Identification of Foundational Accounting Principles

question 53

Essay

Identification of foundational accounting principles
State the accounting principle or assumption that is most applicable in the following situations:
1. A company prepares consolidated financial statements for a subsidiary that it owns.
2. The decision to remove an asset from the balance sheet
3. A large sale on account is not recognized as revenue because collectibility is an issue.
4. Disclosure of the liability from a lawsuit in the financial statements
5. Preparation of monthly financial statements
6. Using the Canadian dollar in financial statements
7. An energy company includes detailed information about its reserves in its notes to the financial statements.

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Definitions:

Initial

Pertaining to the beginning, first, or early stages of a process or series.

Management

The process of planning, organizing, leading, and controlling resources in order to achieve the goals of an organization.

Available Resources

The tangible and intangible assets that a company or an individual possesses, which can be utilized to achieve goals, including financial, human, technological, and natural resources.

Managed

The act of overseeing or controlling business operations and decisions to achieve specific objectives.