In the recent past accountants have shown an interest in identifying the concepts which underlie the techniques they use when accounting for transactions. They acknowledge that some among the accounting concepts are fundamental ones but observe also that occasionally there is a conflict between concepts.

Required:

(a) Illustrate with a transaction a conflict between the following concepts:

(i) The matching working rule and the materiality convention

(ii) The materiality convention and the objectivity convention

(iii) The matching working rule and the prudence convention

(iv) The separate entity assumption and the substance over form convention.

(b) Explain how you would resolve the conflict, pointing out whether your judgement will be swayed because one of the concepts in conflict is identified as a fundamental one.