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Each of the Following Statements Is Justified by a Concept

Question 129

Matching

Each of the following statements is justified by a concept or convention of accounting.Write the letter that match with each statement to the concept or convention involved.

Premises:

Responses:

A company forgoes hiring another full-time accountant,which would add only slightly to the financial statements' accuracy.

Conservatism

This convention best enhances comparability of financial statements between years.

Full disclosure

A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.

Consistency

A large company rounds its financial statement figures to the nearest $10,000.

Materiality

A company uses lower-of-cost-or-market to value inventory.

Cost-benefit

Premises:

A company forgoes hiring another full-time accountant,which would add only slightly to the financial statements' accuracy.

This convention best enhances comparability of financial statements between years.

A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.

A large company rounds its financial statement figures to the nearest $10,000.

A company uses lower-of-cost-or-market to value inventory.

Responses:

Conservatism

Full disclosure

Consistency

Materiality

Cost-benefit

Correct Answer:

Premises:

Responses:

A company forgoes hiring another full-time accountant,which would add only slightly to the financial statements' accuracy.

This convention best enhances comparability of financial statements between years.

A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.

A large company rounds its financial statement figures to the nearest $10,000.

A company uses lower-of-cost-or-market to value inventory.

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