accounting concept justifies usage depreciation amortization policies

What accounting concept justifies the usage of depreciation and amortization policies

Conceptual Framework Underlying Financial Accounting2 - 1782.The assumption that a company will not be sold or liquidated in the near future is knownas the

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83.Which of the following is an implication of the going concern assumption?

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84.Proponents of historical cost ordinarily maintain that in comparison with all other valuationalternatives for general purpose financial reporting, statements prepared using historicalcosts are more

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85.Valuing assets at their liquidation values rather than their cost is inconsistent with thea. periodicity assumption.b. expense recognition principle.c. materiality constraint.d. historical cost principle.

86.Revenue is recognized in the accounting period in which the performance obligation issatisfied. This statement describes the

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87.Generally, revenue from sales should be recognized at a point when

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88.Revenue generally should be recognized

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The correct option is b. “Fair value principle”

a. No, going concern assumption or concept of accounting does not justify the policies depreciation and amortization (D&A). This concept refers to that an entity can continue its business operations in the future without affecting from any factor or reason.

b. Yes, the fair value principle of accounting justified the usage of D&A policies. This principle explains that an entity’s assets must be measured on its current market value or fair value. D&A policies are considered while computing the fair value of the asset because D&A decreases the value of the asset.

c. Full disclosure principle of accounting explains that financial statements of an entity must be included complete, relevant, and accurate information on the financials of the company. So, the users of it can understand it and make the decisions.

d. Monetary unit assumption says that the FS should include only those transactions which can be explained in monetary terms. Thus, D&A policy.

What accounting concept justifies depreciation?

Yes, the fair value principle of accounting justified the usage of D&A policies. This principle explains that an entity's assets must be measured on its current market value or fair value. D&A policies are considered while computing the fair value of the asset because D&A decreases the value of the asset.

What is the accounting concept that justifies?

3] Going Concern Concept So it justifies the financial statements as a part of a continuous series of statements. The current statements are tentative and only reflect the financial position of that particular period of time.

What is the accounting principle that justifies the usage of accruals and deferrals?

The importance of the going concern principle Without it, businesses would not be able to perform accrued or prepaid expenses. The going concern principle allows a business to defer some of their prepaid expenses to future accounting periods, rather than recognising them all at once.

Which accounting concept justifies the depreciation of non current assets?

Noncurrent assets can be depreciated using the straight-line depreciation method, which subtracts the asset's salvage value from its cost basis and divides it by the total number of years in its useful life. Thus, the depreciation expense under the straight-line basis is effectively the same for every year it is used.

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