For Each of the Assumptions Listed Below, Fill in the Appropriate

question 140

Essay

For each of the assumptions listed below, fill in the appropriate letter to indicate which of the following accounting assumptions have been violated.
a) Monetary Unit Assumption
b) Cost Principle
1. Harvester International revalues its financial statements each year to take into consideration the effects of inflation. The company justifies its decision by stating the "inflation adjusted statements more fully reflect the purchasing power of the company's earnings."
2. Ernie began operations 11 years ago and purchased land for $200,000. Ernie has since built a manufacturing plant on this land to use in daily operations. Today Ernie has appraised the value of his land to be $1.5 million. He would like the increase in the value of his land to be reported on the financial statements at $1.5 million.

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Definitions:

Big Five Personality Traits

A framework that defines human personality by five major traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Long-term Memory

The aspect of memory responsible for storing information over extended periods, from days to decades, allowing recall of experiences, knowledge, and skills.

Processing of Information

The operations and activities involved in the perception, manipulation, and storage of information by the human brain or computer systems.

Desired Future Selves

Refers to the aspirational visions individuals have for who they want to become in the future, including their goals, ambitions, and desired attributes.