Ch 11 - Financial Reporting Concepts

Question 1

What is realizable value?

Answer 1

The amount that a business can reasonably expect to collect in cash from that asset.

Question 2

Fair value

Answer 2

measure of the current value of an asset or liability at the reporting date. “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants”.

Question 3

Going Concern Assumption

Answer 3

Assumes that the company will continue operating for the foreseeable future; that is, long enough to carry out its existing objectives and commitments.

Question 4

Monetary Unit Concept

Answer 4

Means money is the common denominator of economic activity.

Question 5

Periodicity Concept

Answer 5

Time period concept. Guides businesses in dividing up their economic activities into distinct time periods