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Accounting conventions represent the principles, assumptions, and rules that guide an accountant as he or she analyzes the effects of business events on the accounting cycle and applies them to various cycle procedures. Part 3 of the assessment requires you to determine which of these conventions apply to a given business scenario to enhance your understanding of the foundation of accounting procedures and processes.
Using Part 3 of the Unit 1 Assessment Template, identify the applicable accounting convention for each of the following business scenarios. More than one convention may apply to each scenario. Explain your choices for each scenario.
Before completing the scenarios consider and describe what role ethics has throughout the accounting process and reporting to internal and external customers. Throughout your assessments ensure that you apply ethics to your decision making and reporting.
Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35 percent, and its unlevered cost of captial is 15 percent. The firm also has outstanding debt of $19.05 million,
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