Solved

Match Each Item in the List with Its Descriptive Statement

Question 79

Matching

Match each item in the list with its descriptive statement by placing the appropriate letter(s) in the space provided.

Premises:
A company records sales on account when providing a service.
A company recognizes as expense the portion of its prepaid rent that has expired.
A company purchased land in 1990 for $500,000 and reports the land at the same amount on its 2016 balance sheet.
A company reports its inventories on the balance sheet at the lower of cost or market.
An entity is preparing its five-year strategic plan.
A company amortizes its patent, an intangible asset, over its useful life.
All financial statements are prepared without the assumption of inflation.
The financial statements of the company are prepared separate from the owners.
Revenue is recognized at the time the product is sold, shipped, or delivered.
Responses:
reporting entity assumption
historical cost principle
going-concern assumption
conservatism
monetary-unit assumption
matching principle
realization
recognition

Correct Answer:

A company records sales on account when providing a service.
A company recognizes as expense the portion of its prepaid rent that has expired.
A company purchased land in 1990 for $500,000 and reports the land at the same amount on its 2016 balance sheet.
A company reports its inventories on the balance sheet at the lower of cost or market.
An entity is preparing its five-year strategic plan.
A company amortizes its patent, an intangible asset, over its useful life.
All financial statements are prepared without the assumption of inflation.
The financial statements of the company are prepared separate from the owners.
Revenue is recognized at the time the product is sold, shipped, or delivered.
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