Accounting Assumptions and QCs

Anna Conda is the owner of Reptile World.  The business drew a cheque for $15,000 payable to Globe Trotter Travel for a family holiday. Which accounting assumption has been breached

• Period

• Going Concern

• Entity

• Relevance

Which one of the following is NOT a qualitative characteristic

• Relevance

• Understandability

• Accrual

• Comparability

Arthur Allsop is the owner of Sugo, an advertising agency who provides advertising services to clients on the basis of three, six and twelve months.  The business reports the total amount of all advertising contracts as revenue for the month in which the contracts are signed and cash received. Which accounting assumption applies?

• Going Concern

• Period

• Relevance

• Entity

The owner of a business has argued that the value of Furniture shown in the Balance Sheet is incorrect as it shows the potential market value of $40,000 rather than its original purchase price of $55.000 (inv 246). Which qualitative characteristic has been breached?

• Verifiability

• Relevance

• Understandability

• Entity

The business wants to give the impression that it is doing well.  Instead of valuing inventory at $49,000 cost price, it values the inventory at the expected selling price of $79,000. Which qualitative characteristic has been breached

• Relevance

• Verifiability

• Comparability

• Faithful Representation

The Brice brothers run three small successful businesses.  The transactions of each of these businesses are combined and recorded in the same set of accounts. Which accounting assumption has been breached?

• Relevance

• Entity

• Going Concern

• Period

Peter’s Pies has been owned and operated by Peter Pikelet for the last seven years.  Over this time he has used the same accounting methods when determining his annual profit or loss. Which qualitative characteristic applies?

• Going Concern

• Comparability

• Entity

• Faithful representation