Question 1

Required:

For the following transactions, identify which principle, constraint, or assumption would apply:

A. Assume a partnership’s business is going to continue indefinitely.

B. Based upon the dollar amount of cash paid or received, transactions are recorded.

C. An accountant may ignore expense accounts with low dollar balances when deciding which expense accounts they may want to increase spending on.

D. Benefits of a new software system should be greater than the costs to implement the new software system.

E. Business owners should keep their personal financial records separate from their business’ financial records.

F. Accounting records should ignore the effects of inflation.