The following list of statements poses conceptual issues:

a. The business entity is considered to be separate and apart from its owners for accounting purposes.

b. A transaction is always recorded in such a way as to reflect its legal form.

c. It is permissible for a company to use straight- line depreciation, even though the rest of the industry uses declining balance, because the company believes that straight- line better reflects the pattern of benefits received from these assets.

d. All details of transactions must be disclosed in the notes to the financial statements.

e. The lower- of- cost- or- market method must be used in valuing inventories.

f. The cost principle relates only to the income statement.

g. Revenue should be recognized only when cash is received.

h. Accruals and deferrals are necessary because of the separate- entity assumption.

i. Revenue should be recognized as late as possible and expenses as early as possible.

Required:

1. Indicate whether each statement is correct or incorrect.

2. Identify the principle(s) posited.

3. Provide a brief discussion of its (their) implications.