be reported in the financial statements?

The full disclosure principle states that you should include in an entity's financial statements all information that would affect a reader's understanding of those statements, such as changes in accounting principles applied.

Which of the following principle guidelines states that the personal assets of the owner of a company will not appear on the company's balance sheet *?

Answer and Explanation: The correct answer is b. Economic entity. This answer is correct because the activities of a business are treated differently from the activities of the business' owner.

Which principle or guideline requires the company's financial statement to have footnotes containing information that is important to users of the financial statement?

Which principle guideline requires the company's financial statement?

Which principle guideline requires a company's balance sheet to report its land at the amount the company paid to acquire?

Why are footnotes important in financial statements?