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

Record transactions and events using a job order costing system.

Determine the cost of direct materials used in production when given finished goods information.

Understand and perform journal entries related to job order costing, including adjusting entries for over- or underapplied overhead.

Understand the role of a job cost sheet in a job order costing system.

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Definitions:

Fair Value

The estimated market price of an asset or liability, based on current market conditions and comparable transactions.

Increasing-Balance

A method of calculating depreciation that applies a constant rate to the asset's net book value each year, resulting in increased depreciation charges over time.

Units-Of-Production

A depreciation method that allocates cost based on the units produced or the machine hours used during the period.