(a) Explain clearly the following accounting terms in a manner which an intelligent non-accountant could understand in the context of a profit-oriented organisation:

(i) Expense

(ii) Prudence

(iii) Objectivity and

(iv) Matching.

(b) Your client has received the following invoice, and has come to you for advice:

Required: 

Write a letter to your client suggesting, for each of the four items in the invoice, how each item is likely to affect the expenses figure in the accounting year ended 31 December 2010. You should explain your suggestions and justify them by reference to accounting conventions.

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From: Marketing Services plc Agreed monthly fees for general advice - three months to 31 Dec. at £1,000 per month Supply of a photocopier on 1.10.2010 with 5-year guarantee for use by marketing dept Deposit paid by us on your behalf for television advertising time in February 2011 Advertising in newspaper from 1 November to 30 November 2010 £ 3,000 10,000 5,000 50,000