In the two-month period June 1–July 31, 2011, Hess Corp. (HES) stock decreased from $80 to $70 per share, and Exxon Mobil (XOM) stock decreased from $83 to $80 per share.† If you invested a total of $21,490 in these stocks at the beginning of June and sold them for $20,500 at the end of July, how many shares of each stock did you buy? HES shares XOM shares Solution.

1. Match the concept or assumption to the area of theory that covers it. Click and drag the
assumption/concept on the right to match the heading on the left. major accounting assumptions
accrual basis and periodicity other basic accounting concepts articulation major principles
materialism modifying concepts matching qualitative characteristics neutrality
Solution
(1) Major accounting assumptions – accrual basia and periodicity
Assumption#1. Accounting Entity.
Assumption#2. Going Concern.
Assumption#3. Measurement and Units of Measure.
Assumption#4. Periodicity.
(2) Other basic accounting concepts – Materialism
There are a number of conceptual issues that one must understand in order to develop a firm
foundation of how accounting works. These basic accounting concepts are as follows:
Accruals concept
Conservatism concept
Consistency concept
Economic entity concept
Going concern concept
Matching concept
Materiality concept
(3) Major principles – Matching
Following are four underlying principles in accounting
(4) Modifying concepts – articulation
Two basic conceptual frameworks exist in accounting theory when it comes to the relationship
between the balance sheet and the income statement. Articulation is an expression of how well
the information on the balance sheet corresponds with the information found a company's
income statement. A non-articulated approach is less concerned with this level of
correspondence.
(5) Qualitative charateristics – neutrality
Method under which revenues are recognized in the period they become available and
measurable, and expenditures are recognized in the period the associated liability is incurred.
Most government accounting follows this method. Also called modified cash basis accounting.
PRIMARY QUALITATIVE CHARACTERISTICS of Accounting Information
The primary decision-specific qualities that make accounting information useful are relevance

2. and reliability.
(a) Relevance: To make a difference in the decision process, information must possess predictive
value and/or feedback value. Timeliness also is an important component of relevance.
(b) Reliability: Reliability is the extent to which information is verifiable, representationally
faithful, and neutral.