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Of the five Generally Accepted Accounting Principles (GAAP) introduced in this section, identify which broad accounting principle describes most directly each of the following.

Business Entity Principle Cost Principle Going-concern Principle Monetary Unit Principle Revenue Recognition Principle

a)

select answer Business Entity Principle Cost Principle Going-concern Principle Monetary Unit Principle Revenue Recognition Principle

Eastman Store applied for a $150,000 bank loan. The bank received the business's financial statements from an independent accountant whose review indicated that Eastman Store had presented their accounting information fairly and that they had strong future potential.

b)

select answer Business Entity Principle Cost Principle Going-concern Principle Monetary Unit Principle Revenue Recognition Principle

Incomplete Data Co. is a sole proprietorship owned by Jack Tasker, who purchased a computer for personal use and recorded it as an asset on the balance sheet of Incomplete Data Co.. Which principle has Jack Tasker violated?

c)

select answer Business Entity Principle Cost Principle Going-concern Principle Monetary Unit Principle Revenue Recognition Principle

Kelly Young owns two sole proprietorships, Raintree and JenStar. In preparing financial statements for Raintree, Kelly Young should be sure that the revenue and expense transactions of JenStar are excluded.

d)

select answer Business Entity Principle Cost Principle Going-concern Principle Monetary Unit Principle Revenue Recognition Principle

Revenues are recorded when they are earned, regardless of when cash is received.

e)

select answer Business Entity Principle Cost Principle Going-concern Principle Monetary Unit Principle Revenue Recognition Principle

Land and building with respective appraised values of $60,000 and $180,000 were purchased for $55,000 and $160,000. Both assets will be recorded at the respective costs of $55,000 and $160,000.

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