32) State the most applicable accounting rule for each of the following situations. An accounting rule can be a principle, assumption, constraint, or information characteristic.
1. All purchases and expenses are recorded at the amount paid.
2. South Seas records items imported from Tahiti in U.S. dollars.
3. The owner intends to run South Seas for an indefinite period of time.
4. Jem's Jewelers sold a $5,000 diamond engagement ring on account and recorded it as a sale.
5. Inventory purchased last month and sold this month was deducted as a cost on this month's income statement.
33) State the most applicable accounting rule for each of the following situations. Each rule can be used more than once. An accounting rule can be a principle, assumption, constraint, or information characteristic.
1. Maids-R-Us recorded using supplies in the same period the supplies were used instead of expensing them in the period when they were purchased.
2. Clean Sweep cleaned an office building in October and was paid in November. Revenue was reported in October.
3. Team Shirts sends a set of financial statements prepared in accordance with GAAP to First Bank every month.
4. Mary Ellis, owner of Clean Sweep, has a bank account for her business separate from her personal bank account.
5. Jem's Jewelers purchased a three-month insurance policy on its diamond inventory. The cost of the policy was recorded as an asset. Later one-third of the asset was expensed each month over the three-month policy.
34) State the most applicable accounting rule for each of the following situations. An accounting rule can be a principle, assumption, constraint, or information characteristic.
1. A $15 wastebasket was expensed when purchased even though it will be used for more than one year.
2. The owner of the business paid for private school tuition and did not list the amount on the books of his business.
3. Team Shirts prepares financial statements in the same manner each year.
4. South Sea's financial statements are prepared within the first week after the close of each accounting period.
5. An external auditor found receipts documenting the purchase of a computerized information system for Team Shirts.