Accounting Concepts-Identification. State the Accounting Assumption, Principle, Information Characteristic, or Constraint That

question 145

Essay

Accounting concepts-identification.
State the accounting assumption, principle, information characteristic, or constraint that is most applicable in the following cases.
1. All payments less than $25 are expensed as incurred. (Do not use conservatism.)
2. The company employs the same inventory valuation method from period to period.
3. A patent is capitalized and amortized over the periods benefited.
4. Assuming that dollars today will buy as much as ten years ago.
5. Rent paid in advance is recorded as prepaid rent.
6. Financial statements are prepared each year.
7. All significant post-balance sheet events are reported.
8. Personal transactions of the proprietor are distinguished from business transactions.

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Definitions:

Functional Departmentation

Is grouping individuals by skill, knowledge, and action.

Grouping of Individuals

The organization or classification of people into groups based on shared characteristics, objectives, or interests.

Formalization

The extent to which an organization's procedures, policies, and rules are written and strictly followed.

Allowable Actions

Those actions or behaviors that are permitted within a given set of rules, regulations, or contexts.