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Problem 1: A sole proprietor owns a computer shop. He reported the cost of his house and lot as an asset of the entity. What accounting assumption was violated?
a. Periodicity b. Materiality c. Monetary unit assumption d. Economic entity
Problem 2: Which of the following appropriately describes the relationship of the users of financial information with the reporting entity?
a. Government agencies are interested in the regulation of the activities of the entity.b. Employees are interested in comparing their salaries with the tax paid by the reporting entity.c. The general public is interested in a sole proprietorship and their ability to force the business's incorporation.d. Customers would like to knows of the ability of the entity to buy goods from the former.
Financial Statement Analysis and Preparation
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