Name: Palec, Callar, Jorca, Sevilla, Herida
Fundamentals of Accountancy, Business, and
Management 1
Case/Situation
Case 1: A large company with
an average total asset of
₱20,000,000 purchases a
₱2,500 digital camera and uses
is immediately instead of
recording it as an asset and
depreciating it over its useful
life. This practice may be
acceptable because of which
Accounting Guideline?
Case 2: A corporation pays its
annual property tax of
approximately ₱12,000 in one
payment each December 28.
During the year, the
corporation’s monthly income
statements report Property Tax
Expense of ₱1,000. This is an
example of which Accounting
Guideline?
Case 3: A company sold a
merchandise of ₱8,000 to a
customer in December. The
company's sales terms require
the customer to pay the
company in 30 days. The
company's income statement
reported the sale in December.
This is proper under which
Accounting Guideline?
Section: 11 ABM – Smith
Operating
Guideline Applied Explanation
or Violated
The materiality principle states
that a company should keep a
systematic record of everything
that can influence a company's
decision or financial
performance. So, if a large
company buys a ₱2,500 digital
Materiality camera and instead of
considering it an asset, the
company expenses it, this is
only acceptable under the
materiality principle because the
camera's cost is low and will not
have a significant impact on the
company.
According to the matching
principle, the company must
Matching match 1/12 of the annual
Principle property tax to each month
when revenue is generated by
the property.
Revenue must be reported
when it is earned (when goods
Revenue
are sold or services are
Recognition
provided), not when payment is
Principle
received, according to the
revenue recognition principle.
Case 4: Jane, a retailer, The cost principle requires that
wishes to report her assets be recorded at their
merchandise inventory on its Historical Cost acquisition cost. The cost
balance sheet at its retail Principle principle forbids increasing the
value. This will violate which cost of inventory items before
Accounting Guideline? they are sold.
Case 5: In the early 2000s,
General Motors was
experiencing great financial
difficulties and was ready to
declare bankruptcy and close
Going concern is associated with
operations all over the world.
this case because this
The Federal government
assumption states that the
stepped in and gave the Going Concern
company will continue to
company a bailout as well as a
operate indefinitely in order to
guarantee. The intervention of
achieve its current goals.
the Federal government
indicated that General Motors
will still operate in the future.
What Operating Guideline is
associated with this case?
Case 6: During the middle of
the night a retailer's store is
vandalized. The signage is
spray-painted all over, the
windows are broken, and some
merchandise is stolen. The
retailer's financial statements
will only report a loss on the
damaged property. Sales lost
due to the time waited for the
repair of the store will not be
reported because of what
Accounting Guideline?