7. Identify which basic assumption of accounting is best described in each item
ID: 2585059 • Letter: 7
Question
7. Identify which basic assumption of accounting is best described in each item below:
a. The economic activities of a corporation are divided into 12-month periods for the purpose of issuing annual reports.
Assumption: _________________________________________________
b. A company does not adjust amounts in its financial statements for the effects of inflation.
Assumption: _________________________________________________
c. A company reports current and noncurrent classifications in its balance sheet.
Assumption: _________________________________________________
d. The economic activities of a company and its subsidiaries are merged for accounting and reporting purposes.
Assumption: _________________________________________________
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Item Assumption Reason a. The economic activities of a corporation are divided into 12-month periods for the purpose of issuing annual reports. Periodicity company can divide its economic activities into time periods. b. A company does not adjust amounts in its financial statements for the effects of inflation. Monetary unit money is the common denominator. c. A company reports current and noncurrent classifications in its balance sheet. Going Concern company to last long enough to fulfill objectives and commitments. d. The economic activities of a company and its subsidiaries are merged for accounting and reporting purposes Economic entity company keeps its activity separate from its owners and other businesses.