Reference no: EM132976641

The following are accounting procedures and practices used by several companies.

1. As soon as it purchases inventory, Sokolich Company records the purchase price as cost of goods sold to simplify its accounting procedures.

2. At the end of each year, Sloan Company records and reports the value of its land based on appraisal values.

3. Ebert Company prepares financial statements only every two years to reduce its costs of preparing the statements.

4. Guthrie Company receives orders from customers and records revenue at that time, even though it has not yet delivered products or services to the customers.

5. Because of inflation, Cross Company adjusts its financial statements each year to show the current purchasing power for all items.

6. David Thomas combines his personal transactions and business transactions when he prepares his company's financial statements so that he can tell how well he is doing on an "overall" basis.

7. At the end of each year, Vann Company reports its economic resources on a liquidation basis even though it is likely to operate in the future.

Required:

Problem 1: Identify what accounting assumption or principle each procedure or practice violates and indicate what should be done to rectify the violation.