8.Which underlying assumption serves as the basis for preparingfinancial statements at regular artificial points in time?a. Accounting entityb. Going concernc. Accounting periodd. Stable monetary unit Show
9.Which basic accounting assumption is threatened by the existence ofsevere inflation in the economy? Get answer to your question and much more 10.Inflation is ignored in accounting due to Get answer to your question and much more PROBLEM 4-31.The concept of accounting entity is applicable Get answer to your question and much more 2. When a parent and subsidiary relationship exists, consolidated financialstatements are prepared in recognition of a. Legal entityb. Economic entityc. Stable monetary unitd. Time period 3. The valuation of a promise to receive cash in the future at present value is validbecause of what accounting concept? Get answer to your question and much more 4. What is the accounting concept that justifies the usage of accruals anddeferrals? Get answer to your question and much more 5. During the lifetime of an entity accountants produce financialstatements at arbitrary points in time in accordance with what basicaccounting concept? Get answer to your question and much more Problem 4-4 (IAA)For each situation, identify the underlying assumption involved.1. The operations of a saving bank are being evaluated by the Bangko Sentral ngPilipinas.During the investigation, the BSP has determined that numerous loans made by topmanagement were unwise and have seriously endangered the future of the savingbank. Get answer to your question and much more 2. The parent entity in Manila has a subsidiary in Japan. The financial statements ofthe subsidiary are translated to pesos for consolidation with the financialstatements of the parent entity at year-end. Get answer to your question and much more 3.A machinery was imported from USA at a certain cost five years ago. Because ofinflation, the machinery has now a current replacement cost which is very muchhigher than the historical cost. Management would like to report the machinery atcurrent replacement cost. Get answer to your question and much more 4. An entity has experienced a drastic reduction in revenue by reason of a long dryspell in the area where the entity grows its tobacco. The management decided towait until next year and present financial statements for a two-year period ratherthan prepare now the traditional twelve-month financial statements. Get answer to your question and much more 5. A subsidiary was exhibiting poor financial performance for the current year. In aneffort to increase the subsidiary's reported income, the parent entity purchasedgoods from the subsidiary at twice the normal markup. Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document 8. Which underlying assumption serves as the basis for preparingfinancial statements at regular artificial points in time?a.Accounting entityb.Going concernc.Accounting periodd.Stable monetary unit 9.Which basic accounting assumption is threatened by the existenceof severe inflation in an economy? 10.Which of the following is not an important characteristic of thefinancial statements that accountants currently prepare?  d.Financial statements can be justified only if the benefits theyprovide exceed the costs.52.Multiple Choice (AICPA)1.The concept of accounting entity is applicable 2. When a parent and subsidiary relationship exists, consolidatedfinancial statements are prepared in recognition ofa.Legal entityb.Economic entityc.Stable monetary unitd.Time period 3.The valuation of a promise to receive cash in the future at presentvalue is valid because of the accounting concept of 4.What is the accounting concept that justifies the usage of accrualsand deferrals?
5. During the lifetime of an entity, accountants produce financialstatements at arbitrary points in time in accordance with what basicaccounting concept?53.Multiple choice (Conceptual Framework) 1. This is a complete, comprehensive and single documentpromulgated by IASB establishing the concepts that underliefinancial reporting.a.Conceptual Framework for Financial Reportingb.Conceptual Framework for Financial Statementsc.Conceptual Framework for Business Entitiesd.Conceptual Framework 2.The Conceptual Framework should c. Guide the PICPA in developing generally accepted auditingstandardsd.Define the basic objectives, terms and concepts of accounting What is the underlying assumption for the preparation of financial statements?The financial statements are normally prepared based on the assumption that operations of an enterprise will continue in the foreseeable future, i.e. neither there is any need nor any intention to materially curtail/ reduce the scale of operations or level of activities.
Which underlying concepts serves as the basis for preparing financial statements at a regular intervals of time?This is known as accounting period concept. Thus, this concept requires that a balance sheet and profit and loss account should be prepared at regular intervals.
What assumptions underlie your financial planning?Key assumptions are critical to all aspects of the financial forecasts – balance sheets, income statements, cash flow, business plans and so on. They include detailed forecasted sales volumes; cost of sales, general administration expenses, and others.
Which of the following are underlying assumptions of financial statements preparation Mcq?c)It states that basic underlying assumptions of financial statements are Prudence andConservatism.
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Which underlying assumption serves as the basis for preparing financial statements
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