Your answer is incorrect Try again Presented below are a num

Your answer is incorrect. Try again. Presented below are a number of accounting procedures and practices at Ramirez Corp. For each of these items, list the assumption, principle, quality, or modifying convention that is violated. 1. Because the company\'s income is low this year, a switch from accelerated 2. The president of Ramirez Corp. believes it is foolish to report financial Periodicity depreciation to straight-line depreciation is made this year. information on a yearly basis. Instead, the president believes that financial information should be disclosed only when significant new information is available related to the company\'s operations Consistency Ramirez Corp. decides to establish a large loss and related liability this year because of the possibility that it may lose a pending patent infringement lawsuit. The possibility of loss is considered remote by its attorneys. 3. Historical cost 4. An officer of Ramirez Corp. purchased a new home computer for personal Expense recognition use with company money, charging miscellaneous expense. A machine, that cost $40,000, is reported at its current market value of $45,000. 5. Economic entity

Solution

the following table shows the answers along with a breif explanation.

Sno	Answer	Reason
1	COnsistency	Consistency requires the entity to follow same method of depreciation every year.
2.	periodicity	accounting reports financial information at regular periodic intervals such as quarterly, annually etc
3	expense recognition	expense is to be recognised only when it is probable that there will be a financial outlfow.
4	Economic entity	Ramrez corp is a different economic entity from its officers and the personal expenses of officers cannot be charged to Ramrez corp
5	Historical cost	A machine is to be presented at historical cost,but not market value.