The Following Accounting Principles and Assumptions Are Included in the Conceptual

question 71

Essay

The following accounting principles and assumptions are included in the conceptual framework of accounting:
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$\text { Economic entity } \quad \text { Going concern } \quad \text { Cost principle }$
$\text { Monetary unit } \quad \text { Time period }$ For each situation in A through C below,identify which assumption or principle applies by selecting from the list provided above,and explain why that assumption or principle applies.
A) Global Corp. has divisions in several countries around the world. Each of these countries has a currency different from the U.S. dollar. Global Corp. is a U.S. company and must include the financial data of its worl dwide divisions in its financial statements.
B) Steve and Mike operate a security business as a partnership. They are considering the advantages of changing over to the corporate form of business.
C) Island Pasta is a locally owned and operated fast-food business. The owners have decided to expand into nearby cities. Expansion will require more capital, but management doesn't expect it will stay in business for more than a year or so regardless of whether it expands or not.

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Definitions:

Infant Mortality Rates

The statistical measure of the number of deaths of infants under one year old per 1,000 live births in a given year.

Industrial Countries

Nations with significant levels of industrialization, high standards of living, and advanced technological infrastructure.

Second Phase

Refers to a subsequent stage in a process or a series of developments, often implying a change or escalation from an initial condition.

Industrial Revolution

A period of major industrialization that took place during the late 1700s and early 1800s, leading to significant changes in agriculture, manufacturing, mining, transport, and technology.