Each of the Following Statements Violates a Concept or Convention

question 129

Essay

Each of the following statements violates a concept or convention of accounting. Write the letter in the blank next to each statement corresponding to the concept or convention violated.
a. Consistency
b. Materiality
c. Conservatism
_____ 1. A note to the financial statements indicating a change in inventory methods is omitted.
_____ 2. When management is unsure of which estimates to use in a given situation, the estimate resulting in the largest net income is always used.
_____ 3. In 2009, a company uses straight-line depreciation and in 2010 the company uses declining-balance depreciation.
_____ 4. A small company expenses all expenditures under $10,000.
_____ 5. A small company purchases a $50,000 computer to save $3,000 per year in bookkeeping wages.
d. Full disclosure
e. Cost-benefit

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Definitions:

BCG Matrix

A strategic business analysis tool used to evaluate the position of a company's products or services within its portfolio based on their market growth rate and relative market share.

Objectivity

The practice of being unbiased, not influenced by personal feelings or opinions in considering and representing facts.

Competitive Advantages

Qualities that allow a company to perform better than its competitors, such as superior products, lower costs, or better branding.