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Finance and Accounting Homework
Finance & Accounting
Pages 6 (1506 words)
Finance and Accounting Name University Course Lecturer 13th April 2012 1 Cost principle is usually used in acquisitions, plant assets that include lump sum purchases. A firm is usually allocated resources in terms of fair value of all its existing assets (Net of all the liabilities) that are used in the whole transaction.
Cost is a crucial aspect, and it facilitates realization of defined results in verifiable and objective amount. The matching of this accounting concept is usually facilitated in order to ensure that there is an accomplishment of radical goals within the depreciation expense parameters. Lump sum purchases should be treated in a way that plant’s asset useful life is well analyzed in a way that reflects all the revenues imperatively in the income statement (Tsuji & Fujibayashi, 2011). Purchases that the organization exercises should be subjected in going concern assumption. This is in order to ensure that there is attainment and realization of integral goals as per the laid down accounting and finance principles and policies in the organization. Revenue recognition principle in many scenarios usually limits an organization from reflecting on mechanisms of holding any asset from the plant. Cost principle should be differentiated in various ways in accordance to the equipments in the organization (Tsuji & Fujibayashi, 2011). 2 Factoring is an important approach in every organization cash flow spheres. Company management can opt to sell all its accounts receivable to the third party at a discounted manner for the sake of exchanging money. The third party in this case is usually any financial institution or bank. ...
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