会计专业外语习题综合.docVIP

1. Business Entity Looking at Finlay Interiors, Carol Finlay must not include personal expenses, such as clothing and the cost of going to the movies, as expenses of her business. 2. Going Concern It is assumed from a review of Finlay Interiors’ financial statements that the business is continuing its operations, because information to the contrary is not included. 3. Monetary Unit (also consistent with the Cost Principle) Assume that in August 2006 Finlay Interiors purchased furniture from a supplier in the United States at a total cost of $1,000 (U.S.), or $1,489 (Cdn) ($1,000/0.6716 exchange rate). If the exchange rate changes several months later to 0.6412, Finlay Interiors does not restate the value of the furniture to $1,560 ($1,000/0.6412). The furniture remains in the accounting records at $1,489 (Cdn) 1. Objectivity If Carol Finlay purchases new furniture and records the transaction based on an invoice prepared by the seller, the invoice is independent and unbiased evidence that verifies the details of the transaction. 2. Cost If Finlay Interiors purchased used furniture for $5,000 cash, it is recorded in the accounting records at $5,000. It makes no difference if Carol Finlay thinks that the value of the furniture is $7,000. 3. Revenue Recognition Assume that on April 3, Finlay Interiors performed work for a client in the amount of $600. The client did not pay the $600 until May 15. Revenue is recorded when actually earned on April 3 in the amount of $600, the value of the noncash asset received by Finlay Interiors. Alternatively, if Finlay Interiors received $1,000 on April 15 for work to be done next month, revenue is not recorded until the work is actually done in May. Exercise 1 – Accounting Cycle and GAAP 1. Which of the following statements is false regarding a sole proprietorship? B A proprietorship has only one owner. A proprietorship is legally a separate entity. The owner is subject to unlimited liability. Income of the proprietorship is ta