Tom runs a business and his accountant, Claire, has recently prepared the business’s annual financial statements. Tom doesn’t know much about accounting, and Claire is explaining some of the figures in the statements. During the conversation, Claire makes the following comments:

(i) ‘Your assets are shown on the balance sheet based on what they originally cost, not what they’re worth now.’

(ii) ‘Yes, I know your house is worth a lot of money, but we can’t put it on your balance sheet!’

(iii) ‘Your profit for the year is based on the sales you made less the expenses you incurred. It’s not the same as the cash you received minus the cash you paid!’

(iv) ‘Yes, I know your business has a really good reputation and lots of loyal customers, but I’m afraid we can’t show these assets on your balance sheet.’

(v) ‘There’s more than one way to calculate one or two things in your financial statements. But once we’ve chosen a particular accounting method, we need to stick with it from one year to the next, unless there’s a good reason to change. We definitely can’t just change it just to make your results look better!’

Required:

For each of the five comments, specify the accounting concept that Claire is referring to.