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Each of the Following Statements Is Justified by a Concept

Question 8

Matching

Each of the following statements is justified by a concept or convention of accounting. Match each statement corresponding to the concept or convention involved.

Premises:
This convention best enhances comparability of financial statements between years.
A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.
A company forgoes hiring another full-time accountant, which would add only slightly to the financial statements' accuracy.
A company uses lower-of-cost-or-market to value inventory.
A large company rounds its financial statement figures to the nearest $10,000.
Responses:
Consistency
Materiality
Conservatism
Full disclosure
Cost-benefit

Correct Answer:

This convention best enhances comparability of financial statements between years.
A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.
A company forgoes hiring another full-time accountant, which would add only slightly to the financial statements' accuracy.
A company uses lower-of-cost-or-market to value inventory.
A large company rounds its financial statement figures to the nearest $10,000.
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