E2-7 (Assumptions, Principles, and Constraint) Presented below are a number of operational guidelines and practices that have developed over time.
Instructions
Select the assumption, principle, or constraint that most appropriately justifies these procedures and practices.
(Do not use qualitative characteristics.)
(a) Fair value changes are not recognized in the accounting records.
(b) Financial information is presented so that investors will not be misled.
(c) Intangible assets are capitalized and amortized over periods benefited.
(d) Repair tools are expensed when purchased.
(e) Agricultural companies use fair value for purposes of valuing crops.
(f) Each enterprise is kept as a unit distinct from its owner or owners.
(g) All significant post-balance-sheet events are reported.
(h) Revenue is recorded at point of sale.
(i) All important aspects of bond indentures are presented in financial statements.
(j) Rationale for accrual accounting.
(k) The use of consolidated statements is justified.
(l) Reporting must be done at defined time intervals.
(m) An allowance for doubtful accounts is established.
(n) Goodwill is recorded only at time of purchase.
(o) A company charges its sales commission costs to expense.

(a) Fair value changes are not recognized in the accounting records.

Category:  Principle

Name: Measurement principle

(b) Financial information is presented so that investors will not be misled.

Category:  Principle

Name: Full disclosure principle

(c) Intangible assets are capitalized and amortized over periods benefited.

Category:  Principle

Name: Expense recognition principle

(d) Repair tools are expensed when purchased.

Category:  Constraint

Name: Material constraint

(e) Agricultural companies use fair value for purposes of valuing crops.

Category:  Principle

Name: Measurement principle

(f) Each enterprise is kept as a unit distinct from its owner or owners.

Category:  Assumption

Name: Economic entity assumption

(g) All significant post-balance-sheet events are reported.

Category:  Principle

Name: Full disclosure principle

(h) Revenue is recorded at point of sale.

Category:  Principle

Name: Revenue recognition principle

(i) All important aspects of bond indentures are presented in financial statements.

Category:  Principle

Name: Full disclosure principle

(j) Rationale for accrual accounting.

Category:  Principle

Name: Expenses recognition principle and revenue

(k) The use of consolidated statements is justified.

Category:  Assumption

Name: Economic entity assumption

(l) Reporting must be done at defined time intervals.

Category:  Assumption

Name: Periodicity assumption

(m) An allowance for doubtful accounts is established.

Category:  Constraint

Name: Conservatism constraint

(n) Goodwill is recorded only at time of purchase.

Category:  Principle

Name: Measurement principle

(o) A company charges its sales commission costs to expense.

Category:  Principle

Name: Expenses recognition principle

answer; /// the above statement is (true);

answer; buyer guide;