The following situations involve accounting principles and assumptions.
1. Bullock Company owns buildings that are worth much more than they originally cost. In an effort to provide more relevant information, Bullock reports the buildings at fair value in its accounting reports.
2. Pennyworth Corporation reports its revenues using numbers and descriptions that match what really happened.
3. Falcone Company includes in its accounting records only transaction data that can 4. Galavan, Inc. owns investment securities that are worth much more than they originally cost. In an effort to provide more relevant information, Galavan reports the investments at fair value in its accounting reports.
5. Butch Gilzean, the owner of Gilzean Photography, records his personal living costs as expenses of the business.
6. Dent Company does not report in its financial statements some financial information that is capable of making a difference in a decision.
For each of the six situations, indicate if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.

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The Answer of The following situations involve accounting principles and assumptions.
1. Bullock Company owns buildings that are worth much more than they originally cost. In an effort to provide more relevant information, Bullock reports the buildings at fair value in its accounting reports.
2. Pennyworth Corporation reports its revenues using numbers and descriptions that match what really happened.
3. Falcone Company includes in its accounting records only transaction data that can 4. Galavan, Inc. owns investment securities that are worth much more than they originally cost. In an effort to provide more relevant information, Galavan reports the investments at fair value in its accounting reports.
5. Butch Gilzean, the owner of Gilzean Photography, records his personal living costs as expenses of the business.
6. Dent Company does not report in its financial statements some financial information that is capable of making a difference in a decision.
For each of the six situations, indicate if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.

The Following Situations Involve Accounting Principles and Assumptions