A2 - Assumptions, Acct Principles

Question 1

Acct Assump & Prin - Four Assumptions?

Answer 1

Entirely from your GUT: Entity, Going Concern, Unit of Measurement and Time Period

Question 2

Acct Assum & Prin - Are values adjusted for inflation?

Answer 2

No. Everything is measured in terms of a stable UOM.

Question 3

Acct Assum & Prin - For Acctg Principles?

Answer 3

1. Revenue Recog 2. Expense Recognition (matching) 3. Measurement 4. Full Disclosure

Question 4

Acct Assum & Prin - Revenue Recognition?

Answer 4

Revenue is recog. when realized (cash or near cash i.e. A/R) and earned.

Question 5

Acct Assum & Prin - Different UOMs?

Answer 5

Historical Cost, Amortized Cost, NRV, Replacement cost (used in LCM/entry price), NPV, Fair Value (market value/exit price)