How is conservatism defined from a preparer’s orientation? Which conservatism goal should take precedence when conservatism criteria conflict?
What will be an ideal response?
ANSWER: Conservative, from a preparer’s point of view, is the attempt to select generally accepted accounting methods that result in any of the following: (1) slower revenue recognition, (2) faster expense recognition, (3) lower asset valuation, and (4) higher liability valuation. If these criteria conflict, lower income considerations should take precedence.
You might also like to view...
Merchandise is sold for cash. The selling price of the merchandise is $3,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include
A) A debit to Cash for $3,000. B) A credit to Sales for $3,210. C) A credit to Sales Tax Payable for $210. D) None of the above.
The information transmission capacity of the available sensory channels is known as ______.
A. capability B. perspective C. sensuality D. bandwidth
A job shop manufacturing process is better suited to make a variety of products than a continuous flow process
Indicate whether the statement is true or false.
A product line is a group of products that are closely related because the:
A. products share the same product managers B. products all function in a similar manner and provide similar benefits C. same company developed the idea for each product D. products are all sold under the same brand name E. products are all priced about the same