Answer:
1.) A number of recommendations are made to limit the risk that accounting estimates could be used for creative accounting purposes. The negative effect of the use of accounting estimates in financial statements is a loss of reliability.
2.) Substance over form is an accounting principle used "to ensure that financial statements give a complete, relevant, and accurate picture of transactions and events". In accounting for business transactions and other events, the measurement and reporting is for the economic impact of an event, instead of its legal form.
3.) Perhaps the most common use of assumptions is in the accounting function, which uses assumptions to facilitate financial measurement, forecasting, and reporting. This assumption holds that the entity will not cease operations or liquidate its assets during the accounting period. The time-period assumption.
4.) The going concern principle is the assumption that an entity will remain in business for the foreseeable future. Conversely, this means the entity will not be forced to halt operations and liquidate its assets in the near term at what may be very low fire-sale prices.
5.) The separation of accounting entities is important because it helps with proper tax accounting and financial reporting.
6.) Companies use the time period assumption in accounting to divide its operating activities into informal time periods so it can produce financial reporting. This financial reporting produces timely information that helps users make decisions.
