Identify accounting the entire cost of a piece of equipment

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Problem 1) In each of the following separate cases at least one of the assumptions or concepts of the accounting conceptual framework has been violated.

Required:

Please identify accounting assumption(s) or concept(s) violated in each case.

1. The owner of Cars-r-Us bought a motor vehicle for his own use. He paid for the motor vehicle by writing a cheque on Cars-r-Us's account. He instructed the bookkeeper to debit the "Vehicle" account and credit the "Cash at Bank" account of Cars-r-Us for the amount paid for the vehicle.

2. The entire cost of a piece of equipment is charged to an expense account in the year the equipment was bought.

3. Because profit for the year was extremely small, no entry was done to make an allowance for doubtful debts (taking into consideration potential bad debts).

4. A firm had been charging depreciation on a building that it expected to use for 10 years, at the rate of one twentieth (10%) per annum. In the present year, the current cost of the building increased dramatically. This caused the accountant to double the depreciation expense.

Reference no: EM132626511

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