Identify the Accounting Assumption That Has Been Violated for Each

question 41

Essay

Identify the accounting assumption that has been violated for each of the following situations.
a. Jeremy is preparing the financial statements for the High Tech Cleaning Company for 2013. The owners have decided to retire and close the business in early 2014. The financial statements have been prepared using historical costs.
b. Mikhail has a small tattoo business. All his cash receipts are deposited into his personal bank account. He pays his bills from either his business bank account or his personal depending on which bank account has more money.
c. Fred's Forestry business sells fir trees in both Canada and the United States. Depending on the transaction, Fred will record some transactions as Canadian and others as U.S. His financial statements have a mixture of Canadian and U.S. dollars.

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Definitions:

Object Permanence

The concept that items maintain their existence even when they are out of sight, sound, or beyond sensory perception.

Motor Development

The progression of muscular coordination required for physical activities, influenced by genetic and environmental factors.

Developmental Milestones

Key stages in the physical, emotional, intellectual, and social development of humans, especially as observed in children as they grow.

Self-esteem

An individual's subjective assessment of their own worth or value.