For each of the following cases, respond to the question asked and indicate the accounting principle or concept that applies.

1. Wilson Company purchased many small tools during 2019 at a total cost of $6,000. Some tools were expected to last for a few weeks, some for several months, and some for several years. Wilson’s income for 2019 will be about $3.5 million. How should Wilson account for the small tools in order to be theoretically correct? As a practical matter, how should Wilson account for these tools? Why?

2. Sergio Rodriguez is the sole proprietor of The Quick Stop Mini Market. Rodriguez’s accountant insists that he keep a detailed record of money and merchandise that he takes out of the business for personal use. Why?

3. At the end of each fiscal period, the accountant for California Company requires that a careful inventory be made of the office supplies and that the amount on hand be reported as an asset and the amount used during the period be reported as an expense. Why?