Joshua Thomas Corporation Manufactures and Retails Computer Hardware

question 113

Multiple Choice

Joshua Thomas Corporation manufactures and retails computer hardware.The president of the corporation bought a new car as a gift for his daughter and paid for it using cash from the business.Since the corporation paid for the car,it was recorded in its books as an asset.Which of the following concepts or principles of accounting did the corporation violate?

• A)monetary unit assumption
• B)economic entity assumption
• C)cost principle
• D)going concern assumption

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Definitions:

Growth Rate

The percentage increase in the size or value of something over a specific period, often used to describe the expansion of a company's revenue or economy.

Nominal Interest Rate

The interest rate which is advertised or stated, without adjustment for the full effects of compounding or inflation.

Semiannual Compounding

The process of applying interest to a principal sum twice a year, leading to interest being earned on interest.

Periodic Interest Rate

The interest rate applied over a specific time period, crucial for calculating interest in savings and loan scenarios.