Wrap-up: Assumptions
We have just covered four assumptions in accounting:
| A corporation is considered a “living, fictional” being. |
| A corporation is assumed to remain in existence indefinitely. |
| Financial statements show only measurable activities of a company. Financial statements must be reported in the national monetary unit (i.e., U.S. dollars for U.S. companies). |
| A company’s continuous life can be divided into measured periods of time for which financial statements are prepared. U.S. companies are required to file quarterly and annual reports. |
1. Accounting Entity and Going Concern
Exercise
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2. Measurement
Exercise
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