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E7-1 A number of accounting reporting situations are described below.

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E7-1 A number of accounting reporting situations are described below.

1. Church Company recognizes revenue at the end of the production cycle, but before sale.The price of the product, as well as the amount that can be sold, is not certain.

2. In preparing its financial statements, Leask Company omitted information concerning its method of accounting for inventories.

3. Zareena Corp. charges the entire premium on a 2-year insurance policy to the first year.

4. Whitney Hospital Supply Corporation reports only current assets and current liabilities on its balance sheet. Property, plant, and equipment and bonds payable are reported as current assets and current liabilities, respectively. Liquidation of the company is unlikely.

5. Dean Inc. is carrying inventory at its current market value of $100,000. Inventory had an original cost of $110,000.
6. Hot Shot Company is in its fifth year of operation and has yet to issue financial statements. (Do not use full disclosure principle.)

7. Silas Rupe Co. has inventory on hand that cost $400,000. Rupe Co. reports inventory on its balance sheet at its current market value of $425,000.

8. Charlotte Webb, president and owner of the Always Music Company, bought a computer for her personal use. She paid for the computer by using company funds and debited the “Computers” account.

For each of the above, list the assumption, principle, or constraint that has been violated, if any. List only one term for each case.

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